U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB AMENDED
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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ICEBERG CORPORATION OF AMERICA
(Name of Small Business Issuer in its charter)
Nevada Applied For
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
P.O. Box 8251, St. John's, Newfoundland, Canada A1B 3N4
(Address of principal executive offices)
(709) 739-5731
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
$0.0001 PAR VALUE COMMON STOCK
(Title of Class)
$0.0001 PAR VALUE SPECIAL COMMON STOCK
(Title of Class)
<PAGE>
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and
Management
Item 5. Directors, Executive Officers, Promoters and Control
Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
PART F/S
Financial Statements
PART III
Index to Exhibits
Signatures
Exhibits
<PAGE>
PART I
Item 1. Description of Business
a) Company Background.
Iceberg Corporation of America (the "Company") was organized
under the laws of the State of Nevada on July 3rd, 1989, under
the name "D.V. Holdings, Inc." Until June of 1999, the Company
conducted no business. On June 25, 1999, the Company consummated
a reverse merger whereby it acquired 100% of the issued and
outstanding common shares of Iceberg Industries Corporation
("Iceberg Industries") for total consideration of $3,631,848,
based upon a share for share exchange at a ratio of 1.7 shares of
the Company for each share of Iceberg Industries. As a result of
the merger, the Company filed a Certificate of Amendment with the
Secretary of State of the State of Nevada changing its name to
"Iceberg Corporation of America".
At the date of combination, the Company was a dormant public
shell company with no identifiable assets other than cash. As
such, the reverse takeover transaction was considered a capital
transaction rather than a business combination. The purchase
price for the Iceberg Industries shares was satisfied by the
issuance of 1,251,753 Common Shares and 4,506,106 Special Common
Shares of the Company. The Special Common Shares are held by
Icecap Equity, Inc., an entity incorporated under the laws of the
Province of Newfoundland, through its trustee James D. Smyth, to
allow for the postponement of potential tax implications to
Canadian resident shareholders of Iceberg Industries resulting
from the reverse takeover transaction. The Special Common Shares
have voting rights equal to the Company's Common Shares and may
be exchanged at any time for a Common Share of the Company on an
equivalent basis. Accordingly, the Special Common Shares are the
economic equivalent of the Common Shares, and, in effect, give
the Company full ownership and control of Iceberg Industries.
As a result of these transactions, the former shareholders
of Iceberg Industries effectively control the Company through
their share ownership. Under these circumstances, U.S. GAAP
requires that Iceberg Industries be identified as the accounting
acquirer. Accordingly, this registration statement and the
accompanying financial statements reflect, both prior and
subsequent to the acquisition, the business of the acquired
entity, Iceberg Industries Corporation. Historical shareholders'
equity of Iceberg Industries has also been retroactively restated
for the equivalent number of shares received in the reverse
takeover transaction.
Iceberg Industries Corporation, a development stage company,
was incorporated under the laws of the province of Newfoundland,
Canada on July 22, 1996. As a result of its acquisition of
Iceberg Industries, the Company's principal activity is intended
to be the commercial supply of premium beverage products,
including iceberg water, beer and vodka, which utilize only water
obtained from icebergs as the core ingredient. To date, Iceberg
Industries has generated 55% of its revenue from bottling spring
water and 45% from iceberg water. Iceberg Industries has
invested $698,264 in the development of technology for the
harvesting of icebergs and the production of premium water from
icebergs. Iceberg Industries acquired a spring water bottling
company on March 31, 1998, which gave it access to an existing
water bottling line as well as trained staff who could be used to
bottle the iceberg water product. It has subsequently developed
substantial new production facilities and has recently focused
its energies on product development, packaging, market research
and market development. Management continues to commit
significant efforts to these development activities, financial
planning and raising the required capital to support the ongoing
research and development.
The acquired company, Iceberg Industries Corporation, had
previously received a Grant from the Canadian government for up
to $400,000 in recognition of the company's attempt to increase
employment in the St. John's, Newfoundland area; had secured an
improvement loan from Hong Kong Bank in the amount of $165,000 to
retrofit a ship for the company's business venture; and had
secured a permit from the United States Food and Drug
Administration (the "FDA") to "test market" Borealis Iceberg
Water in the U.S. marketplace. This permit, attached hereto as
Exhibit 10.4, was obtained when Iceberg Industries applied to the
FDA for permission to sell Iceberg water in the United States.
The permit allows Iceberg Industries to sell 150,000 cases of
Iceberg water over a period of 15 months commencing with the
first shipment of Iceberg water products. Subsequently, Iceberg
Industries has applied for permission to sell Iceberg water
products in the United States and to date has received individual
permits from 41 States. The Company expects to receive
permission from the remaining nine states over the next two
months.
The Company operates a processing plant in Trepassey,
Newfoundland, and has long-term leases on the property upon which
the facility is located and for purposes of office space at 16
Forest Road, St. Johns, Newfoundland.
b) Description of Business.
General Information on Icebergs.
Almost the entire extent of Greenland is covered by a huge
glacial blanket over 700,000 square miles in area and more than
9,000 feet in maximum thickness. Icebergs are created where the
glaciers meet the sea. Icebergs spend nearly three years at sea
in the freezing Arctic waters of the North Atlantic before they
arrive off the coast of Newfoundland and Labrador. This annual
migration of thousands of icebergs to the rugged coastline of
Newfoundland can pose a serious threat to ships. Countless ships
and lives have been lost to these "phantoms of the north". Every
year thousands of tourists flock to the rugged shores of
Newfoundland and Labrador to witness one of nature's truly
magnificent marvels, the migration of ancient icebergs. These
massive white giants evoke powerful images and are unique to this
geographic region. The continuing interest in the Titanic has
helped reinforce consumer awareness and respect for these
floating fresh water sanctuaries. Icebergs start their
three-year journey to the coastline of Newfoundland from
Greenland. Extensive records exist on iceberg prevalence
throughout the season, dating back many years. These are
compiled by the International Ice Patrol, an organization formed
shortly after the sinking of the Titanic in 1912. The data
provides a level of comfort that icebergs will be available. The
International Ice Patrol reports the number of observed icebergs
that drift south of the 48th parallel North, a point that crosses
the northernmost tip of the Avalon Peninsula on the Northeast
coast of Newfoundland. From 1983 to 1994 an average of 312
icebergs were sighted annually. For the period 1990-1995,
iceberg conditions were much more severe, with an average of 876
spotted per year. In some years more than 1,500 have been
observed. A single iceberg can weigh millions of metric tones.
The Company's targeted harvest represents a very small portion of
this amount.
The purity and quality of the iceberg water has been
verified by independent laboratory analysis. Iceberg Industries
selected water samples from several large volume producers of
water products and engaged an independent lab, CANTEST, to
compare various components of each water product. The results of
this test indicated that Iceberg water was an excellent product
and exceeded all of the tested products in 27 out of 28 elements
that were measured. In the particular category, "Total Dissolved
Solids", which is used by certain companies to promote their
products, Iceberg water did not register on the measurement scale
whereas a Canadian market leader measured 209 mg/L and a French
market leader measured 301 mg/L.
Harvesting Icebergs.
Iceberg Industries was the first holder of a permit to
harvest icebergs under the Government of Newfoundland and
Labrador's water use policy. The technology for harvesting
icebergs is unique to Iceberg Industries. Large icebergs
fracture or "calve" into smaller pieces. Once the bergs have
calved to a manageable size, the Iceberg Industries' harvesting
process can begin. With the use of an ocean-going tug, an ice
harvesting vessel fully equipped for harvesting and processing is
carefully positioned alongside a suitable iceberg. Using a crane
and hydraulic grapple, ice is retrieved, crushed, and deposited
into a sterile melting tank. When full, the harvesting vessel is
towed to the production facility in Trepassey, Newfoundland and
the water is transferred into a land storage system.
Bottling of "Iceberg Water" is conducted at the Company's
plant in Trepassey. A recent expansion and renovation added an
additional 6,400 square feet. In addition, a new bottling line
was installed which gives Iceberg Industries the capacity to
produce 1,800,000 cases of water on an annual basis. Trepassey,
Newfoundland is located on the ocean approximately two hours away
from St. John's. St. John's is located on the shipping lanes to
Europe and as such provides Iceberg Industries with an economical
containerized shipping service to major markets. In addition,
Newfoundland, which is located on the extreme East Coast of
Canada, receives large quantities of goods by transport truck.
There is not enough local export business to utilize all of these
transport trucks on their return trips and as a result local
exporters can receive favorable freight rates for the movement of
goods. This provides some assistance to Iceberg Industries in
making their products competitive in various markets outside of
Newfoundland.
Iceberg Industries bottles its own Spring water and Iceberg
water products at its Trepassey plant. Vodka production has been
sub-contracted to a highly regarded manufacturing company in
Ontario, Canada. A packaging arrangement has been negotiated for
the production and bottling of Vodka with Commercial Alcohol Co.
at their Brampton, Ontario facility.
Beer production has been sub-contracted to Moosehead
Breweries Inc. located in Saint John, New Brunswick, Canada. No
formal contracts have yet been signed with these companies.
Industry Information.
The bottled water industry has experienced tremendous growth
over the last decade due to two major trends: rising concern
about the safety of tap water and a general shift in the beverage
market toward healthier, low calorie, non-alcoholic products.
This trend continues. The North American bottled water market is
currently a $4 billion market and, with an annual growth rate of
10%, is the fastest growing segment of the beverage industry.
Management believes that the market in North America is still far
from saturated as domestic per capita consumption of bottled
water is only a fraction of European consumption. The industry
is also extremely fragmented, with the top 10 brands accounting
for only 40% of total industry sales. Industry analysts predict
that bottled water sales in the United States will reach $5
billion by the year 2000. The United Kingdom and other European
Union countries are also major consumers of bottled water, with
per capita consumption in such countries as Germany, France and
Italy being five to six times higher than that in Canada.
Further market opportunities exist in Japan and other Asian
countries. At the same time, the bottled water industry is
highly competitive. There are hundreds of water bottlers, many
of which operate on a regional basis due to relatively high
transport costs. For a major portion of the market, competition
on price is important. However, there are products positioned at
the high end of the market that successfully receive a price
premium. "Iceberg Water" is positioned here, as an ultra premium
product, capitalizing on its ability to provide the unique
experience of drinking pure water from icebergs hundreds of
thousands of years old. It is promoted as an affordable treat.
Iceberg Industries' research and development efforts have
positioned it as the world's first commercial supplier of a
family of products which utilize water obtained from icebergs as
the core ingredient. These "bergs", up to one hundred and fifty
thousand years in age, yield a pristine source of natural
drinking water. Protected from man and our polluted planet,
these icebergs represent a unique category of drinking water.
This is what separates Iceberg from the pack: pre-civilization,
pre-pollution, quality water. All Iceberg products are
positioned in niche markets at the premium end of the price and
quality spectrum. Marketing programs rely upon the powerful,
pristine and emotive images of icebergs.
Iceberg water is considered a premium water product and as
such the Company generally compares its retail price with Evian,
a world leader in bottled water. The suggested retail price for
1 Liter of Iceberg water in the local market is US$1.08, although
the retailer is at liberty to charge whatever price is
appropriate. The price for 1 Liter of Evian water ranges from
US$1.06 to US$1.15 in the same marketplace.
Branding.
Iceberg Industries is committed to building brand equity.
The product family will carry a common brand name - "BOREALIS".
This helps support the cold, northern image and mystique
surrounding the Company's products. Application has been made to
have the name "Borealis" registered as a trademark in the United
States and in Canada. In Europe, due to prior registrations of
the name "Borealis", Iceberg Industries has made application to
register the name "White Berg" for all products to be sold in
that territory. The word "ICEBERG" will play prominently in the
name, used as a descriptive term for all products. Private label
production is also possible for selected customers, with a
further opportunity to build brand equity. To date, water has
been produced for Canadian Pacific Hotels with the "BOREALIS"
trade name retained. Product has also been produced for Loblaw's
and, although this was done under the President's Choice banner,
it has helped create awareness of the availability of iceberg
water. Iceberg Industries' initial family of products is:
* bottled iceberg water
* iceberg vodka
* iceberg beer
* crushed iceberg ice, and
* bottled natural spring water
New and exciting additions to the product line are currently
in the planning process, including "ice tea" and other products
that use water as a foundation.
Borealis Iceberg Water is a unique experience to be enjoyed
and savored. Taste tests conducted by prospective distributors
have determined that iceberg water has the softest, most natural
taste of any bottled water on the market.
Borealis Iceberg Vodka is an ultra-smooth, four-column
distilled spirit. Iceberg water is used in both the distillation
and blending processes.
Borealis Iceberg Beer is craft brewed in small batches for
superior quality and consistency at a highly-regarded Atlantic
Canada brewery.
Borealis Iceberg Ice has a number of unique features that
create exceptional promotional opportunities. When added to
beverages, it fizzles and crackles, releasing ancient, pure air
from tiny air pockets trapped under pressure in the ice.
Market Positioning.
Iceberg Industries has created a new sector in the beverage
industry. All products will be positioned at the premium end of
the price and quality spectrums. Management believes that the
Company's products, being unique and authentic, have many
marketing advantages. Management believes it is critical to
adopt this "premium" positioning strategy given the incremental
harvesting, transport and processing costs relative to more
conventional beverage producers.
Target Markets and Distribution.
The initial marketing thrust has been in Canada and the
United States, with the United Kingdom as an additional key
market. Thus far, marketing efforts have utilized established
beverage marketing companies within these regions. The intention
of the Company is to utilize these companies' expertise as well
as take advantage of existing shelf space made available through
these companies. Negotiations have been completed with the
following key distributors:
Central Dairies ("Central"): Iceberg Industries has
negotiated an arrangement with Central to represent our
water products, both Spring water and Iceberg water, in
Newfoundland, Nova Scotia, New Brunswick and Prince Edward
Island commonly referred to as the Atlantic Provinces of
Canada. Central is a division of the Farmers Dairy Co-
operative Society in Nova Scotia and is the largest dairy
producer and distributor in Newfoundland. Our water
products are a complimentary addition to their product line.
No formal contract has been entered into for this
arrangement.
Loblaw Companies Limited ("Loblaws"): Iceberg Industries
has negotiated an arrangement with Loblaws for a private
label 1 litre "President's Choice" Iceberg water product
which is being distributed through Loblaws' 450 store
supermarket chain. Future plans are to add a 500ml bottle
size to the current product and to expand distribution to an
additional approximately 1,000 supermarket and franchised
stores. No formal contract has been entered into for this
arrangement.
Better Beverage Importers Co. ("BBI"): Iceberg Industries
has negotiated a contract with BBI to be our importer of
record to distribute Iceberg vodka in the United States.
Transtrade International Inc. ("Transtrade"): Iceberg
Industries has negotiated a contract with Transtrade to
represent all Iceberg products in various countries around
the world. The term of the contract is for 18 months and
shall be renewed automatically subject to certain sales
objectives on subsequent annual periods for four years.
St. Killian Importing Co. Inc. ("St. Killian"): Iceberg
Industries has negotiated a contract with St. Killian to
represent Iceberg beer in the United States. The term of
the contract is for a period of three years with a one year
renewal at that time.
Promotion.
The Company has focused on public relations as a major
contributor to the awareness of Iceberg products. Press coverage
on the Company and its activities has been favorable. It is the
intention of the Company to take advantage of this situation as
much as possible in order to capitalize on the editorial pieces
and free press made available to the Company. This will be
supplemented by expenditures on promotional materials as well as
participation with distributors in joint promotional activities.
Management believes that such activities as being the "official
water" of the 1998 Canadian Commonwealth Games Team have
tremendous ongoing promotional value.
Raw Material Transport.
Water will be primarily transported to the plant using an
ice harvesting vessel. Some road transport using tanker trucks is
also anticipated during the harvesting season and for
transportation to producers of beer and vodka. To date, the
Company has used a combination of its own tanker and a leased
tanker. It intends to acquire several additional tankers which
will give the Company complete control over the material put into
the tankers. Hauling of these will be contracted to independent
truckers. Commercial carriers will be used for longer distances.
An option also exists to transport water in portable storage bags
in conjunction with regular transport trailers. These can be
employed for transporting bulk water over long distances. Raw
material for ice production will be transported and stored in
insulated containers with plastic liners. These containers each
hold approximately 0.5 metric tones. The Company will have to
purchase its own containers in order to maintain product
integrity and to ensure an adequate supply. When offloaded from
the barge or vessel at other than the processing location, these
containers can be loaded into transport trailers for
transportation to the processing facility.
To date, the Company has used the services of independent
local carriers and national carriers to deliver water to its
processing facility. No formal contracts have been negotiated
but there are adequate for-hire truckers located in the area to
meet any raw material transportation requirements.
Production.
It is not desirable for the Company to make the significant
investment required to have all the required production
capabilities in-house. The basic philosophy will be to make a
series of strategic contractor arrangements for its products,
other than water production. The Company's Trepassey plant has
been bottling natural spring water since 1992. Trepassey is
located 140 km south of the capital city of St. John's,
Newfoundland. The plant is also used to bottle the Iceberg
Water. A recent expansion added an additional 6,400 square feet,
more than doubling the size of the plant. This is required to
meet the demand for Iceberg Water and to accommodate the growing
local demand for spring water. Within the limited confines of
the existing plant processing area some equipment enhancements
were initiated in the Spring of 1998. Additional enhancements
were added with the plant expansion in order to meet growth in
sales volume, enhance efficiencies, adhere to the rigid quality
standards of the International Bottled Water Association and to
reduce product costs.
Iceberg Vodka - A packaging arrangement has been negotiated
for the production of vodka with Commercial Alcohol's at their
Brampton, Ontario facility. The Company will transport iceberg
water to the distiller for blending with spirits and bottling
under the Company's label. No formal contract has been
negotiated with Commercial Alcohol at this time. Iceberg
Industries supplies all of the water and packaging and the final
product is then produced on a per unit fee basis.
Iceberg Beer - Excess capacity exists in the brewing
industry. Arrangements have been made with Moosehead Breweries
in Saint John, New Brunswick to produce an iceberg beer product.
The Company will deliver iceberg water to Moosehead for the
brewing and bottling of beer for national and international
markets. No formal contract has been negotiated with Moosehead
Breweries at this time. Iceberg Industries supplies all of the
water and packaging and the final product is then produced on a
per unit fee basis.
Iceberg Ice - There are many dormant and under-utilized
seafood processing facilities on the coast of Newfoundland.
These contain a variety of receiving, weighing, conveying,
sorting, processing and packaging equipment and cold storage
areas. With minimal modification these are well-suited to the
requirements for processing ice. Because of this, Iceberg
Industries has not made any provision to process bagged crushed
ice at its facility in Trepassey. The front end of the
production set-up is similar to that required for melting. The
ice is dumped into a hopper and fed to an ice crusher. From
there the crushed ice is automatically "screened" to remove small
pieces unsuitable for an ice product. These smaller particles
are retrieved for melting. The pieces suitable for an ice
product fall onto a flat grading conveyor. Any large or
otherwise unsuitable pieces are removed. The balance continues
to the end of the belt to an automatic packaging machine. After
being filled, the container is appropriately sealed and placed
into cold storage.
Preliminary discussions have taken place with a company
located on the North East Coast of Newfoundland, near iceberg
alley, with a view to utilizing their cold storage facility to
process the Company's requirements for bagged crushed ice. It is
not anticipated that the Company will have to spend significant
dollars to accommodate this production activity.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Forward Looking Information.
This report contains certain forward-looking statements and
information. The cautionary statements made in this report
should be read as being applicable to all related forward-looking
statements wherever they appear. Forward-looking statements, by
their very nature, include risks and uncertainties. Accordingly,
the Company's actual results could differ materially from those
discussed herein. A wide variety of factors could cause or
contribute to such differences and could adversely impact
revenues, profitability, cash flows and capital needs. Such
factors, many of which are beyond the Company's control, include
the following: our success in obtaining new customers; the
volume and type of orders that are received from such customers;
levels of, and ability to, collect accounts receivable;
availability of trained personnel and utilization of the
Company's capacity to complete work; competition and competitive
pressures on pricing; availability, cost and terms of debt or
equity financing; and economic conditions in the United States
and in the regions served.
The Company's functional currency is the Canadian dollar as
all Company operations have been conducted in Canada and are
denominated in the Canadian dollar. Except for share investments
in U.S. dollars, there has been no activity denominated in
foreign currency through June 30, 1999. Therefore, there is no
currency risk or exposure to the Company in the period to June
30, 1999.
The Company's financial statements are translated into U.S.
dollars using the current exchange rate as required by FAS 52.
The accumulated currency translation adjustment is reported as
other comprehensive income in the statement of shareholders'
equity and was $29,199 to June 30, 1999. Subsequently, in
September and October 1999, the Company issued 600,000 shares for
proceeds of US$1.5 million. In the future, the Company intends
to conduct operations in the U.S. and in Europe. Currency risks
and functional currency will be evaluated as future plans are
formulated.
While the Company is still in its development stage,
management has presented the statements of operations in the
traditional format.
During the six month period ended December 31, 1999, the
Company continued its development strategy by investing $142,600
in plant, property and equipment. This brings its total
investment in plant, property and equipment to $2,141,141.
In order to finance the additional investment in plant and
equipment, increase in inventory, and to support ongoing start-up
and research and development, the Company raised $1,500,000
through the issuance of equity shares during the six month period
ended December 31, 1999. The Company is continuing its strategy
of funding development through additional equity financing.
These funds will be used to manage working capital requirements
and to fund ongoing operational costs with a particular emphasis
on marketing expenditures as the Company introduces its products
to the European Economic Community.
The Company reports sales of $385,387 and $190,211 for the
six months ended December 31, 1999, and the six months ended
December 31, 1998, respectively. These sales represent minimal
revenue from bottling spring water and some iceberg water. Sales
have doubled over the same period last year with management's
anticipation that the next quarter will see increased sales
volumes for each of these products. Management continues to
focus its energies on product development, market research and
market development, which includes the formation of alliances in
various geographical areas.
General and administration expenses have increased in the
six month period ended December 31, 1999 to $601,966 as compared
with $286,283 for the six month period ended December 31, 1998.
The major portion of the increase can be attributed to legal
costs and additional accounting and auditing costs which were
incurred in the process of preparing Iceberg Industries
Corporation for the reverse takeover of Iceberg Corporation of
America.
Research and development expenses decreased in the six month
period ended December 31, 1999 to $94,406 compared to $209,319
for the six month period ended December 31, 1998. Our production
facility became operational during the period and the ice
harvesting methodology was determined with the result that less
additional expenditures are being incurred on these activities.
Research and development expenses in the second quarter ended
December 31, 1999 were reduced when iceberg water which was
harvested in the research and development activity of the first
quarter was transferred to finished product inventory.
Sales and marketing expenses increased in the six month
period ended December 31, 1999 to $359,618 as compared with
$128,808 for the six month period ended December 31, 1998. This
increase is a result of our redesign of all of our labels to
better position our products for the international marketplace.
Additional costs were incurred in shipping and warehousing as the
Company started to ship products into the United States market.
Product giveaways and expenditures to support the brand also
increased as product sales doubled during the six month period.
Depreciation and Amortization increased in the six month
period ended December 31, 1999 to $166,417 compared with $91,563
for the six months ended December 31, 1998. This increase
results from the amortization of the costs of an extension to our
production facility at Trepassey which was completed in July
1998. We also installed a new bottling line which became
operational in July 1998 and additional depreciation has been
reflected in these six month statements.
Interest and bank charges increased in the six month period
ended December 31, 1999 to $32,116 compared with $27,710 for the
six month period ended December 31, 1998. The net increase of
$4,406 comprised of a decrease in short term interest expense of
$321 and an increase in long term interest expense of $4,727.
The increase in long term interest expense resulted from interest
charges on recent loans from shareholders.
Net loss for the six months ending December 31, 1999 was
$1,125,504 ($0.12 per share) compared to $731,214 ($0.17 per
share) for the six months ending December 31, 1998.
Research and development expenses decreased in the three
months ended September 30, 1999 to $48,425 as compared with
$95,675 for the three months ended September 30, 1998. This
decrease resulted from the fact that our production facility
became operational during the three months and the ice harvesting
methodology has been determined with the result that future
research and development expenditures on these particular
activities will be reduced on an ongoing basis.
Sales and Marketing expenses increased in three months ended
September 30, 1999 to $186,061 as compared with $81,606 for the
three months ended September 30, 1998. As stated earlier, the
company recently designed new labels for all iceberg products in
order to provide a consistent format in label design on the
advice of our U.S. Marketing consultant. These additional costs
in addition to increased wages, travel, sales retainers and
advertising, as the new products became available in the
marketplace, resulted in extra costs for the three month period.
Depreciation ad Amortization increased in the three months
ended September 30, 1999 to $83,032 as compared with $38,318 for
the three months ended September 30, 1998. This increase results
from the costs of an extension to our production facility at
Trepassey and installation of a new bottling line. Both of these
acquisitions were substantially completed at June 30, 1999.
Interest and bank charges increased in the three months
ended September 30, 1999 to $17,498 as compared to $14,985 for
the three months ended September 30, 1998. The net increase of
$2,513 comprised of a reduction in short term interest expense of
$4,915 and an increase in long term interest expense of $7,428.
The increase in long term expenses resulted from interest charges
on recent loans from shareholders.
During the six month period ended June 30,1999, the Company
continued its development strategy by investing $985,794 in
plant, property and equipment. This brings its total investment
in plant, property and equipment to $1,858,953. This current
period investment expanded the Company's production facility and
also resulted in the installation of a new bottling line for
production of its water-based products. In addition, the Company
acquired land adjacent to its facility and installed storage
capacity to hold bulk products for subsequent processing.
In order to finance the acquisition of the plant and
equipment, and to support ongoing start-up and research and
development, the Company raised $1,878,149 through the issuance
of additional equity shares during the six month period ended
June 30, 1999. This significant financing activity was
supplemented by shareholder advances of $425,974, an increase in
trade payables of $618,587 and additional long-term debt
financing of $161,033. The Company is continuing its strategy of
funding development through additional equity financing. These
funds will be used to manage working capital requirements and to
fund ongoing developments costs. Subsequent to the June 30, 1999
year-end, the Company has raised $1,500,000 from the issuance of
an additional 600,000 common shares. Management believes that
this strategy will enable the Company to finance its start-up and
development and move it to commercial production by the fourth
quarter of fiscal year 2000.
For the six months ended June 30, 1999 and 1998, the Company
reported sales of $209,188 and $113,640, respectively. These
sales represent minimal revenue from bottling spring water and
some iceberg water. Management recognizes that its cost of sales
for the six months ended June 30, 1999 exceeds sales by $78,282.
This is as a result of the Company being in its development stage
and volume of sales for the above period were insufficient to
absorb the new production costs associated with the Company's
expanded facility. Management expects that this will be
corrected as new markets create demand for the Company's
products. Management continues to focus its energies on product
development, market research and market development, which
includes the formation of alliances in various geographical
areas.
Cost of sales for the six months ended June 30, 1999 was
$287,470 as compared to $45,013 for the six months ended June 30,
1998. In addition to the effect of increased sales, the cost of
sales increase was partly the result of a write-down of vodka
inventory in the amount of $94,849. This write-down was
necessary to reflect the fact that previously made sales
arrangements with distributors did not come to maturation. Since
this was the Company's first production run of this product,
packaging and label designs were not acceptable to other
potential distributors. The inventory turnover ratio for the six
months ended June 30, 1999 was 4.8 times per year. This ratio
was not materially different from the inventory turn-over ratio
of the previous year.
General and administration expenses increased in the six
month period ended June 30, 1999 to $1,059,010, as compared with
$267,543 for the six month period ended June 30, 1998. These
expenses include substantial costs which were incurred in the
acquisition of Iceberg Corporation of America. These particular
costs represent amounts paid to lawyers, accountants and other
advisors in the amount of $568,095. This acquisition represents
a significant event in the planned positioning of the Company
into the international market place for both sales and financing.
General and administration expenses include other costs,
such as wages of $114,169 and legal and accounting fees of
$63,819, incurred to enable the Company to organize itself and
create the infrastructure to become an international provider of
premium beverage products.
Research and development expenses increased in the six
months ended June 30, 1999 to $217,058 as compared with $169,335
for the six months ended June 30, 1998. These expenses represent
a continuation of expenses incurred in operating and maintaining
the ice harvesting vessel and finalizing the production and
storage system at the plant in Trepassey.
Sales and Marketing expenses incurred in the six months
ended June 30, 1999 increased to $236,230 as compared with
$74,354 for the six month period ended June 30, 1998. The
increase represents additional costs incurred for wages, travel,
sales retainers and advertising supplies and design work to
prepare the Iceberg water products for introduction into the
United States markets.
Depreciation and Amortization expenses increased in the six
months ended June 30, 1999 to $111,259 as compared with $47,855
for the six months ended June 30, 1998. This increase resulted
from the acquisition of the ice harvesting vessel in late 1997
and the extra depreciation resulting from the purchase of
Enterprise Atlantic Limited in March 1998.
Interest and bank charges increased in the six months ended
June 30, 1999 to $41,913 as compared with $33,866 for the six
months ended June 30, 1998. The increase results mainly from
interest charges incurred on recent loans from shareholders.
The Company reported sales of $248,092 and nil for the years
ended December 31, 1998 and 1997, respectively. Sales of Iceberg
water products did not occur in this previous period as Iceberg
Industries was still in its research and development phase.
Iceberg Industries had purchased a spring water company,
Enterprise Atlantic Limited, in early 1998 and the 1998 sales
represent revenue from spring water sales and some iceberg water.
General and administration expenses increased in the year
ended December 31, 1998 to $507,167 as compared with $185,934 for
the year ended December 31, 1997. These expenses which are
comprised of management salaries ($207,125), legal and audit fees
($149,214), and other costs ($150,828), increased because of the
activity which resulted from the purchase of the spring water
company and efforts to further advance the business of producing
and selling iceberg water products.
Research and development expenses increased in the year
ended December 31, 1998 to $361,850 as compared with $66,464 for
the year ended December 31, 1997. These expenses represent the
amounts of $182,271 incurred in operating and maintaining the
Company's ice harvesting vessel as it experimented with various
methods of retrieving ice from icebergs in different locations
around the province of Newfoundland. The balance of research and
development expenditures are comprised of amounts incurred at the
Company's production facility in experimenting with different
methods and procedures to safely and efficiently handle the
receiving and processing of the iceberg water.
Sales and Marketing expenses increased in the year ended
December 31, 1998 to $198,250 as compared with $157,078 for the
year ended December 31, 1997. These expenses represent costs
incurred for wages, travel, sales retainers and advertising
supplies and design work to prepare the iceberg water products
for introduction into the United States market.
Depreciation and Amortization increased in the year ended
December 31, 1998 to $130,881 as compared with $8,202 for the
year ended December 31, 1997. This increase resulted from the
acquisition of the ice harvesting vessel and the extra
depreciation resulting from the purchase of Enterprise Atlantic
Limited in March 1998.
Interest and bank charges increased in the year ended
December 31, 1998 to $59,968 as compared with $15,819 for the
year ended December 31, 1997. This increase resulted from
interest paid on a new loan of $170,000 received from the Hong
Kong Bank of Canada to purchase and refurbish the Company's ice
harvesting vessel. In addition, the Company incurred high
interest charges on a credit card facility which was used to fund
operations prior to the completion of significant equity sales.
The Company has incurred significant operating losses since
its inception and has an accumulated deficit of $4,586,287 at
December 31, 1999. The Company expects to incur further
development costs to continue its product development and
marketing efforts, and the Company's working capital deficiency
at December 31, 1999, and limited revenue will not be sufficient
to meet its development requirements. The Company's management
recognizes this "going concern" issue and the need to generate
additional revenues and/or resources, and has implemented several
solutions to address this problem.
Primary to management's plans for solvency in the coming
year is the sale of additional equity in the Company, at least
$1,500,000 of which has already been secured. (See Rule 144A
Private Placement, Exhibit 10.11). Additional common stock
and/or convertible debt will be marketed in the 4th quarter of
fiscal 2000 to sustain the Company's projected ongoing losses.
The Company also intends to enter into distribution agreements
for its products in the United States, shifting marketing costs
to the distributors, and thereby increasing its delivery of
product through existing channels without commensurate increases
in overhead. The Company believes that it can be operationally
profitable by the fourth quarter of 2000, and should only
experience further losses if it opts to increase advertising in
an attempt to rapidly increase market penetration.
Notwithstanding the foregoing, there is substantial doubt
regarding the Company's ability to continue as a going concern,
and as such, the Company is substantially dependent upon its
ability to generate sufficient revenues to cover its operating
costs.
The Company is presently in negotiations with a third-party
U.S.-based investor for a $2,000,000 equity investment and a
$1,000,000 line-of-credit commitment. The Company expects to
complete the sale in March 2000. These funds will be used to
fund ongoing costs incurred to produce and bring the Company's
products to market. Capital commitments for the year ended June
30, 2000, are estimated at $350,000 and these additional funds
will be sufficient to meet the Company's obligations until the
various sales initiations described herein are able to create
significant cash flow. No additional facilities are needed to
enable the Company to produce on a commercial basis.
The Company believes that its long-term debt is manageable
due to the fact that it is owed primarily to government lenders
interested in the viability of the Company (Atlantic Canada
Opportunities Agency and the Trepassey Community Development Fund
totaling $395,821) or because it is payable to Company "insiders"
who are likely to defer collection if shortages occur ($346,150
due to directors and officers).
RISK FACTORS
Market Risk.
There has already been significant and substantial interest
in the Iceberg product line, however, as with any market and/or
product, there are uncertainties, including:
New Product Risk.
There is a risk that consumer acceptance or ongoing interest
may not be as widespread as expected.
Price Resistance Risk.
These products are premium products that demand a high
price. There is a danger of price resistance in the consumer
marketplace.
Harvesting Risk.
The data available to the Company indicates that the
availability of ice from bergs will not be a problem. However,
the data does not indicate the proximity of icebergs to the
shore, which is a cost-sensitive condition for the Company. To
safely and cost-effectively harvest icebergs, they must be close
to shore to the point where the icebergs are actually aground or
touching the bottom and generally in areas offering some
protection from the open sea. The reported length of the season
can also be misleading. Icebergs may be present but they must
also be in a suitable location and in the process of breaking up
in order to be harvested. The data currently available does not
provide such detailed information. However, it is known that
over the last three years, there were approximately 1,800
icebergs per year which floated down from Northern Labrador and
Greenland. Of this number, approximately 30-40% would migrate
into the sheltered bays and coves where harvesting can take
place. There can be no guarantee, however, as to how many of
these icebergs actually reach close enough to shore and in
sheltered locations where they can be safely and economically
harvested.
Sub-Contractor Performance.
The Company relies upon sub-contracted vessels to assist in
harvesting its ice supply. There is a risk of default or
non-performance by these sub-contractors.
Processing Risk.
The extent of raw material handling before final production
poses an element of risk. The Company's Quality
Assurance/Quality Control (QA/QC) manager has developed and
monitors procedures and ensures adherence to raw material and
finished product specifications. Regular lab analysis is
conducted at all stages of the process. The Company is moving to
implement a Hazard Analysis of Critical Control Points ("HACCP")
system and is pursuing ISO 9000 certification. As a member of
the International Bottled Water Association, the Company also has
access to technical resources and is subject to an annual
independent review of the Company's manufacturing processes.
Financial Risk.
If the Company needs to raise additional funds in order to
fund expansion, develop new or enhanced products, respond to
competitive pressures or acquire complementary products,
businesses or technologies, additional funds raised through the
issuance of equity or convertible debt securities may dilute the
percentage ownership of the present stockholders of the Company,
and, in addition, such securities may have rights, preferences or
privileges senior to those of the Company's Common Stock. The
Company does not currently have any contractual restrictions on
its ability to incur debt and, accordingly, the Company could
incur significant amounts of indebtedness to finance its
operations. Any such indebtedness could contain covenants which
would restrict the Company's operations. There can be no
assurance that additional financing will be available on terms
favorable to the Company, or at all. If adequate funds are not
available or are not available on acceptable terms, the Company
may not be able to continue in business, or to a lesser extent,
not be able to take advantage of acquisition opportunities,
develop or enhance its products or respond to competitive
pressures.
YEAR 2000 DISCLOSURE
The Year 2000 issue is the potential for system and
processing failures of date-related data and the result of
computer-controlled systems using two digits rather than four to
define the applicable year. For example, computer programs that
have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in
system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability
to process transactions. The Company has not in any way been
affected by Year 2000 issues related to non-compliant information
technology ("IT") systems or non-IT systems operated by the
Company or by third parties.
As of the date of this filing, this risk has been a non-
issue and neither the Company nor any of its hardware or software
suppliers has experienced any system failures or disruptions
caused by the Year 2000 issue. To date, the Company has not
incurred, and does not in the future expect to incur, any
material costs in remediating any potential Year 2000 problems.
Most of the Company's equipment is not date-sensitive and thus
not susceptible to Year 2000 issues. Any equipment that may be
date-sensitive is new, and the architecture and design of its
software was taken into account in all equipment purchases.
Purchases have been and will continue to be limited to equipment
from well-known and reputable hardware manufacturers.
Item 3. Description of Property
Iceberg Industries, a wholly-owned subsidiary of the
Company, has an 11,200 square foot manufacturing facility at
Trepassey, Newfoundland where its water products are processed
and bottled. This facility is located on approximately 40 acres
of Company-owned land, and all of the equipment is owned by the
Company. Embedded within the 40-acre site is a small piece of
real estate owned by the City of Trepassey, which is specifically
the size of and constitutes the site for the bottling plant.
This parcel has been leased to the Company for a term of 99
years, with an annual rental or lease rate of $1.00. The City is
surrendering fee title on this parcel to the Company after the
next batch of bottle labels are modified to show Trepassey as the
source of the spring water. As of the date of this filing, the
transfer has not occurred. The 40-acre parcel is encumbered by a
first mortgage to Trepassey Community Development Fund in the
amount of $88,021, with monthly payments of $990.00, and a second
mortgage to Bank of Nova Scotia, securing an obligation of
$27,461, which has amortizing payments of $1667.00 per month.
This property is, in the opinion of management, adequately
covered by Insurance on the premises and its contents, under a
policy issued by AXA Insurance Company.
The Company also has long-term water rights leases in place
with Basil James, an unrelated third-party landowner, for
extraction of mineral water from a site directly adjacent to the
Trepassey facility. The Company has these water rights for $67
per month for a period of 25 years, commencing January of 1992.
The Company maintains an office at 16 Forest Road, St.
John's, Newfoundland, Canada, which it utilizes as its main
corporate business office. This lease is from Commerce Atlantic
Limited, and is for a term of three (3) years, commencing on
December 1, 1998, with an annual rental rate of $32,000. The
space is approximately 4200 square feet, comprising the second
floor of the premises. This property is also covered by
insurance through AXA Insurance Company.
The Company also maintains offices at 675 Fairview Drive, #
246, Carson City, Nevada 89701, furnished without cost to the
Company.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial
ownership interest for each class of equity securities known by
the Company to have more than five (5%) percent of the voting
securities.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership (1)
Common John Kleinert 969,226 11.02%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Ron Stamp 620,860 7.06%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Maurice Murphy 619,140 7.04%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Paul Benson 480,958 5.47%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Special James D. Smyth, Trustee 4,506,106 51.26%
Common (2) 16 Forest Road (affiliate)
Suite 100
St. John's, Newfoundland
Canada
(1) Unless otherwise indicated, the Company believes that all
persons named in the above table have sole voting and
investment power with respect to all shares of common stock
beneficially owned by them.
(2) James D. Smyth is functioning as trustee for the Canadian-
resident investors and shareholders that acquired their stock
by way of an investment in Icecap Equity, Inc., an
intermediary company formed to enable the Iceberg Industries
acquisition, on a tax-deferred basis for Canadian
shareholders. (See "Purchase Offer for Securities of Iceberg
Industries" at Exhibit 10.6, which details the terms of the
acquisition and the rights of holders of the Company's Special
Common Stock; and "Notice of Change in Purchase Offer for
Securities of Iceberg Industries" at Exhibit 10.7)
</TABLE>
(b) Security Ownership of Management.
The following table sets forth the beneficial ownership for each
class of equity securities of the Company beneficially owned by all
directors and officers of the Company.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership (1)
Common John Kleinert 969,226 11.02%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Ron Stamp 620,860 7.06%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Maurice Murphy 619,140 7.04%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Paul Benson 480,958 5.47%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common Lewis Stoyles 144,018 1.64%
16 Forest Road (affiliate)
Suite 200
St. John's, Newfoundland
Canada
Common All Officers and 2,834,202 32.23%
Directors as a
Group
(1) Unless otherwise indicated, the Company believes that all
persons named in the above table have sole voting and
investment power with respect to all shares of common stock
beneficially owned by them.
</TABLE>
Item 5. Directors, Executive Officers, Promoters and
Control Persons
The directors and officers of the Company are as follows:
Name Age Position
- ----------------- --- ---------------
Paul Benson 46 President, CEO & Director
Ron Stamp 45 Vice President-Marketing & Director
Maurice Murphy 48 Vice President-Operations
Lewis Stoyles 50 Vice President-Finance & Director
John Kleinert 40 Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There is no family relationship
between any executive officer and director of the Company.
PAUL BENSON, 46, President, C.E.O. & Director
Mr. Benson has served in senior management positions with
national and local multi-unit organizations. He founded
Newfoundland's first independent retail gasoline operation and
co-founded a Newfoundland based advertising and marketing firm.
Mr. Benson is a co-founder of the Company, and a founder of
Newfoundland's first and largest bottled water operation,
Enterprise Atlantic Limited, since amalgamated with the Company.
Mr. Benson founded Enterprise Atlantic Limited in 1991, and was
President of the company until its merger with Iceberg Industries
Corporation in 1998. Mr. Benson is a graduate of Memorial
University in St. John's and has served as an officer in the
Canadian Navy.
RONALD STAMP, 45, Vice President - Marketing and Sales & Director
Mr. Stamp is a co-founder of the Company, and has overall
responsibility for sales and marketing. From 1994 until his co-
founding of the Company in 1996, Mr. Stamp was Managing Director
at Canadian Iceberg Vodka Corporation. He has over 20 years of
experience in sales, marketing and public relations in the food
and beverage industry in Canada, the United States and the
Caribbean.
MAURICE MURPHY, 48, P. Eng., Vice President - Operations
Mr. Murphy is a registered professional engineer and
possesses a Third Class Power Certificate of Competency, issued
by the government of Canada. Mr. Murphy has had over 20 years
experience in the food and beverage industry in Newfoundland in
senior management positions. These positions all involved
responsibility for capital and operational budgets for these
facilities, as well as overall responsibility for maintenance and
engineering departments. Mr. Murphy assumes similar
responsibilities in both plant and harvesting operations at
Iceberg. Prior to his employment with the Company, Mr. Murphy
was President of M.J. Murphy and Associates, Ltd., a designer,
supplier and installer of general mechanical and refrigeration
systems. Mr. Murphy received his Bachelor of Engineering degree
from Memorial University in St. John's, Newfoundland.
LEWIS STOYLES, 50, FCA, CMC, Vice President, C.F.O. & Director
Mr. Stoyles is a member of the Canadian Institute of
Chartered Accountants and a fellow of the Newfoundland Institute
of Chartered Accountants. In addition, Mr. Stoyles is a
certified management consultant. He brings over 30 years
experience in accounting, auditing and financial management to
his position. Mr. Stoyles has worked for 20 years in various
industries including manufacturing and distribution of food
products, trucking and aviation transport operations. Prior to
his position at Iceberg, Mr. Stoyles was managing partner of the
Coopers and Lybrand, St. John's office for 6 years. Mr. Stoyles
is responsible for all financial affairs of the Company.
JOHN KLEINERT, 40, Director
Mr. Kleinert has over 18 years experience in the financial
industry. As a General Partner at Goldman Sachs & Co. in New
York, Mr. Kleinert worked in the municipal bond department
wherein he managed the firm's Risk Portfolio. Since 1995, Mr.
Kleinert has been the Chief Financial Officer of a high
technology firm specializing in thermal management. Mr. Kleinert
received his Bachelor of Science degree in Chemical Engineering
from Princeton University.
During the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company:
(1) was a general partner or executive officer of any
business against which any bankruptcy petition was filed, either
at the time of the bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject
to a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(3) was subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
Item 6. Executive Compensation.
The following table sets forth the cash compensation which
was paid by the Company for services rendered to the Company.
During fiscal years ended 1996, 1997 and 1998, the following
payments were made:
<TABLE>
<S> <C> <C> <C> <C>
Remuneration (US$)
----------------------------
Name Position 1999 1998 1997
----------------------------
Paul Benson President & CEO 63,102 69,994 40,482
Ron Stamp Vice President 60,426 55,146 35,836
-Marketing
Maurice Murphy Vice President 45,037 25,263 Nil
-Operations
Lewis Stoyles Vice President 51,340 9,628 Nil
-Finance
All Executive
Officers as
a group 219,905 159,671 76,318
</TABLE>
No compensation is payable to Directors of the Company in
connection with attendance at board meetings, except as to such
Directors who also serve as Officers of the Company in capacities
other than Directors. At this time, no other compensation has
been scheduled for any other member of the Board of Directors or
Officer of the Company.
Future compensation of Officers will be determined by the
Board of Directors based upon the financial condition and
performance of the Company, the financial requirements of the
Company, and upon the individual performance of each Officer.
The Board of Directors intends to ensure that the salaries paid
to the Company's Officers and employees are reasonable and
prudent and are based upon both the financial condition and
performance of the Company and upon the performance of individual
Officers and employees.
Item 7. Certain Relationships and Related Transactions.
The Company and Icecap Equity Inc. purchased all of the
issued and outstanding common shares of Iceberg Industries on the
basis of one and seven-tenths Preferred Exchangeable Shares of
Icecap Equity Inc. for each one Iceberg Industries Share or, at
the option of a holder who was a non-resident of Canada, one and
seven-tenths Common Shares of the Company for each Iceberg
Industries Share. This purchase was completed on June 25, 1999.
Icecap Equity Inc. was incorporated on May 3rd, 1999, to
allow for the postponement of a deemed disposition of shares of
Iceberg Industries and consequential tax implications for
Canadian resident security holders of Iceberg Industries, until
such time as the investor disposes of the Company's shares
exchanged for shares of Icecap Equity Inc. Other than for the
purposes stated herein, Icecap Equity Inc. has no other business
activities, and shares of Icecap Equity Inc. have no value other
than the right to be exchanged for shares of the Company. (See
"Purchase Offer for Securities of Iceberg Industries" at Exhibit
10.6, which details the terms of the acquisition and the rights
of holders of the Company's Special Common Stock; and "Notice of
Change in Purchase Offer for Securities of Iceberg Industries" at
Exhibit 10.7)
In addition, the Company has outstanding notes payable due
to shareholders and to directors. Notes payable to shareholders
matured in June 1999, and bear interest at rates which range
between 6% to 8.75%. At June 30, 1999, all principal and accrued
interest related to the notes were in arrears and outstanding.
Subsequent to June 30, 1999, $328,000 of the notes have been
repaid, and Management expects to fully repay the remaining
balance of these notes during the fiscal year ended June 30,
2000. Notes payable to directors are unsecured, bear interest at
5% and are repayable upon demand. As of June 30, 1999, notes
payable to directors totaled $346,150. The directors holding
these notes have agreed not demand repayment before July 1, 2000.
Except as herein above set forth, there have been no related
party transactions, or any other transactions or relationships
required to be disclosed pursuant to Item 404 of Regulation S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of
25,000,000 shares of Common Stock, par value $.0001 per share,
and five million (5,000,000) shares of Special Common Stock, par
value $.0001 per share. At June 30, 1999, there were 4,285,085
Common Shares issued and outstanding and 4,506,106 Special Common
Shares issued and outstanding, for a total of 8,791,191 issued
and outstanding shares of the Company.
All shares of the Company's Common Stock and Special Common
Stock have equal voting rights and, when validly issued and
outstanding, are entitled to one vote per share in all matters to
be voted upon by shareholders.
The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully
paid and non-assessable shares. Cumulative voting in the
election of directors is not permitted, which means that the
holders of a majority of the issued and outstanding shares of
Common Stock represented at any meeting at which a quorum is
present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining
shares of Common Stock will not be able to elect any directors.
In the event of liquidation of the Company, each shareholder is
entitled to receive a proportionate share of the Company's assets
available for distribution to shareholders after the payment of
liabilities and after distribution in full of preferential
amounts, if any. All shares of the Company's Common Stock issued
and outstanding are fully paid and non-assessable. Holders of
the Common Stock are entitled to share pro rata in dividends and
distributions with respect to the Common Stock, as may be
declared by the Board of Directors out of funds legally available
therefor.
The Special Common Stock shares of the Company are
convertible, at the option of the respective holders of the
shares thereof, at any time, and into fully paid, non-assessable
Common Stock shares of the Company, at the rate of one Common
Stock share for each one Special Common Stock share so
surrendered for conversion. The Special Common Stock shares of
the Company carry the following additional rights:
Dividend rights: any dividends paid will be equivalent to
dividends paid on the common shares of Iceberg Corporation of
America Shares.
Direct Voting Rights: One vote per Special Common Stock
Share.
Retraction/Redemption Rights: The Special Common Stock
Shares are redeemable at the option of Icecap Equity Inc. and
retractable at the option of the holder upon delivery of one
Iceberg Corporation of America Share.
Liquidation Entitlement: Special Common Stock Share holders
are entitled to be paid, upon any liquidation of the assets of
Icecap Equity Inc. , an amount of money equivalent to the amount
that would be received per Iceberg Corporation of America Share
on a liquidation of Iceberg Corporation of America
Anti-dilution: The Special Common Stock Shares contain
anti-dilution provisions to keep such shares pari passu with any
changes involving Iceberg Corporation of America Shares, such as
reorganizations or stock splits.
In addition to the foregoing, the Special Common Stock
Shares are subject to certain collateral contractual arrangements
as follows:
Voting Rights in Iceberg Corporation of America, Inc.:
Iceberg Corporation of America, Inc. will issue special voting
shares to a trustee (the "Iceberg Corporation of America Trust
Shares"). The terms of the trust shall be contained in a trust
indenture which will provide as follows: (i) the number of
Iceberg Corporation of America Trust Shares shall be equal to the
number of Special Common Stock Shares; (ii) the voting rights of
the Iceberg Corporation of America Trust Shares shall be equal
and equivalent to the voting rights attached to the Iceberg
Corporation of America Shares; (iii) the trustee shall vote the
Iceberg Corporation of America Trust Shares as directed by the
holders of the Special Common Stock Shares; and (iv) as each
Special Common Stock Share is exchanged for an Iceberg
Corporation of America Share, the corresponding equivalent
Iceberg Corporation of America Trust Share shall be cancelled.
Put Rights: The holders of Special Common Stock Shares may
require those shares to be acquired by Iceberg Corporation of
America, Inc. in exchange for an equal number of Iceberg
Corporation of America Shares.
The Company shall at all times reserve and keep available
out of its authorized but non-issued common shares the full
number of Common Shares deliverable upon the conversion of all of
the then outstanding Special Common Shares, and shall take all
action and obtain all permits or orders that may be necessary to
enable the Company lawfully to issue common shares upon the
conversion of the Special Common Shares.
PART II
Item 1. Market Price for Common Equity and Related Stockholder
Matters
(a) Market Price.
The Company's Common Stock is presently quoted on the
National Quotation Bureau's "pink sheets."
As of June 30, 1999, the Company had 188 shareholders of
record of its common stock and one shareholder of record for the
special common stock. See Item 7, Certain Relationships and
Related Transactions. The Company has not paid cash dividends on
its common stock. The Company anticipates that for the
foreseeable future any earnings will be retained for use in its
business, and no cash dividends will be paid on the common stock.
Declaration of common stock dividends will remain within the
discretion of the Company's Board of Directors and will depend
upon the Company's growth, profitability, financial condition and
other relevant factors.
The Company's Common Stock is traded on the NQB "pink
sheets" under the symbol "ICBG". This Registration Statement is
being filed in order to bring the Company into compliance with
the reporting requirements of the National Association of
Securities Dealers Rule 6530 and thereby permit its listing on
the NASD Over The Counter Bulletin Board.
The table below reflects the high and low "bid" and "ask"
quotations for the Company's Common Stock for each of the
calendar years covered by this report. The prices reflect
inter-dealer prices, without retail mark-up, mark-down or
commission and do not necessarily represent actual transactions.
1997 HIGH LOW
----------- ------ ------
1st Quarter N/A
2nd Quarter
1998 HIGH LOW
----------- ------ ------
1st Quarter
2nd Quarter N/A
3rd Quarter
4th Quarter
1999 HIGH LOW
----------- ------ ------
1st Quarter
2nd Quarter N/A
3rd Quarter 3.75 1.00
4th Quarter 2.75 2.125
(b) Other.
The securities of the Company will be considered low-priced
or "designated" securities under rules promulgated under the
Securities and Exchange Act of 1934. Penny Stock Regulation and
Broker-Dealer practices in connection with transactions in "Penny
Stocks" are regulated by certain rules adopted by the Securities
and Exchange Commission. Rule 15g-9 under the Exchange Act
establishes the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require: (i) that a broker or dealer approve a person's account
for transactions in penny stocks; and (ii) the broker or dealer
receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be
purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable
for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form, (i) sets forth the
basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a
signed, written agreement from the investor prior to the
trans-action. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the
securities and the rights and remedies available to an investor
in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the
limited market in penny stocks. Therefore, the Company's stock
will become subject to the penny stock rules and investors may
find it more difficult to sell their securities, should they
desire to do so.
(c) Dividends.
The payment of dividends is within the discretion of the
Board of Directors of the Company. The Company currently intends
to retain all earnings, if any, in the foreseeable future for use
in the development of the Company's business. The Company has
not paid dividends since inception. It is not anticipated that
any dividends will be paid in the foreseeable future and there
can be no assurance that dividends can or will ever be paid. The
payment of dividends is contingent upon future earnings, if any,
the Company's financial condition and capital requirements,
general business conditions and other factors.
(d) Transfer Agent.
The Transfer Agent for the Company's Common Stock is Pacific
Stock Transfer Company, 5844 S. Pecos Road, Suite D, Las Vegas,
Nevada 89120.
Item 2. Legal Proceedings.
There are no legal proceedings threatened or pending, except
such ordinary routine matters which may be incidental to the
business currently being conducted by the Company.
Item 3. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
Item 4. Recent Sales of Unregistered Securities.
During June 1999, and closing on June 25, 1999, the Company
consummated a reverse merger transaction whereby it acquired 100%
of the issued and outstanding stock of Iceberg Industries
Corporation for total consideration of $3,631,848, which was
satisfied by the issuance of 5,757,859 shares of the Company's
stock, consisting of 1,251,753 Common Shares and 4,506,106
Special Common Shares. This transaction was completed pursuant
to Section 4(2) of the Securities Act of 1933, as amended, and
Internal Revenue Code section 368. As a result of these
transactions, the former shareholders of Iceberg Industries
effectively control the Company through their share ownership.
In September 1999, the Company completed a private placement
under Rule 506 of Regulation D whereby it issued an aggregate of
600,000 restricted shares of the Company's Common Stock in
exchange for $1,500,000, or $2.50 per share, which proceeds were
intended to fund the Company's immediate working capital needs.
As part of the offering price, the accredited investor also
received 1,300,000 Share Purchase Warrants convertible into an
equivalent number of shares of the Company's Common Stock at
$2.50 per share. The first 600,000 Warrants expire on December
15, 2000; the next 600,000 Warrants expire on March 15, 2002; and
the final 100,000 Warrants expire on September 15, 2009. The
Term Sheet for the Private Placement is included herewith as
Exhibit 10.11.
No compensation or commissions were paid to any person in
connection with the issuance of the shares, and no underwriter,
broker or dealer participated in such a sale. Each issuee in the
transaction described above made a written representation to the
Company that he was acquiring the Company's stock for investment
purposes and not with a view to the resale or redistribution
thereof. Each stock certificate issued contains a restrictive
legend. Each of the above transactions was deemed by the Company
to be exempt from registration under Section 4(2) of the
Securities Act of 1933, and Rule 145 (17 CFR Section 230.145) as
a transaction not involving any public offering.
As of the date of this report, 6,757,859 of the issued and
outstanding shares of the Company's Common Stock and Special
Common Stock could potentially be eligible for sale under Rule
144 promulgated under the Securities Act of 1933, as amended,
subject to certain limitations included in the Rule:
In summary, Rule 144 applies to affiliates (that is, control
persons) and nonaffiliates when they resell restricted securities
(those purchased from the issuer or an affiliate of the issuer in
non-public transactions). Nonaffiliates reselling restricted
securities, as well as affiliates selling restricted or
non-restricted securities, are not considered to be engaged in a
distribution and, therefore, are not deemed to be underwriters as
defined in Section 2(a)(11), if six conditions are met:
(1) Current public information must be available about the
issuer unless sales are limited to those made by non-affiliates
after two years.
(2) When restricted securities are sold, generally there
must be a one-year holding period.
(3) When either restricted or non restricted securities are
sold by an affiliate after one year, there are limitations on the
amount of securities that may be sold (144(e)); when restricted
securities are sold by non-affiliates between the first and
second years, there are identical limitations; after two years,
there are no volume limitations for resales by non-affiliates
(144(k)).
(4) Except for sales of restricted securities made by
non-affiliates after two years, all sales must be made in
brokers' transactions as defined in Section 4(4) of the
Securities Act of 1933, as amended, or a transaction directly
with a "market maker" as that term is defined in Section 3(a)(38)
of the 1934 Act.
(5) Except for sales of restricted securities made by
non-affiliates after two years, a notice of proposed sale must be
filed for all sales in excess of 500 shares or with an aggregate
sales price in excess of $10,000.
(6) There must be a bona fide intention to sell within a
reasonable time after the filing of the notice referred to in (5)
above.
Furthermore, Rule 145, which applies when a merger, share
exchange or similar reorganization of a company takes place,
would limit the ability of holders of restricted securities to
sell their shares through the public market. All securities
received as a result of a transaction subject to Rule 145 would
be restricted for a minimum of one year from the date on which
the consideration for these shares was exchanged, which would be
June 25, 1999 for a large majority of the shareholders of the
Company. Once the one-year period has elapsed, the holders are
subject to the normal restrictions and exemptions set forth in
Rule 144.
Based upon the Company's knowledge of the dates of
acquisition of the various securities of the Company, there are
currently no shares of the 6,757,859 potentially tradeable
restricted shares which could be immediately sold under Rule 144
of the Securities Act.
Item 5. Indemnification of Directors and Officers.
Except for acts or omissions which involve intentional
misconduct, fraud or known violation of law or for the payment of
dividends in violation of Nevada Revised Statutes, there shall be
no personal liability of a director or officer to the Company, or
its stockholders for damages for breach of fiduciary duty as a
director or officer. The Company may indemnify any person for
expenses incurred, including attorneys fees, in connection with
their good faith acts if they reasonably believe such acts are in
and not opposed to the best interests of the Company and for acts
for which the person had no reason to believe his or her conduct
was unlawful. The Company may indemnify the officers and
directors for expenses incurred in defending a civil or criminal
action, suit or proceeding as they are incurred in advance of the
final disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of the director or officer to
repay the amount of such expenses if it is ultimately determined
by a court of competent jurisdiction in which the action or suit
is brought determined that such person is fairly and reasonably
entitled to indemnification for such expenses which the court
deems proper.
Indemnification of Directors, Officers, Employees and Agents
So far as permitted by the Nevada Business Corporation Act,
the Company may indemnify its directors and officers against
expenses and liabilities they incur to defend, settle or satisfy
any civil or criminal action brought against them on account of
their being or having been Company directors or officers unless,
in any such action, they are adjudged to have acted with gross
negligence or to have engaged in willful misconduct.
Section 78.751(1) of the Nevada Revised Statutes (NRS) authorizes
a Nevada corporation to indemnify any director, officer,
employee, or corporate agent who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation due to his or her corporate role.
Section 78.751(1) extends this protection against expenses,
including attorney's fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 78.751(2) of the NRS also authorizes indemnification
of the reasonable defense or settlement expenses of a corporate
director, officer, employee or agent who is sued, or is
threatened with a suit, by or in the right of the corporation.
The party must have been acting in good faith and with the
reasonable belief that his of her actions were not opposed to the
corporation's best interests. Unless the court rules that the
party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee,
or agent is successful on the merits or otherwise in defending
any action or proceeding referred to in Section 78.751(1) or
78.751(2), Section 78.751(3) of the NRS requires that he or she
be indemnified against expenses, including attorneys fees,
actually and reasonably incurred by him in connection with the
defense.
Section 78.751(4) of the NRS limits indemnification under
Section 78.751(1) and 78.751(2) to situations in which either (i)
the stockholders; (ii) the majority of a disinterested quorum of
directors; or (iii) independent legal counsel determine that
indemnification is proper under the circumstances.
Pursuant to Section 78.175(5) of the NRS, the corporation
may advance an officer's or director's expenses incurred in
defending any action or proceeding upon receipt of an
undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees
and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent
has the right to indemnity, Section 78.752 allows the corporation
to purchase and maintain insurance on his or her behalf against
liability resulting from his or her corporate role.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company
has been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore
unenforceable.
PART F/S
Financial Statements.
The following financial statements are attached to this
report and filed as a part hereof.
1) Consolidated Financial Statements as of
December 31, 1999 (unaudited)
2) Consolidated Financial Statements as of
September 30, 1999 (unaudited)
3) Audited Consolidated Financial Statements as of
June 30, 1999, and for the years ended
December 31, 1998 and 1997
4) Consolidated Financial Statements as of
June 30, 1998 (unaudited)
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C> <C>
December December
31, 1999 31, 1998
ASSETS
Current assets
Cash and cash equivalents $ 45,784 $ 60,351
Trade accounts receivable, less allowance
for doubtful accounts of $5,625, and $3,296,
respectively 276,457 49,566
Inventory 565,067 290,780
Prepaid expenses 64,895 17,414
--------- ---------
Total current assets 952,203 418,111
Property, plant and equipment, net 1,727,375 737,324
Goodwill 234,161 286,388
--------- ---------
Total assets $ 2,913,739 $1,441,823
========= =========
LIABILITIES
Current liabilities
Accounts payable $ 1,177,282 $ 542,083
Accrued liabilities 50,000 18,792
Deferred government grant - 44,935
Due to shareholders 454,249 -
Current portion of long term debt 45,789 43,610
--------- ---------
Total current liabilities 1,727,320 649,420
Long term debt 555,934 732,276
--------- ---------
Total liabilities 2,283,254 1,381,696
--------- ---------
SHAREHOLDERS' EQUITY
Common shares, $.0001 par value; 25,000,000 shares
authorized, 4,885,085 and 2,069,125 shares issued
and outstanding in 1999 and 1998 respectively 488 207
Special common shares, $.0001 par value; 5,000,000
shares authorized, 4,506,106 and 2,175,848 shares
issued and outstanding in 1999 and 1998 respectively 451 217
Additional paid-in capital 5,130,909 1,753,275
Deficit accumulated during the development stage (4,586,287) (1,717,031)
Accumulated other comprehensive income 84,924 23,459
--------- ---------
Total shareholders' equity 630,485 60,127
--------- ---------
Total liabilities and shareholders' equity $ 2,913,739 $ 1,441,823
========= =========
</TABLE>
<PAGE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
_________
(all amounts in U.S. dollars)
<TABLE>
<S> <C> <C> <C>
From
July 22, 1996 Six Months Three Months
(Date of Ended Ended
Inception) to December December
December 31, 1999 31, 1999 31, 1999
Sales $ 842,667 $ 385,387 $ 190,829
Cost of sales 764,456 256,368 137,149
----------- ----------- -----------
Gross (loss) profit 78,211 129,019 53,680
----------- ----------- -----------
Operating expenses
General and administrative 2,354,077 601,966 248,203
Research and development 792,670 94,406 45,981
Sales and marketing 951,176 359,618 173,557
Depreciation and amortization 416,759 166,417 83,385
----------- ----------- -----------
4,514,682 1,222,407 551,126
----------- ----------- -----------
Operating loss (4,436,471) (1,093,388) (497,446)
----------- ----------- -----------
Other expenses
Interest and bank charges 71,485 8,341 3,758
Interest on long term debt 78,331 23,775 10,860
----------- ----------- -----------
149,816 32,116 14,618
----------- ----------- -----------
Loss before taxes (4,586,287) (1,125,504) (512,064)
Income taxes - - -
----------- ----------- -----------
Net loss $(4,586,287) $(1,125,504) $ (512,064)
=========== =========== ===========
Loss per share - basic
and diluted $ (1.74) $ (0.12) $ (0.05)
=========== =========== ===========
Weighted average common shares -
basic and diluted 3,044,855 9,156,408 9,323,800
=========== =========== ===========
</TABLE>
<PAGE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
_________
(all amounts in U.S. dollars)
<TABLE>
<S> <C> <C> <C>
From
July 22, 1996 Six Months Three Months
(Date of Ended Ended
Inception) to December December
December 31, 1999 31, 1998 31, 1998
Sales $ 842,667 $ 190,211 $ 63,036
Cost of sales 764,456 177,742 97,993
----------- ----------- -----------
Gross (loss) profit 78,211 12,469 (34,957)
----------- ----------- -----------
Operating expenses
General and administrative 2,354,077 286,283 52,006
Research and development 792,670 209,319 113,644
Sales and marketing 951,176 128,808 47,202
Depreciation and amortization 416,759 91,563 53,245
----------- ----------- -----------
4,514,682 715,973 266,097
----------- ----------- -----------
Operating loss (4,436,471) (703,504) (301,054)
----------- ----------- -----------
Other expenses
Interest and bank charges 71,485 8,662 (836)
Interest on long term debt 78,331 19,048 13,561
----------- ----------- -----------
149,816 27,710 12,725
----------- ----------- -----------
Loss before income taxes (4,586,287) (731,214) (313,779)
Income taxes - - -
----------- ----------- -----------
Net loss $(4,586,287) $ (731,214) $ (313,779)
=========== =========== ===========
Loss per share - basic
and diluted $ (1.74) $ (0.17) $ (0.07)
=========== =========== ===========
Weighted average common shares -
basic and diluted 3,044,855 4,244,973 4,244,973
=========== =========== ===========
</TABLE>
<PAGE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
_________
(all amounts in U.S. dollars)
<TABLE>
<S> <C> <C> <C>
From
July 22, 1996 Six Months Six Months
(Date of Ended Ended
Inception) to December December
December 31, 1999 31, 1999 31, 1998
Operating activities
Net loss $(4,586,287) $(1,125,504) $ (731,214)
Items not requiring cash:
Depreciation and amortization 416,759 166,417 91,563
Gain on sale of property,
plant and equipment (22,219) - -
----------- ----------- -----------
(4,191,747) (959,087) (639,651)
Changes in current assets
and liabilities
Decrease (increase) in
accounts receivable (182,164) (60,192) 87,358
Decrease (increase) in
inventory (359,145) (251,951) (59,561)
Decrease in prepaid expenses (34,122) (10,618) (3,421)
Increase (decrease) in
accounts payable 724,988 (39,921) 48,983
Increase in accrued liabilities 49,920 20,933 7,700
Increase in deferred
government grants (693) - 41,258
----------- ----------- -----------
Cash used by operating activities (3,992,963) (1,300,836) (517,334)
----------- ----------- -----------
Investing activities
Purchase of property, plant
and equipment (1,770,277) (142,600) (91,556)
Proceeds from sale of property,
plant and equipment 45,626 - -
Acquisition of subsidiary (1) - -
----------- ----------- -----------
(1,724,652) (142,600) (91,556)
----------- ----------- -----------
Financing activities
Proceeds from short term
borrowings 14,956 - -
Advances from third parties 259,870 - -
Repayment of advances from
third parties (516,030) - -
Advances from shareholders 431,515 5,541 -
Repayment of advances from
shareholders (289,301) (289,301) (24,435)
Proceeds from issuance of
long term debt 871,171 36,419 371,707
Repayment of long term debt (135,038) (33,124) -
Net proceeds from issuance
of shares 5,131,848 1,500,000 321,347
----------- ----------- -----------
Cash provided by financing
activities 5,768,991 1,219,535 668,619
----------- ----------- -----------
Effect of exchange rate
changes on cash (5,592) (4,302) (1,360)
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents during the period 45,784 (228,203) 58,369
Cash and cash equivalents,
beginning of period - 273,987 1,982
----------- ----------- -----------
Cash and cash equivalents,
end of period $ 45,784 $ 45,784 $ 60,351
=========== =========== ===========
Supplemental disclosures of
cash flow information:
Cash paid for interest $ 149,816 $ 32,116 $ 14,618
=========== =========== ===========
Cash paid for income taxes $ - $ - $ -
=========== =========== ===========
</TABLE>
<PAGE>
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying interim financial statements have been prepared
by the Company in accordance with the rules and regulations of
the Securities and Exchange Commission for interim reporting.
Accounting policies utilized in the preparation of financial
information herein presented are the same as set forth in the
Company's annual financial statements. Certain disclosures and
information normally included in financial statements have been
condensed or omitted. In the opinion of the management of the
Company, these financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary
for a fair presentation of the interim financial statements.
Interim results of operations are not necessarily indicative
of the results of operations for the full year.
2. Inventories
Inventories consist of the following:
December December
31, 1999 31,1998
---------- ----------
Raw materials $ 287,214 $ 149,681
Finished goods 289,706 148,218
--------- ---------
576,920 297,899
Less reserve (11,853) (7,119)
--------- ---------
$ 565,067 $ 290,780
========= =========
3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
December December
31, 1999 31,1998
---------- ----------
Plant $ 460,009 $ 138,336
Land 47,924 -
Tank farm 221,918 -
Furniture and equipment 1,272,889 637,850
Vehicles 26,400 46,070
---------- ----------
2,029,140 822,256
Less accumulated depreciation (301,765) (84,932)
---------- ----------
$1,727,375 $ 737,324
========== ==========
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C> <C>
September September
30, 1999 30, 1998
ASSETS
Current assets
Cash and cash equivalents $ 100,808 $ 17,844
Trade accounts receivable, less allowance
for doubtful accounts of $5,734, and $17,067,
respectively 233,298 127,904
Inventory 662,482 203,839
Prepaid expenses 43,583 4,163
--------- ---------
Total current assets 1,040,171 353,750
Property, plant and equipment, net 1,762,641 763,129
Goodwill 248,033 305,613
--------- ---------
Total assets $ 3,050,845 $1,422,492
========= =========
LIABILITIES
Current liabilities
Accounts payable $ 953,306 $ 490,666
Accrued liabilities 151,860 12,593
Deferred government grant - 81,635
Due to shareholders 452,002 89,234
Current portion of long term debt 45,037 42,721
--------- ---------
Total current liabilities 1,602,205 716,849
Long term debt 854,060 384,447
--------- ---------
Total liabilities 2,456,265 1,101,296
--------- ---------
SHAREHOLDERS' EQUITY
Common shares, $.0001 par value; 25,000,000 shares
authorized, 4,685,085 and 2,031,098 shares issued
and outstanding in 1999 and 1998 respectively 468 203
Special common shares, $.0001 par value; 5,000,000
shares authorized, 4,506,106 and 2,151,162 shares
issued and outstanding in 1999 and 1998 respectively 451 215
Additional paid-in capital 4,630,929 1,704,281
Deficit accumulated during the development stage (4,074,223) (1,428,149)
Accumulated other comprehensive income 36,955 44,646
--------- ---------
Total shareholders' equity 594,580 321,196
--------- ---------
Total liabilities and shareholders' equity $ 3,050,845 $ 1,422,492
========= =========
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C> <C> <C>
From
July 22, 1996 Three Months Three Months
(Date of Ended Ended
Inception) to September September
September 30, 1999 30, 1999 30, 1998
Sales $ 651,838 $ 194,558 $ 127,175
Cost of sales 627,307 119,219 79,749
----------- ----------- -----------
Gross profit 24,531 75,339 47,426
----------- ----------- -----------
Operating expenses
General and administrative 2,105,874 353,763 234,277
Research and development 746,689 48,425 95,675
Sales and marketing 777,619 186,061 81,606
Depreciation and amortization 333,374 83,032 38,318
----------- ----------- -----------
3,963,556 671,281 449,876
----------- ----------- -----------
Operating loss (3,939,025) (595,942) (402,450)
----------- ----------- -----------
Other expenses
Interest and bank charges 67,727 4,583 9,498
Interest on long term debt 67,471 12,915 5,487
----------- ----------- -----------
135,198 17,498 14,985
----------- ----------- -----------
Loss before income taxes (4,074,223) (613,440) (417,435)
Income taxes - - -
----------- ----------- -----------
Net loss $(4,074,223) $ (613,440) $ (417,435)
=========== =========== ===========
Loss per share - basic
and diluted $ (1.74) $ (0.07) $ (0.18)
=========== =========== ===========
Weighted average common shares -
basic and diluted 2,548,581 8,921,625 2,341,690
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C> <C> <C>
From
July 22, 1996 Three Months Three Months
(Date of Ended Ended
Inception) to September September
September 30, 1999 30, 1999 30, 1998
Operating activities
Net loss $(4,074,223) $ (613,440) $ (417,435)
Items not requiring cash:
Depreciation and amortization 333,374 83,032 38,318
(Gain) loss on sale of property,
plant and equipment (22,219) - -
----------- ----------- -----------
(3,763,068) (530,408) (379,117)
Changes in current assets
and liabilities
Decrease (increase) in
accounts receivable (143,446) (21,474) 8,319
Decrease (increase) in
inventory (463,377) (356,183) 30,786
Decrease in prepaid expenses (14,081) 9,423 10,118
Increase (decrease) in
accounts payable 698,318 (66,591) (66,003)
Increase in accrued liabilities 150,636 121,649 1,263
Increase in deferred
government grants (693) - 77,867
----------- ----------- -----------
Cash used by operating activities (3,535,711) (843,584) (316,767)
----------- ----------- -----------
Investing activities
Purchase of property, plant
and equipment (1,767,265) (139,588) (75,695)
Proceeds from sale of property,
plant and equipment 45,626 - -
Acquisition of subsidiary (1) - -
----------- ----------- -----------
(1,721,640) (139,588) (75,695)
----------- ----------- -----------
Financing activities
Proceeds from (payments of)
short term borrowings 167,306 152,350 58,580
Advances from third parties 259,870 - -
Repayment of advances from
third parties (516,030) - -
Advances from shareholders 425,974 - 65,818
Repayment of advances from
shareholders (314,464) (314,464) -
Proceeds from issuance of
long term debt 834,752 - 17,430
Repayment of long term debt (125,528) (23,614) (5,408)
Net proceeds from issuance
of shares 4,631,848 1,000,000 275,386
----------- ----------- -----------
Cash provided by financing
activities 5,363,728 814,272 411,806
----------- ----------- -----------
Effect of exchange rate
changes on cash (5,569) (4,279) (3,482)
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents during the period 100,808 (173,179) 15,862
Cash and cash equivalents,
beginning of period - 273,987 1,982
----------- ----------- -----------
Cash and cash equivalents,
end of period $ 100,808 $ 100,808 $ 17,844
=========== =========== ===========
Supplemental disclosures of
cash flow information:
Cash paid for interest $ 135,198 $ 17,498 $ 14,985
=========== =========== ===========
Cash paid for income taxes $ - $ - $ -
=========== =========== ===========
</TABLE>
<PAGE>
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying interim financial statements have been prepared
by the Company in accordance with the rules and regulations of
the Securities and Exchange Commission for interim reporting.
Accounting policies utilized in the preparation of financial
information herein presented are the same as set forth in the
Company's annual financial statements. Certain disclosures and
information normally included in financial statements have been
condensed or omitted. In the opinion of the management of the
Company, these financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary
for a fair presentation of the interim financial statements.
Interim results of operations are not necessarily indicative
of the results of operations for the full year.
2. Inventories
Inventories consist of the following:
September September
30, 1999 30,1998
---------- ----------
Raw materials $ 319,322 $ 110,195
Finished goods 355,808 97,851
--------- ---------
675,130 208,046
Less reserve (12,648) (4,207)
--------- ---------
$ 662,482 $ 203,839
========= =========
3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
September September
30, 1999 30,1998
---------- ----------
Plant $ 450,735 $ 134,490
Land 47,137 -
Tank farm 218,273 -
Furniture and equipment 1,251,366 651,613
Vehicles 25,966 30,910
---------- ----------
1,993,477 817,013
Less accumulated depreciation (230,836) (53,884)
---------- ----------
$1,762,641 $ 763,129
========== ==========
<PAGE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
DELOITTE & TOUCHE LLP
Fort William Building
10 Factory Lane
St. John's, Newfoundland
A1C 6H5
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Iceberg Corporation of America
We have audited the accompanying consolidated balance sheets of
Iceberg Corporation of America (a development stage company) and
subsidiaries as of June 30, 1999 and December 31, 1998, and the
related consolidated statements of operations, shareholders'
equity and cash flows for the six months ended June 30, 1999,
for each of the years ended December 31, 1998 and 1997, and for
the period from July 22, 1996 (inception) to June 30,1999. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of Iceberg Corporation of America and subsidiaries as of
June 30, 1999 and December 31, 1998, and the results of their
operations and their cash flows for the six months ended June 30,
1999, for each of the years ended December 31, 1998 and 1997, and
for the period from July 22, 1996 (inception) to June 30, 1999,
in conformity with generally accepted accounting principles in
the United States.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
Iceberg Corporation of America is a development stage company
engaged in the development, production and commercial marketing
of premium beverage products, which utilize iceberg water as a
core ingredient. As discussed in Note 1 to the consolidated
financial statements, the deficiency in working capital at June
30, 1999 and the operating losses since inception raise
substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also
described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
St. John's, Newfoundland, Canada Deloitte & Touche LLP
October 26, 1999
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
_________
(all amounts in U.S. dollars)
<S> <C> <C>
June December
30, 1999 31, 1998
ASSETS
Current assets
Cash and cash equivalents $ 273,987 $ 60,351
Trade accounts receivable, less allowance
for doubtful accounts of $5,374, and $3,296,
respectively 193,936 49,566
Inventory 302,901 290,780
Prepaid expenses 53,322 17,414
--------- ---------
Total current assets 824,146 418,111
Property, plant and equipment, net 1,693,831 737,324
Goodwill 266,733 286,388
--------- ---------
Total assets $ 2,784,710 $1,441,823
========= =========
LIABILITIES
Current liabilities
Accounts payable $ 1,202,633 $ 542,083
Accrued liabilities 29,412 18,792
Deferred government grant - 44,935
Due to shareholders 425,974 -
Current portion of long term debt 44,058 43,610
--------- ---------
Total current liabilities 1,702,077 649,420
Long term debt 882,369 732,276
--------- ---------
Total liabilities 2,584,446 1,381,696
--------- ---------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common shares, $.0001 par value; 25,000,000 shares
authorized, 4,285,085 and 2,069,125 shares issued
and outstanding in 1999 and 1998 respectively 428 207
Special common shares, $.0001 par value; 5,000,000
shares authorized, 4,506,106 and 2,175,848 shares
issued and outstanding in 1999 and 1998 respectively 451 217
Additional paid-in capital 3,630,969 1,753,275
Deficit accumulated during the development stage (3,460,783) (1,717,031)
Accumulated other comprehensive income 29,199 23,459
--------- ---------
Total shareholders' equity 200,264 60,127
--------- ---------
Total liabilities and shareholders' equity $ 2,784,710 $ 1,441,823
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
_________
(all amounts in U.S. dollars)
<S> <C> <C> <C> <C>
From
July 22, 1996 Six Months Year Year
(Date of Ended Ended Ended
Inception) to June December December
June 30, 1999 30, 1999 31, 1998 31, 1997
Sales $ 457,280 $ 209,188 $ 248,092 $ -
Cost of sales 508,088 287,470 220,618 -
----------- ----------- ----------- ----------
Gross (loss) profit (50,808) (78,282) 27,474 -
----------- ----------- ----------- ----------
Operating expenses
General and administrative 1,752,111 1,059,010 507,167 185,934
Research and development 698,264 217,058 361,850 66,464
Sales and marketing 591,558 236,230 198,250 157,078
Depreciation and amortization 250,342 111,259 130,881 8,202
----------- ----------- ----------- ----------
3,292,275 1,623,557 1,198,148 417,678
----------- ----------- ----------- ----------
Operating loss (3,343,083) (1,701,839) (1,170,674) (417,678)
----------- ----------- ----------- ----------
Other expenses
Interest and bank charges 63,144 28,135 22,858 12,151
Interest on long term debt 54,556 13,778 37,110 3,668
----------- ----------- ----------- ----------
117,700 41,913 59,968 15,819
----------- ----------- ----------- ----------
Loss before taxes (3,460,783) (1,743,752) (1,230,642) (433,497)
Income taxes - - - -
----------- ----------- ----------- ----------
Net loss $(3,460,783) $(1,743,752) $(1,230,642) $ (433,497)
=========== =========== =========== ==========
Loss per share - basic
and diluted $ (1.74) $ (0.27) $ (0.52) $ (1.73)
=========== =========== =========== ==========
Weighted average common shares -
basic and diluted 1,984,074 6,480,860 2,364,155 250,247
=========== =========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
_________
(all amounts in U.S. dollars)
<S> <C> <C> <C> <C>
From
July 22, 1996 Six Months Year Year
(Date of Ended Ended Ended
Inception) to June December December
June 30, 1999 30, 1999 31, 1998 31, 1997
Operating activities
Net loss $(3,460,783) $(1,743,752) $(1,230,642) $ (433,497)
Items not requiring cash:
Depreciation and amortization 250,342 111,259 130,881 8,202
(Gain) loss on sale of property,
plant and equipment (22,219) 4,127 (26,346) -
----------- ----------- ----------- ----------
(3,232,660) (1,628,366) (1,126,107) (425,295)
Changes in current assets
and liabilities
(Increase) in accounts
receivable (121,972) (139,132) (11,875) (11,676)
(Increase) decrease in
inventory (107,194) 3,962 88,721 (199,877)
(Increase) decrease in
prepaid expenses (23,504) (34,328) 10,824 -
Increase (decrease) in
accounts payable 764,909 618,587 (85,683) 232,004
Increase in accrued liabilities 28,987 10,195 2,132 16,660
Increase (decrease) in deferred
government grants (693) (46,599) 45,905 -
----------- ----------- ----------- ----------
Cash used by operating activities (2,692,127) (1,215,681) (1,076,083) (388,184)
----------- ----------- ----------- ----------
Investing activities
Purchase of property, plant
and equipment (1,627,677) (985,794) (413,712) (223,670)
Proceeds from sale of property,
plant and equipment 45,626 5,866 39,760 -
Acquisition of subsidiary (1) - (1) -
----------- ----------- ----------- ----------
Cash used by investing activities (1,582,052) (979,928) (373,953) (223,670)
----------- ----------- ----------- ----------
Financing activities
Proceeds from (payments of)
short term borrowings 14,956 - (152,985) 167,941
Advances from third parties 259,870 - - 233,275
Repayment of advances from
third parties (516,030) - (506,716) -
Advances from shareholders 425,974 425,974 - -
Proceeds from issuance of
long term debt 834,752 161,033 659,064 14,655
Repayment of long term debt (101,914) (55,482) (43,188) (3,244)
Net proceeds from issuance
of shares 3,631,848 1,878,149 1,554,984 198,642
----------- ----------- ----------- ----------
Cash provided by financing
activities 4,549,456 2,409,674 1,511,159 611,269
----------- ----------- ----------- ----------
Effect of exchange rate
changes on cash (1,290) (429) (847) -
----------- ----------- ----------- ----------
Increase (decrease) in cash and cash
equivalents during the period 273,987 213,636 60,276 (585)
Cash and cash equivalents,
beginning of period - 60,351 75 660
----------- ----------- ----------- ----------
Cash and cash equivalents,
end of period $ 273,987 $ 273,987 $ 60,351 $ 75
=========== =========== =========== ==========
Supplemental disclosures of
cash flow information:
Cash paid for interest $ 117,700 $ 41,913 $ 59,968 $ 15,819
=========== =========== =========== ==========
Cash paid for income taxes $ - $ - $ - $ -
=========== =========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
__________
(all amounts in U. S. dollars)
<S> <C> <C> <C> <C> <C> <C>
Common and Deficit
Special Common Accumulated Accumulated Total
Shares Additional During the Other Share-
Par Value Paid in Development Comprehensive holders'
Number Amount Capital Stage Income Equity
Balance at July 22, 1996
(Inception) $ - $ - $ - $ - $ -
Components of comprehensive
income (loss)
Net loss - - - (52,892) - (52,892)
Foreign currency
translation adjustment - - - - 270 270
----------
Total comprehensive
income (loss) (52,622)
----------
Issuance of shares 10,000 1 72 73
------- ------- -------- ---------- --------- ----------
Balance at December 31,
1996 10,000 1 72 (52,892) 270 (52,549)
Components of
comprehensive
income (loss)
Net loss - - - (433,497) - (433,497)
Foreign currency
translation adjustment - - - - 16,210 16,210
----------
Total comprehensive
income (loss) (417,287)
----------
Issuance of shares 481,006 48 198,594 - - 198,642
------- ------- -------- ---------- --------- ----------
Balance at December 31,
1997 491,006 49 198,666 (486,389) 16,480 (271,194)
Components of
comprehensive
income (loss)
Net loss - - - (1,230,642) - (1,230,642)
Foreign currency
translation adjustment - - - - 6,979 6,979
----------
Total comprehensive
income (loss) (1,223,663)
----------
Issuance of shares 3,753,967 375 1,554,609 1,554,984
------- ------- -------- ---------- --------- ----------
Balance at December 31,
1998 4,244,973 424 1,753,275 (1,717,031) 23,459 60,127
Components of
comprehensive
income (loss)
Net loss - - - (1,743,752) - (1,743,752)
Foreign currency
translation adjustment - - - - 5,740 5,740
----------
Total comprehensive
income (loss) (1,738,012)
----------
Issuance of shares 4,546,218 455 1,877,694 - - 1,878,149
------- ------- -------- ---------- --------- ----------
Balance at June 30,
1999 8,791,191 $ 879 $3,630,969 $(3,460,783) $ 29,199 $ 200,264
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________
(all amounts in U.S. dollars)
1. Description of business and basis of presentation
Description of business
Iceberg Industries Corporation ("Iceberg Industries"), a
development stage company, was incorporated under the laws of the
province of Newfoundland, Canada on July 22, 1996. As more fully
described in Note 3(a), Iceberg Corporation of America ("the
Corporation"), a dormant public shell company, acquired Iceberg
Industries effective June 25, 1999. The acquisition by the
Corporation resulted in the former shareholders of Iceberg
Industries acquiring control of the Corporation and, accordingly,
this transaction has been treated as a reverse takeover and is
deemed in substance a capital transaction, rather than a business
combination. Under this basis of accounting in accordance with
generally accepted accounting principles in the United States
("U.S. GAAP"), Iceberg Industries has been identified as the
accounting acquirer. The financial statements prior to the
aforementioned acquisition are those of Iceberg Industries since,
under a reverse takeover transaction, comparative figures become
those of the accounting acquirer.
The Corporation's principal activity is intended to be the
commercial supply of premium beverage products, including iceberg
water, beer and vodka, which primarily utilize water obtained
from icebergs as the core ingredient. To date, however, the
Corporation has only generated minimal revenue from bottling
spring water and some iceberg water. The Corporation has
invested heavily in the development of technology for the
harvesting of icebergs and the production of premium water from
icebergs. It has developed substantial production facilities and
has recently focused its energies on product development,
packaging, market research and market development. Management
continues to commit significant efforts to these development
activities, financial planning and raising the required capital
to support the ongoing research and development.
Basis of presentation
These consolidated financial statements have been prepared on a
going concern basis which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal
course of business. The Corporation has incurred significant
operating losses since inception and has an accumulated deficit
of $3,460,783 at June 30, 1999. The Corporation expects to incur
further development costs to continue its product development and
marketing initiatives. The Corporations' working capital
deficiency at June 30, 1999 and limited revenue will not be
sufficient to meet its development requirements. Management
recognizes that the Corporation must generate additional
resources. Management's plans include the sale of additional
equity securities, the pursuit of business alliances for the
production and marketing of product and the ongoing development
of markets for its products.
The Corporation has issued an additional 600,000 commons shares
for proceeds of $1,500,000 in September and October, 1999 and has
plans to market additional common stock or convertible debt in
the fourth quarter of fiscal 2000. The Corporation also plans to
enter into distribution agreements for its products in the United
States. This is intended to shift marketing costs to the
distributors and to increase delivery of products through
existing channels without commensurate increases in overhead
costs.
No assurances can be given that the Corporation will be
successful in raising sufficient additional capital or entering
into business alliances, which will enable it to achieve
profitability or positive cash flow.
2. Significant accounting policies
Basis of consolidation
These consolidated financial statements include the accounts of
the Corporation and its subsidiaries. All significant
intercompany balances and transactions have been eliminated upon
consolidation. Such consolidated financial statements include,
as appropriate, the financial position and results of operations
of acquired businesses since the date of such respective
acquisitions.
Change in fiscal year
The Corporation changed its financial reporting year end from
December 31 to June 30 effective January 1, 1999 to more closely
align its fiscal reporting to its business cycle.
Reporting currency and foreign currency translation
The Corporation reports its consolidated financial statements in
U.S. dollars. The functional currency of the Corporation's major
operations to date conducted by Iceberg Industries is the
Canadian dollar. Canadian dollar denominated amounts have been
translated into U.S. dollars using the exchange rate at each
balance sheet date for assets and liabilities and the weighted
average exchange rate for each period for revenues, expenses and
gains and losses. Translation adjustments are recorded as a
separate component of other comprehensive income. Gains and
losses resulting from foreign currency transactions are included
in the results of operations.
Use of estimates
The preparation of the Corporation's consolidated financial
statements in conformity with generally accepted accounting
principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less when purchased.
Inventory
Inventory is valued at the lower of cost or market. Cost is
determined on a first-in, first out basis. Inventory balances
include the following:
June 30, December 31,
1999 1998
------------ ------------
Raw materials $ 243,230 $ 153,241
Finished goods 59,671 137,539
------------ ------------
$ 302,901 $ 290,780
============ ============
Government grants
The Corporation applies government grants received related to the
purchase of property, plant and equipment to the cost of those
assets. Grants received in advance of the acquisition of the
related property, plant and equipment are deferred until the
asset has been acquired.
Property, plant and equipment
Property, plant and equipment are recorded at historical cost
less government grants received.
Property, plant and equipment are depreciated over their useful
lives using the declining balance method at the following annual
rates:
Plant 4%
Tank farm 10%
Furniture and equipment 20% - 30%
Vehicles 30%
Repairs and maintenance are expensed as incurred. Expenditures
that result in the enhancement of the value of the facilities
involved are treated as additions to property, plant and
equipment. Cost of property, plant and equipment disposed of and
the related accumulated depreciation are removed from the related
accounts, and a gain or loss, if any, is recognized.
Goodwill
Goodwill is the excess of the purchase price over the fair value
of the identifiable net assets acquired in business combinations
accounted for as purchases. Goodwill is amortized on a
straight-line basis over the periods benefitted.
Impairment of long-lived assets
The Corporation evaluates its long-lived assets, including
goodwill, for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets
may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of any
asset to future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the
assets.
Fair value of financial instruments
The Corporation has evaluated fair values of its financial
instruments based on the current interest rate environment,
related market values and current pricing of financial
instruments with comparable terms. The carrying values of
financial instruments are considered to approximate fair value,
except as otherwise indicated in Note 6.
Revenue recognition
Revenue associated with the sale of bottled water has been
recognized upon shipment at which time the benefits of ownership
and the risk of loss passes to the customer.
Income taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Valuation
allowances are established when it is more likely than not that
some or all of the deferred tax assets will not be realized.
Research and development
Research and development costs are expensed as incurred.
Recent accounting pronouncements
During the year ended December 31, 1998, the Corporation adopted
Statement of Financial Accounting Standards ("SFAS") 130:
Reporting Comprehensive Income. SFAS 130 establishes standards
for reporting and displaying comprehensive income (loss) and its
components in a full set of general-purpose financial statements.
Comprehensive income (loss) is determined by adjusting net loss
by other items not included as a component of net loss, such as
the foreign currency translation adjustment. Total comprehensive
income (loss) is shown in the consolidated statement of
shareholders' equity.
Also during the year ended December 31, 1998, the Corporation
adopted SFAS 131: Disclosures about Segments of an Enterprise and
Related Information. SFAS 131 establishes standards for the
manner in which public business enterprises report information
about operating segments in annual and interim financial
statements. It also establishes standards for related
disclosures about products and services, geographic areas and
major customers. Because the Corporation has focused its efforts
to date on developing its business and conducting market research
and product development, the Corporation has operated as a single
segment. Management will re-evaluate its segment disclosure upon
commencement of its principal operations.
During the six months ended June 30, 1999, the Corporation
adopted Statement of Position ("SOP) 98-1: Accounting for the
Costs of Computer Software Developed or Obtained for Internal
Use. SOP 98-1 establishes the accounting practice for
capitalization of certain costs incurred in connection with the
acquisition or development of computer software to be used for
internal purposes, including internal costs. The adoption of SOP
98-1 did not have a material effect on the Corporation's
financial position, results of operations or cash flows, or cause
the Corporation to capitalize any material costs associated with
the acquisition or development of computer software to be used by
the Corporation for internal purposes.
Also during the six months ended June 30, 1999, the Corporation
adopted SOP: 98-5: Reporting on the Costs of Start-Up Activities.
SOP 98-5 provides guidance on the financial reporting of start-up
costs and organization costs and requires such costs to be
expensed as incurred. Accordingly, during the six months ended
June 30, 1999, the Corporation expensed as incurred all costs
attributable to its start-up activities. The Corporation did not
have significant capitalized costs as of December 31, 1998 and
1997, and therefore, a cumulative adjustment was not required.
In June 1998, the Financial Accounting Standards Board issued
SFAS 133: Accounting for Derivative Instruments and Hedging
Activities. SFAS 133 establishes accounting and reporting
standards for derivative financial instruments and hedging
activities related to those instruments, as well as other hedging
activities. Because the Corporation does not currently hold any
derivative instruments and does not engage in hedging activities,
the Corporation expects that the adoption of SFAS 133 will not
have a material impact on its financial position, results of
operations or cash flows. The Corporation will be required to
adopt SFAS 133 in fiscal 2001.
3. Acquisitions
(a) Business Combination of Iceberg Corporation of America with
Iceberg Industries Corporation
Effective June 25, 1999, the Corporation acquired 100% of Iceberg
Industries for total consideration of $3,631,848 based upon a
share for share exchange at a ratio of 1.7 shares of the
Corporation for each share of Iceberg Industries. At the date of
combination, the Corporation was a dormant public shell company
with no identifiable assets other than cash. As such, the
reverse takeover transaction was considered a capital transaction
rather than a business combination. The purchase price for the
Iceberg Industries' shares was satisfied by the issuance of
1,251,753 common shares and 4,506,106 special common shares of
the Corporation. The special common shares have voting rights
equal to the Corporation's common shares and may be exchanged at
any time for a common share of the Corporation on an equivalent
basis. Accordingly, they are the economic equivalent of the
common shares.
As a result of these transactions, the former shareholders of
Iceberg Industries effectively control the Corporation through
their share ownership. Under these circumstances, U.S. GAAP
requires that Iceberg Industries be identified as the accounting
acquirer. Accordingly, the financial statements prior to the
acquisition are those of Iceberg Industries. Historical
shareholder's equity of the Corporation has also been
retroactively restated for the equivalent number of shares
received in the reverse takeover transaction.
b) Business Combination of Iceberg Industries Corporation and
Enterprise Atlantic Limited
Iceberg Industries acquired a 100% interest in Enterprise
Atlantic Limited ("Enterprise") on March 31, 1998 for $1 and has
accounted for the acquisition using the purchase method of
accounting. Accordingly, the results of operations of Enterprise
subsequent to March 31, 1998 are included in the accompanying
consolidated financial statements.
The following summarizes the net assets acquired:
Property, plant and equipment $ 238,340
Goodwill 355,646
----------
593,986
Less: Liabilities assumed (593,985)
----------
Net assets acquired for cash $ 1
==========
The goodwill is being amortized on a straight-line basis over
five years.
The following unaudited pro forma information presents the
results of operations of the Corporation as if the acquisition of
Enterprise had occurred on January 1 of each of the years
presented:
1998 1997
----------- -----------
Sales $ 320,285 $ 320,506
Net loss $(1,313,804) $ (691,083)
Basic and diluted
loss per share $ (0.56) $ (2.76)
The unaudited pro forma amounts include certain adjustments, such
as additional amortization expense as a result of goodwill. They
do not purport to be indicative of the results of operations
which actually would have resulted had the acquisition occurred
on the dates indicated, or which may result in the future.
4. Property, plant and equipment
Property, plant and equipment is comprised of the following:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
June 30, 1999 December 31, 1998
---------------------------------------- -----------------------------------
Accumulated Net Book Accumulated Net Book
Cost Depreciation Value Cost Depreciation Value
Plant $ 437,374 $ 7,224 $ 430,150 $138,336 $ 4,077 $ 134,259
Land 43,984 - 43,984 - - -
Tank farm 183,246 - 183,246 - - -
Furniture and
equipment 1,152,031 139,881 1,012,150 637,850 68,155 569,695
Vehicles 42,318 18,017 24,301 46,070 12,700 33,370
---------- ---------- ----------- -------- -------- ---------
$1,858,953 $ 165,122 $ 1,693,831 $822,256 $ 84,932 $ 737,324
========== ========== =========== ======== ======== =========
</TABLE>
The tank farm was not depreciated during the six months ended
June 30, 1999 as it was placed in operation at the end of the
fiscal period.
5. Due to shareholders
Notes payable to shareholders matured in June 1999 and bear
interest at rates which range between 6% to 8.75%. At
June 30, 1999, all principal and accrued interest related to
the notes were in arrears and outstanding. Subsequent to
June 30, 1999, $328,000 of the notes have been repaid.
Management expects to fully repay the remaining balance of
these notes during the fiscal year ended June 30, 2000.
6. Long term debt
<TABLE> <C> <C>
<S> June December
30, 1999 31, 1998
Notes payable to directors, bearing interest at
5%, unsecured debt, repayable on demand.
The directors have agreed not to demand repayment
before July 1, 2000 $ 346,150 $ 326,797
Atlantic Canada Opportunities Agency, non-interest
bearing, unsecured debt, repayable in monthly
installments commencing 2000 and maturing 2005 307,800 136,318
Hongkong Bank of Canada, term loan bearing interest,
at prime plus 3% repayable in blended monthly
installments, maturing 2004, secured by certain
assets of the Corporation, and limited guarantees
of certain shareholders 149,813 152,337
Trepassey Community Development Fund, term loan
bearing interest at 5%, repayable in blended monthly
installments, maturing 2015, secured by certain
assets of the Corporation 88,021 87,650
Bank of Nova Scotia, term loan bearing interest at
prime plus 2%, repayable in monthly installments
plus interest, maturing 2001, secured by certain
assets of the Corporation 27,461 32,456
Other 7,182 40,328
----------- -----------
926,427 775,886
Current portion 44,058 43,610
----------- -----------
$ 882,369 $ 732,276
=========== ===========
</TABLE>
Principal repayments over the next five years as of June 30, 1999
are as follows:
Fiscal Year Amount
2000 $ 44,000
2001 99,300
2002 100,200
2003 102,900
2004 105,700
----------
Total $ 452,100
==========
As noted above, the Corporation receives governmental assistance
in the form of non-interest bearing notes. In addition, the
Corporation's long term debt is not subject to any significant
restrictive debt covenants.
The fair value of long term debt has been estimated to be
$794,800 and $689,400 at June 30, 1999 and December 31, 1998,
respectively.
7. Income taxes
The Corporation has reported its income tax expense in the
statement of operations to include the following components:
Six Months Year Year
Ended Ended Ended
June December December
30, 1999 31, 1998 31, 1997
Current tax expense $ - $ - $ -
Deferred tax benefit 649,497 599,421 246,240
Valuation allowance (649,497) (599,421) (246,240)
---------- --------- ----------
$ - $ - $ -
========== ========= ==========
Deferred tax assets are summarized as follows:
June 30, December 31,
1999 1998
Non -capital losses $1,195,594 $ 738,583
Share issue costs 53,034 33,870
Property, plant and equipment 28,931 834
Eligible capital expenditures 145,225 -
---------- -------------
1,422,784 773,287
Valuation allowance (1,422,784) (773,287)
---------- -------------
$ - $ -
========== =============
The Corporation has recorded a full valuation allowance against
its deferred tax asset because it believes it is more likely than
not that sufficient taxable income will not be realized during
the carry forward period to utilize the deferred tax asset.
Realization of the future tax benefits related to the deferred
tax assets is dependent upon many factors, including the
Corporation's ability to generate taxable income in Canada within
the loss carryforward periods.
For Canadian federal and Newfoundland provincial tax purposes,
the Corporation's net operating loss carryforwards are subject to
certain limitations on utilization in the event of changes in
ownership.
At June 30, 1999, the Corporation had accumulated income tax
losses of $3,231,337 available in Canada for carryforward to
reduce taxable income of future years. The loss carryforwards
expire as follows:
Fiscal Year Amount
2003 $ 194,610
2004 665,511
2005 1,246,950
2006 1,124,266
-----------
Total $ 3,231,337
===========
The principal items accounting for the difference between income
taxes computed at the Canadian statutory rate and the provision
for income taxes are as follows:
June 30, December 31,
1999 1998
Canadian statutory rate 37.0% 37.0%
Amounts not deductible
for tax purposes (7.9)% (1.7)%
Eligible capital expenditures (7.3)%
Depreciation (1.4)% (3.9)%
Operating losses not benefitted (20.4)% (31.4)%
---------- ----------
- -
========== ==========
8. Commitments and contingencies
The Corporation leases certain office space accounted for as
operating leases. As of June 30, 1999, the future minimum lease
payments under non-cancelable operating leases with initial terms
of one or more years are as follows:
Amount
2000 $ 47,900
2001 39,900
2002 15,200
2003 1,500
2004 1,400
---------
Total $ 105,900
=========
Rental expense on operating leases was $15,900, $18,550, and
$9,960 during the six months ended June 30, 1999 and the years
ended December 31, 1998 and 1997, respectively.
The Corporation is involved in various routine legal proceedings
incidental to the ordinary course of its business. The
Corporation believes the outcome of all pending legal proceedings
in the aggregate will not have a material adverse effect on its
financial condition, results of operations, or cash flows.
9. Loss per share
Basic loss per share is computed by dividing net loss by the
weighted-average number of shares outstanding during each period.
The weighted-average number of shares prior to the June 25, 1999
reverse takeover transaction disclosed in Note 3(a) has been
retroactively restated for the equivalent number of shares of
common stock of the Corporation. The special common shares are
included in the calculation as common shares as they are the
economic equivalent of common shares. Diluted loss per share is
equivalent to basic loss per share as there are no potentially
dilutive securities.
10. Subsequent events
In September and October 1999, the Corporation issued an
additional 600,000 common shares for proceeds of $1,500,000.
Management intends to use the proceeds to fund immediate working
capital needs as discussed in Note 1.
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C>
June
30, 1998
--------
ASSETS
Current assets
Cash and cash equivalents $ 1,982
Trade accounts receivable, less allowance
for doubtful accounts of $3,300 142,015
Inventory 244,422
Prepaid expenses 14,787
---------
Total current assets 403,206
Property, plant and equipment, net 739,785
Goodwill 336,526
---------
Total assets $ 1,479,517
=========
LIABILITIES
Current liabilities
Accounts payable $ 519,522
Accrued liabilities 11,833
Deferred government grant 4,783
Due to shareholders 25,147
Current portion of long term debt 53,525
---------
Total current liabilities 614,810
Long term debt 379,685
---------
Total liabilities 994,495
---------
SHAREHOLDERS' EQUITY
Common shares, $.0001 par value; 25,000,000 shares
authorized, 1,762,785 shares issued and outstanding 176
Special common shares, $.0001 par value; 5,000,000
shares authorized, 1,853,708 shares issued and outstanding 185
Additional paid-in capital 1,493,698
Deficit accumulated during the development stage (1,010,714)
Accumulated other comprehensive income 1,677
---------
Total shareholders' equity 485,022
---------
Total liabilities and shareholders' equity $ 1,479,517
=========
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C>
Six Months
Ended
June 30, 1998
-------------
Sales $ 113,640
Cost of sales 45,013
-----------
Gross profit 68,627
-----------
Operating expenses
General and administrative 267,543
Research and development 169,335
Sales and marketing 74,354
Depreciation and amortization 47,855
-----------
559,087
-----------
Operating loss (490,460)
-----------
Other expenses
Interest and bank charges 14,904
Interest on long term debt 18,962
-----------
33,866
-----------
Loss before income taxes (524,326)
Income taxes -
-----------
Net loss $ (524,326)
===========
Loss per share - basic and diluted $ (0.73)
===========
Weighted average common shares -
basic and diluted 715,937
===========
</TABLE>
<PAGE>
<TABLE>
ICEBERG CORPORATION OF AMERICA AND SUBSIDIARIES
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
_________
(all amounts in U.S. dollars)
<S> <C>
Six Months
Ended
June 30, 1998
-------------
Operating activities
Net loss $ (524,326)
Items not requiring cash:
Depreciation and amortization 47,855
Gain on sale of property,
plant and equipment (26,346)
-----------
(502,817)
Changes in current assets and liabilities
Decrease (increase) in
accounts receivable (87,872)
Decrease (increase) in inventory 148,282
Decrease in prepaid expenses 14,245
Increase (decrease) in accounts payable (134,666)
Increase in accrued liabilities (5,568)
Increase in deferred government grants 4,647
-----------
Cash used by operating activities (558,749)
-----------
Investing activities
Purchase of property, plant
and equipment (322,156)
Proceeds from sale of property,
plant and equipment 39,760
Acquisition of subsidiary (1)
-----------
(282,397)
-----------
Financing activities
Proceeds from (payments of)
short term borrowings (152,985)
Advances from third parties -
Repayment of advances from
third parties (506,716)
Advances from shareholders -
Repayment of advances from shareholders
24,435
Proceeds from issuance of
long term debt 287,357
Repayment of long term debt (43,188)
Net proceeds from issuance of shares 1,233,637
-----------
Cash provided by financing
activities 842,540
-----------
Effect of exchange rate
changes on cash 513
-----------
Increase (decrease) in cash and cash
equivalents during the period 1,907
Cash and cash equivalents,
beginning of period 75
-----------
Cash and cash equivalents,
end of period $ 1,982
===========
Supplemental disclosures of
cash flow information:
Cash paid for interest $ 33,866
===========
Cash paid for income taxes $ -
===========
</TABLE>
<PAGE>
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying interim financial statements presented for
comparative purposes have been prepared by the Company in
accordance with the rules and regulations of the Securities and
Exchange Commission for interim reporting. Accounting policies
utilized in the preparation of financial information herein
presented are the same as set forth in the Company's annual
financial statements. Certain disclosures and information
normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these
financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation
of the interim financial statements. Interim results of
operations are not necessarily indicative of the results of
operations for the full year.
2. Inventories
Inventories consist of the following:
June
30, 1998
----------
Raw materials $ 319,322
Finished goods 355,808
---------
675,130
Less reserve (12,648)
---------
$ 662,482
=========
3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
June
30, 1998
----------
Plant $ 450,735
Land 47,137
Tank farm 218,273
Furniture and equipment 1,251,366
Vehicles 25,966
----------
1,993,477
Less accumulated depreciation (230,836)
----------
$1,762,641
==========
<PAGE>
PART III
Exhibit Index
3.1 Articles of Incorporation, filed July 3, 1989
3.2 Amendment to Articles of Incorporation, filed
November 9, 1998
3.3 Amendment to Articles of Incorporation, filed
June 24, 1999
3.4 Bylaws
10.1 Land Lease for Company Facility at Trepassey,
commencing July 16, 1992 and extending for 99 years
10.2 Business Development Agreement between Company and
ATLANTIC CANADA OPPORTUNITY AGENCY, dated
April 9, 1998
10.3 Grant for $600,000 from Human Resources Development
of Canada, dated June 23, 1998
10.4 US Food and Drug Administration Permit to test
market product in United States, issued
November 6, 1998
10.5 Office Lease for facilities at 16 Forest Road, St.
Johns, Newfoundland, commencing December 1, 1998
10.6 Purchase Offer for Securities of Iceberg Industries,
initiated May 3, 1999
10.7 Notice of Change in Purchase Offer for Securities of
Iceberg Industries, dated May 28, 1999
10.8 Hong Kong Bank Loan Agreement for $249,900, dated
May 8, 1998, with guarantees
10.9 Permit to Harvest Icebergs, granted by government of
Newfoundland and Labrador, effective June 17, 1999
10.10 Distribution Agreement with Transtrade
International, effective August 16, 1999
10.11 Private Placement Contract under Rule 144A for
$1,500,000, executed July 9, 1999
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ICEBERG CORPORATION OF AMERICA
(Registrant)
Date: March 17, 2000 By: /s/ Paul Benson
Paul Benson,
President & Director
Date: March 17, 2000 By: /s/ Ron Stamp
Ron Stamp,
Vice President & Director
Date: March 17, 2000 By: /s/ Lewis Stoyles
Lewis Stoyles,
Vice President & Director
<PAGE>
Exhibit 3.1 - Articles of Incorporation
ARTICLES OF INCORPORATION
of
D.V. HOLDINGS, INC.
KNOW ALL MEN BY THESE PRESENTS;
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under
and pursuant to the laws of the State of Nevada, and we do hereby
certify that:
I
The name of the Corporation is
D.V. HOLDINGS, INC.
II
The principal office and place of business in Nevada of this
Corporation shall be located at the offices of Harry Paul
Marquis, Chartered# 301 South Rancho Drive, Suite G-46, Las
Vegas, Nevada 89106.
Offices for the transaction of business of the corporation
and where meetings of the Board of Directors and of the
Shareholders any be held, may be established and maintained in
any other part of the state of Nevada, or in any other state,
territory or possession of the United States of America, or in
any foreign country.
III
The nature of the business and objects and purposes proposed
to be transacted, promoted, or carried on by the corporation are:
(a) To engage in any lawful activity.
IV
The members of the governing Board of the Corporation shall
be styled Directors, and the number thereof shall not be less
than two (2), except that, in cases where all the shares of the
Corporation are owned beneficially and of record by either one or
two Shareholders, the number of Directors may not be less than
the number of Shareholders, but shall be of full age and at least
one shall be a citizen of the United States. The names and
addresses of the first Board of Directors, which shall consist of
two (2) persons and who shall hold office until his successors
are duly elected and qualified is:
NAME ADDRESS
DONALD HOKE, JR. 501 South Rancho Drive, 0-46
Las Vegas, Nevada 69106
JOHN BARR 501 South Rancho Drive, C-46
Las Vegas, Nevada 80106
V
The number of Directors of the Corporation may be increased
or decreased from time to tins as shall be provided in the
By-Laws of the Corporation.
VI
A. This Corporation is authorized to issue 10,000 shares of
stock with a par value of $.001 per share, said shares being
non-assessable.
B. Shareholders shall have pre-emptive rights.
VII
This Corporation shall have perpetual existence.
VIII
The names and post office addresses of the Incorporators of
the Corporation shall be as follows:
NAME ADDRESS
Loretta Gillespie 501 South Rancho Drive
Suite G-46
Las Vegas Nevada 89106
Lisa Steiner 501 South Rancho Drive
Suite G-46
Las Vegas, Nevada 89106
IX
Except as hereinafter provided, the officers and Directors
of the Corporation shall not be personally liable to the
Corporation or its stockholders for damages for breach of
fiduciary duty an a director or officer. This limitation on
personal liability shall not apply to acts or omissions which
involved intentional misconduct, fraud, knowing violation of the
law, or unlawful payments of dividends prohibited by Nevada
Revised Statutes Section 178.300.
We, the undersigned, for the purposes of forming a
corporation under the laws of the State of Nevada, do make file
and record this Certificate,, and do certify that the facts
heroin stated are true) and we have accordingly hereunto met our
hands and seals this 27th day of June, 1989.
/s/ Loretta Gillespie
/s/ Lisa Steiner
<PAGE>
Exhibit 3.2 - Amendment to Articles of Incorporation
FILED
IN THE OFFICE OF THE
SECRETARY 0F STATE 0F THE
STATE OF NEVADA
NOV 09 1998
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
D.V. HOLDINGS, INC.
The undersigned, being the Chairman and President of D.V.
Holdings, Inc., a Nevada Corporation, hereby certify that by
majority vote of the Board of Directors and majority vote of the
stockholders at a meeting held on 3rd July 1996, it was voted
that this CERTIFICATE AMENDING ARTICLES OF INCORPORATION be
filed.
The undersigned further certify that ARTICLES FOURTH of the
original Articles of Incorporation filed on the 3rd day of July
1989 herein is amended to read as follows:
RESOLVED that Article Six, "A" is hereby amended to read as
follows:
The total number of authorized capital stock is increased to
Twenty Five million (25,000,000) shares at $.0001 par value per
share shall be authorized. said shares at $.0001 par value may be
issued by the corporation from time to time for such
consideration as may be fixed from time to time by the Board of
Directors.
RESOLVED that, the Corporation declare a 1 to 200 forward
stock split to be effective July 30, 1996
The undersigned hereby certify that they have on this 3rd
July 1996 executed this Certificate Amending that original
Articles of incorporation heretofore filed with the Secretary of
State of Nevada.
/S/ M. Zapara
M. Zapara, President/Secretary
<PAGE>
Exhibit 3.3 - Amendment to Articles of Incorporation
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After issuance of Stock)
Filed by:
D.V. HOLDINGS, INC,
Name of Corporation
We the undersigned:
ROY POCKETT, President
President or Vice President
MAGGIE ABBOTT. Secretary
Secretary or Assistant Secretary
of
D.V. HOLDINGS, INC.
Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting
duly convened, held on the 15th day of March, 1999, adopted
resolutions to amend the original articles as follows:
Article I is hereby amended to read in full as follows:
"The name of the corporation is: Iceberg Corporation of
America."
Article VI is hereby amended by deleting "B. Shareholders shall
be pre-empted rights."
Article VI is hereby amended to read in full as follows:
"A. The aggregate number of shares which this Corporation
shall have authority to issue is Twenty Five Million
(25,000,000) shares of common stock at $.0001 par value per
share and Five Million (5,000,000) shares of special common
stock at $.0001 par value per share shall be authorized.
Upon the amendment of this Article to read as hereinabove
set forth, each outstanding share shall be deemed to be
shares of common stock.
B. The special common stock shall be convertible at the
option of the respective holders of the shares thereof, at
any time, and into fully paid non-assessable common shares
of the corporation at the rate of one common share for each
one- and seven-tenth special common share so surrendered for
conversion.
C. The number of common shares into which the special common
shares may be converted shall be subject to adjustment from
time to time in certain cases as follows:
(i) If the corporation shall combine its
outstanding common shares or smaller number of shares
without subdividing or continuing the special common
shares in like proportion, then in each such case the
number of shares into which the special common shares
may be converted shall be increased in the same
proportion;
(ii) If the corporation shall set a record date
for the purpose of entitling the holders of its common
shares to receive a dividend or other distribution
payable in common shares or securities convertible into
or exchangeable. for common shares, then in each such
case, the maximum number of common shares issuable in
payment of the dividend or distribution or upon
conversion or in exchange for the securities
convertible into or exchangeable. for common shares,
shall be deemed to have been issued and to be
outstanding as the record date, and in each such case,
the number of common shares into which the special
common shares may be converted shall be increased in
proportion to the increase, through the dividend or
distribution, of the number of outstanding common
shares.
D. The corporation shall at all times reserve and keep
available out of its authorized but non-issued common shares
the full number of common shares deliverable upon the
conversion of all of the then outstanding special common
shares, and shall take all action and obtain all permits or
orders that may be necessary to enable the corporation
lawfully to issue common shares upon the conversion of the
special common shares.
E. The holders of the common shares and the special common
shares shall equally have and possess the exclusive right to
notice of shareholders' meetings and the exclusive voting
rights and powers to vote upon the 'election of directors or
upon any other matter.
F. No special common shares of the corporation which have
been converted by the corporation after the original
issuance thereof shall ever again be reissued, and all such
shares so converted shall cease to be a part of the
authorized shares of the corporation. Further, any special
common shares which have not been issued on or before June
30, 1999, shall-cease to be part of the authorized shares of
the corporation."
The number of shares of the corporation outstanding and
entitled to vote on an amendment to the Articles of Incorporation
is 3,000,000; that the said change(s) and amendment have been
consented to and approved by a majority vote of the stockholders
holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
/s/ Roy Pockett, President
/s/ Maggie Abbot, Secretary
<PAGE>
Exhibit 3.4 - Bylaws
BYLAWS
OF
D.V. HOLDINGS, INC.
(the "Corporation")
Article I.
Office
The Board of Directors shall designate and the Corporation
shall maintain a principal office. The location of the principal
office may be changed by the Board of Directors. The Corporation
also may have offices in such other places as the Board may from
time to time designate. The location of the initial principal
office of the Corporation shall be designated by resolution.
Article II.
Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation
shall be held at such place within or outside the State of Nevada
as shall be set forth in compliance with these Bylaws. The
meeting shall be held on the 3 of July of each year. If such day
is a legal holiday, the meeting may be on the next business day.
This meeting shall be for the election of Directors and for the
transaction of such other business as may properly come before
it.
2. Special Meetings
Special meetings of shareholders, other than those regulated
by statute, may be called by the President upon written request
of the holders of 50% or more of the outstanding shares entitled
to vote at such special meeting. Written notice of such meeting
stating the place, the date and hour of the meeting, the purpose
or purposes for which it is called, and the name of the person by
whom or at whose direction the meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place,
day, and hour of the meeting, and in the case of a special
meeting, the purpose or purposes for which the meeting is called,
which shall be delivered not less than ten or more than fifty
days before the date of the meeting, either personally or by mail
to each. shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when
deposited in the United States Mail, addressed to the shareholder
at his. address as it appears on the books of the Corporation,
with postage thereon prepaid. Attendance at the meeting shall
constitute a waiver of notice thereof.
4. Place of Meeting
The Board of Directors may designate any place, either
within or without the State of Nevada, as the place of meeting
for any annual meeting or for any special meeting called by the
Board of Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either
within or without the State of Nevada, as the place for the
holding of such meeting. If no designation is made, or if a
special meeting is otherwise called, the place of meeting shall
be the principal office of the, Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor
more than sixty days prior to any meeting as the record date for
the purpose of determining shareholders entitled to notice of and
to vote at such meetings of the shareholders. The transfer books
may be closed by the Board of Directors for a stated period not
to exceed fifty days for the purpose of determining shareholders
entitled to receive payment of any dividend, or in order to make
a determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a
majority of the outstanding shares are represented at a meeting,
a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At a meeting resumed
after any such adjournment at which a quorum shall be present or
represented, any business may be transacted, which might have
been transacted at the meeting as originally noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a
meeting, may vote at such meeting in person or by proxy. Except
as may otherwise be provided in the currently filed Articles of
incorporation, every shareholder shall be entitled to one vote
for each share standing in his name on the record of
shareholders. Except as herein or in the currently filed Articles
of Incorporation otherwise provided, all corporate action shall
be determined by a majority of the vote's cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in
person or by proxy executed in writing by the shareholder or by
his duty authorized attorney=in-fact. Such proxy shall be filed
with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after six months from the
date of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the
shareholders, may be taken without a meeting if a consent in
writing,, setting forth the action so taken, shall be signed by a
majority of the shareholders entitled to vote with respect to the
subject matter thereof.
Article III.
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed
by its Board of Directors. The Board of Directors may adopt such
rules and regulations for the conduct of their meetings and the
management of the Corporation as they appropriate under the
circumstances. The Board shall have authority to authorize
changes in the Corporation's capital structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number
between one and five, as the Directors may by resolution
determine from time to time. Each of the Directors shall hold
office until the next annual meeting of shareholders and until
his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held
without other notice than by this Bylaw, immediately after and,
at the same place as the annual meeting of shareholders. The
Board of Directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other
notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by
order of the Chairman of the Board or the President. The
Secretary shall give notice of the time, place and purpose or
purposes of each special meeting by mailing the same at least two
days before the meeting or by telephone, telegraphing or
telecopying the same at least one day before the meeting to each
Director. Meeting of the Board of Directors may be held by
telephone conference call.
5. Quorum
A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business, but less
than a quorum may adjourn any meeting from time to time until a
quorum shall be present-,. whereupon the meeting may be held, as
adjourned, without further notice. At any meeting at which every
Director shall be present, even though without any formal notice,
any business may. be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director
shall have one vote. The act of a majority of Directors present
at a meeting shall be the act of the full Board of Directors,
provided that a quorum is present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist
in the case of death, resignation, or removal of any Director, or
if the authorized number of Directors is increased, or if the
shareholders fail, at any meeting of the shareholders, at which
any Director is to be elected, to elect the full authorized
number of Director to be elected at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the
shareholders holding a majority of the shares outstanding and
entitled to vote. Such vacancy shall be filled by the Directors
then in office, though less than a quorum, to hold office until
the next annual meeting or until his successor is duly elected
and qualified, except that any directorship to be filled by
election by the shareholders at the meeting at which the Director
is removed. No reduction of the authorized number of Directors
shall have the effect of removing any Director prior to the
expiration of his term of office.
9. Resignation
A Director may resign at. any time by delivering written
notification thereof to the President or Secretary of the
Corporation. A resignation shall become effective upon its
acceptance by the Board of Directors; provided, however, that if
the Board of Directors has not acted thereon within ten days from
the date of its delivery, the resignation shall be deemed
accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of
the Board of Directors at which action on any corporate matter is
taken shall be presumed-to have assented to the actions(s) taken
unless his dissent shall be placed in the minutes of the meeting
or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered
mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply
to a Director who voted in favor of such action.
11. Compensation
By resolution of the Board of Directors, the Directors may
be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation
in any other capacity and receiving compensation therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the
Directors are incapacitated or otherwise unable to attend the
meetings and function as Directors, the remaining members of the
Board of Directors shall have all the powers necessary to
function as a complete Board, and for the purpose of doing
business and filling vacancies shall constitute a quorum, until
such time as all Directors can attend or vacancies can be filled
pursuant to these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a
Chairman of the Board, who shall preside at all meetings of the
Board of Directors, and shall perform such other duties as may be
prescribed from time to time by the Board of Directors. The
Chairman may by appointment fill any vacancies on the Board of
Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President, one or
more Vice Presidents, and a Secretary Treasurer, each of whom
shall be elected by a majority of the Board of Directors. Such
other Officers and assistant Officers as may be deemed necessary
may be elected or appointed by the Board of Directors. In its
discretion, the Board of Directors may leave unfilled for any
such period as it may determine any office except those of
President and Secretary. Any two or more offices may be held by
the same person. Officers may or may not be Directors or
shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board
of Directors shall be elected annually by the Board of Directors
at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of Officers
shall not be held at such meeting, such election shall be held as
soon thereafter as convenient. Each Officer shall hold office
until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. Resignations
Any Officer may resign at any time by delivering a written
resignation either to the President or to the Secretary. Unless
otherwise specified therein, such resignation shall take effect
upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an Officer or agent shall
not of itself create contract rights. Any such removal shall
require a majority vote of the Board of Directors, exclusive of
the Officer in question if he is also a Director.
5. Vacancies
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, or if a new office shall
be created, may be filled by the Board of Directors for the
unexpired portion of the term.
6. President
The President shall be the chief executive and
administrative Officer of the Corporation. He shall preside at
all meetings of the stockholders and, in the absence of the
Chairman of the Board, at meetings of the Board of Directors. He
shall exercise such duties as customarily pertain to the office
of President and shall have general and active supervision over
the property, business, and affairs of the Corporation and over
its several Officers, agents, or employees other than those
appointed by the Board of Directors. He may sign, execute and
deliver in the name of the Corporation powers of attorney,
contracts, bonds and other obligations, and shall perform such
other duties as may be prescribed from time to time by the Board
of Directors or by the Bylaws.
7. Vice President
The Vice President shall have such powers and perform such
duties as may be assigned to him by the Board of Directors or the
President. In the absence or disability of the President, the
Vice President designated by the Board or the President shall
perform the duties and exercise the powers of the President. A
Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors and, to the extent
ordered by the Board of Directors or the President, the minutes
of meetings of all committees. He shall cause notice to be given
of meetings of stockholders, of the Board of Directors, and of
any committee appointed by the Board. He shall have custody of
the corporate seal and general charge of the. records, documents
and papers of the Corporation not pertaining to the performance
of the duties vested in other Officers, which shall at all
reasonable times be open to the examination of any Directors. He
may sign or execute contracts with the President or a Vice
President thereunto authorized in the name, of the Corporation
and affix the seal of the Corporation thereto. He shall perform
such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection
and disbursement of funds of the Corporation. He shall endorse on
behalf of the Corporation for collection checks, notes and other
obligations, and shall deposit the same to the credit accounts to
any Director of the Corporation upon application at the office of
the Corporation during business hours; and, whenever required by
the Board of Directors or the President, shall render a statement
of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the
Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such
powers as may be assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the
Corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any
person or group of persons the power to fix the salaries or other
compensation of any subordinate Officers or agents, No Officer
shall be prevented from receiving any such salary or compensation
by reason of the fact that he is also a Director of the
Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer
or agent of the Corporation shall execute to the Corporation a
bond in such sums and with such surety or sureties as the Board
of Directors may direct, conditioned upon the faithful
performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all
property, moneys or securities of the Corporation, which may come
into his hands.
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or
Officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the
Corporation and such authority may be general or confined to
specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the
Corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name,
and no property of the Corporation shall be mortgaged, pledged,
hypothecated or transferred as security for the payment of any
loan advance, indebtedness or liability of the Corporation unless
and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in
such banks, trust companies or other depositories as the Board of
Directors may select, or as may be selected by an Officer or
agent of the Corporation authorized to do so by the Board of
Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and
evidence of indebtedness of the Corporation shall be signed by
such Officer or Officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from
time to time may determine. Endorsements for deposits to the
credit of the Corporation in any of its duly authorized
depositories shall be made in such manner as the Board of
Directors may from time to time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be
in the form of an appropriate legal writing, which shall be
signed by the President or Vice President and by the Treasurer or
by the Secretary, and sealed with the seal of the Corporation.
The seal may be facsimile, engraved or printed. Where such bond
or debenture is authenticated with the manual signature of an
authorized Officer of the Corporation or other trustee designated
by the indenture of trust or other agreement under which such
security is issued, the signature of any of the Corporation's
Officers named thereon may be facsimile. In case any Officer who
signed, or whose facsimile signature has been used on any such
bond or debenture, shall cease to be an Officer of the
Corporation for any reason before the same has been delivered by
the Corporation, such bond or debenture may nevertheless be
adopted by the Corporation and issued and delivered as though the
person who signed it or whose facsimile signature has been used
thereon had not ceased to be such Officer.
Article VI.
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by
certificates prepared by the Board of Directors and signed by the
President. The signatures of such Officers upon a certificate may
be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation
itself -or one of its employees. All certificates for shares
shall be consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be
canceled except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may
prescribe.
2, Transfer of Shares
Transfer of shares of the Corporation shall be made only on
the stock transfer books of the Corporation by the holder of
record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the Secretary of the Corporation, and on surrender for
cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all
purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint
one or more transfer agents and registrars for the transfer and
registration of certificates of stock of any class, and may
require that stock certificates shall be countersigned and
registered by one or more of such transfer agents and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any
certificate theretofore issued by it alleged to have been lost or
destroyed. The Board of Directors may require the owner of such a
certificate or his legal representative to give the Corporation a
bond in such sum and with such sureties as the Board of Directors
may direct to indemnify the Corporation as transfer agents and
registrars, if any, against claims that may be made on account of
the issuance of such new certificates. A new certificate may be
issued without requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for
such consideration as shall be fixed from time to time by the
Board of Directors. In the absence of fraud, the determination of
the Board of Directors as to the value of any property or
services received in full or partial payment of shares shall be
conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder thereof, in
fact, and shall not be bound to recognize any equitable or other
claim to or on behalf of this Corporation to any and all of the
rights and powers incident to the ownership of such stock at any
such meeting, and shall have power and authority to execute and
deliver proxies and consents on behalf of this Corporation in
connection with the exercise by this Corporation of the rights
and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any
other person or persons.
Article VII.
Indemnification
No Officer or Director shall be personally liable for any
obligations of the Corporation or for any duties or obligations
arising out of any acts or conduct of said Officer or Director
performed for or on behalf of the Corporation. The Corporation
shall and does hereby indemnify and hold harmless each person and
his heirs and administrators who shall serve at any time
hereafter as a Director or Officer of the Corporation from and
against any and all claims, judgments and liabilities to which
such persons shall become subject by reason of his having
heretofore or hereafter been a Director or Officer of the
Corporation, or by reason of any action alleged to have
heretofore or hereafter taken or omitted to have been taken by
him as such Director or Officer, and shall reimburse each such
person for all legal and other expenses reasonably incurred by
him in connection with any such claim or liability, including
power to defend such persons from all suits or claims as provided
for under the provisions of the Nevada Revised Statutes;
provided, however, that no such persons shall be indemnified
against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own negligence or
willful misconduct. The rights accruing to any person under the
foregoing provisions of this section shall not exclude any other
right to which he may lawfully be entitled, nor shall anything
herein contained restrict the right of the Corporation to
indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its
Directors, Officers, employees and agents shall be fully
protected in taking any action or making any payment, or in
refusing so to do in reliance upon the advice of counsel.
Article VIII.
Notice
Whenever any notice is required to be given to any
shareholder or Director of the Corporation under the provisions
of the Articles of Incorporation, or under the provisions of the
Nevada Statutes, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of
such notice. Attendance at any meeting shall constitute a waiver
of notice of such meetings, except where attendance is for the
express purpose of objecting to the holding of that meeting.
Article IX
Amendments
These Bylaws may be altered, amended, repealed, or new
Bylaws adopted by a majority of the entire Board of Directors at
any regular or special meeting. Any Bylaw adopted by the Board
may be repealed or changed by the action of the shareholders.
Article X.
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be
varied by resolution of the Board of Directors.
Article XI.
Dividends
The Board of Directors may at any regular or special
meeting, as they deem advisable, declare dividends payable out of
the surplus of the Corporation.
Article XII.
Corporate Seal
The seal of the Corporation shall be in the form of a circle
and shall bear the name of the Corporation and the year of
incorporation per sample affixed hereto.
3 July 1989
/s/ Maria Contreras
Maria Contreras, Secretary
<PAGE>
Exhibit 10.1 - Land Lease for Company Facility at Trepassey
THIS INDENTURE made this 16th day of July, One thousand nine
hundred and ninety-two
BETWEEN: THE TOWN COUNCIL FOR THE TOWN OF TREPASSEY, a
body corporate under The Municipalities Act;
(hereinafter called the "Lessor")
of the one part
AND: ENTERPRISE ATLANTIC LIMITED, a body corporate
under the laws of the Province of
Newfoundland;
(hereinafter called the Lessee)
of the other part
WHEREAS the Lessor is the absolute owner of ALL THAT piece or
parcel of land hereinafter described in Schedule "A" hereto ("the
"Land") and more particularly described In the diagram marked
Schedule "B";
AND WHEREAS the Lessor Is desirous of leasing to the Lessee the
Land for the term of ninety-nine (99) years on the terms and
conditions hereinafter set forth;
IT IS AGREED BETWEEN THE LESSOR AND LESSEE as follows:
1. That the Land will be leased to the Lessee for a term of
ninety-nine (99) years to commence on the 16th day of July,
1992, A.D. 19__ and expiring on the 16 day of July, 2091,
A.D. 20__.
2. That the Lessee will pay to the Lessor the sum of One dollar
($1.00) per year rent, said rent to be paid on the 16 day of
July, 1992, A.D. 19__ and to be paid annually until the term
aforesaid has concluded.
3. The Lessee will be responsible for payment of any and all
taxes and assessments on the Land relating to the Lessee's
use and occupation of same. The Lessor will be responsible
for payment of all taxes and assessments on the Land
relating to the Lessor's use and occupation of same, whether
federal, provincial or municipal, including, without
limitation, property, water and school taxes.
4. The Lessee shall not assign or sublet the Land without first
having received the Lessor's consent in writing, which
consent shall not be unreasonably withheld. Any such
subletting or assignment without such consent shall
constitute a breach of this Lease.
5. The Lessee shall use the Land for the purposes of a water
bottling operation. Any alternative commercial usage or any
usage of the land inconsistent with such use (i.e. heavy
Industrial) must receive approval in writing from the
Lessor, Any such use of the Land without consent of the
Lessor shall constitute a breach of a condition of this
Lease. Such consent shall not be unreasonably withheld.
6. The Lessee shall be responsible for complying with federal,
provincial and municipal regulations In force from time to
time respecting the Lessee's use of the Land. Any
noncompliance shall constitute a breach of condition of this
Lease.
7. The Lessee shall be responsible for all appropriate
Insurance coverage including, without limitation, liability
Insurance in accordance with the Lessee's intended use of
the Land and shall make all such insurance policies
available for Lessor's inspection upon request.
8. The Lessor covenants that the Lessee shall have quiet
enjoyment and sole and exclusive possession of the Land.
9. The Lessor may cancel this Lease and re-enter and take
possession of the Land In the event that:
(a) the Lessee has failed to observe, perform or
fulfill any of the terms or conditions of or pertaining
to this Lease relating to the Lessee's use and
occupation of the Land; provided that Lessee shall have
been given written notice of such default and 90 days
to rectify same;
(b) this Lease was issued as a result of or contingent
upon any material ails representations by the Lessee;
or
(c) the Lessee becomes bankrupt or insolvent, has
declared bankruptcy or has committed an act of
bankruptcy.
10. Upon cancellation and reentry by the Lessor in accordance
with clause 9 hereof, the Lessee shall be given 180 days
within which to remove Its buildings or equipment and take
reasonable steps to ensure the land is available for normal
alternative usage and, respecting the Lessee's use and
occupation of the Land, in a reasonably clean and safe
condition in accordance with all applicable regulations,
failing which removal and restoration of land for normal
alternative usage within the time aforesaid any such
building or equipment shall become the property of the
Lessor absolutely. The Lessor covenants to give the Lessee
reasonable access to the Land during normal working hours to
remove the building and restore the Land to the condition as
required herein.
11. Any notices required pursuant to this Lease shall be In
writing to the following address:
(a) Address of the Lessee:
P. 0. Box 13234
St. Johns, NF
A1B 4A5
(b) Address of the Lessor:
Town of Trepassey
Trepassey, NF
A0A 4B0
IN WITNESS WHEREOF, the Lessor has hereunto Its hand and seal
subscribed and set the day and year first before written.
SIGNED, SEALED AND DELIVERED
by the said Town of Trepassey
in the presence of:
TOWN OF TREPASSEY
Per: /s/
And Per: /s/
SIGNED, SEALED AND DELIVERED
by the said Enterprise Atlantic
Limited in the presence of:
ENTERPRISE ATLANTIC LIMITED
Per: /s/
<PAGE>
SCHEDULE "A"
RENOUF Ltd.
ENGINEERS - SURVEYORS - HYDROGRAPHERS
15 July 1992
Job No. 92-129
DESCRIPTION
Land of Community of Trepassey
Daniel's Point Road Trepassey, Newfoundland
ALL that piece or parcel or land situate and being on the western
side of Daniel's Point Road, at Trepassey, Newfoundland, In the
electoral district of Ferryland, and being bounded and abutted as
follows, that Is to say:
BEGINNING at a point on the western side or Daniel's Point Road,
at Trepassey, said point being the southwestern corner of the
land, now or formerly, of Barry James And having coordinates of
North 3 179 222.16 metres and East 275 927.59 metres In the
Modified "roe Degree Transverse Mercator Projection for the
province or Newfoundland, zone One;
THENCE running along Daniel's Point Road, South 080 38' East,
16.13 metres
THENCE turning and running along the land, now or formerly, of
the Daniel J. Pennell, South 700 34' West, 84.37 metres; thence
North 470 02' West, 35.84 metres; thence North 420 47 West, 63.65
metres;
THENCE turning and running along land, now or formerly, Crown
land, North 25o 00' Fast, 35.97 metres;
THENCE turning and running along the land, now or formerly, of
Barry James, South 430 06' East, 63.67 metres; thence South 810
26 East, 88,88 metres, more or less, to the point of commencement
and containing an area of 0.587 hectares, more or less.
All bearings are Grid bearings referred to Grid North. All
distances are horizontal ground distances.
/s/ J. Keith Renouf, N.L.S.
<PAGE>
Exhibit 10.2 - Business Development Agreement between
Company and ATLANTIC CANADA OPPORTUNITY
AGENCY
Atlantic Canada
Opportunities
Agency
Newfoundland Office
P.O. Box 1060
St. John's, NFLD
Project No: 620-4034006-1 A1C 5M5
April 9, 1998
Iceberg Industries Corporation
447 Kenmount Rd.
P.O. Box 13518
St. John's, NF
A1B 4B7
Attention: Mr Gerry Donovan
Manager
Dear Sir:
Re: ACOA Business Development Program
In response to your application dated April 14, 1997, the
Atlantic Canada Opportunities Agency ("the Agency"), hereby
offers to make repayable Contribution to Iceberg Industries
Corporation ("the Applicant") upon the following Terms and
Conditions:
1.00 Contribution:
1.01 Subject to all other provisions of this Agreement, the
Agency will make a repayable Contribution ("the
Contribution") to the Applicant to assist in the
execution by the Applicant of the Project as described
and defined in Annex 1 (Statement of Work) calculated
as the lesser of (a) and (b) as follows:
(a) 25.97% of eligible capital costs estimated to be
$1,925,000; and
(b) $500,000.
2.00 Disbursements:
2.01 Progress Payments
At the request of the applicant, the Agency may make
progress payments to the Applicant based on claims for
eligible costs which have been incurred. Each claim
shall be completed in accordance with instructions to
be provided by the Agency to the Applicant.
Joint Payments
At the discretion of the Agency or at the request of
the Applicant, the Agency may make a payment/s jointly
to the Applicant and the supplier for eligible costs
which have been incurred.
Final Payments
Notwithstanding the foregoing, 10% of the Contribution
will normally be reserved for a final payment to be
based on a claim submitted by the Applicant at the time
of Project Completion and normally after all eligible
costs have been incurred and paid.
2.02 It is a requirement of this agreement that the
Applicant shall keep the original invoices and proof of
payment for all claimed costs readily available for
examination by the Agency during any payment
verification or audit and until 36 months following the
end of the Control Period.
3.00 Repayment Terms:
3.01 The Applicant shall repay the Contribution to the
Agency in fifty-nine (59) consecutive monthly
instalments of $8,400, however, the last instalment
will be adjusted to include all sums owing.
3.02 The first repayment instalment is due and payable on
December 1, 2000.
Subsequent repayment installments are due and payable
at intervals of one (1) month thereafter until the
Contribution shall be fully repaid.
3.03 Prior to acceptance of the Letter of Offer by the
Agency, the Applicant shall arrange pre-authorized
payments for schedule repayments for the period until
full repayment of the Contribution is completed.
3.04 The Applicant shall pay, where the account is overdue
and in addition to any amount payable, interest on that
amount. The interest, calculated and compounded
monthly, shall accrue from the due date until payment
is received. The rate of interest shall be equal to
three percent (3%) higher than the average Bank of
Canada discount rate for the previous month.
3.05 A $15 administration fee will be charged on every
payment for which insufficient funds were available in
the account identified for payment.
3.06 The Applicant may, at any time, make prepayments on
account of repayment installments and each such
prepayment will be applied first to interest owing and
secondly to repayment instalments in reverse order of
maturity.
4.00 Special Conditions:
4.01 The Agency shall not contribute to any cost incurred by
the Applicant prior to April 14, 1997.
4.02 As a condition of the Agency's assistance,
(a) The Applicant shall ensure the Project commences
on or before May 1, 1998.
(b) The Applicant shall ensure the Project is
completed as described in the Statement of Work on
or before November 30, 1998.
4.03 The Applicant shall inform the Agency promptly in
writing of any assistance from other federal,
provincial or municipal sources which had been received
or is to be received for the Project and the Agency
shall have the right to adjust the amount of the
assistance to take into account the amount of any such
further assistance received.
4.04 The Applicant shall comply with environmental
protection measures in relation to the Project that
satisfy the requirements of all regulatory bodies of
appropriate jurisdiction.
4.05 The applicant shall attain equity, satisfactory to the
Agency, in the total amount of $1,500,000 on or before
the date of the first disbursement by the Agency to the
Applicant.
4.06 Unless otherwise authorized by the Agency in writing,
this level of equity shall be maintained until the end
of the control period.
4.07 Prior to the end of the control period, the Applicant
shall not pay any dividends whatsoever, make payments
to a parent company or any of its affiliates, nor
payout shareholders loans without the approval of the
Agency.
4.08 The Applicant, on or before the date of first
disbursement, shall obtain the following financing:
Transitional Jobs Fund $600,000
4.09 The Applicant, on or before the first disbursement
shall finalize the acquisition of the shares/assets of
Enterprise Atlantic Limited.
5.00 Reporting:
5.01 From the date of Project Commencement until the Project
Completion date, the Applicant shall submit annual
status reports on the progress and results of the
Project in a form satisfactory to the Agency.
5.02 The Applicant shall submit to the Agency, within 120
days of the end of each fiscal year which commences
before the end of the Control Period, as defined in the
attached general conditions, a copy of its auditor-
prepared financial statements.
6.0 Notice:
6.01 Any notice or correspondence to the Agency, including
the attached duplicate copy of this Agreement signed by
the Applicant, shall be addressed to:
Atlantic Canada Opportunities Agency
P.O. Box 1060, Station "C"
11th Floor, John Cabot Building
St. John's, Newfoundland
A1C 5M5
Attention: Mr. Kevin Stacey
Account Manager
or to such address as is designated by the Agency in
writing.
7.00 Entire Contract:
7.01 This offer, if accepted, including all Annexes will
constitute the entire agreement between the parties
with respect to its subject matter. No amendments
shall be made to the resulting contracts unless
confirmed in writing.
This offer is open for acceptance for 60 days from the
date that appears on its face. The date of acceptance
shall be the date the duplicate copy of this offer,
unconditionally accepted and duly executed by the
Applicant is received by the Agency.
If further information is required, please contact you Account
Manager, Mr. Kevin Stacey, at (709) 772-4229.
Yours truly,
/s/ Karen Skinner
Karen Skinner
A/Director
Business Programs
Attachments:
* Annex 1 - The Project-Statement of work
* Annex 2 - Project Fact Sheet for News Release
* Annex 3 - General Conditions
* Annex 4 - Pre-Authorized Payment
* Costing Memorandum
The foregoing offer is hereby accepted this 15 day of April ,
1998
Iceberg Industries Corporation
Project No: 620-4034006-1
Per: /s/
(Signature)
/s/
(Title)
(Corporate Seal)
/s/
(Signature)
/s/
(Title)
<PAGE>
Exhibit 10.3 - Grant for $600,000 from Human Resources
Development of Canada
These Articles of Agreement are made as of the 23 day of June,
1998
BETWEEN: Her Majesty the Queen in right of Canada, as
represented by the Minister of Human Resources
Development (hereinafter referred to as "CANADA")
PO BOX 8548, 277 WATER ST ST JOHNS
AND: ICEBERG INDUSTRIES CORPORATION
(herein referred to as the "RECIPIENT")
PO BOX 8251 ST JOHNS NFLD A1B3N4
WHEREAS the RECIPIENT proposes to carry out the project described
in Schedule A hereto and has applied to the COMMISSION for
financial assistance towards the costs of the project;
AND WHEREAS CANADA wishes to make a contribution towards the
costs of the project under its Transitional Jobs Fund program;
CANADA and the RECIPIENT agree as follows:
1.0 AGREEMENT
1.1 The following documents and any amendments thereto form the
agreement between CANADA and the RECIPIENT:
a) these Articles of Agreement;
b) the document attached hereto as Schedule A entitled
"Project":
2.0 INTERPRETATION
2.1 Unless the context requires otherwise, the expressions
listed below have the following meanings for the purposes of
this agreement:
a) "funding period" means the period described in Schedule
A, Page 1, Box 16 entitled "Funding Period";
b) "Project" means the activities described in Schedule A;
3.0 CONTRIBUTION
3.1 Subject to the terms and conditions of this agreement,
CANADA agrees to make a contribution to the RECIPIENT of an
amount equal to the lesser of:
a) N/A % of the eligible costs, or
b) the contribution amount set out in Schedule A, Page 2,
Box 28.
3.2 Notwithstanding section 3.1, CANADA, may, in its absolute
discretion, reduce the amount of its commitment under
paragraph 3.1 (b) if
a) the funding period extends into more than one fiscal
year of Canada (April 1 of one year to March 31 of the
following year), and
b) in the plan approved by the Treasury Board for any
fiscal year during the funding period following the
first fiscal year, there is a reduction in the estimate
of the amount of financial assistance to be paid out
for the fiscal year for the purpose of Implementing
Transitional Jobs Fund.
3.3 Where, pursuant to section 3.2, CANADA intends to reduce the
amount of its commitment under paragraph 3.1, it shall give
the RECIPIENT 30 days notice of its intention to do so.
3.4 Where, as a result of a reduction in funding under section
3.2 the RECIPIENT is unable or unwilling to complete the
Project, the RECIPIENT may, upon notice to CANADA, terminate
the agreement.
4.0 ELIGIBLE COSTS
4.1 For the purposes of the agreement, "eligible costs" means
the following costs:
a) employee wages and related employment taxes and
benefits,
b) overhead costs, and
c) capital costs.
(attach the approved budget as an annex to Schedule A.)
4.2 For greater certainty, "eligible costs" do not include the
following costs:
a) training costs
b) depreciation on fixed assets
c) the cost of purchase of motor vehicles
d) club memberships
e) bonuses
f) fines or penalties
g) directors' fees or honoraria
h) entertainment costs
4.3 Costs are eligible only if they are, in the opinion of
CANADA, directly related to the Project and reasonable.
5.0 TERMS OF PAYMENT
(Delete "monthly" or "quarterly", as appropriate)
5.1 Subject to sections 5.2 to 5.10 , to CANADA may make
monthly/quarterly advances of it contribution covering the
RECIPIENT'S estimated financial requirements for each
month/quarter of the funding period.
5.2 The estimate of the RECIPIENT'S financial requirements will
be based upon a forecast of its cash flow requirements,
satisfactory in form and detail, submitted to CANADA by the
RECIPIENT.
5.3 If there is a variance between the cash flow requirements
and the actual expenditures for any given month/quarter
exceeding 15%, the RECIPIENT shall furnish CANADA with a
revised forecast of cash flow requirements.
5.4 Before making the advance for the third month/quarter and
each month/quarter thereafter, the RECIPIENT shall furnish
CANADA with a satisfactory accounting of the contribution
for the month/quarter ending one month/quarter prior to the
month/quarter for which the advance in question is to be
paid.
5.5 CANADA may withhold final payment of up to 10% of its total
contribution until the Project has been completed. Final
payment will be made following:
a) receipt and verification of a claim for the balance
due, and
b) receipt of the information of job creation referred to
in section 7.3 which the RECIPIENT is required to turn
over to CANADA, and
c) if required by CANADA, receipt of any auditor's report
or other report that may be required to be submitted by
the RECIPIENT under the terms of this agreement.
5.6 Verification by CANADA of the claim for the balance due
under paragraph 5.5 a)may include, if deemed advisable by
CANADA, the conduct of an audit by CANADA of the RECIPIENT's
books and records to verify the amount of the costs for
which the RECIPIENT has claimed payment under the agreement.
5.7 Where quarterly advances are being made to the RECIPIENT
under section 5.1, CANADA may, at any time and in its
absolute discretion, by notice, alter the frequency of such
advance payments and change them to a monthly basis.
5.8 Any interest earned on advances of CANADA's contribution
shall be accounted for by the RECIPIENT. Such interest
shall be deemed to be part payment of the contribution and
shall be taken into account in the calculation of the final
payment by CANADA, or repayment by the RECIPIENT, as may be
appropriate in the circumstances.
5.9 In the event payments made to the RECIPIENT (including any
interest earned on advances that is deemed to be part
payment of the contribution under section 5.8) exceed the
amounts to which the RECIPIENT is properly entitled under
this agreement, the amount of such excess is a debt owing to
CANADA and shall be promptly repaid to CANADA upon receipt
of notice to do so.
5.10 CANADA may withhold payment of any claim or advance pending
the completion of an audit of the RECIPIENT's books and
records conducted either by CANADA or by an independent
auditor pursuant to paragraph 6.1 (i).
6.0 OBLIGATIONS OF THE RECIPIENT
6.1 The RECIPIENT shall:
a) carry out and complete the Project in a diligent and
professional manner, using qualified personnel;
b) demonstrate to the satisfaction of CANADA that the
carrying out of the Project will cause no harm, or only
minimal harm to the environment;
c) comply with all environmental protection laws and
implement any mitigative measures that have been
identified as being required to ensure that the project
will not cause significant harm to the environment;
d) upon request of CANADA, produce any certificates,
licences and other authorizations required for the
carrying out of the Project in respect of the rules
relating to the environment;
e) keep proper books of accounts and records, in
accordance with generally accepted business and
accounting practices, of the financial management of
the Project, including payroll records of staff of the
RECIPIENT employed for carrying out the Project and
records of all other Project expenditures and revenues
including funding for Project costs received from other
sources;
f) make the books, accounts and records referred to in
paragraph e) available at all reasonable times for
inspection and audit by the representatives of CANADA
who shall be permitted to take copies and extracts from
such books and records;
g) furnish CANADA with such additional information as it
may require with reference to such books and records;
h) preserve the books and records referred to in paragraph
e) and keep them available for audit and inspection by
representatives of CANADA for a period of two (2) years
following the end of the funding period;
i) whenever CANADA deems it necessary and so requests the
RECIPIENT in writing, retain the services of a duly
qualified accountant approved by CANADA to carry out an
audit of the books and records relating to the Project.
The audit report shall certify:
i) the total actual expenditures on the eligible
costs to date,
ii) the total payments of CANADA's contribution to
date, including the amount of interest that has
accrued on any advances of the contribution,
iii) that all expenditures, except as noted in the
report, were in accordance with this agreement;
and
j) within 30 days after completion of the audit report
referred to in paragraph i), provide a copy of it to
CANADA
7.0 REPORTS AND INFORMATION
7.1 The RECIPIENT shall, upon request, provide CANADA with
progress reports, satisfactory in scope and detail,
concerning the progress of the Project.
7.2 The RECIPIENT shall, upon request, arrange for
representatives of CANADA to have access to the site or
sites where the Project activities are being carried out to
monitor their progress.
7.3 The RECIPIENT shall provide CANADA with the following
information 30 days following the completion of the
agreement and one year after the termination of the project:
a) number of direct permanent, full-time jobs,
b) number of direct permanent, part-time jobs,
c) number of direct seasonal jobs,
d) number of short-term jobs.
8.0 PUBLICITY
8.1 The RECIPIENT shall ensure that in any and all communication
activities, publications, advertising and press releases
referring to the Project, include an appropriate
acknowledgment, in terms satisfactory to CANADA, of CANADA's
role in creating sustainable jobs and its contribution. The
RECIPIENT shall notify CANADA in advance of any and all such
communication activities, publications, advertising and
press releases.
9.0 DISPOSITION OF ASSETS
9.1 The RECIPIENT shall preserve any assets acquired with the
contribution and use them for the purposes of the Project
during the funding period unless:
a) CANADA authorizes their disposition;
b) replacement of assets subject to wear is necessary;
c) assets which have become outdated require replacement.
9.2 The RECIPIENT agrees that at the end of the funding period,
or upon termination of this agreement, if earlier, and if
directed to do so by CANADA, any assets referred to in
section 9.1 that have been preserved by it shall be
a) sold at fair market value and that the funds realized
from such sale be applied to the eligible costs of the
Project to offset its contribution to the eligible
costs of the Project;
b) turned over to another person or organization
designated or approved by CANADA; or
c) disposed of in such other manner as may be determined
by CANADA.
10.0 DEFAULT
10.1 The following constitute Events of Default:
a) the RECIPIENT becomes bankrupt or insolvent, goes into
receivership, or takes the benefit of any statute from
time to time being in force relating to bankrupt or
insolvent debtors;
b) an order is made or resolution passed for the winding
up of the RECIPIENT, or the RECIPIENT is dissolved;
c) the RECIPIENT is in breach of the performance of, or
compliance with, any term, condition or obligation on
its part to be observed or performed pursuant to this
agreement;
d) the RECIPIENT has submitted false or misleading
information to CANADA;
e) in the opinion of CANADA, the RECIPIENT has failed to
proceed diligently with the Project;
f) in the opinion of CANADA, there is a material adverse
change in risk in the RECIPIENT's ability to carry out
the Project.
10.2 If
a) an Event of Default specified in paragraph 10.1 (a) or
(b) has occurred; or
b) an Event of Default specified in paragraph 10.1 (c),
(d), (e) or (f) has occurred and has not been remedied
within 15 days of receipt by the RECIPIENT of written
notice of default, or a plan satisfactory to CANADA to
remedy such Event of Default has not been put into
place within such time period;
CANADA may, in addition to any remedies otherwise available,
immediately terminate by written notice any obligation to
make any further contribution to the RECIPIENT. All
eligible costs up to the date of termination will be paid by
CANADA, however.
10.3 In the event CANADA gives the RECIPIENT written notice of
default pursuant to paragraph 10.2 (b), CANADA may suspend
any further payment under this agreement until the end of
the period given to the RECIPIENT to remedy the Event of
Default.
10.4 The fact that CANADA refrains from exercising a remedy it is
entitled to exercise under this agreement shall not be
considered to be a waiver of such right and, furthermore,
partial or limited exercise of a right conferred upon CANADA
shall not prevent CANADA in any way from later exercising
any other right or remedy under this agreement or other
applicable law.
11.0 NEPOTISM
11.1 Notwithstanding section 2, no contribution shall be paid in
respect of the wages paid to any employee who is a member of
the immediate family of the RECIPIENT, or, if the RECIPIENT
is a corporation or unincorporated association, who is a
member of the family of an officer or a director of the
corporation or unincorporated association, unless CANADA is
satisfied that the hiring of the employee was not the result
of favouritism by reason of the employee's membership in the
immediate family of the RECIPIENT or officer or director of
the RECIPIENT, as the case may be.
11.2 For the purposes of subsection (1), "immediate family" means
father, mother, step-father, step-mother, foster-parent,
brother, sister spouse (including common law spouse), child
(including child of common law spouse), step-child, ward,
father-in-law, mother-in-law, or relative permanently
residing with the RECIPIENT, officer or director, as the
case may be.
12.0 EARLY TERMINATION
12.1 CANADA may terminate this agreement at any time without
cause upon not less than 30 days written notice of
intention to terminate.
12.2 In the even of a termination notice being given by the
RECIPIENT under section 3.4 or by CANADA under section 12.1
a) the RECIPIENT shall make no further commitments in
relation to the Project and shall cancel or otherwise
reduce, to the extent possible, the amount of any
outstanding commitments in relation hereto;
b) all eligible costs incurred by the RECIPIENT up to the
date of termination will be paid by CANADA, including
its costs of, and incidental to, the cancellation of
obligations incurred by it as a consequence of the
termination of the agreement; provided always that
payment and reimbursement under this paragraph shall
only be made to the extent that it is established to
the satisfaction of CANADA that the costs mentioned
herein were actually incurred by the RECIPIENT and the
same are reasonable and properly attributable to the
termination of the agreement; and
c) the amount of any contribution on funds which remain
unspent shall be promptly repaid to CANADA, and such
amount shall be a debt due to CANADA.
12.3 The RECIPIENT shall negotiate all contracts related to the
Project, including subcontracts and employment contracts on
terms that will enable the RECIPIENT to cancel same upon
conditions and terms which will minimize to the extent
possible their cancellation costs in the event of a
termination of this agreement, and generally the RECIPIENT
shall cooperate with CANADA and do everything reasonably
within its power at all times to minimize and reduce the
amount of CANADA's obligations in the event of early
termination hereunder.
13.0 GENERAL
13.1 This agreement may be amended by the mutual consent of the
parties. To be valid, any amendment to this agreement shall
be in writing and signed by the parties.
13.2 The RECIPIENT shall not assign this agreement or any part
thereof or any payments to be made thereunder without the
written permission of CANADA and any assignments made
without that permission is void and of no effect.
13.3 No member of the House of Commons shall be admitted to any
share or part of this agreement or to any benefit to arise
therefrom.
13.4 The management, supervision and control of the Project are
the sole and absolute responsibility of the RECIPIENT. The
RECIPIENT is not in any way authorized to make a promise,
agreement or contract on behalf of CANADA. The RECIPIENT
shall be solely responsible for any and all payments and
deductions required by law to be made including those
required for Canada Pension Plan, employment insurance,
workers' compensation and income tax. The parties hereto
declare that nothing in this agreement shall be construed as
creating a partnership or agency relationship.
13.5 The RECIPIENT shall disclose to CANADA without delay any
fact or event that the RECIPIENT is aware of from time to
time which may compromise the RECIPIENT's chances of success
in carrying out the Project either immediately or in the
long term.
13.6 The RECIPIENT shall obtain, prior to the commencement of any
Project activity, all permits, licenses, consents and other
authorizations that are deemed necessary to permit the
carrying out of the Project, and the Project shall be
executed in compliance with all laws, by-laws and
regulations.
13.7 The RECIPIENT shall both during and following the term of
this agreement indemnify and save CANADA harmless from and
against all claims, losses, damages, costs, expenses and
other actions made, sustained, brought, threatened to be
brought or prosecute, in any manner based upon, occasioned
by or attributable to any injury or death of a person, or
loss or damage to property caused or alleged or be caused by
any willful or negligent act, omission or delay on the part
of the RECIPIENT or its employees or agents, participating
employers or participants in connection with anything
purported to be or required to be provided by or done by the
RECIPIENT pursuant to this agreement or done otherwise in
connection with the Project. This provision shall survive
the termination of this agreement.
13.8 It is a term of this agreement that no individual, for whom
the post-employment provisions of the "Conflict of Interest
and Post-Employment Code for Public Office Holders" or the
"Conflict of Interest and Post-Employment Code for the
Public Service" apply, shall derive any direct benefit from
this agreement unless that individual is in compliance with
the applicable post-employment provisions.
13.9 This agreement, including Schedule A, attached hereto,
constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all
previous agreements between the parties.
13.10 This agreement is binding upon the RECIPIENT and its
successors and assigns.
Signed this ____ day of _________, ________ .
For the COMMISSION:
/s/
(Signature) (Position) (Date)
For the RECIPIENT:
/s/ Lewis Stoyles V.P. Finance July 23, 1998
(Signature) (Position) (Date)
<PAGE>
Exhibit 10.4 - US Food and Drug Administration Permit
November 6, 1998
Kelly Squires
Production/Quality Assurance Coordinator
Iceberg Industries Corporation
447 Kenmount Road, Box 13518
St. John's Newfoundland
Canada A1B 4B7
Re: Docket No. 98P-0880
Dear Ms. Squires:
This is in response to your application to the Food and Drug
Administration (FDA) for a temporary permit to market test, in
interstate commerce, a product to be designated as Borealis
Iceberg Water that will deviate from the U.S. standards of
identity for bottled water (21 CFR 165.110) in that the source of
the water is an iceberg and the name of the product is "Iceberg
Water." In all other respects, the test product will conform to
the standard for bottled water.
For the purposes of this permit , the name of the test product
will be "Borealis Iceberg Water." The information panel of the
labels will bear nutrition labeling in accordance with 21 CFR
101.9.
Relying on the representations made in your application, we are
hereby granting your request to make interstate shipments for
test marketing purposes of 75,00 cases of the 24 x 350 ml and
another 75,000 cases of the 12 x 1 L, giving 150,000 cases in
total. The total fluid weight of the test product will be
403,694 gallons or 1,530,000 liters. Finished labels must be
submitted to the Branch Chief, Food Standards Branch, HFS-158,
Division of Programs and Enforcement Policy, office of Food
Labeling, before the product is shipped in interstate commerce.
The test product will be manufactured at Enterprise Atlantic
Limited Water Bottling Plant, Daniel's Point, Trepassy,
Newfoundland, Canada, AOA 4BO. The product will be distributed
by Iceberg Industries in the United States. Each of the
ingredients used in the food must be declared on the labels as
required by the applicable sections of 21 CFR part 101.
<PAGE>
Exhibit 10.5 - Office Lease for facilities at 16 Forest Road
THIS LEASE made in triplicate this 1st day of December, A.D.,
1998.
BETWEEN: COMMERCE ATLANTIC LIMITED, a body corporate, duly
incorporated under the Laws of the Province of
Newfoundland; (hereinafter called the "Lessor")
of the one part
AND: Iceberg Industries Corporation, a body corporate,
authorized to carry on business in the Province of
Newfoundland; (hereinafter called the "Lessee")
of the other part
WHEREAS the Lessor is the owner of an office building at 16
Forest Road, in the City of St. Johns, Province of Newfoundland;
AND WHEREAS the Lessee desires to lease office space in the
building as hereinafter provided;
AND WHEREAS it is the intention of this lease that the rental
received by the Lessor shall be completely gross rental;
DEMISE
1. IN CONSIDERATION of the rents, covenants, and agreements
herein, the lessor leases to the Lessee for use as office space
that portion of the building outlined on the attached plan marked
Schedule "A" consisting of the entire 2nd Floor, for property 16
Forest Road, St. Johns, Newfoundland. ("the Demised Premises").
TERM
2. TO HOLD the demised premises for a term of Three (3) years
from the 1st day of December, A.D., 1998.
RENT
3. THE ANNUAL RENT the Lessee shall pay during the term to the
Lessor is:
Forty-Eight Thousand Dollars Canadian ($48,000.00) payable in
advance in equal monthly installments of Four Thousand Dollars
($4,000.00) each on the 1st day of each and every month
commencing on the 1st day of December, A.D., 1998 up to and
including the 31st day of November, A.D., 2001.
DEFAULT OF LESSEE
4. (i) The lessor shall have the right upon 24 hours written
notice (except in an emergency) to remedy or attempt to
remedy any default of the Lessee, and in so doing to make
any payments due or alleged to be due by the Lessee to third
parties and upon the same notice may enter upon the demised
premises to do any work or other things therein and in such
event all expenses of the Lessor in remedying or attempting
to remedy such default shall be payable by the Lessee to the
Lessor as additional rent forthwith upon demand.
(ii) The Lessor shall have the same rights and remedies in
the event of non-payment by the Lessee of any amounts
payable by the Lessee under any provision of this Lease as
in the case of non-payment of rent.
(iii) If the Lessee shall fail to pay any rent or amount
from time to time payable by it to the Lessor hereunder
within 10 days after receiving written notice from the
Lessor of late payment, the Lessor shall be entitled, if it
shall demand it, to interest thereon at the rate of three
(3) percentage points above the prime bank commercial
lending rate charged by the Lessor's chartered bank at the
time of such default
(iv) Upon any event of default the then-current month's
rent including additional rent and the next ensuring three
(3) months rent including additional rent shall immediately
become due and payable; PROVIDED HOWEVER no such event shall
occur where the default is in respect of a matter other than
the payment of monies unless and until the Lessee is given
ten (10) days written notice of the default and the default
shall continue.
(v) Upon any event of default it shall be lawful upon 24
hours written notice for the Lessor thereafter to enter into
and upon the demised premises or any part thereof in the
name of the whole and the same to have again, repossess and
enjoy as of its former estate anything in this Lease
contained to the contrary notwithstanding: PROVIDED HOWEVER
no such event shall occur where the default is in respect of
a matter other than the payment of monies unless and until
the Lessee is given ten (10) days written notice of the
default and the default shall continue.
(vi) If and whenever the Lessor becomes entitled to re-
enter upon the demised premises, the Lessor, in addition to
all other rights and remedies, shall have the right to
terminate this Lease forthwith by leaving upon the demised
premises notice in writing of such termination; and upon the
giving of the Lessor of such notice this Lease and the term
hereof shall terminate.
(vii) The Lessor, in the event of termination of this Lease
by the Lessor pursuant to the provisions hereof, will
proceed to relet the Demised Premises. The Lessor will relet
the Demised Premises for a reasonable rent and if a
sufficient sum shall not be thus realized, after paying all
expenses of such reletting and collecting the rent hereby
reserved, the Lessee agrees to satisfy and pay any
deficiency.
LESSEE'S COVENANTS
5. THE LESSEE'S COVENANTS with the Lessor are as follows:
(a) To pay to the Lessor at such place as the Lessor may
from time to time designate, the rent and all other sums
which under provision of this Lease may be chargeable
against the Lessee, promptly when due, with no deductions
which the Lessee may feet are due because of an alleged or
real grievance.
(b) To occupy the demised premises in a reasonable and
tenant-like manner and the Lessee shall repair damage to the
heating, mechanical and plumbing systems caused by the
negligence of the Lessee, its employees, servants, or
agents.
(c) To permit the Lessor to view the state of repair of the
demised premises by prior appointment.
(d) Not to assign or sub-lease the demised premises without
the written permission of the Lessor, such permission not to
be unreasonably withheld, Notwithstanding anything herein
contained, the Lessee shall be entitled to assign or sublet
the demised premises, without the prior permission of the
Lessor, to any company which is a subsidiary, associate or
affiliate of the Lessee or to any corporation which results
from the amalgamation or merger of the Tenant with another
corporation or corporations.
(e) To permit the Lessor upon 24 hours written notice
(except in emergencies) to make structural repairs and to
perform other work in the building deemed necessary by the
Lessor and to enter the demised premises for those purposes
without any adjustment of rent or indemnity, provided that
the Lessee is not hereby deprived of the use of the Demised
Premises.
(f) Not to make any alterations, repairs or additions to
the demised premises without prior consent in writing of the
Lessor, which shall not be unreasonably withheld.
(g) The Lessee will not permit, nor cause anything to be
done to the Demised Premises which would allow any lien, lis
pendens judgement or certificate of any court or any
mortgage, charge or encumbrance of any nature whatsoever to
be imposed or to remain upon the Demised Premises or the
lands containing the building. In the event of the
registration of any lien or other encumbrance by a
contractor or sub-contractor of the Lessee, the Lessee shall
at its own expense immediately cause the same to be
discharged. If the lien is not discharged within three (3)
days after notice is given by the Lessor, the Lessor may
discharge such lien and recover its costs as additional
rent.
(h) The Lessee shall pay directly all business taxes and
goods and services or value added taxes charged in
connection with the occupancy of the Demised Premises and
the operation of the activity carried on.
(i) The Lessee shall throughout the term of the Lease
provide at its own expense and keep in force the following
coverages:
(1) Public liability and property insurance including
personal injury liability with respect to the Demised
Premises and the Lessee's use of the common areas and
facilities, coverage to include the activities and
operations conducted by the Lessee and any other person
on the Demised Premises and by the Lessee or any other
person performing work on behalf or the Lessee in any
other part of the building. Such policies shall be
written on a comprehensive basis with inclusive limited
of not less than $1,000,000.00 for bodily injury to any
one or more persons or property damage and such higher
limits as the Lessor, acting reasonable, or the
Lessor's mortgagee requires from time to time and shall
not be invalidated as respects the interest of the
Lessor and such mortgages by reason of any breach or
violation of any warranties, representations,
declarations or conditions contained in the policies.
(2) Any and all insurance considered necessary by the
Lessor or the Lessor's mortgage acting reasonable as a
prudent owner or mortgagee as the case may be.
All policies shall contain an undertaking by the
insurers to notify the Lessor and the Lessor's
mortgagee in writing not less than thirty (30) days
prior to any material change, cancellation or
termination thereof.
(j) That the Lessee covenants the Lessor shall not in
any event whatsoever be liable or responsible in any way for
any personal injury. or death that may be suffered by the
Lessee, its employees, agents or invitees, unless due to the
negligence of the Lessor, its agents and employees.
(1) Not to carry on any business or permit anything to
be done or kept on the Demised Premises or in the
building or on the grounds of the Lessor which shall be
deemed by the Lessor to be a nuisance, grievance or
disturbance to the other Lessees in the building or
other buildings on the grounds of the Lessor or which
shall be noisy or improper or contrary to any law of
any governmental authority.
(2) That the Lessor shall not be responsible for any
damages which may be caused, should any heating
apparatus be temporarily stopped or cease working for
the purposes of affecting repairs or improvements of
it; or by reason of the failure of electric or other
power or otherwise, or for any interruption of the
operation of the drains or plumbing; or any
interruption of the rights and privileges hereby
granted, which may occur in consequence or by reason or
by any accident or casualty or any matter or thing
beyond the Lessor's control.
LESSOR'S COVENANTS
6. THE LESSOR COVENANTS with the Lessee as follows:
(a) The Lessee shall have quiet enjoyment of the Demised
Premises subject to the Lease.
(b) That the Lessor will ensure that adequate insurance is
maintained in force.
(c) That the Lessor will ensure that the building and the
grounds are property managed and maintained at all times and
will include the following expenses:
1 Electricity;
2. Office Cleaning, 3 nights/week,
3. Maintenance and Repairs to the areas common to all
tenants;
4. Maintenance and Repairs to the electrical and mechanical
heating and air conditioning systems and plumbing;
5. Security systems operation and maintenance;
6. Water;
7. Insurance;
8. Property Taxes;
9. Maintenance of the Building's Exterior Shell;
10. Exterior Window Cleaning;
11. Exterior Site Lighting;
12. Parking Lot and Landscape Maintenance;
13. Garbage and Snow Removal;
14. Property Management;
15. And any other Operating Expenses deemed necessary by the
Lessor for the proper operation and maintenance of the
building. and grounds associated therewith.
(d) That the Lessor will pay all water charges and all real
property taxes assessed against the building, land and other
improvements of which the Demised Premises for a part.
DAMAGES AND DESTRUCTION
7. It is expressly agreed that if during the term hereby
demised the building in which
the Demised Premises or any part thereof is situate shall be
destroyed or damaged by fire,
lightning, tempest, impact from aircraft, acts of God or the
Queen's enemies, riots,
insurrections, explosions, structural defects or weaknesses, or
other casualty not caused
by the Lessee, the following provisions shall have effect:
(a) If the Demised Premises are rendered partially unfit
for occupancy by the Lessee only the rent hereby reserved
(including additional rent) shall abate in part only in the
proportion that the part of the Demised Premises rendered
unfit for occupancy by the Lessee bears to the whole of the
Demised Premises and continuing until the Demised Premises
have been rebuilt, repaired and restored. If the Demised
Premises are rendered wholly unfit for occupancy by the
Lessee only the rent hereby reserved (including additional
rent) shall abate in whole until the Demised Premises have
been rebuilt, repaired and restored, if such is to be done.
The Lessor shall commence diligently to reconstruct, rebuild
or repair the demised premises. Upon the Lessee being
notified by the Lessor that the Lessor's work has been
substantially completed, the Lessee shall forthwith complete
all Lessee's work required to fully restore the Demised
Premises for business fully fixtured stocked and staffed.
The Lessee shall complete the Lessee's work and, if the
Demised Premises have been closed for business, reopen for
business within forty five (45) days after notice that the
Lessor's work has been substantially completed.
(b) Notwithstanding anything contained in this Lease and in
the event of substantial destruction of the Demised Premises
or of any part of any building of which the Demised Premises
form a part (whether or not the Demised Premises are
affected), the Lessor or Lessee may within thirty (30) days
after such destruction and on giving written notice to the
other party declare this Lease terminated forthwith, and in
such even , rent shall be apportioned and shall be payable
up to the time, of such destruction, or termination, if the
Demised Premises shall not have been damaged or destroyed,
and the Lessee shall be entitled to be repaid by the Lessor
any rent paid in advance and unearned or a proportionate
part thereof The phrase "substantial destruction" shall mean
damage or destruction:
(i) as requires substantial alteration or
reconstruction of the Demised Premises or of any
buildings of which the Demised Premises form a part;
and
(ii) to the Demised Premises as cannot be repaired or
restored within one hundred and twenty (120) days from
the time of such damage having regard to the weather
conditions prevailing at the time such damage occurs
and having further regard to the availability of
materials and labor or
(iii) to the building such that thirty percent (30%)
or more of the rentable area of the building is damaged
and cannot be repaired or restored within one hundred
and eighty (180) days from the time of such damage,
having regard to the weather conditions prevailing at
the time such damage occurs and having further regard
to the availability of materials and labor.
(c) Notwithstanding the foregoing provisions, in the event
of damage or destruction occurring by reason of any cause in
respect of which there are no proceeds of insurance, or
proceeds of insurance substantially sufficient to pay for
the costs of rebuilding or making fit the building or the
Demised Premises are not payable to or received by the
Lessor, or in the event that any mortgagee or other person
entitled thereto shall not consent to the payment to the
Lessor or the proceeds of any insurance policy for such
purpose, the Lessor may terminate this Lease on ninety (90)
day's written notice. The same shall also apply in the event
the lands containing the building are expropriated.
RENT DEFINITIONS
8. All monies payable by the Lessee to the Lessor under this
Lease (other than the annual rental hereinbefore specified in
Paragraph 3 hereof) whether or not the same are expressed as
being additional rent, shall be additional rent, including
without limiting the generality of the foregoing, all sums
payable as rent at the times and in the manner herein provided
but if no time is herein provided for the payment of any item of
additional rent, the same shall be paid with the next ensuing
installment of rental after the additional rental has been
determined.
RULES AND REGULATIONS
9. The Lessor shall have the right at any time, to make such
reasonable rules and regulations as may, in the sole discretion
of the Lessor be desirable for the safety, care, cleanliness,
operation and maintenance of the building and the Demised
Premises, the grounds, roadways and parking lots and for the
preservation of good order and good cheer therein. All such rules
and regulations shall be faithfully observed and performed by
the Lessee and its servants and agents. The Lessor shall have the
right to vary such reasonable rules and regulations as may, in
the sole discretion of the Lessor, be desirable for the
aforementioned purposes after notice to the Lessee.
SIGNS
10. The Lessee may install a sign or signs on the Demised
Premises, only after all plans and specifications of the proposed
sign or signs are submitted to the Lessor who must give its
written approval before any such sign may be installed on the
Demised Premises, which approval shall not be unreasonable
withheld. The Lessee's sign or signs shall comply with the City
of St. John's By-Laws and shall be approved by the City of St.
John's.
The Lessor shall have the right for six (6) months prior to
the termination of this Lease, to place upon the Demised Premises
a notice stating the Demised Premises are for rent and the Lessee
will not remove such notice.
The Lessor shall have the right to exhibit the Demised
Premises from time to time to any prospective mortgagee,
purchaser or Lessee at all reasonable times upon reasonable
notice.
NOTICES
11. All notices to be given by either party shall be in writing
and given by personal delivery or sent by pre-paid registered
mail or by telecopier delivered or addressed to the parties as
follows:
TO THE LESSOR: Commerce Atlantic Limited
P.O. Box 5322
16 Forest Road
St. Johns, Newfoundland
A1C 5W1
Fax: (709) 576-0849
TO THE LESSEE: Iceberg Industries Corporation
16 Forest Road
St. Johns, NF
Any notice or document as given shall be deemed to have been
received when delivered by hand, or, if mailed, then forty eight
(48) hours following the date of mailing. Any party may from time
to time by notice given as provided above change its address for
the purpose of this paragraph.
ATTORNMENT AND SUBORDINATION
12. This Lease is subject and subordinate to all mortgages or
deeds of trust and all renewals and modifications,
consolidations, replacements, and expansions thereof which
may now or at any time hereafter affect the Demised Premises in
whole or in part or the building in whole or in part and whether
or not such mortgages and deeds of trust shall affect only the
Demised Premises or the building in which the Demised Premises
shall form a part or shall be blanket mortgages or deeds of trust
affecting other premises as well provided any mortgagee, etc.,
agrees to accept this Lease and tenancy and not to disturb
the Lessee's tenancy while the Lessee is not in default under
this Lease. The Lessee shall at any time on notice from the
lessor attorn to and become a Lessee of a mortgagee or
trustee under any such mortgage or deed of trust upon the same
terms and conditions as set forth in this Lease and shall execute
promptly on request by the Lessor any estoppel certificate,
instruments of postponement or attornment of other instruments
from time to time requested to give full effect to this
requirement or to set out the status of the Lease and state of
account between the Lessor and the Lessee, and the Lessee hereby
constitutes the lessor, the agent or attorney of the lessee for
the purpose of executing any such certificates, instruments or
postponement or attornment or other instruments necessary to give
full effect to this clause, provided any mortgagee, etc., agrees
to accept this Lease and tenancy and not to disturb the Lessee's
tenancy while the Lessee is not in default under the Lease.
INTERIOR FINISHING
13. Notwithstanding the above, the Lessor covenants that the
Lessee shall have the right, within the (10) days after the
termination of the Lease, to remove. all furnishing, chattels,
and fixtures which have been installed or constructed by the
Tenant, and without limiting the generality of the foregoing,
furniture, counters, business equipment, signs, directories,
prefabricated modular partitions, vault doors and grills,
(including frames), prefabricated modular or unitized vaults,
free standing vaults, or safe, safety deposit boxes, treasury and
security lockers and fire resistant vault doors and frames,
provided however, that in the removal of the same the Lessee
shall be liable for the cost of repairing or restoring any damage
so caused (reasonable wear and tear excepted). Upon termination
of the Lease, the Lessee may, at its option, leave any permanent
vault in the Demised Premises without liability for any costs
incurred by the Lessor in removing same. In such event, said
vault (excluding doors and grills) shall become the property of
the Landlord. If the Lessee so chooses, it may leave the doors
and grills at not cost.
ENTIRE AGREEMENT
14. The Lessee acknowledges that there are no covenants,
representations, warranties, agreements, or conditions expressed
or implied collateral or otherwise forming part of or in any way
affecting or relating to this Lease save as expressly set out or
incorporated by reference to this Lease and that this Lease
constitutes the entire agreement duly executed by the Lessor and
the Lessee.
COVENANTS AND AGREEMENTS
15. All of the provisions of this Lease are to be construed as
covenants and agreements as though the words implying such
covenants and agreements were used in each paragraph hereof. The
Lessee acknowledges that there are no covenants, representations,
warranties, agreements or conditions expressed or implied
collateral or otherwise forming part of or in any way affecting
or relating to this Lease save as expressly set out and that this
Lease constitutes the entire agreement.
POSSESSION BY LESSEE
16. The Lessee shall examine the Demised Premises before taking
possession hereunder and such taking of possession shall be
conclusive evidence as against the Lessor that at the time
thereof the Demised Premises were in good order and satisfactory
condition and that all promises, representations and undertakings
by or binding upon the Lessor with respect to any alteration,
remodeling or decorating of or installation of fixtures in the
Demised Premises have been fully satisfied and performed by the
Lessor. In taking possession the Lessee acknowledges that the
existing leasehold improvements, if any are acceptable and that
the Lessee is taking possession of the Demised Premises "as is".
CONDITION OF TERMINATION
17. The lessee has one option to terminate the lease after year
2 with a 3 month rental penalty if the lease is terminated before
the three year term. Upon the expiration or sooner termination of
the tenancy hereby created the Lessee covenants:
(a) to surrender the Demised Premises to the Lessor in as
good condition and repair as the Lessee is required to
maintain the Demised Premises throughout the term;
(b) to surrender all keys for the Demised Premises to the
Lessor at the place then fixed for payment of rent and to
inform the Lessor of all combination on locks;
DEPOSIT
18. The Lessee has delivered to the Lessor or its Agent two
cheques. One is the sum of $4,000.00 plus applicable taxes dated
December 1/98 for first months rent, and the other in the sum of
$4,000.00 plus applicable taxes dated December 7/98 as last
months rent. If the Lessee default in carrying out any of its
obligations hereunder, the Lessor, at its option, may retain the
deposit as liquidated damages and not as penalty, without
limiting the Lessor's other remedies at law or at equity.
RENEWAL
19. The Lessee shall have one (1) option to renew this Lease for
a further term of (3) three years. The terms and conditions of
this Lease shall apply to any such renewal with the exception of
the annual rental to be paid during the renewal term and any
further rights of renewal, If the Lessee elects to exercise the
aforesaid option to renew, it shall do so by giving the Lessor
notice in writing of its intention not! later than six (6) months
before (a) the expiration of the term of the Lease or (b) at the
expiration of the first renewal term.
During the said renewal term, the Lessee shall pay an annual
rent to be agreed upon prior to the commencement of the renewal
term based on the then-current market rental for premises of
comparable type, age, location and condition. In the event that
the said annual rental has not been agreed upon by the parties
thirty (30) days prior to the commencement of a renewal term,
each party shall at once appoint an arbitrator and such
appointees shall jointly appoint a third. The decision of any
two of the three arbitrators so appointed shall be final and
binding upon the parties hereto, who covenant one with the other
that their dispute shall be so decided by arbitration alone and
not by recourse to any Court by action of law. The aforesaid
arbitration shall be carried out pursuant to the provisions of
arbitration legislation from time to time in effect in the
Province of Newfoundland
20. The Lessor guarantees that the Lessee will be provided with
adequate parking for the Lessee and its customers.
IN WITNESS WHEREOF the parties hereto have executed these
presents in accordance with their respective rules and
regulations the day and year first before written.
THE COMMON SEAL of the Lessor Commerce Atlantic Limited
was hereunto affixed in the
presence of: /s/
/s/
THE COMMON SEAL of the Lessee was Iceberg Industries
hereunto affixed in the presence of: Corporation
/s/ /s/
<PAGE>
Exhibit 10.6 - Purchase Offer for Securities of Iceberg
Industries
This document is important and requires your immediate
attention. If you are in any doubt as to how to deal with it, you
should consult your investment dealer, stockbroker, bank manager,
lawyer or other professional advisor.
No securities commission or similar authority in Canada has
in any way passed upon the merits of the securities offered
hereunder and any representation to the contrary is an offence.
The securities offered hereby have not been registered under the
United States Securities Act of 1933, as amended, and are being
offered and sold in reliance on exemptions from the registration
requirements of said Act. These securities have not been
approved or disapproved by the United States Securities and
Exchange Commission or by the securities divisions of any state,
nor has the United States Securities and Exchange Commission or
any state regulator passed upon the accuracy or adequacy of this
offer and offering circular. Any representation to the contrary
is a criminal offence.
FORMAL OFFER
by Icecap Equity Inc. and D. V. Holdings, Inc.
to purchase all of the
outstanding Common Shares of
Iceberg Industries Corporation
on the basis of one and seven-tenths Preferred Exchangeable
Shares of Icecap Equity Inc.
for each one Common Share of
Iceberg Industries Corporation or, at the option of a holder of
the Common Shares of Iceberg Industries Corporation who is a
non-resident of Canada, one and seven-tenths Common Shares of
D.V. Holdings, Inc. for each one Common Share of
Iceberg Industries Corporation
This offer (the "Offer") will be open for acceptance until
midnight (Newfoundland time) on May 28, 1999 unless withdrawn or
extended.
The Offer is conditional upon, among other things, valid
deposits of that number of outstanding common shares (the
"Iceberg Shares") of Iceberg Industries Corporation ("Iceberg")
pursuant to the Offer and not withdrawn that would constitute at
least ninety percent (90%) of the Iceberg Shares. The conditions
of the Offer are fully described in the Offer under Section 6,
"Conditions of the Offer".
Holders of Iceberg Shares wishing to accept the Offer should
complete and sign the accompanying Letter of Acceptance and
Transmittal and mail or deliver it, together with their share
certificates and all other documents required by the Letter of
Acceptance and Transmittal, to the Depositary, Smyth Woodland &
Del Rizzo, Barristers and Solicitors, at its address set forth in
the Instructions accompanying the Letter of Acceptance and
Transmittal. Questions and requests for assistance may be
directed to the Depositary.
SUMMARY
The following is a summary only of the Offer and Offering
Circular and is qualified in its entirety by the more detailed
information set forth in the attached documents.
The Offer
Icecap Equity Inc. and D.V. Holdings, Inc. (together, the
"Offeror") are jointly offering, upon the terms and subject to
the conditions of the Offer, to purchase all of the issued and
outstanding Common Shares (the "Iceberg Shares") of Iceberg
Industries Corporation ("Iceberg") on the basis of one and
seven-tenths Preferred Exchangeable Shares of Icecap Equity
Inc.,("Icecap Preferred Exchangeable Shares") for each one
Iceberg Share or, at the option of a holder who is a non-resident
of Canada, one and seven-tenths common shares of D. V. Holdings,
Inc. ("D.V. Shares") for each one Iceberg Share. The Offer is
open for acceptance until midnight (Newfoundland time) on May 28,
1999, unless the Offer is withdrawn or extended at the Offeror's
sole discretion (the "Expiry Time").
Manner of Acceptance of the Offer
Iceberg Shareholders wishing to accept the Offer must mail
or deliver the certificate(s) for their Iceberg Shares, together
with a properly completed and duly executed Letter of Acceptance
and Transmittal enclosed herewith or a manually signed facsimile
thereof and all other documents required by the Letter of
Acceptance and Transmittal to, and such must be received by the
Depositary at its offices specified in the Instructions
accompanying the Letter of Acceptance and Transmittal not later
than the Expiry Time. See Section 4 of the Offer, "Manner and
Time of Acceptance".
Conditions of the Offer
The Offeror shall have the right to terminate or withdraw
the Offer and shall not be required to take up and pay for any
Iceberg Shares deposited under the Offer, or may delay the
acceptance for payment of such Iceberg Shares deposited, if:
(a) there are not valid deposits of that number of
outstanding Iceberg Shares not withdrawn at the Expiry Time that
would constitute at least 90 % of the issued and outstanding
Iceberg Shares;
(b) there has been any undisclosed action prior to the date
of the Offer or any action subsequent to such date by a person or
company, other than the Offeror or its affiliates, but including
a governmental or regulatory authority, Iceberg and its directors
and senior officers, which results in or would, in the opinion of
the Offeror, result in a material change in the business, assets,
operations, capital or affairs of Iceberg;
(c) all approvals of or for the completion of the Offer
which are necessary or required therefor from any governmental or
regulatory agency, board, commission or other body shall not have
been obtained or, if obtained, shall not be in full force and
effect, or any applicable governmental or other waiting period
shall not have expired; or
(d) there shall be threatened, instituted or pending any
action or proceeding by or before any court or governmental,
administrative or regulatory agency or authority or any other
person or tribunal, domestic or foreign, challenging the making
of the Offer or the acquisition by the Offeror of any Iceberg
Shares, or otherwise directly or indirectly relating to the Offer
or, in the sole judgment of the Offeror, otherwise adversely
affecting Iceberg or the value of the Iceberg Shares.
Purpose of the Offer
The purpose of the Offer is to allow Icecap Equity Inc. and
D. V. Holdings, Inc. to acquire control of Iceberg. It is
intended that the name of D. V. Holdings, Inc. will be changed to
Iceberg Corporation of America.
Withdrawal Rights
All deposits of Iceberg Shares are irrevocable except as
provided in Section 7 of the Offer, "Right to Withdraw Deposited
Iceberg Shares".
Depositary
Smyth Woodland & Del Rizzo, Barristers and Solicitors, as
Depositary, will be responsible for receiving deposits of Iceberg
Shares, for giving notices, if required, and for making the
exchange for the Iceberg Shares purchased by the Offeror under
the Offer.
Canadian Tax Considerations
The sale of Iceberg Shares pursuant to the Offer will be a
disposition for tax purposes and may give rise to tax
consequences to holders of Iceberg Shares. Holders of Iceberg
Shares are encouraged to seek their own tax and legal advice in
connection with this Offer. See "Canadian Federal Income Tax
Considerations" in the Offering Circular.
OFFER
May 3, 1999
TO: The Holders of Common Shares of Iceberg Industries
Corporation
1. The Offer
D.V. Holdings, Inc. and Icecap Equity Inc. (together, the
"Offeror") hereby jointly offer to purchase during the Offer
Period (as defined below) all of the issued and outstanding
common shares (the "Iceberg Shares") of Iceberg Industries
Corporation ("Iceberg") on the basis of one and seven-tenths
Preferred Exchangeable Shares of Icecap Equity Inc. ("Icecap
Preferred Exchangeable Shares") for each one Iceberg Share or, at
the option of a holder who is a non-resident of Canada, one and
seven-tenths common shares of D. V. Holdings, Inc. ("D.V.
Shares") for each one Iceberg Share, upon the terms and subject
to the conditions set forth in this Offer, the Offering Circular
(as defined below) and the Letter of Acceptance and Transmittal
(as defined below).
The Offer, together with the Offering Circular and the
Letter of Acceptance and Transmittal, comprise the Offeror's
offer for the Iceberg Shares and contain important information
which should be read carefully before a decision is made with
respect to this Offer.
A more detailed description of the shares of the Offeror is
provided under "Share Capital of the Offeror" in the accompanying
Offering Circular. All shares of the Offeror issued as a result
of acceptance of the Offer will be issued as fully paid and
non-assessable shares in the capital stock of the relevant
issuer.
2. Definitions
In this Offer, the Offering Circular and the Letter of
Acceptance and Transmittal, the following terms have the
following meanings:
(a) "Act" means the Corporations Act, Revised Statutes of
Newfoundland 1990, Chap. C-36, as amended;
(b) "Business Day" means any day, other than a Saturday,
Sunday, Canadian federal or Newfoundland provincial statutory
holiday, on which banks are open for business in the City of St.
John's, Newfoundland;
(c) "Depositary" means Smyth Woodland & Del Rizzo,
Barristers and Solicitors at its offices specified in the
Instructions accompanying the Letter of Acceptance and
Transmittal;
(d) "Dollars" or "$" means the legal currency of Canada;
(e) "Expiry Date" means May 28, 1999, or such later date to
which the Offer may be extended pursuant to Section 5 of the
Offer;
(f) "Expiry Time" means midnight (Newfoundland Time) on the
Expiry Date;
(g) "Letter of Acceptance and Transmittal" means the Letter
of Acceptance and Transmittal and the Instructions thereto in the
form accompanying this Offer and the Offering Circular, or a
facsimile thereof;
(h) "Offer" means the offer made hereby, the terms and
conditions of which are set forth in this Offer, the Offering
Circular and the Letter of Acceptance and Transmittal;
(i) "Offering Circular" means the Offering Circular
included in this document;
(j) "Offer Period" means the period commencing on the date
of this Offer and ending at the Expiry Time;
3. Time for Acceptance
The Offer may be accepted by Iceberg Shareholders up to, but
not after, the Expiry Time.
4. Manner and Time of Acceptance
A Iceberg Shareholder who wishes to accept the Offer must
complete and sign the Letter of Acceptance and Transmittal or a
manually signed facsimile thereof in accordance with the
instructions contained therein and mail or deliver it together
with the certificate(s) representing the Iceberg Shares and any
other documents required by the Letter of Acceptance and
Transmittal to, and such must be received by, the Depositary on
behalf of the Depositary, at its offices specified in the
Instructions at or prior to the Expiry Time.
If required by the Instructions, the signature on such
Letter of Acceptance and Transmittal must be witnessed by a
Notary Public or in such other manner as approved by the
Depositary. If a Letter of Acceptance and Transmittal is executed
by a person other than the registered holder of the Iceberg Share
certificate(s) deposited therewith, the said certificate(s) must
be endorsed or be accompanied by appropriate share transfer
powers duly and properly completed by the registered holder. The
Offeror reserves the right to permit Iceberg Shareholders to
accept the Offer in a manner other than that set out above.
The method of delivery of certificates for Iceberg Shares
and all other required documents is at the option and risk of the
depositing Iceberg Shareholder. The Offeror recommends that such
documents be delivered by hand to the Depositary and a receipt
obtained or, if mailed, that such documents be sent by registered
mail, with return receipt or acknowledgment of receipt requested,
and that proper insurance be obtained.
Neither the Offeror nor the Depositary shall be under any
duty to give any notice of any defect or irregularity with
respect to any deposit, nor shall any of them incur any liability
for failure to give any such notification. The Offeror's
interpretation of the terms and conditions of the Offer will be
binding.
Persons whose Iceberg Shares are registered in the name of a
nominee must contact their broker, investment dealer, bank, trust
company or other nominee for assistance in depositing Iceberg
Shares.
By executing the Letter of Acceptance and Transmittal the
Iceberg Shareholder revokes any proxy, power or authority
previously granted with respect to the Iceberg Shares deposited
thereby, and irrevocably appoints the Offeror as its agent,
attorney, attorney-in-fact and proxy with respect to such Iceberg
Shares and any dividend, distribution or payment declared, made
or paid by Iceberg after the date of the Offer, including the
exercise of all rights and the execution and delivery of a proxy
with respect to such Iceberg Shares, dividends, distributions or
payments.
The delivery of Iceberg Shares pursuant to the procedures
described above will constitute a binding agreement between the
delivering Iceberg Shareholder and the Offeror upon the terms and
subject to the conditions of the Offer.
5. Extension and Variation of the Offer
Unless extended, the Offer is open for acceptance at the
place of deposit specified in the Letter of Acceptance and
Transmittal until, but not after, the Expiry Time.
The Offeror reserves the right, in its sole discretion, at
any time and from time to time during the Offer Period or
otherwise as permitted by law, to extend the Offer Period or to
vary the Offer by giving written or other notice to the
Depositary. Where all the terms and conditions of the Offer have
been complied with or waived by the Offeror, the Offer will not
be extended unless the Offeror first takes up and pays for all
Iceberg Shares deposited pursuant to the Offer and not withdrawn
at that date. Any notice of extension or variation will be deemed
to have been given and be effective on the day on which it is
delivered or otherwise communicated to the Depositary.
During any such extension or in the event of any variation,
all Iceberg Shares previously deposited and not taken up or
withdrawn will remain subject to the Offer and may be accepted
for purchase by the Offeror in accordance with the terms hereof.
An extension of the Offer Period or a variation of the Offer does
not constitute a waiver by the Offeror of its rights under
Section 6 hereof.
6. Conditions of the Offer
Notwithstanding any other provision of the Offer, the
Offeror shall have the right to terminate or withdraw the Offer,
and shall not be required to take up and accept for payment, or
pay for, any Iceberg Shares deposited under the Offer, or may
delay the acceptance for payment of any Iceberg Shares deposited,
if:
(a) there are not valid deposits of that number of
outstanding Iceberg Shares not withdrawn at the Expiry Time that
would constitute at least 90% of the issued and outstanding
Iceberg Shares;
(b) there has been any undisclosed action prior to the date
of the Offer or if there is any action subsequent to such date by
a person or company, other than the Offeror but including a
governmental or regulatory authority, Iceberg and its directors
and senior officers, which results in or would, in the opinion of
the Offeror, result in a material change in the business, assets,
operations, capital or affairs of Iceberg;
(c) all approvals of or for the completion of the Offer
which are necessary or required therefor from any governmental or
regulatory agency, board, commission or other body shall not have
been obtained or, if obtained, shall not be in full force and
effect or any applicable governmental or other waiting period
shall not have expired; or
(d) there shall be threatened, instituted or pending any
action or proceeding by or before any court or governmental,
administrative or regulatory agency or authority or any other
person or tribunal, domestic or foreign, challenging the making
of the Offer or the acquisition by the Offeror of any Iceberg
Shares, or otherwise directly or indirectly relating to the
Offer or, in the sole judgment of the Offeror, otherwise
adversely affecting Iceberg or the value of the Iceberg Shares.
The foregoing conditions are for the benefit of the Offeror
and may be asserted by the Offeror regardless of the
circumstances or may be waived by the Offeror, in whole or in
part, at any time without prejudice to any other rights which the
Offeror may have under the Offer. Any determination by the
Offeror concerning such conditions shall be final and binding on
all parties.
Any waiver of a condition or the withdrawal of the Offer
shall be effective upon written notice by the Offeror to the
Depositary and shall be communicated by the Depositary as soon as
practicable thereafter by notice to Iceberg Shareholders in the
manner set forth in Section 11 hereof.
If the Offer is withdrawn, the Offeror shall not be
obligated to take up any Iceberg Shares deposited under the Offer
and the Depositary will return all certificates for deposited
Iceberg Shares and Letters of Acceptance and Transmittal to the
parties by whom they were deposited.
7. Right to Withdraw Deposited Shares
Except as provided in this Section, and subject to all
applicable laws, all deposits of Iceberg Shares pursuant to the
Offer are irrevocable. Iceberg Shares deposited pursuant to the
Offer may be withdrawn by or on behalf of the depositing Iceberg
Shareholder at any time after forty-five days, if the Iceberg
Shares have not been taken up.
If a notice of change is delivered to Iceberg Shareholders
or if there is a variation in the terms of the Offer, deposited
Iceberg Shares not taken up by the Offeror at the date the notice
of change or variation is mailed, delivered or otherwise properly
communicated may be withdrawn at any time before the expiration
of the tenth day after the sending of such notice.
Withdrawals of Iceberg Shares deposited pursuant to the
Offer must be effected by notice of withdrawal made by or on
behalf of the Iceberg Shareholder by whom or on whose behalf such
Iceberg Shares were deposited and must be actually received by
the Depositary at the office at which such Iceberg Shares were
deposited within the time-limits indicated above. A notice of
withdrawal must (a) be in writing, including telegraphic
communication or notice by electronic means that produces a
printed copy, (b) be signed by or on behalf of the person who
signed the Letter of Acceptance and Transmittal accompanying the
Iceberg Shares which are being withdrawn, and (c) specify such
person's name, the number of Iceberg Shares of each class to be
withdrawn, the name of the registered holder and the certificate
number shown on each certificate evidencing the Iceberg Shares to
be withdrawn.
All questions as to the validity (including timely receipt)
and form of notices of withdrawal shall be determined by the
Offeror in its sole discretion, and such determination shall be
final and binding on all parties.
8. Payment for Deposited Shares Purchased
Where, after the Expiry Time, all the terms and conditions
attaching to the Offer have been complied with or waived by the
Offeror, the Offeror will, upon the terms and subject to the
conditions of the Offer, as soon as practicable after the Expiry
Time and in any event within the period required by any
applicable legislation, take up and pay for all of the Iceberg
Shares validly deposited pursuant to the Offer and not withdrawn.
The Offeror will accept deposited Iceberg Shares for purchase by
giving written notice to the Depositary.
The Depositary will act as the agent of persons who have
deposited Iceberg Shares in acceptance of the Offer for the
purposes of receiving payment from the Offeror and transmitting
payment to such persons. Unless otherwise directed in the Letter
of Acceptance and Transmittal, the shares of the Offeror will be
issued in the name of the registered holder of the Iceberg Shares
deposited.
9. Mail Service Interruption
Notwithstanding the provisions of the Offer or of the Letter
of Acceptance and Transmittal, share certificates and any other
relevant documents will not be mailed if the Offeror determines
that delivery thereof by mail may be delayed. Persons entitled to
share certificates or any other relevant documents which are not
mailed for the foregoing reason may take delivery thereof at the
office of the Depositary at which the Iceberg Shares were
deposited, upon application to the Depositary, until such time as
the Offeror has determined that delivery by mail will no longer
be delayed.
10. Dividends and Distributions
If, on or after the date of this Offer and before the
Offeror takes up the Iceberg Shares, Iceberg should split,
combine or otherwise change any of the Iceberg Shares or its
capitalization, or shall disclose that it has taken any such
action or shall have taken any steps in pursuance of such action,
then the Offeror may, in its sole discretion, make such
adjustments as it deems appropriate to reflect such split,
combination or other change in the purchase price and the other
terms of this Offer.
Iceberg Shares acquired pursuant to this Offer shall be
acquired by the Offeror free and clear of all liens, charges,
encumbrances, claims and equities and together with all rights
and benefits arising therefrom including the right to all
dividends, distributions, payments, securities, rights, assets or
other interests which may be declared, paid, issued, distributed,
made or transferred on or after the date of this Offer on or in
respect of the Iceberg Shares. If, on or after the date of this
Offer, Iceberg should declare or pay any dividend or declare,
make or pay any other distribution or payment on or declare,
allot, reserve or issue any securities, rights or other interests
with respect to the Iceberg Shares, payable or distributable to
holders of Iceberg Shares of record on a date prior to the
transfer of Iceberg Shares accepted for purchase pursuant to this
Offer to the name of the Offeror or its nominee or transferee on
the transfer records, then such non-cash dividend, distribution,
payment, right or other interest will be received and held by the
depositing holder of Iceberg Shares for the account of the
Offeror.
11. Notice
Any notice which the Offeror or the Depositary may give or
cause to be given under the Offer will be deemed to have been
properly given to Iceberg Shareholders if it is mailed by first
class mail to the registered holders of Iceberg Shares at their
respective addresses as shown on the share register of Iceberg
and will be deemed to have been received on the fifth Business
Day following mailing. These provisions apply notwithstanding any
accidental omission to give notice to any one or more Iceberg
Shareholders and notwithstanding any interruption of mail service
following mailing. In the event of any interruption of mail
service following mailing, the Offeror intends to use reasonable
efforts to disseminate the notice by other means, such as
publication.
Upon receipt of Notice from the Offeror that 90% of Iceberg
Shareholders have accepted the Offer, the Offeror shall issue
such number of shares as is sufficient to satisfy the Offer
requirements and shall thereupon deposit such shares with the
Depositary to be exchanged for the Iceberg Shares and delivered
to the Iceberg Shareholders. The Offeror will make settlement by
causing the Depositary to deliver to each holder of Iceberg
Shares who accepts the Offer certificates for shares of the
Offeror. Unless otherwise directed in the respective Letter of
Acceptance and Transmittal, the certificate for the shares of the
Offeror will be issued in the name of each holder of Iceberg
Shares deposited hereunder and such certificate will be forwarded
by mail to such holder at the address of such holder as shown on
the share register for the Iceberg Shares. Delivery of any share
certificates mailed as aforesaid shall be deemed to have been
made at the time of mailing, subject to the provisions of Section
9, "Mail Service Interruption".
12. Fractional Shares
No fractional shares of the Offeror will be issued under the
terms of the Offer and no cash payment will be made in lieu
thereof.
13. Other Terms
The Offeror shall, in its discretion, be entitled to make a
final and binding determination of all questions relating to the
validity of any acceptance of the Offer and to any withdrawals of
Iceberg Shares including, without limitation, the validity, form,
eligibility and time of receipt of any deposit of Iceberg Shares
made or notice of withdrawal of Iceberg Shares given hereunder.
The Offeror reserves the right to waive any defect or
irregularity in the deposit of any Iceberg Shares. There shall be
no obligation on the Offeror or the Depositary to give notice of
any defects or irregularities in any acceptance or notice of
withdrawal and no liability shall be incurred by either of them
for failure to give any such notification.
No broker, investment dealer or other person has been
authorized to give any information or to make any representation
on behalf of the Offeror other than as contained in the Offer
and, if any such information or representation is given or made,
it must not be relied upon as having been authorized by the
Offeror. No broker, investment dealer or other person shall be
deemed to be the agent of the Offeror, any of its affiliates, or
the Depositary for the purposes of the Offer.
The Offer and the agreement resulting from the acceptance of
the Offer shall be governed by and construed in accordance with
the laws of the Province of Newfoundland and the laws of Canada
applicable therein.
Dated this 3rd day of May, 1999.
Icecap Equity Inc. D.V. Holdings, Inc.
Per: /s/ Paul Benson Per: /s/ Roy Pockett
President President
OFFERING CIRCULAR
This Bid Offering Circular (the " Circular") is furnished in
connection with the Offer (the "Offer") dated May 3, 1999, made
by Icecap Equity Inc. and D.V. Holdings, Inc. (together, the
"Offeror") to purchase all of the issued and outstanding common
shares (the "Iceberg Shares") of Iceberg Industries Corporation
("Iceberg"), on the terms and subject to the conditions thereof.
Shareholders are referred to the accompanying Offer for details
of the terms and conditions of the Offer, including details as to
payment and withdrawal rights. The terms and conditions of the
Offer are incorporated into and form part of this Circular, and
the Offer, the Circular and the Letter of Acceptance and
Transmittal together constitute the Offeror's offer for the
Iceberg Shares. Defined terms used in the Offer are used herein
with the same meaning unless the context otherwise requires.
The information concerning Iceberg contained in the Offer
and the Circular has been provided to the Offeror by Iceberg.
Although the Offeror has no knowledge that would indicate that
any statements contained herein which are taken from or based
upon such documents and records or other information are untrue
or incomplete, the Offeror does not assume any responsibility for
the accuracy or completeness of the information taken from or
based upon such documents and records or for any failure by
Iceberg to disclose events unknown to the Offeror which may have
occurred or which may affect the significance or accuracy of any
such information which are unknown to the Offeror.
The Offeror
This Offer is being made jointly by Icecap Equity Inc. and
D.V. Holdings, Inc.
D.V. Holdings, Inc. was incorporated under the laws of the
State of Nevada. Upon the successful completion and closing of
this Offer, the name of D.V. Holdings, Inc. shall be changed to
Iceberg Corporation of America and the board of directors of D.
V. Holdings, Inc. shall be the same as the current board of
directors of Iceberg - Paul Benson, Ronald Stamp, Lewis Stoyles
and Maurice Murphy (for further particulars, see "Management
Team").
Icecap Equity Inc. was incorporated under the laws of the
Province of Newfoundland on May 3, 1999. The sole officer and
director of Icecap Equity Inc. is Paul Benson, the President and
Chief Executive Officer of Iceberg.
To date, neither company has engaged in any activities other
than those incidental to its organization and the making of the
Offer.
Share Capital of the Offeror
D. V. Holdings, Inc.: The share capital consists of an
authorized capital of 25,000,000 common shares (the "D.V.
Shares") 3,000,000 of which are outstanding as at the date
hereof, and a special class of voting shares to be issued to a
trustee on behalf of the holders of Preferred Exchangeable Shares
of Icecap Equity Inc., as defined hereinafter.
Icecap Equity Inc.: The share capital consists of an
authorized capital of an unlimited number of common shares, (the
"Icecap Common Shares") and an unlimited number of preferred
exchangeable shares issuable in series (the "Icecap Preferred
Exchange Shares"). A summary of the terms of the Icecap
Preferred Exchangeable Shares follows:
Dividend rights: any dividends paid will be equivalent to
dividends paid on the D.V. Shares.
Direct Voting Rights: One vote per Icecap Preferred
Exchangeable Share.
Retraction/Redemption Rights: The Icecap Preferred
Exchangeable Shares are redeemable at the option of Icecap Equity
Inc. and retractable at the option of the holder upon delivery of
one D.V. Share.
Liquidation Entitlement: Icecap Preferred Exchangeable Share
holders are entitled to be paid, upon any liquidation of the
assets of Icecap Equity Inc. , an amount of money equivalent to
the amount that would be received per D.V. Share on a liquidation
of D.V. Holdings, Inc.
Anti-dilution: The Icecap Preferred Exchangeable Shares
contain anti-dilution provisions to keep such shares pari passu
with any changes involving D.V. Shares, such as reorganizations
or stock splits.
In addition to the foregoing, the Icecap Preferred
Exchangeable Shares are subject to certain collateral contractual
arrangements as follows:
Voting Rights in D.V. Holdings, Inc.: D.V. Holdings, Inc.
will issue special voting shares to a trustee (the "D.V. Trust
Shares"). The terms of the trust shall be contained in a trust
indenture which will provide as follows: (i) the number of D.V.
Trust Shares shall be equal to the number of Icecap Preferred
Exchangeable Shares; (ii) the voting rights of the D.V. Trust
Shares shall be equal and equivalent to the voting rights
attached to the D.V. Shares; (iii) the trustee shall vote the
D.V. Trust Shares as directed by the holders of the Icecap
Preferred Exchangeable Shares; and (iv) as each Icecap Preferred
Exchangeable Share is exchanged for a D.V. Share, the
corresponding equivalent D.V. Trust Share shall be cancelled.
Put Rights: The holders of Icecap Preferred Exchangeable
Shares may require those shares to be acquired by D.V. Holdings,
Inc. in exchange for an equal number of D.V. Shares.
Share Capital of Iceberg
The share capital consists of an authorized capital of an
unlimited number of common shares. As of April 29, 1999,
approximately 2,960,546 Shares were outstanding.
Iceberg Industries Corporation
Iceberg (also called "the Company") was incorporated under
the Act on July 22, 1996.
Iceberg's research and development efforts have positioned
it as the world's first commercial supplier of a family of
products which utilize water obtained from icebergs as the core
ingredient. These "bergs", up to one hundred and fifty thousand
years in age, yield a pristine source of natural drinking water.
Protected from man and our polluted planet, it represents a
unique category of drinking water. This is what separates Iceberg
from the pack: pre-civilization, pre-pollution, quality water.
All Iceberg products are positioned in niche markets at the
premium end of the price and quality spectrum. Marketing
programs rely upon the powerful, pristine and emotive images of
icebergs.
General information on icebergs. Almost the entire extent of
Greenland is covered by a huge glacial blanket over 700,000
square miles in area and more than 9,000 feet in maximum
thickness. Icebergs are created where the glaciers meet the sea.
Icebergs spend nearly three years at sea in the freezing Arctic
waters of the North Atlantic before they arrive off the coast of
Newfoundland and Labrador. This annual migration of thousands of
icebergs to the rugged coastline of Newfoundland can pose a
serious threat to ships. Countless ships and lives have been lost
to these "phantoms of the north". Every year thousands of
tourists flock to the rugged shores of Newfoundland and Labrador
to witness one of nature's truly magnificent marvels, the
migration of ancient icebergs. These massive white giants evoke
powerful images and are unique to this geographic region. The
continuing interest in the Titanic has helped reinforce consumer
awareness and respect for these floating fresh water sanctuaries.
Icebergs start their three year journey to the coastline of
Newfoundland from Greenland. Extensive records exist on iceberg
prevalence throughout the season, dating back many years. These
are compiled by the International Ice Patrol, an organization
formed shortly after the sinking of the Titanic in 1912. The
data provides a level of comfort that icebergs will be readily
available. The International Ice Patrol reports the number of
observed icebergs that drift south of the 48th parallel North, a
point that crosses the northernmost tip of the Avalon Peninsula
on the Northeast coast of Newfoundland. From 1983-1994 an average
of 312 icebergs were sighted. More importantly, for the period
1990-1995, iceberg conditions were much more severe, with an
average of 876 spotted per year. In some years more than 1,500
have been observed. A single iceberg can weigh millions of metric
tonnes. Iceberg's targeted harvest represents a very small
portion of this. The purity and quality of the iceberg water has
been verified by independent laboratory analysis.
Harvesting Icebergs. Iceberg was the first and is currently
the only holder of a permit to harvest icebergs under the
Government of Newfoundland and Labrador's water use policy. The
technology for harvesting icebergs is unique to the Company.
Large icebergs fracture or "calve" into smaller pieces. Once the
bergs have calved to a manageable size, the Company's harvesting
process can begin. With the use of an ocean-going tug, an ice
harvesting vessel fully equipped for harvesting and processing
is carefully positioned alongside a suitable iceberg. Using a
crane and hydraulic grapple, ice is retrieved, crushed, and
deposited into a sterile melting tank. When full, the harvesting
vessel is towed to the production facility in Trepassey,
Newfoundland and the water is transferred into a land storage
system.
Bottling of "Iceberg Water" is conducted at the Company's
plant in Trepassey. Expansion and renovations are currently
underway and, when completed in the early spring of 1999, will
add to the existing production facilities an additional 6,400
square feet. Vodka production has been sub-contracted to a highly
regarded manufacturing company with a number of production
locations and its own international sales force.
Market Positioning. Iceberg has created a new sector in the
beverage industry. All products will be positioned at the
premium end of the price and quality spectrums. Management
believes that the Company's products, being unique and authentic,
have many marketing advantages., It is critical to adopt this
"premium" positioning strategy given the incremental harvesting,
transport and processing costs relative to more conventional
beverage producers.
Industry Information. The bottled water industry has
experienced tremendous growth over the last decade due to two
major trends: rising concern about the safety of tap water and a
general shift in the beverage market toward healthier, low
calorie, non-alcoholic products. This trend continues. The North
American bottled water market is currently a $4 billion market
and, with an annual growth rate of 10%, is the fastest growing
segment of the beverage industry. Management believes that the
market in North America is still far from saturated as domestic
per capita consumption of bottled water is still only a fraction
of European consumption. The industry is also extremely
fragmented with the top 10 brands accounting for only 40% of
total industry sales. Industry analysts predict that bottled
water sales in the United States will reach $ 5 billion by the
year 2000. The United Kingdom and other European Union countries
are also major consumers of bottled water, with per capita
consumption in such countries as Germany, France and Italy being
five to six times higher than that in Canada. Further market
opportunities exist in Japan and other Asian countries. At the
same time, the bottled water industry is highly competitive.
There are hundreds of water bottlers, many of which operate on a
regional basis due to relatively high transport costs. For a
major portion of the market, competition on price is important.
However, there are products positioned at the high end of the
market that successfully receive a price premium. "Iceberg
Water" is positioned here, as an ultra premium product,
capitalizing on its ability to provide the unique experience of
drinking pure water from icebergs hundreds of thousands of years
old. It is promoted as an affordable treat.
Branding. Iceberg is committed to building brand equity.
The product family will carry a common brand name - "BOREALIS".
This helps support the cold, northern image and mystique
surrounding the products. The word "ICEBERG" will play
prominently in the name, used as a descriptive term for all
products. As the Company grows from what was once a small
regional operation to a national and international player, the
focus on brand equity will be further enhanced. Private label
production is also possible for selected customers, with a
further opportunity to build brand equity. To date water has been
produced for Canadian Pacific Hotels, with the "BOREALIS" trade
name retained. Product has also been produced for Loblaw's and,
although this was done under the President's Choice banner, it
helped create awareness of the availability of iceberg water.
Iceberg's initial family of products are:
* bottled iceberg water
* iceberg vodka
* iceberg beer
* crushed iceberg ice, and
* bottled natural spring water
New and exciting additions to the product line are currently in
the planning process, including "ice tea" and other products that
use water as a foundation, such as cosmetics.
Borealis Iceberg Water is a unique experience to be enjoyed and
savoured. Taste tests have determined that iceberg water has the
softest, most natural taste of any bottled water on the market.
Borealis Iceberg Vodka is an ultra-smooth, four column distilled
spirit. Iceberg water is used in both the distillation and
blending processes.
Borealis Iceberg Beer is craft brewed in small batches for
superior quality and consistency at a highly regarded Atlantic
Canada brewery.
Borealis Iceberg Ice has a number of unique features that create
exceptional promotional opportunities. When added to beverages,
it fizzles and crackles, releasing ancient, pure air from tiny
air pockets trapped under pressure in the ice.
Target Markets and Distribution. The initial marketing thrust has
been in Canada and the United States. The United Kingdom is an
additional key market. Thus far, marketing efforts have utilized
established beverage marketing companies within these regions.
The intention of the Company is to utilize these companies'
expertise as well as take advantage of existing shelf space made
available through these companies. Negotiations have been
completed (denoted by *) or are in the advanced stages with the
following key distributors:
Company Country
Loblaw Brands* Canada & USA
Andres Wines* Canada
Reid Distributors* Canada (Ottawa)
T. McConnell* Canada (Ontario)
R.F. Cream Inc*. Canada (Quebec)
Brookfield Dairies* Canada (Newfoundland)
Coca-Cola* Canada (Newfoundland)
Nash Distributors USA (New Jersey)
Better Beverage Importers USA (all States)
AMIA International Corp USA & Europe
Intrac Group USA (All States)
Desert Eagle Distributors USA (2 States)
GDH Consultants Asia
Promotion. The Company has focused on public relations as a
major contributor to the awareness of Iceberg products. Press
coverage on the Company and its activities has been favourable.
It is the intention of the Company to take advantage of this
situation as much as possible in order to capitalize on the
editorial pieces and free press made available to the Company.
This will be supplemented by expenditures on promotional
materials as well as participation with distributors in joint
promotional activities. Management believes that such activities
as being the "official water" of the 1998 Canadian Commonwealth
Games Team have tremendous ongoing promotional value.
Raw Material Transport. Water will be primarily transported
to the plant using an ice harvesting vessel. Some road transport
using tanker trucks is also anticipated during the harvesting
season and for transportation to producers of beer and vodka. The
Company has used a combination of its own tanker and a leased
tanker to date. It intends to acquire several additional tanker
trailers to eliminate the need for leased units. This will give
the Company complete control over the material put into the
tankers. Hauling of these will be contracted to independent
truckers. Commercial carriers will be used for longer distances.
An option also exists to transport water in portable storage bags
in a regular transport trailer. These can be employed for
transporting bulk water over long distances. Raw material for ice
production will be transported and stored in insulated containers
with plastic liners. These containers each hold approximately .5
metric tonnes. The Company will have to purchase its own
containers in order to maintain product integrity and to ensure
an adequate supply. When offloaded from the barge or vessel at
other than the processing location, these containers can be
loaded into transport trailers for transportation to the
processing facility.
Production. It is not desirable for the Company to make the
significant investment required to have all the required
production capabilities in-house. The basic philosophy will be to
make a series of strategic contractor arrangements for its
products, other than water production. The Company's Trepassey
plant has been bottling natural spring water since 1992.
Trepassey is located 140 km south of the capital city of St.
John's. The plant is also used to bottle the Iceberg Water. An
expansion underway with an anticipated completion in or about
June 1999 will add an additional 6,400 square feet, more than
doubling the size of the plant. This is required to meet the
demand for Iceberg Water and to accommodate the growing local
demand for spring water. Within the limited confines of the
existing plant processing area some equipment enhancements were
initiated in the Spring of 1998. Additional enhancements will
coincide with the plant expansion in order to meet growth in
sales volume, enhance efficiencies, adhere to the rigid quality
standards of the International Bottled Water Association and to
reduce product costs. An investment of approximately $1.5 million
will bring the plant up to the required standard.
Iceberg Vodka - A packaging arrangement has been
negotiated for the production of vodka with Andres Wines at
their Truro, Nova Scotia facility. The Company will transport
iceberg water to the distiller for blending with spirits and
bottling under the Company's label.
Iceberg Beer - Excess capacity exists in the brewing
industry. Arrangements have been made with Moosehead Breweries in
Saint John, New Brunswick to produce an iceberg beer product. The
Company will deliver iceberg water to Moosehead for the brewing
and bottling of beer for national and international markets.
Iceberg Ice - There are many dormant and under-utilized
seafood processing facilities on the coast of Newfoundland.
These contain a variety of receiving, weighing, conveying,
sorting, processing and packaging equipment and cold storage
areas. With minimal modification these are well suited to the
requirements for processing ice. The front-end of the production
set-up is similar to that required for melting. The ice is dumped
into a hopper and fed to an ice crusher. From here the crushed
ice is automatically "screened" to remove small pieces unsuitable
for an ice product. These smaller particles are retrieved for
melting. The pieces suitable for an ice product fall onto a flat
grading conveyor. Any large or otherwise unsuitable pieces are
removed. The balance continue to the end of the belt to an
automatic packaging machine. After being filled the container is
appropriately sealed and placed into cold storage.
Management Team. The Company has assembled a strong
management team that is focused on the ability to produce large
volumes of high quality products for distribution around the
world. The principal management personnel bring a broad range of
experience in the food and beverage sector, including research
and development, production and international marketing
expertise. The management team of the Company consists of the
following individuals:
Paul Benson - President and Chief Executive Officer
Lewis Stoyles - Vice President and Chief Financial Officer
Ronald Stamp - Vice President, Marketing and Sales
Maurice Murphy - Vice President, Operations
Vernon Matheson - Plant Manager
Steven Daw - Controllor
Gary Walsh - Manager of Accounting / Purchasing
Paul Benson, President and C.E.O. - Mr. Benson has served in
senior management positions with national and local multi-unit
organizations, including Mac's Convenience Stores. He founded
Newfoundland's first independent retail gasoline operation and
co-founded a Newfoundland based advertising and marketing firm.
He is a co-founder of the Company, and a founder of
Newfoundland's first and largest bottled water operation, since
amalgamated with the Company. Mr. Benson is a graduate of
Memorial University in St. John's and has served as an officer in
the Canadian Navy.
Ronald Stamp, Vice President, Marketing and Sales - Mr. Stamp has
over 20 years of experience in sales, marketing and public
relations in the food and beverage industry in Canada, the United
States and the Caribbean. He is a co-founder of the Company, and
has overall responsibility for sales and marketing.
Maurice Murphy, P. Eng., Vice President Operations - Mr. Murphy
is a registered professional engineer and possesses a Third Class
Power Certificate of Competency. Mr. Murphy has had over 20
years experience in the food and beverage industry in
Newfoundland in senior management positions. These positions all
involved responsibility for capital and operational budgets for
these facilities, as well as overall responsibility for
maintenance and engineering departments. Mr. Murphy assumes
similar responsibilities in both plant and harvesting operations
at Iceberg.
Vernon Matheson, Plant Manager - Mr. Matheson has 20 years of
plant managerial experience in the food and beverage industry in
Atlantic Canada, including bottled water production. He has been
highly successful in all aspects of improving plant operations
and overseeing significant plant expansions. Mr. Matheson is
responsible for day-today operation of the plant and for
production scheduling.
Lewis Stoyles, FCA, CMC, Vice President and C.F.O. - Mr. Stoyles
is a member of the Canadian Institute of Chartered Accountants
and a fellow of the Newfoundland Institute of Chartered
Accountants. In addition, Mr. Stoyles is a certified management
consultant. Mr. Stoyles brings over 30 years experience in
accounting, auditing and financial management to his position.
Mr. Stoyles has worked for 20 years in various industries
including manufacturing and distribution of food products,
trucking and aviation transport operations. He was managing
partner of the Coopers and Lybrand, St. John's office for 6
years. Mr. Stoyles is responsible for all the financial affairs
the Company.
Steven Daw, Controller - Mr. Daw brings 23 years experience in
accounting, management and ownership positions in retail oil and
gas, automotive, management services and business consulting. He
has a wide range of experience in day-to-day cash management,
financial reporting, human resources and information technology.
Mr. Daw has overall responsibility for all accounting and
administrative personnel, as well as for cash flow management,
forecasting and financial statement preparation.
Gary Walsh, CGA, Manager of Accounting/Purchasing - Mr. Walsh
brings over 8 years experience in a manufacturing environment
where he focused on materials management, production scheduling
and maintenance scheduling. Mr. Walsh received his Certified
General Accountant's designation in 1998 and recently completed
an assignment as a tax auditor with the Newfoundland provincial
government. Mr. Walsh is responsible for all raw materials
purchasing, finished goods storage and logistics.
Employees. Supplementing the management team is a dedicated
group of individuals involved in the task of ice harvesting
production and marketing. Total peak staffing of 30 in 1998 will
grow to 40 in 1999, with continued growth in step with additional
volume anticipated. The Company has received government funding
in the form of a non-repayable grant to offset the cost of new
employees.
Financial Requirements. The Company requires significant
additional funding to finance its working capital needs, facility
upgrading, and capital equipment acquisition. To date, with the
Company's approach of utilizing existing facilities and
subcontracting production for three of its products, it has been
possible to keep investment requirements to a reasonable level.
Access to government support in the form of no and low-interest
loans, capital grants and tax holidays has also been beneficial.
More detail is contained in the Financial Statements of the
Company attached hereto.
Risk Factors
Market Risk. There has been significant and substantial
interest in the iceberg product line. However, as with any
market there are uncertainties, including:
- These are relatively new products. There is a risk
that consumer acceptance or ongoing interest may not be
widespread as expected.
- These are premium products that demand a high price.
There is a danger of price resistance.
Harvesting Risk. The data indicates that availability of
ice will not be a problem. However, the data does not indicate
the proximity of icebergs to the shore. To safely and
cost-effectively harvest icebergs they must be close to shore, in
areas offering some protection from the open sea. The reported
length of the season can also be misleading. Icebergs may be
present but they must also be in a suitable location and breaking
up in order to be harvested. The data does not provide that
information. The Company has relied on subcontracted vessels to
assist in harvesting its ice supply. There is always a risk of
default or non-performance.
Processing Risk. The extent of raw material handling before
final production poses an element of risk. The Company's Quality
Assurance/Quality Control (QA/QC) Manager has developed and
monitors QA/QC procedures and ensures adherence to raw material
and finished product specifications. Regular lab analysis is
conducted at all stages in the process. The Company is moving to
implement a HACCP system and is pursuing ISO 9000 certification.
As a member of the International Bottled Water Association it
also has access to technical resources and is subject to an
annual independent audit.
Financial Risk. The projections contained in the Company's
business plan are based on a combination of best estimates and
actual data for both sales values and volumes, product costs and
overheads. Some of these elements can be more accurately
projected than others.
Tax Considerations
Certain shareholders accepting the Offer may make an
election which will affect the income tax consequences of the
transaction for them. See "Canadian Federal Income Tax
Considerations" in this Circular.
Basis of the Offer
The basis of the Offer is one and seven-tenths Icecap
Preferred Exchangeable Shares or, at the option of a holder who
is a non-resident of Canada, one and seven-tenths D.V. Shares
(together, the "Shares of the Offeror") for each one Iceberg
Share.
Ownership of and Trading in Securities of Iceberg
D.V. Holdings, Inc. does not beneficially own, directly or
indirectly, or exercise control or direction over, any Iceberg
Shares and no director or senior officer of D.V. Holdings, Inc.
and, to the knowledge of the Offeror after reasonable inquiry, no
associate of any director or senior officer of D.V. Holdings,
Inc. (except as set forth below), no person or company holding
more than 10% of any class of the shares of D.V. Holdings Inc.,
no associate or affiliate of D.V. Holdings, Inc. and no person
acting jointly or in concert with D.V. Holdings, Inc.
beneficially owns or exercises control or direction over any
securities of Iceberg.
There are no commitments of the Offeror , any director or
officer of the Offeror, or anyone else acting jointly or in
concert with any person owning more than 10% of the common stock
of the Offeror, or anyone else acting jointly or in concert with
the Offeror or of any of the persons or companies referred to in
the preceding paragraphs to acquire Iceberg Shares, except as
provided in the Offer.
Restrictions on the sale of the common shares of D.V. Holdings,
Inc. being acquired by holders of Iceberg Shares
The D.V. Shares and the D.V. Trust Shares have been issued
pursuant to an exemption from the registration requirements under
the United States Securities Act of 1933, as amended. The D.V.
Shares and the D.V. Trust Shares are deemed to be "restricted
securities" as that term is defined in the Securities Act of
1933, as amended.
Rule 144, promulgated under the Securities Act of 1933, as
amended, provides for a holding period of restricted securities.
In general, a minimum of one year must elapse between the date of
the acquisition of the securities and any resale of the
securities. In addition, current public information must be
available about D.V. Holdings, Inc. unless sales are limited to
those sales made after two years. Under Rule 144 as currently in
effect, a person who has beneficially owned their restricted
shares for at least one year (including the holding period of any
prior owner) would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of (i)
1% of the number of shares of common shares then outstanding, or
(ii) the average weekly trading volume of the common shares
during the four calendar weeks preceding the filing of a Form 144
with respect to such sale. Such form is available from a
broker-dealer. Further, all sales must be made in broker's
transactions as defined under the Securities Act of 1933, as
amended, or a transaction directly with a "market maker." The
restrictions applicable to officers and directors, deemed to be
affiliates, are more restrictive.
Share Trading in the United States Generally
When the shares of D.V. Holdings, Inc. become eligible to be
sold by a holder thereof (see paragraph immediately above),
shareholders should be aware that the price that they may be able
to obtain therefor may fluctuate greatly. For instance, the
market price of the common shares could be subject to significant
fluctuations in response to various factors and events that are
beyond the control of a company or its management, including,
among other things, the liquidity of the market, quarterly
variations in actual or anticipated operating results, quote
rates, changes in estimates by an analyst, market conditions in
the industry in which a company competes, announcements by
competitors, regulatory actions and general economic conditions.
In addition, the stock market has from time to time experienced
significant price and value fluctuations that have affected the
market price of stock in all companies, and which may be
unrelated to the operating performance of particular companies.
Furthermore, as no active market for the common shares of the
Offeror has developed, future sales of substantial amounts of
common shares in the public market could adversely affect market
prices prevailing from time to time. Accordingly, future sales of
substantial amounts of common shares of the Offeror in the public
market after the lapse of existing resale restrictions could
adversely affect the prevailing market price.
Dividend Policy
Management expects that any profits generated from the
operations of Iceberg will be reinvested in its business and,
accordingly, no dividends are expected to be declared on the
Icecap Preferred Exchangeable Shares or the D. V. Shares in the
foreseeable future.
Business Relationship Between the Offeror and Iceberg
There is no business relationship between the Offeror and
Iceberg, except for the transactions contemplated herein.
Arrangements Between the Offeror and Directors or Senior Officers
or Shareholders of Iceberg
There are no arrangements or agreements between the Offeror
and any of the directors or officers or shareholders of Iceberg,
except agreements relating to their continued employment and
their employment terms with Iceberg, such agreements being in
conformance with usual market terms.
Material Changes in the Affairs of Iceberg
Except as disclosed herein, at the date hereof, the Offeror
is not aware of any information which indicates that any material
change has occurred in the affairs of Iceberg since the date of
the last published financial statements of Iceberg, being the
audited financial statements of Iceberg for the period ended
December 31, 1998.
Except as disclosed herein, the Offeror has no knowledge of
any material facts concerning the securities of Iceberg or other
material facts that have not previously been generally disclosed
and which would reasonably be expected to affect the decision of
Shareholders to accept or reject the Offer.
Investment Eligibility
Under the Regulations to the Income Tax Act (Canada) (the
"Tax Act") a share of the capital of a corporation is a qualified
investment for a trust governed by a registered retirement
savings plan or a registered retirement income fund if at the
time the share is acquired by the trust or at the end of the last
taxation year of the corporation ending before that time, the
corporation is a "small business corporation" and immediately
after the time the share was acquired, the annuitant under the
plan or fund was not a connected shareholder of the corporation.
Based and relying upon certain factual representations made to
counsel by an officer of Iceberg, in the opinion of Macleod
Dixon, special tax counsel to the Offeror, Iceberg was at the end
of its last taxation year, and will be at the time of the closing
of the exchange of Iceberg Shares under the Offer, a small
business corporation. Icecap Equity Inc. will also be a small
business corporation at the time that the Icecap Preferred
Exchangeable Shares are issued, provided that: (i) Icecap Equity
Inc. is not controlled by non-residents of Canada; and (ii) all
or substantially all of its assets are the Iceberg Shares.
Based upon and subject to the foregoing, in the opinion of
Macleod Dixon, the Icecap Preferred Exchangeable Shares acquired
under the Offer will generally be qualified investments for
trusts governed by registered retirement savings plans and
registered retirement income funds under the Tax Act, provided
that (i) the annuitants of such plans or funds are not "connected
shareholders" of Iceberg at the time that the Icecap Preferred
Exchangeable Shares are issued; (ii) Iceberg is connected with
Icecap Equity Inc. at the time that the Icecap Preferred
Exchangeable Shares are issued; (iii) the exchanged Iceberg
Shares were qualified investments for the trust immediately
before the exchange; (iv) neither D.V. Holdings, Inc. nor any
other person or persons who are not residents of Canada will own
or be entitled contingently or otherwise to acquire shares of
Icecap Equity Inc. representing in the aggregate more than 50% of
the voting rights of all the issued shares of Icecap Equity Inc.
For this purpose, a connected shareholder includes any person who
either alone or together with non-arm's length parties owns,
directly or indirectly (including for this purpose certain rights
to acquire shares), 10% or more of the shares of any class of
Iceberg, Icecap Equity Inc. or of any other related corporation,
including certain shares owned by trusts or partnerships of which
any such person is a member or beneficiary, including the trusts
governed by registered retirement savings plans or registered
retirement income funds, unless the aggregate cost amount of the
shares or rights so owned is less than $25,000. In this regard,
where reliance has been placed on the $25,000 limitation,
consideration should be given to making an election or elections,
including by such trusts, under Section 85 of the Tax Act to
ensure that the aggregate cost amount of the relevant Icecap
Preferred Exchangeable Shares does not exceed $25,000. Provided
that Icecap Equity Inc.'s taxation year end for the year of the
exchange is December 31, 1999, the deadline for such an election
will likely be March 30, 2000. In the absence of such an
election, the cost amount of such shares would be equal to their
fair market value at the time they are issued. The Put Rights and
Voting Rights in D.V. Holdings, Inc. and the D.V. Shares will not
be qualified investments for trusts governed by registered
retirement savings plans and registered retirement income funds.
No material adverse consequences should arise, provided that (i)
the value of such rights is not material on the date such rights
are issued; (ii) such rights are not disposed of otherwise than
as a result of an exercise of the Put Rights; and (iii) the D.V.
Shares are disposed of immediately following their acquisition
for proceeds of disposition equal to their fair market value,
such that no gain or loss arises.
The Icecap Preferred Exchangeable Shares will be considered
to be foreign property because they will not be listed on a
prescribed stock exchange and will be exchangeable for property
that is foreign property (i.e. the D.V. Shares). Because the
Icecap Preferred Exchangeable Shares will be issued in exchange
for Iceberg Shares and Icecap Equity Inc. will acquire control of
Iceberg, there will be a 24 month "grace period" before the cost
amount of such shares will, in effect, be included in determining
the cost amount to the trust of its foreign property for the
purposes of the special tax under Part XI of the Tax Act on
excess foreign property holdings.
Canadian Federal Income Tax Considerations
In the opinion of Macleod Dixon, special tax counsel to the
Offeror, the following is, as of the date hereof, a fair and
adequate summary of the principal Canadian federal income tax
considerations generally applicable to a holder of Iceberg Shares
(a "Shareholder") who disposes of Iceberg Shares pursuant to the
Offer. This summary is generally applicable to a Shareholder who,
for purposes of the Tax Act, holds the Iceberg Shares (and will
hold Icecap Preferred Exchangeable Shares or D.V. Shares) as
capital property and deals at arm's length with Iceberg, Icecap
Equity Inc. and D.V. Holdings, Inc. Iceberg Shares, Icecap
Preferred Exchangeable Shares and D.V. Shares will generally
constitute capital property to a Shareholder unless the
Shareholder is a trader or dealer in respect of such shares, has
acquired such shares in a transaction or transactions considered
to be an adventure in the nature of trade or is a financial
institution subject to the "market-to-market" rules within the
meaning of the Tax Act.
Certain Shareholders resident in Canada for the purposes of
the Tax Act whose Iceberg Shares might not otherwise qualify as
capital property may, in certain circumstances, be entitled to
have them treated as capital property by making an irrevocable
election in accordance with subsection 39(4) of the Tax Act.
Such an election would not, however affect the characterization
of (i) any D.V. Shares; or (ii) where an election is made by the
Shareholder under section 85 of the Tax Act, the Icecap Preferred
Exchangeable Shares.
Shareholders in respect of whom D.V. Holdings Inc. is a
foreign affiliate under the Tax Act should consult their own
advisors with respect to the special rules under the Tax Act in
respect of the ownership and disposition of the D.V. Shares.
Generally, D.V. Holdings, Inc. will not be a foreign affiliate of
a Shareholder provided that the Shareholder and persons not
dealing at arm's length with the Shareholder do not directly or
indirectly own at least 10% of the issued shares of any class of
D.V. Holdings, Inc.
This summary is based upon the current provisions of the Tax
Act, the regulations thereunder, all proposed amendments thereto
publicly announced by the Minister of Finance prior to the date
hereof and the current published administrative and assessing
practices of Revenue Canada. This summary does not otherwise take
into account or anticipate changes in the law, whether by way of
judicial, governmental or legislative decision or action, nor
does it take into account provincial, territorial or foreign tax
legislation or considerations, which may vary significantly from
those discussed herein.
This summary is of a general nature only and is not intended
to be, nor should it be construed to be, legal or tax advice to
any particular Shareholder. Accordingly, Shareholders should
consult their own independent tax advisors for advice with
respect to the income tax consequences to them of disposing of
their Iceberg Shares having regard to their own particular
circumstances.
Residents of Canada
The following portion of this summary is applicable to
Shareholders who, for purposes of the Tax Act (and any applicable
tax treaty), are resident in Canada at all relevant times.
Exchange of Iceberg Shares
A Shareholder who exchanges the Shareholder's Iceberg Shares
for Icecap Preferred Exchangeable Shares and does not make an
election under section 85 of the Tax Act as described below will
have proceeds of disposition of those Iceberg Shares equal to the
fair market value of the consideration received. The
consideration received will include both the Icecap Preferred
Exchangeable Shares and the associated Put Rights and Voting
Rights in D.V. Holdings, Inc. Such a Shareholder will realize a
capital gain or loss equal to the amount, if any, by which the
proceeds of disposition of the Iceberg Shares, net of any
reasonable costs of disposition, exceed or are exceeded by the
Shareholder's adjusted cost base of such shares. Such
Shareholder's cost of the consideration received on the exchange
will be equal to its fair market value.
The amount of a capital loss realized by a corporate
Shareholder may be reduced by the dividends received or deemed to
have been received by it on the Iceberg Shares, to the extent and
under the circumstances prescribed by the Tax Act. Similar rules
may apply where a corporation is a member of a partnership or
beneficiary of a trust that owns Iceberg Shares.
A Shareholder who exchanges all or a portion of the
Shareholder's Iceberg Shares for Icecap Preferred Exchangeable
Shares will be entitled to make a joint election with Icecap
Equity Inc. under section 85 of the Tax Act in respect of the
disposition. By making such an election, a Shareholder may be
entitled to defer the recognition of all or a portion of any
taxable capital gain arising on the exchange, as discussed in
more detail below.
Three-quarters of any capital gain (a "taxable capital
gain") arising on the exchange of Iceberg Shares must be included
in the Shareholder's income for the taxation year in which the
exchange occurs. Subject to certain specific rules contained in
the Tax Act, three-quarters of any capital loss (an "allowable
capital loss") may be deducted against any taxable capital gains
realized by the Shareholder in the taxation year in which the
exchange occurs, in any of the three preceding taxation years or
in any subsequent taxation year.
In the case of a Shareholder that is an individual, a
cumulative lifetime exemption of up to $500,000 in respect of
certain capital gains may be available. The eligible capital
gains include gains arising on the disposition of shares that are
qualifying small business corporation shares ("QSBC Shares").
The Iceberg Shares may be QSBC Shares for a particular
Shareholder provided that (i) the shares have been held
throughout the last 24 months only by the Shareholder or a person
that is related to the Shareholder; and (ii) certain other
conditions are met. In view of the complexity of these
conditions, certain of which depend on the personal circumstances
of the particular individual, individuals should consult their
own tax advisors in connection with this exemption.
Capital gains realized by individuals and certain trusts may
be subject to alternative minimum tax, even if the exemption for
QSBC Shares applies. A Shareholder that is a
"Canadian-controlled private corporation" may be liable to pay,
in addition to the tax otherwise payable, a refundable tax of 6
2/3% in respect of certain investment income, including net
taxable capital gains.
Section 85 Elections
A Shareholder who exchanges the Iceberg Shares for Icecap
Preferred Exchangeable Shares may jointly elect with Icecap
Equity Inc. under section 85 of the Tax Act and the corresponding
provision of any applicable provincial statute to deem the
Shareholder's proceeds of disposition to be equal to the amount
specified in the election. The amount specified cannot be (i)
less than the greater of the Shareholder's adjusted cost base of
the Iceberg Shares and the fair market value of the consideration
other than Icecap Preferred Exchangeable Shares received by the
Shareholder on the exchange ("non-share consideration"); and (ii)
more than the aggregate fair market value of the exchanged
Iceberg Shares. (In the event of a conflict between these two
requirements, the second requirement will govern.) Specified
elected amounts which do not otherwise comply with the
limitations under the Tax Act will automatically be adjusted
under the Tax Act so that they comply. For this purpose, the
Put Rights and Voting Rights in D.V. Holdings, Inc. will be
non-share consideration. A Shareholder will be required to
include in income any resulting taxable capital gain or allowable
capital loss in the manner and subject to the rules described
above.
Shareholders who wish to make an election under section 85
of the Tax Act should obtain from a Revenue Canada Tax Services
Office two copies of the current election form. It will be the
responsibility of each Shareholder who wishes to make a joint
election to (i) complete all portions of the election form which
are applicable, including the number and adjusted cost base of
all the Shareholder's Iceberg Shares and the elected amount, (ii)
sign the forms where required, and (iii) forward the signed forms
to Icecap Equity Inc. , by the earlier of October 1, 1999 and 30
days before the date on which the election is due to be filed.
Provided the completed and signed election forms are forwarded to
Icecap Equity Inc. as required above, Icecap Equity Inc. will
file the forms with Revenue Canada within the time permitted
therefor under the Tax Act. The deadline for filing an election
under section 85 of the Tax Act is the earlier of (i) June 30,
2000 (assuming that Icecap Equity Inc.'s taxation year end for
the year of the exchange is December 31, 1999) and (ii) the day
on or before which the Shareholder is required to file a Canadian
federal income tax return for the Shareholder's taxation year in
which the exchange occurs (i.e. the deadline will likely be April
30, 2000 for most individuals other than trusts and March 30,
2000 for most trusts other than testamentary trusts).
Each Shareholder who wishes to make an election under
section 85 of the Tax Act, or under any provincial legislation,
should submit the necessary forms to Icecap Equity Inc. as soon
as possible and, in any event, by the earlier of October 1, 1999
and 30 days before the date on which the election is due to be
filed. Icecap Equity Inc. will not be liable for any late filing
penalties or other loss resulting from the late filing of any
election form received by Icecap Equity Inc. or from the
invalidation of any election form unless such invalidation is
solely attributable to any negligent act or omission of Icecap
Equity Inc.
Shareholders should consult with their advisors as to the
desirability of making an election to defer all or a portion of
the capital gain that would otherwise arise. In the case of
Shareholders that are individuals, consideration should be given
to the fact that the Iceberg Shares and possibly the Preferred
Exchangeable Shares may be QSBC shares, but the D.V. Shares will
not be QSBC Shares.
Icecap Preferred Exchangeable Shares
Dividends
A Shareholder of Icecap Preferred Exchangeable Shares that
is an individual will be required to include in income dividends
received or deemed to be received on the Icecap Preferred
Exchangeable Shares, subject to the gross-up and dividend tax
credit rules normally applicable to dividends received from
taxable Canadian corporations.
Dividends received or deemed to be received on the Icecap
Preferred Exchangeable Shares by a Shareholder that is a
corporation must be included in the Shareholder's income, but
will generally be deductible in computing its taxable income. A
Shareholder that is a "private corporation" (as defined in the
Tax Act), or any other corporation resident in Canada and
controlled or deemed to be controlled by or for the benefit of an
individual or a related group of individuals, may be liable under
Part IV of the Tax Act to pay a refundable tax of 33 1/3% on
dividends received or deemed to be received on the Icecap
Preferred Exchangeable Shares to the extent that such dividends
are deductible in computing the Shareholder's taxable income.
Dividends or deemed dividends on the Icecap Preferred
Exchangeable Shares that are deductible by a corporate
Shareholder in computing its taxable income will not be subject
to the 10% tax under Part IV.1 of the Tax Act which is applicable
to certain dividends on taxable preferred shares (other than
short term preferred shares).
Disposition
A Shareholder of Icecap Preferred Exchangeable Shares
will normally realize a capital gain (or a capital loss) on the
disposition or deemed disposition of such shares (other than a
retraction, redemption or other disposition to Icecap Equity Inc.
) to the extent that the Shareholder's proceeds of disposition of
such Icecap Preferred Exchangeable Shares, net of any reasonable
costs of disposition, exceed (or are exceeded by) the aggregate
of the Shareholder's adjusted cost base of the Icecap Preferred
Exchangeable Shares immediately before the disposition. Where
the disposition of the Icecap Preferred Exchangeable Shares
occurs pursuant to the exercise of the Put Rights, the
Shareholder's proceeds of disposition of the Icecap Preferred
Exchangeable Shares would be equal to the fair market value of
the D.V. Shares received on the exchange, minus the cost to the
Shareholder of the Put Rights and the Put Rights are deemed not
to have been disposed of.
Where a Shareholder makes a joint election under section 85
of the Tax Act in respect of an exchange of Iceberg Shares for
Icecap Preferred Exchangeable Shares, as described above, the
cost to the Shareholder of the Icecap Preferred Exchangeable
Shares will equal the amount so elected less the aggregate fair
market value of any non-share consideration received (i.e. the
related Put Rights and Voting Rights in D.V. Holdings, Inc.).
Where a Shareholder does not make a joint election under
section 85 of the Tax Act, the cost to the Shareholder of the
Icecap Preferred Exchangeable Shares will equal the fair market
value of such Icecap Preferred Exchangeable Shares at the time
such shares are issued minus the fair market value of the
non-share consideration received.
Redemption or Retraction
On the redemption or retraction (collectively referred
to as a "redemption") of an Icecap Preferred Exchangeable Share
by a Shareholder who does not exercise the associated Put Rights
and Voting Rights in D.V. Holdings, Inc., the Shareholder will be
deemed to have received a dividend equal to the amount (if any)
by which the amount received on the redemption exceeds the
paid-up capital of such Icecap Preferred Exchangeable Share. In
the case of a Shareholder that is a corporation, in some
circumstances the amount of any deemed dividend may be
characterized pursuant to subsection 55(2) of the Tax Act as
proceeds of disposition rather than as a deemed dividend, for
purposes of calculating a capital gain on the retraction.
Subject to such possible characterization, a deemed dividend
arising on the redemption of an Icecap Preferred Exchangeable
Share is subject to the tax treatment accorded to dividends on
the Icecap Preferred Exchangeable Share described above. In
addition to this deemed dividend, the Shareholder of the Icecap
Preferred Exchangeable Shares may also realize a capital gain (or
a capital loss) on the redemption equal to the amount by which
the Shareholder's proceeds of disposition for the Icecap
Preferred Exchangeable Share, less the amount of any dividend
deemed to have been received by the Shareholder (described above)
and any reasonable costs of disposition, exceed (or are exceeded
by) the adjusted cost base of the Icecap Preferred Exchangeable
Share to the Shareholder.
The amount of a capital loss realized by a corporate
Shareholder may be reduced by the dividends received or deemed to
have been received by it on the Icecap Preferred Exchangeable
Shares, to the extent and under the circumstances prescribed by
the Tax Act. Similar rules may apply where a corporation is a
member of a partnership or beneficiary of a trust that owns
Icecap Preferred Exchangeable Shares.
The paid-up capital of an Icecap Preferred Exchangeable
Share being redeemed will be determined by dividing the paid-up
capital for the entire class of the Icecap Preferred Exchangeable
Shares by the number of such shares outstanding immediately
before the retraction. Generally, the paid-up capital of the
entire class at any time will reflect the consideration for which
the shares of the class were previously issued. In particular,
where a Shareholder makes an election under section 85 of the Act
in respect of the exchange of Iceberg Shares, the amount added to
the paid-up capital of the class on the issue to that Shareholder
of the Icecap Preferred Exchangeable Shares may not exceed the
elected amount minus the fair market value of the non-share
consideration. Because of the averaging involved in the
determination of paid-up capital, the limitation in respect of
the amount that may be added to paid-up capital on the issue of
Icecap Preferred Exchangeable Shares to a particular Shareholder
will be relevant in determining the paid-up capital of all
outstanding Icecap Preferred Exchangeable Shares.
Because the tax consequences of a retraction are materially
different from those arising on a disposition to D.V. Holdings,
Inc., a Shareholder who is considering such a retraction should
consider and consult with the Shareholder's tax advisor
concerning the alternative of exercising the associated Put
Rights, rather than retracting the Icecap Preferred Exchangeable
Shares. Similarly, where Icecap Equity Inc. gives notice of a
proposed redemption of such shares, Shareholders should consider
exercising their Put Rights in D.V. Holdings, Inc. prior to the
effective date of the redemption.
D.V. Holdings, Inc. Common Shares
Dividends
A holder of D.V. Shares will be required to include in
income dividends received or deemed to be received on the D.V.
Shares. In the case of an individual the gross up and credit
rules will not apply. In the case of a corporation the amount of
the dividend will not be deductible in computing taxable income.
Disposition
On a disposition of D.V. Shares by a Shareholder, a
capital gain or loss may arise. Such gain or loss would
generally be determined and treated in the same manner as a
capital gain or loss on a disposition (other than a retraction)
of the Icecap Preferred Exchangeable Shares.
Non-Residents of Canada
This portion of the summary is applicable to Iceberg Share
holders who are neither resident, nor deemed to be resident, in
Canada for purposes of the Tax Act or any applicable tax treaty,
who will not use or hold or be deemed to use or hold the Icecap
Preferred Exchangeable Shares or the D.V. Shares in the course of
carrying on a business in Canada and who do not carry on an
insurance business in Canada (a "Non-Resident Holder").
Exchange of Iceberg Shares under the Offer
As the Iceberg Shares are taxable Canadian property of a
Non-Resident Holder, a Non-Resident Holder is liable, subject to
relief under an applicable tax treaty, for Canadian tax on any
taxable capital gain that arises on an exchange of the Iceberg
Shares under the Offer and must file a Canadian income tax return
in respect thereof. In particular, provided that the value of
the Iceberg Shares is not primarily attributable to real property
situated in Canada, the Canada-U.S. Income Tax Convention would
provide relief in respect of such a capital gain for a resident
of the United States.
A Non-Resident Holder who exchanges an Iceberg Share under
the Offer will realize a taxable capital gain or allowable
capital loss, calculated in the same manner as described above
for residents of Canada. A Non-Resident Holder is entitled to
make a joint election under section 85 of the Tax Act in respect
of an exchange of Iceberg Shares for Icecap Preferred
Exchangeable Shares (but not in respect of an exchange of Iceberg
Shares for D.V. Shares) in the same manner as an Iceberg
Shareholder who is a resident of Canada. Generally, from a
Canadian income tax perspective, a Non-Resident Holder that is
entitled to tax treaty protection in respect of any capital gain
on the Iceberg Shares should exchange such shares for D.V. Shares
rather than Icecap Preferred Exchangeable Shares and in such a
case, there would be no need for, or ability to make, a section
85 election. For Non-Resident Holders that wish to make such an
election, reference should be made to the portion of the summary
relating to residents of Canada that deals with such an election.
A Non-Resident Holder is required to notify Revenue Canada
of a disposition, or proposed disposition, of the Iceberg Shares
and apply for a certificate in respect of the disposition. If
the required certificate is not received, Icecap Equity Inc. must
withhold 33 1/3 % of its cost and remit it to Revenue Canada on
account of any tax liability of the Non-Resident Holder in
respect of the disposition. Iceberg is willing to assist
Non-Resident Holders in making such notification and application.
Where a Non-Resident Holder who has elected to receive Icecap
Preferred Exchangeable Shares also wishes to make an election
under section 85 of the Tax Act, Revenue Canada will normally
require that such an election be made concurrently with the
application for the certificate.
Preferred Exchangeable Shares
Dividends
Dividends or deemed dividends in respect of the Icecap
Preferred Exchangeable Shares paid or credited to a Non-Resident
Holder will be subject to a non-resident withholding tax under
the Tax Act at the rate of 25%, subject to reduction under an
applicable tax treaty. For holders who are resident in the
United States for the purposes of the Canada-U.S. Income Tax
Convention, the treaty-reduced rate is generally 15%.
Disposition
A Non-Resident Holder will be liable, subject to relief
under an applicable tax treaty, for Canadian tax on any taxable
capital gain that arises on a disposition of the Icecap Preferred
Exchangeable Shares and must file a Canadian income tax return in
respect thereof. The amount of any taxable capital gain or
allowable capital loss will generally be calculated in the same
manner as described above for residents of Canada. The
notification and certificate procedure referred to above in
respect of the Iceberg Shares will also apply to the Icecap
Preferred Exchangeable Shares.
Redemption or Retraction
On the redemption or retraction (collectively referred to as
a "redemption") of an Icecap Preferred Exchangeable Share held by
a Non-Resident Holder, the Non-Resident Holder will be deemed to
have received a dividend equal to the amount (if any) by which
the amount received on the redemption exceeds the paid-up capital
of such Icecap Preferred Exchangeable Share. Reference should be
made to the discussion of the determination of paid-up capital
above in connection with residents of Canada. This deemed
dividend will be subject to Canadian withholding tax as described
above. The Non-Resident Holder may also realize a capital gain
(or a capital loss) equal to the amount by which the holder's
proceeds of disposition for the Icecap Preferred Exchangeable
Share, less the amount of any dividend deemed to have been
received by the holder (described above) and any reasonable costs
of disposition, exceed (or are exceeded by) the adjusted cost
base of the Icecap Preferred Exchangeable Share to the
Non-Resident Holder. Any capital gain so realized will be
subject to tax under the Tax Act, subject to relief under an
applicable tax treaty.
Because the tax consequences of a retraction are materially
different from those arising on a disposition to D.V. Holdings, a
Non-Resident Holder who is considering such a retraction should
consider and consult with the Non-Resident Holder's tax advisor
concerning the alternative of exercising the associated Put
Rights, rather than retracting the Icecap Preferred Exchangeable
Shares. Similarly, where Icecap Equity Inc. gives notice of a
proposed redemption of such shares, Non-Resident Holders of
Icecap Preferred Exchangeable Shares should consider exercising
their associated Put Rights prior to the effective date of the
redemption.
D.V. Shares
A Non-Resident Holder will not be subject to tax under the
Tax Act in respect of gains or losses arising on the disposition
of a D.V. Share or in respect of dividends received on such
share. The notification and certificate procedure referred to
above in respect of the Iceberg Shares will not apply to the D.V.
Shares because they will not be taxable Canadian property under
the Tax Act for a non-resident Holder.
Expenses of the Offer
The expenses relating to the Offer, including financial advisory
fees, depositary, printing, accounting and legal expenses will be
paid by Iceberg.
Depositary
The Offeror has appointed Smyth Woodland & Del Rizzo, Barristers
and Solicitors, to act as Depositary for the receipt of
certificates in respect of Shares and related Letters of
Acceptance and Transmittal deposited under the Offer and for the
payment of the purchase price for Shares purchased by the Offeror
pursuant to the Offer. The Depositary will receive no
compensation from the Offeror for its depository services in
connection with the Offer but will be indemnified against certain
liabilities, including liabilities under securities laws.
Statutory Rights
Securities legislation in certain of the provinces and
territories of Canada provides Iceberg Shareholders in addition
to any other rights they may have at law, with rights of
rescission or to damages, or both, if there is a
misrepresentation in a circular or notice that is required to be
delivered to such Shareholders. However, such rights must be
exercised within prescribed time-limits. Shareholders should
refer to the applicable provisions of the securities legislation
of their province or territory for particulars of those rights or
consult with a lawyer.
For example, the Securities Act (Newfoundland) provides, in
effect, that a shareholder/offeree whose last address as shown on
the books of the company is in Newfoundland and who is a party to
a contract resulting from a take-over has, subject to the
limitations set forth in the said Act, a right to rescind the
contract if the offering circular received by the offeree, as of
the date of receipt, contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make
any statement contained therein not misleading in light of the
circumstances in which it was made, but any action to enforce
this right may not be commenced after the expiration of the time
limits set forth in such Act. The right of rescission or damages
is in addition to and without derogation from any other rights an
offeree may have at law.
The foregoing is a summary only and is subject to the
express provisions of the applicable legislation, including
section 131 of the Securities Act (Newfoundland), which confer
remedies for misrepresentation. Shareholders resident in other
provinces or territories should refer to corresponding provisions
of securities legislation of such Shareholders' province or
territory for the particulars of these rights or consult with a
lawyer.
Approval and Certificate
The contents of the Offer and the Offering Circular have
been approved and the sending, communication or delivery thereof
to the Shareholders has been authorized by the Board of Directors
of Icecap Equity Inc. and D. V. Holdings, Inc.
The foregoing contains no untrue statement of a material
fact and does not omit to state a material fact that is required
to be stated or that is necessary to make a statement not
misleading in light of the circumstances in which it was made.
The foregoing does not contain any misrepresentation likely to
affect the value or market price of the Iceberg Shares.
DATED: May 3, 1999.
Icecap Equity Inc. D. V. Holdings, Inc.
Per: /s/ Paul Benson Per: /s/ Roy Pockett
President President
<PAGE>
Exhibit 10.7 - Notice of Change in Purchase Offer for
Securities of Iceberg Industries
This document is important and requires your immediate attention.
If you are in any doubt as to how to deal with it, you should
consult your investment dealer, stockbroker, bank manager, legal
or other professional advisor.
NOTICE OF CHANGE
of the
FORMAL OFFER
by Icecap Equity Inc. and D. V. Holdings, Inc.
to purchase all of the
outstanding Common Shares of
Iceberg Industries Corporation
On May 3, 1999, Icecap Equity Inc. and D.V. Holdings, Inc.
(collectively referred to herein as the "Offerors") made an offer
to purchase all of the outstanding common shares of Iceberg
Industries Corporation on the basis of one and seven-tenths
Preferred Exchangeable Shares of Icecap Equity Inc. for each one
common share of Iceberg Industries Corporation or, at the option
of the holder of the common shares of Iceberg Industries
Corporation who is a non-resident of Canada, one and seven-tenths
common shares of D.V. Holdings, Inc. for each one common share of
Iceberg Industries Corporation (the "Offer").
The Offerors are hereby adding to the Offering Circular by
providing supplementary information to the shareholders of
Iceberg Industries Corporation as required by the Securities Act,
Revised Statutes of Newfoundland 1990, Chap. S-13, as amended,
(the "Securities Act") and pursuant to an Order of the Director
of Securities dated May 28, 1999 and made pursuant to section 105
of the Securities Act, a copy of which Order is annexed hereto.
Particulars of Change:
The particulars of change are as set forth in the List of
Supplementary Information and Directors Circular, both of which
documents are annexed hereto.
Other Terms and Conditions:
Except as provided for in this Notice of Change, the terms and
conditions of the Offer shall remain in full force and effect,
unamended.
Statutory Rights:
Securities legislation in certain of the provinces and
territories of Canada provides securityholders of Iceberg
Industries Corporation with, in addition to any other rights they
may have at law, rights of rescission or to damages, or both, if
there is a misrepresentation in a circular or notice that is
required to be delivered to such securityholders. However, such
rights must be exercised within prescribed time limits.
Securityholders should refer to the applicable provisions of the
securities legislation of their province or territory for
particulars of those rights or consult with a lawyer.
APPROVAL AND CERTIFICATE
The contents of this Notice of Change have been approved and the
publication, sending, communication or delivery thereof to
shareholders has been authorized by the Board of Directors of the
Offerors. The Offer and Offering Circular and this Notice of
Change contain no untrue statement of a material fact and do not
omit to state a material fact that is required to be stated or
that is necessary to make a statement not misleading in the light
of the circumstances in which it was made. The foregoing does
not contain any misrepresentation likely to affect the value or
market price of the Shares.
DATED this 31st of May, 1999.
Icecap Equity Inc. D. V. Holdings, Inc.
Per: /s/ Paul Benson Per: /s/ Roy Pockett
President President
<PAGE>
Exhibit 10.8 - Hong Kong Bank Loan Agreement, with
guarantees
Hongkong Bank of Canada
GUARANTEE (For use in all Provinces except Quebec)
1. To Hongkong Bank of Canada
In consideration of Hongkong Bank of Canada (herein called the
"Bank") dealing with
Iceberg Industries Corporation
(herein called the "Customer") and one dollar and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned hereby jointly and severally
unconditionally guarantees) payment to the Bank of all present
and future debts and liabilities direct or indirect, absolute or
contingent, now or at any time and from time to time hereafter
due or owing to the Bank from or by the Customer whether as
principal or surety, and whether incurred by the Customer alone
or jointly With any other Corporation, person or persons, or
otherwise howsoever together with all costs, charges and expenses
(including legal fees on a solicitor and client basis) incurred
by the Bank, the receiver, receiver-manager or agent of the
Customer, or the agent of the Bank in the perfection and
enforcement of this Guarantee and of any security held by the
Bank in respect of such indebtedness, obligations, liabilities,
expenses and interest.
Provided that no sum in excess of $ 249,900.00 and interest
thereon as herein provided calculated from the date demand is
made under this Guarantee and accruing both before and after
judgment (the "Limited Amount"), shall be recoverable from the
undersigned hereunder.
[For an obligation which is payable only in a currency other than
Canadian currency express the Limited Amount in the foreign
currency.]
Provided that if this Guarantee is expressed to be made in
respect of a Limited Amount, the undersigned shall, in addition
to the Limited Amount be liable for all amounts received by the
undersigned as trustee for the Bank in accordance with paragraphs
12 or 17 and all costs, charges and expenses (including legal
fees on a solicitor and client basis) incurred by the Bank, its
receiver, its receiver-manager or agent of the Customer or the
agent of the Bank in the perfection and enforcement of this
Guarantee
And the undersigned and each of them (if more than one) hereby
jointly and severally agree with the Bank as follows:
1. The sum collectible by the Bank under this Guarantee shall
include interest accruing on the debt owed by the Customer to the
Bank at the respective rates of interest Applicable to the
Various obligations of the Customer which constitute the
Customer's debts and liabilities to the Bank. Where the Customer
is liable to the Bank for interest calculated at more than one
rate then the particular rate of interest charged on a particular
obligation shall continue to apply hereunder in respect of such
obligation both before and after default and before and after
judgment.
2. Every certificate issued under the hand of the Manager or
Acting Manager of the Bank at the branch where the Customer's
account is kept, purporting to show the amount at any particular
time due and payable to the Bank and covered by this Guarantee,
shall be received as conclusive evidence against the undersigned
that such amount is at such time due and payable to the Bank and
is covered hereby.
3. If this Guarantee is expressed to be made in respect of a
Limited Amount and the Limited Amount in the aggregate of the
obligations of the Customer, then a certificate by the Manager or
Acting Manager of the branch of the Bank where the Customer's
account is kept shall be conclusive as to which of the
obligations of the Customer are being allocated for collection
under this Guarantee and the rate or rates of interest
applicable.
4. If the Customer is a corporation, no change in the name,
objects, capital stock or constitution of the Customer shall in
any way affect the liability of the undersigned, either with
respect to transactions occurring before or after any such
change, and this Guarantee shall extend to all debts and
liabilities to the Bank of the person or corporation who or which
assumes the obligations of the Customer in whole or in part in
whatsoever manner including, without limitation, by amalgamation
with the Customer.
5. The Bank shall not be obliged to inquire into the powers of
the Customer or any of its directors or other agents acting or
purporting to act on its behalf, and moneys, advances, renewals
or credits in fact borrowed or obtained from the Bank in exercise
of such powers shall be deemed to form part of the debts and
liabilities hereby guaranteed, notwithstanding that such
borrowing or obtaining of moneys, advances, renewals or credits
is in excess of the powers of the Customer or of its directors or
other agents, or is in any way irregular or, defective or
informal.
6. If the Customer is a partnership, no change in the name of
the Customer's firm or in the membership of the Customer's firm
through the death, retirement or introduction of one or more
partners or otherwise, or by the disposition of the Customer's
business in whole or in part, shall in any way affect the
liability of the undersigned, either with respect to transactions
occurring before or after any such change, and this Guarantee
shall extend to all debts and liabilities to the Bank of the
person or corporation who or which assumes the obligations of the
Customer in whole or in part in whatsoever manner.
7. The Bank, without exonerating in whole or in part the
undersigned, may grant time, renewals, extensions, indulgences
releases and discharges to, may take securities from and give the
same and any or all existing securities up to, may abstain from
taking securities from, or from perfecting securities of, may
cease or refrain from giving credit or making loans or advances
to, may accept compositions from and may otherwise deal with the
Customer and all other persons including the undersigned and any
other guarantor) and securities, as the Bank may see fit, and all
dividends, compositions, and moneys received by the Bank from the
Customer or from any other persons or estates capable of being
applied by the Bank in reduction of the debts and liabilities
hereby guaranteed, shall be regarded for all purposes as payments
in gross. No loss of or in respect of the securities received by
the customer or others, whether occasioned by the fault of the
Bank or otherwise, shall in any way limit or lessen the liability
of the undersigned under this guarantee. Until all indebtedness
of the Customer to the Bank has been paid in full, the
undersigned shall not have any right of subrogation to the Bank
or to the securities held by the Bank and its Guarantee shall not
be diminished or affected on account of any act or failure to act
on the part of the Bank which would prevent subrogation front
operating in favor of the undersigned. The Bank shall be entitled
to prove against the estate of the Customer upon any insolvency
or winding-up in respect of the whole of said debts and
liabilities; and the undersigned shall have no right to be
subrogated to the Bank or to the securities held by the Bank
until the Bank has received payment in full of its claim with
interest.
8. The Bank, in its sole discretion and as the Bank sees fit,
without in any way prejudicing or affecting the rights of the
Bank hereunder, may appropriate any moneys received to any
portion of the debts and liabilities hereby guaranteed, whether
then due or to become due, and may revoke or alter any such
appropriation.
9. This shall be a continuing guarantee, and shall cover and
secure any ultimate balance owing to the Bank, but the Bank shall
not be obliged to enforce its rights against the Customer or
other persons or the securities it may hold before being entitled
to payment front the undersigned of all and every of the debts
and liabilities hereby guaranteed: Provided always that the
undersigned may determine his or her or their further liability
under this continuing guarantee by 90 days' notice in writing to
be given to the Bank, and the liability hereunder of the
undersigned shall continue until the expiration of 90 days after
the giving of such notice, notwithstanding the death or insanity
of the undersigned, and after the expiry of such notice (lie
undersigned shall remain liable under this Guarantee in respect
of any sum or sums of money owing to the Bank as aforesaid on the
date such notice expired and also in respect of any contingent or
future liabilities incurred to or by the Bank on or before such
date but maturing thereafter, but in the event of the
determination of this Guarantee as to one or more of the
undersigned it shall remain a continuing guarantee as to the
other or others of the undersigned.
10. Notwithstanding the provisions of any statute relating to
the rate of interest payable by debtors, this Guarantee shall
remain in full force and effect whatever the rate of interest
received or demanded by the Bank.
11. The undersigned hereby grants to the Bank the right to set
off against any and all accounts, credits or balances maintained
by the undersigned with the Bank, the aggregate amount of any and
all undersigned hereunder if and shall become due and payable.
12. All debts and liabilities present and future of the Customer
to the undersigned are hereby assigned to the Bank and postponed
to the present and future debts and liabilities of the Customer
to the Bank and all moneys received by the undersigned front the
Customer shall be received in trust for the Bank and forthwith
upon receipt shall be paid over to the Bank until the Customer's
indebtedness to the Bank is fully paid and satisfied; all without
prejudice to or without in anyway limiting or lessening the
liability of the undersigned to the Bank whether this Guarantee
is expressed to be made in respect of a Limited Amount or
otherwise.
13. The Bank shall not be obliged to give the undersigned notice
of default by the Customer, and upon any default by the Customer
the undersigned shall be held bound directly to the Bank as
principal debtor in respect of the payment of the amounts hereby
guaranteed.
14. No suit based on this Guarantee shall be instituted until
demand for payment has been made. Any notice, demand or court
process may be served by the Bank on the undersigned or his or
her or their legal personal representatives either personally or
by posting the same by ordinary mail postage prepaid, in all
envelope addressed to the address of the party to be served last
known to the Bank, and the notice or demand so sent shall be
deemed to be served on the day following that on which it is
mailed.
15. This Guarantee shall be operative and binding upon every
signatory of notwithstanding the non-execution hereof by any
other proposed signatory or signatories, and the undersigned
acknowledges that this Guarantee has been delivered free of any
conditions and that no statements, representations, agreements,
collateral agreements or promises have been made to or with the
undersigned affecting or limiting the liability of the
undersigned under this Guarantee or inducing the undersigned to
grant this Guarantee except as specifically contained herein in
writing, all agree that this Guarantee is in addition to and not
in substitution for any other guarantees held or which may
hereafter be held by the Bank.
16. No alteration or waiver of this Guarantee or of any of its
terms, provisions or conditions shall be binding on the Bank
unless made in writing under the signature of either the
President or one of the Vice-Presidents of the Bank.
17. The undersigned shall file all claims against the Customer
in any bankruptcy or other proceedings in which the filing of
claims is required by law or upon any indebtedness of the
Customer to the undersigned and will assign to the Bank all of
the undersigned's rights thereunder. In all such cases, whether
an administration, bankruptcy, or otherwise, the person or
persons authorized to pay such claims shall pay to the Bank the
full amount payable on the claim in the proceeding before making
any payment to the undersigned; all without in any way limiting
or lessening the liability of the undersigned to the Bank whether
this Guarantee is expressed to be made in respect of a Limited
Amount or otherwise. All moneys received by the undersigned in
all such cases shall be received in trust for the Bank and
Forthwith upon receipt shall be paid over to the Bank until the
Customer's indebtedness is fully paid and satisfied. To the
fullest extent necessary for the purposes of this paragraph 17
the undersigned hereby assigns to the Bank all the undersigned's
rights to any payments or distributions to which the undersigned
otherwise would be entitled.
18. In this Guarantee, any word importing the singular number
shall include the plural, and without restricting the generality
of the foregoing, where there is more than one undersigned any
reference to the undersigned refers to each and every one of the
undersigned, and any word importing a person shall include a
corporation, partnership and any other entity.
19. If this Guarantee is executed by more than one party, the
liability of each of the undersigned hereunder shall be joint and
several.
20. This Guarantee shall extend to and enure to the benefit of
the successors and assigns of the Bank, and shall be binding upon
the Undersigned and the respective heirs, executors,
administrators, successors and assigns of each of the
undersigned.
21. No invalidity, irregularity or unenforceability by reason of
any bankruptcy or similar law or any law or order of any
government or agency thereof purporting to reduce, amend or
otherwise affect the liability of the Customer to the Bank or of
any security therefor, shall affect, impair or be a defense to
this Guarantee. If one or mole of the provisions contained herein
shall be invalid, illegal or unenforceable in any respect, such
provision shall be deemed to be severable and the validity,
legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
22. With respect to any portion of the indebtedness secured
hereby which is payable in a currency other than Canadian
currency (the "Foreign Currency Obligation"), the following
provisions shall apply:
(a) Payment hereunder with respect to the Foreign Currency
Obligation shall all be made in immediately available funds
in lawful money of the jurisdiction in the currency of which
the Foreign Currency Obligation is payable (the "Foreign
Currency") in such form as shall be customary at the time of
payment for settlement of international payments in
Vancouver, British Columbia without set-off, compensation or
counterclaim and free and clear of and without deduction for
any and all present and future taxes, levies, imposts,
deductions, charges and withholdings with respect thereto.
(b) The undersigned shall hold the Bank harmless from any
loss incurred by the Bank arising from any change in the
value of Canadian currency in relation to the Foreign
Currency between the date the Foreign Currency Obligation
becomes due and the date of payment thereof.
(c) If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder in the Foreign
Currency into Canadian funds ("Canadian dollars"), the rate
of exchange used shall be that at which in accordance with
normal banking procedures the Bank could purchase the
Foreign Currency with Canadian dollars on the business day
preceding that on which final judgment is given.
The obligation of the undersigned in respect of any Foreign
Currency Obligation due by it to the Bank hereunder shall,
notwithstanding any judgment in Canadian dollars, be discharged
only to the extent that on the business day following receipt by
the Bank of any sum adjudged to be so due in Canadian dollars the
Bank may in accordance with normal banking procedures purchase
the Foreign Currency with Canadian dollars; if the amount of the
Foreign Currency so purchased it less than the sum originally due
to the Bank in the Foreign Currency the undersigned agrees, as a
separate obligation and notwithstanding any such judgment, to
indemnify the Bank against such loss and if the Foreign Currency
purchased exceeds the sum originally due to the Bank in the
Foreign Currency the Bank agrees to remit such excess to the
undersigned to the extent the undersigned Is entitled thereto.
23. All the rights, powers and remedies of the Bank hereunder
and under any other agreement now or at any time hereafter in
force between the Bank and the undersigned shall be cumulative
and shall be in addition to and not in substitution for all
rights, powers and remedies of the Bank at law or in equity.
24. The undersigned by its signature of this Guarantee on the
one hand and the Bank by making this Guarantee available to the,
undersigned on the other hand acknowledge having expressly
required it to be drawn up in the English language. La sosignee
par sa signature de ce cautionnement d'une part et la Banque en
mettant ledit cautionnement A sa disposition d'autre part,
reconaissent avoir expressenment exige qu'il soit redige en
language anglaise.
25. This Guarantee shall be construed in accordance with the
laws of the Province of Newfoundland and shall be deemed to have
been made in such Province and, to be performed there, and the
Courts of such Province shall have jurisdiction over all disputes
which may arise under this Guarantee, provided that nothing
herein contained shall prevent the Bank from proceeding at its
election against the undersigned in the courts of any other
province or country.
If the undersigned becomes resident outside the Province
referred to in this paragraph 25 then the undersigned hereby
submits to the jurisdiction of the courts of competent
jurisdiction of the Province referred to in this paragraph 25 in
respect of any proceeding hereon. Service of any process upon the
undersigned may be made by ordinary mail in an envelope addressed
to the following address:
447 Kenmount Road
St Johns, Newfoundland
or in any other manner permitted by law.
26. Each of the undersigned hereby acknowledges that he or she
has read the contents of this Guarantee and understands that the
signing of this Guarantee Involves joint and several financial
responsibility on the part of the undersigned.
Given under seal at St. Johns, Newfoundland, this 8th day of May,
1998.
/s/ Millenium Holdings Corporation
<PAGE>
Exhibit 10.9 - Permit to Harvest Icebergs, granted by
government of Newfoundland and Labrador
GOVERNMENT OF
NEWFOUNDLAND AND LABRADOR
Department of Environment and Labour
Water Resources Management Division
June 25, 1999
Mr. Lewis W. Stoyles, FCA, CMC
Vice President, Finance
Iceberg Industries Corporation
16 Forest Road, Suite 200
P.O. Box 8251
St. John's, NF A1B3N4
Dear Mr. Stoyles:
Re: Notification of Acceptance and Reporting for Water Use
Authorization No. WUA-99-010-Water Bottling from Harvesting
Icebergs
The Water Use Authorization No. WUA-99-010 is not valid
unless Iceberg Industries Corporation completes and returns the
Notification of Acceptance of Water Use Authorization to the
Water Rights Section of this Department within thirty (30) days
of receipt. Also, your Corporation must promptly continue its
reporting on iceberg harvesting related activities and shall
abide by the terms and conditions of the said Authorization.
Thank you for your anticipated cooperation.
Yours very truly,
/s/
A.K. Abdel-Razek, Ph.D., P.Eng.
Manager, Water Rights Section
<PAGE>
GOVERNMENT OF
NEWFOUNDLAND AND LABRADOR
Department of Environment and Labour
WATER USE AUTHORIZATION
Pursuant to the Environment Act
Date: June 17, 1999 No: WUA 99-010
File: 516
Holder: Iceberg Industries Corporation
16 Forest Road, Suite 200
P.O. Box 8251
St. John's, NF A1B 3N4
Attention: Mr. Lewis W. Stoyles, FCA, CMC, Vice-President,
Finance
Re: Water Use from Harvesting Icebergs
Authorization is hereby given to Iceberg Industries
Corporation "the Holder" to harvest icebergs within the
jurisdiction of the Province for the purpose of obtaining water
from these icebergs and the water so obtained may be used to
produce bottled water, vodka, beer, and other finished water
based products which may be sold to consumers in and outside the
Province, in reference to the application dated April 19, 1999.
This Authorization does not release the Holder from the
obligation to obtain appropriate approvals, permits or licences
from other concerned federal, provincial, and municipal agencies.
This Authorization is subject to the terms and conditions,
reservations, exceptions, and provisions stated herein and the
Environment Act. Appendices A and B (attached) form part and
parcel of this Authorization.
Failure to comply with the terms and conditions,
reservations, exceptions, and provisions set out herein will
render this Authorization null and void, place the Holder and/or
its agent(s) in violation of the Environment Act, and make the
Holder responsible for any remedial measures which may be
prescribed by the Department of Environment and Labour.
/s/
MINISTER
<PAGE>
Exhibit 10.10 - Distribution Agreement with Transtrade
International
AGREEMENT
This agreement entered into this 16th day of August, 1999 by and
between "ICEBERG INDUSTRIES CORPORATION", hereinafter called the
SUPPLIER and "TRANSTRADE INTERNATIONAL, INC." hereinafter called
MC (Export Management Co.).
Witnesseth:
Whereas, EMC believes it can adequately sell and distribute the
products of the SUPPLIER in the territories of the world
hereinafter set forth, these products at the present time
specifically include the SUPPLIERS line of ICEBERG WATER, SPRING
WATER, BEER AND ICEBERG VODKA, both branded and private label.
Private label product will exempt sales to President's Choice
International.
Whereas, the SUPPLIER desires to sell their products in the
territories hereinafter set forth and represents itself to be
capable of delivery to the EMC quantities of the products
according to terms, delivery times, conditions and prices set
forth hereafter.
Now, therefore, in consideration of the above and each and all of
the terms and provisions hereinafter contained, it is agreed as
follows:
1. SUPPLIER grants EMC authority to appoint representatives or
distributors for the sale of their products in the foreign
territory, but such representative-distributors shall be subject
to all limitations of the EMC set forth herein and will require
SUPPLIER'S approval of appointment.
2. EMC shall have the exclusive right to sell SUPPLIER'S products
to international markets, hereinafter referred to as the foreign
territory and as shown in Schedule A. SUPPLIER may authorize EMC
to sell to domestic accounts by separate letter of appointment.
3. EMC agrees not to sell or cause to be delivered any of
SUPPLIER'S products within the United States, except for export
to foreign territory.
4. SUPPLIER agrees that all inquiries, orders, communications and
leads of any kind, referring to sales to be made directly or
indirectly, to or for the foreign territory shall be immediately
referred by the SUPPLIER to the EMC.
5. SUPPLIER agrees to supply EMC with sufficient samples,
catalogues, price lists, technical data, etc. which are required
to suitably promote their products in the area covered by this
agreement.
6. EMC agrees to pay all the costs involved in converting
domestic labels, literature, and packaging to different wording
and language including private labeled products with SUPPLIER'S
approval.
7. SUPPLIER'S selling price to EMC will be the lowest price
offered domestically or internationally less ten (10%) percent.
Terms are 3%10, net 30. Sales to President's Choice will be
exempt from these price points.
8. SUPPLIER'S selling price to EMC is F.O.B. SUPPLIER'S
warehouse.
9. SUPPLIER shall not be liable for any additional forwarding
freight charges, fees, or expenses related to export shipments.
10. EMC assumes full responsibility for arranging and scheduling
all forwarding freight carriers related to picking up shipments
from SUPPLIER.
11. EMC agrees to place orders with SUPPLIER by written purchase
order or facsimile transmittal.
12. SUPPLIER agrees to furnish EMC a shipping date within three
(3) working days after receipt of order for EMC to facilitate
forwarding arrangements.
13. EMC assumes full credit responsibility on all orders
submitted by EMC to SUPPLIER or on orders received by the
SUPPLIER and approved by EMC in writing. EMC may extend to the
customers whatever terms of payment, which at EMC's discretion,
are necessary and advisable to obtain orders. SUPPLIER shall not
be liable for, nor bear any of the costs of financing or granting
of extended terms of payment to any such customers.
14. In addition to acting as an independent export management
company, EMC will be responsible for the preparation of all
documentation relating to export shipments, including consular
papers, customs declaration, ocean bills of lading and airway
bills of lading, pro-forma invoices, etc. EMC will also be
responsible for air freight and marine insurance, overseas
billing and collection, staff travel, overseas postage,
communication charges, and any other routine matters related to
foreign trade not otherwise agreed upon herein.
15. SUPPLIER shall have the right to increase prices at their own
discretion, so long as consistent with the price changes in the
domestic market. However, SUPPLIER shall, before such increased
prices become effective, give to EMC a minimum of 60 days notice
of proposed price increase, or when applicable, notice of
availability of new products or modifications of existing
products and prices. Such notices shall be sent by facsimile or
registered mail, return receipt requested. Where firm quotations
have been given by EMC and accepted by EMC's customers subject to
the above and where EMC has firm order, but where the necessary
export formalities (such as obtaining of the import license,
opening of letter credit, etc.) have not been completed, the
order will be honored at quoted price for a period up to 60 days
from date of quotation.
16. SUPPLER shall have the right to delete products, modify
product labels, formulations and packaging at their own
discretion. However, SUPPLIER will notify EMC in writing of any
changes to label, package size, and formulations thirty (30) days
prior to shipping any orders which EMC has entered with SUPPLIER.
17. SUPPLIER agrees within reasonable limits to extend to export
sales the same warranty covering their merchandise as is extended
in the domestic market.
18. SUPPLIER agrees that EMC has exclusive power to represent the
SUPPLIER in all licensing agreements in the areas covered by this
agreement and agrees to refer all inquiries regarding such
licensing agreements to EMC. SUPPLER will retain final approval
on any negotiations for licensing rights.
19. SUPPLIER and all subsidiary companies' Trademarks are the
exclusive property of SUPPLIER.
20. This agreement shall remain in effect for an initial period
of Eighteenth 8) months from the date of signing SUPPLIER agrees
to automatically renew this agreement if EMC purchases are equal
to ten (10 of SUPPLIER'S U.S. revenues during the Eighteen (18)
months of the product line offered by SUPPLIER. After the
eighteen (18) month period, the exclusivity shall be
automatically renewed if EMC has an annual sales increase of
Fifteen (15%) percent for the first annual period, and Ten (10%)
percent on subsequent annual periods of four: (4) years.
Annual purchases for purposes of meeting the annual percentage
increases will be based on the first period (18 months) of
purchases required under this agreement. The purchase
requirements will have as a base number those purchases required
for the eighteen (18) month period and subsequent purchase quotas
will not be affected by purchases which exceed the minimum
requirements for the 18 month period or for any subsequent period
when the annual purchases exceed the required percentage
increases from year to year. EMC will have a moratorium of one
(1) annual period if purchase increases are no more than ten
(10%) percent less than purchase requirements due to territorial
currency disaster.
Sales performance requirements will be decreased in equal dollar
amount to any product discontinued or eliminated from the product
line, based on the amount purchased the previous year. If
SUPPLIER adds new products to the line, new purchase performance
agreements can be added to this agreement by mutual agreement in
writing.
SUPPLIER will notify EMC in writing of any deficiency in meeting
purchase performance within ten (10) days after the end of any
contract period. EMC will have forty-five (45) days to remedy
deficiency.
Should the SUPPLIER not notify EMC within thirty days (30) at the
end of any one (1) year period that the annual purchases are not
sufficient for renewal, it will be construed as a part of this
agreement to mean the latest annual purchases are to be the new
base sales figure for the next annual period and subsequent
percentages increases for continuing the agreement will be based
on the last annual period purchases.
21. This agreement shall supersede all prior agreements, may not
be modified except in writing, and shall be construed under the
laws of the State of South Carolina.
22. Cancellation may be accomplished by either party giving 90
days written notice to the other, subject to the stipulations in
paragraph 20 , above. SUPPLIER agrees to fill all orders from EMC
which might be forwarded for 90 days after termination of this
agreement should termination take place. In the event of
termination by SUPPLIER, EMC shall continue to receive commission
for remaining term of any license then in effect or subsequently
consummated for which EMC was in negotiation at time of
cancellation. However, in this event, EMC will continue to
perform all its responsibilities relative to servicing such
licenses at the option of licenser.
23. This agreement shall be binding on all successors to the
principals named herein.
24. In the event of any dispute hereunder, both parties agree to
arbitration in South Carolina under the rules and auspices of the
American Arbitration Association.
25. The spirit of this agreement is that the two parties are to
cooperate to the fullest extent in furthering their mutual
interest.
26. Whenever, by this agreement, any notice shall be required to
be given to either party, such notice shall be addressed to such
party at the following address, or at such other address as may
be provided in the future.
27. This agreement will be non-assignable without prior written
approval from either party.
28. In the event SUPPLIER sells its stock or operations, this
agreement will be binding to purchaser unless a new mutually
agreed contract can be agreed upon.
IN WITNESS WHEREOF the parties hereto have set their hands and
seals, executing this document in duplicate this 16th day August
1999.
By /s/ By /s/ Paul Benson
President President
Transtrade International, Inc. Iceberg Industries
Corporation
<PAGE>
Schedule A - Territories
Water, Beer and Vodka:
UAE
Bahrain
Israel
Lebanon
Palestine
Italy
Monaco
Bulgaria
Romania
China (Excluding Hong Kong)
Malaysia
S. Korea
All Caribbean Countries (w/Bermuda to Trinidad and including
Puerto Rico and Cuba)
Water Only:
Saudi Arabia
UK
Kuwait
Qatar
Jordan
Oman
Vodka Only:
Australia
New Zealand
Argentina
Brazil
Venezuela
Panama
Mexico
<PAGE>
Exhibit 10.11 - Private Placement Contract under Rule 144A
for $1,500,000
ICEBERG CORPORATION OF AMERICA
Private Placement of Common Shares
and
Share Purchase Warrants
to
John C. Kleinert
Term Sheet
July 9, 1999
---------------------------------------------------------------
Issuer: Iceberg Corporation of America (the
"Company")
Transaction: Offering of 600,000 units to John C. Kleinert
(the "Investor) at a price of US$2.50 per
unit, (the "Units") each of which Units shall
consist of the following:
1. One Common Share of the Company;
2. Share Purchase Warrant A, which entitles
the holder to redeem said Share Purchase
Warrant for one Common Share of the
Company upon the payment of US$2.50 if
redeemed before the expiry date of the
said Share Purchase Warrant; and,
3. Share Purchase Warrant B, which entitles
the holder to redeem said Share Purchase
Warrant for one Common Share of the
Company upon the payment of US$2.50 if
redeemed before the expiry date of the
said Share Purchase Warrant.
Amount: US$1.5 million
Price: US$2.50 per Unit
Type of
Transaction: Units are to be sold on a Private Placement
basis pursuant to Rule 144A
Conditions: 1. On July 15, 1999, the Investor shall
purchase and the Company shall sell 200,000
Units at a price per Unit of US$2.50 by
Private Placement, which Units shall consist
of the following:
* 200,000 Common Shares in the
Company, which shall be recorded in
the books of the Company as having
a price per common share of
US$2.50;
* Certificates representing Share
Purchase Warrants in two series as
follows:
(a) Series A1 Share Purchase
Warrants: convertible to
200,000 common shares of the
Company up to and including
December 15, 2000 at a price
per share of US$2.50, after
which time, if not exercised
by the Investor, such Share
Purchase Warrants will expire,
and,
(b) Series B1 Share Purchase
Warrants: convertible to
200,000 common shares of the
Company up to and including
March 15, 2002, at a price per
share of US$2.50, after which
time, if not exercised by the
Investor, such Share Purchase
Warrants will expire.
* Each Share Purchase Warrant will
entitle the Investor to receive,
upon exercise and payment of the
price per share, one common share
in the Company.
2. On August 1, 1999 the Investor shall
purchase and the Company shall sell 200,000
Units at a price per Unit of US$2.50 by
Private Placement, which Units shall consist
of the following:
* 200,000 common shares in the
Company, which shall be recorded in
the books of the Company as having
a price per common share of
US$2.50;
* Certificates representing Share
Purchase Warrants in two series as
follows:
(a) Series A2 Share Purchase
Warrants: convertible to
200,000 common share of the
Company up to and including
December 15, 2000 at a price
per share of US$2.50, after
which time, if not exercised
by the Investor, such Share
Purchase Warrants with expire;
and,
(b) Series B2 Share Purchase
Warrants: convertible to
200,000 common shares of the
Company up to and including
March 15, 2002, at a price per
share of US$2.50, after which
time, if not exercised by the
Investor, such Share Purchase
Warrants will expire.
* Each Share Purchase Warrant will
entitle the Investor to receive,
upon exercise and payment of the
price per share, one common share
in the Company.
3. On September 15, 1999, the Investor
Shall purchase and the Company shall sell
200,000 Units at a price per unit of US$2.50
by Private Placement, which Units shall
consist of the following:
* 200,000 common shares in the
Company, which shall be recorded in
the books of the Company as having
a price per common share of
US$2.50;
* Certificates representing Share
Purchase Warrants in two series as
follows:
(a) Series A3 Share Purchase
Warrants: convertible to
200,000 common shares of the
Company up to and including
December 15, 2000 at a price
per share of US$2.50, after
which time, if not exercised
by the Investor, such Share
Purchase Warrants will expire;
and,
(b) Series B3 Share Purchase
Warrants: convertible to
200,000 common shares of the
Company up to and including
March 15, 2002 at a price per
share of US$2.50, after which
time, if not exercised by the
Investor, such Share Purchase
Warrants will expire.
* Each Share Purchase Warrant will
entitle the Investor to receive,
upon exercise and payment of the
price per share, one common share
in the Company.
4. Upon and subject to completion by the
Investor of the full investment of
US$1.5 million by September 15, 1999,
the Company shall grant to the Investor
an Option to purchase 100,000 common
shares in the Company at a price of
US$2.50 per common share, to be
exercised on or before September 15,
2009.
Exchange Listing NASDAQ
U.S. Sales On a Private Placement basis under Rule 144A
Closing Date: September 15, 1999
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0
451
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