ACQUISITION AGREEMENT
THIS AGREEMENT is made on and as of the 1st day of March, 1997
AMONG:
ALPHA VENTURES INC., a corporation existing under the laws of the Province of
Alberta
("Alpha Ventures")
- -and
MICHAEL P. KRAFT, Richard A. Sherman, 1077431 Ontario Limited, Kraft Investments
Corp., Michael P. Kraft, as beneficiary for First Marathon Securities Limited
RRSP Account 4009516S and Richard Sherman, as beneficiary for Nesbitt Bums Inc.
RRSP Account #371050025-13
(collectively the "Shareholders")
WHEREAS Alpha Ventures has made an offer to purchase dated April 9, 1997 (the
"Offer") to the holders of common shares ("AC Shares") of Alpha Corporation
("AC") to purchase all of the issued and outstanding AC Shares, for the
consideration of 1.38 common shares of Alpha Ventures for each AC Share to a
total of 6,978,828 shares of Alpha Ventures.
IN CONSIDERATION of $1.00 and the covenants, agreements, representations and
warranties contained in this Agreement, the parties hereto agree as follows:
1. Covenants of the Shareholders pertaining to AC
On behalf of AC and to the best of each of the Shareholders' knowledge, the
Shareholders represent, covenant and agree with Alpha Ventures as follows:
(a) Operation of Business. During the period commencing on the date hereof and
continuing until the completion or termination of the Offer, the Shareholders
agree (except as expressly contemplated by this Agreement or to the extent that
Alpha Ventures shall otherwise consent) that they will use their best efforts to
cause:
(i) AC to carry on its business in the regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) AC not to declare or pay any dividends on or make other distributions or
payments (whether in cash, shares or property or any combination thereof)
in respect of the AC Shares or take or authorize any act to implement any
of the foregoing;
(iii)AC not to amend or authorize or authorize any amendment to its articles or
by-laws;
(iv) AC not to issue, authorize or propose or commit to the issuance of, or,
directly or indirectly, purchase or propose the purchase of any securities
of AC (other than the issuance of AC Shares pursuant to the exercise of
options outstanding on the date hereof);
(v) AC not to acquire or agree to acquire by amalgamating,
merging,consolidating or entering into a business combination with, or by
purchasing or leasing substantially all the assets of, any business or
undertaking or any corporation, partnership, association or other business
organization or division thereof;
(vi) AC not to sell, lease, transfer mortgage or otherwise dispose of or
encumber any of its properties or assets;
(vii)AC not to incur indebtedness for money borrowed, or assume, guarantee,
endorse or otherwise become liable or responsible for the obligations of
any person or issue or sell any debt securities other than borrowings in
the ordinary course of business consistent with prior practice;
(viii) AC not to grant to any officer or employee of AC any increase in
compensation or in severance or termination pay, or enter into any
employment agreement with any officer or employee of AC;
(ix) except in the ordinary course of business, AC not to enter into or amend
existing agreements, commitments or contracts which, individually or in the
aggregate, are material to AC; and
(x) AC to promptly advise Alpha Ventures in writing of any material change in
the financial condition or operations of AC that is likely to be materially
adverse to AC.
(c) Non-Solicitation During the period commencing on the date hereof and
continuing until the completion or termination of the Offer, the Shareholders
will not cause AC to solicit, initiate or knowingly encourage submission of
proposals or offers from any other person, entity or group relating to the
acquisition or disposition of its issued and outstanding AC Shares, any
amalgamation, merger, or other form of business combination involving AC, any
sale, lease, exchange or transfer of all or substantially all of its assets, or
any take-over bid, reorganization, recapitalization, liquidation or winding up
of, or other business combination or similar transaction involving AC and any
other party other than Alpha Ventures (collectively, the "Proposed
Transactions"); provided, however, that the foregoing shall not prevent the
board of directors of AC from responding as required by law to any submission or
proposal regarding a Proposed Transaction or from making such disclosure to AC's
security holders which in the judgement of the board of directors of AC upon the
advice of counsel is required under applicable law. The Shareholders agree to
forthwith advise Alpha Ventures of any Proposed Transaction communicated or
submitted after the date hereof and the terms hereof.
(d) Access to Information The Shareholders will their best efforts to cause AC
to give Alpha Ventures and its solicitors, accountants, engineers and other
agents full access during reasonable business hours throughout the period from
the date hereof to the time of the expiry of the Offer to information concerning
the business, assets and liabilities of AC.
2. Covenants of the Shareholders
Each of the Shareholders severally covenants and agrees with Alpha Ventures as
follows:
(a) Deposit AC Shares Each of the Shareholders shall deposit under the Offer all
AC Shares beneficially owned by such Shareholder before the time fixed for the
expiry of the Offer and thereafter shall not withdraw such deposited AC Shares
under any circumstances, notwithstanding any statutory or other right of
withdrawal he or it may otherwise have provided that each of the following has
occurred:
(i) The shareholders of Alpha Ventures have:
(A) approved the acquisition of the AC Shares as Alpha Ventures' Major
Transaction as set out and in accordance with the provisions of Policy
4.11 ("Policy 4.11") of the Alberta Securities Commission and the
rules of The Alberta Stock Exchange;
(B) approved the granting of further options to purchase up to 700,000
common shares of Alpha Ventures at $0.20 each in accordance with the
provisions of Alpha Ventures' Stock Option Plan;
(C) approved the continuance of Alpha Ventures to the jurisdiction of
Canada;
(D) approved the amendment of the Articles to permit the directors to
appoint additional directors to the board of Alpha Ventures between
annual meeting of shareholders;
(ii) the Offer is not withdrawn and all of the AC Shares tendered prior to the
expiry of the Offer have been taken up and paid for immediately after the
expiry of the Offer;
(b)NoTransfer From the date hereof until the time of the expiry of the Offer,
the Shareholders shall not sell, transfer or otherwise dispose of any AC
Shares beneficially owned by the Shareholders on the date hereof (except by
depositing AC Shares under the Offer).
3. Representations and Warranties of the Shareholders.
Each of the Shareholders severally represents and warrants to Alpha Ventures
(and acknowledges that Alpha Ventures is relying upon such representations and
warranties in connection with the entering into of this Agreement) that, as of
the date hereof, the Shareholder is the registered beneficial owner of the
number of AC Shares set opposite the Shareholder's name below, free and clear of
all liens, charges, encumbrances, security interests and other rights of others
whatsoever and has good and sufficient power, authority and right to transfer or
cause to be transferred the registered and beneficial title to such AC Shares to
Alpha Ventures with good and marketable title thereto:
Name AC Shares
Michael Kraft1 94,610
Richard Sherman2 35,000
1077431 Ontario Limited 3 1,527,550
Kraft Investments Corp.4 1,435,940
1. Held by First Marathon Securities Limited RRSP Account #009516S
beneficially for Michael Kraft.
2. Held by Nesbitt Bums Inc. RRSP Account # 371050 25-13 beneficially for
Richard Sherman.
3. 1077431 Ontario Limited is controlled by Richard Sherman.
4. Kraft Investments Corp. is controlled by Michael Kraft.
3. Counterpart and Facsimile
This Agreement and any document or instrument to be executed and delivered by
the parties hereto or in connection with this Agreement may be executed and
delivered in separate counterparts and delivered by one party to the other by
facsimile, each of which when so executed and delivered shall be deemed to be an
original and all such counterparts shall together constitute one and the same
agreement, and production of an originally executed or a copy of a transmittal
facsimile of each counterpart execution page hereof shall be sufficient for
purposes of proof of the execution and delivery of this Agreement or such
document or instrument.
4. Further Assurances
The parties shall from time to time execute and deliver all such further
documents and instruments and do all acts and things as the other party may
reasonably require to effectively carry out or better evidence or perfect the
full intent and meaning of this Agreement.
5. Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, legal personal
representatives, successors and assigns.
6. Notices
Any demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and shall be given by personal delivery or
by facsimile transmission addressed to the recipient as follows:
To Alpha Ventures:
#500, 530 - 4th Ave. S.W. Calgary, Alberta T2P OJ9
Phone No.: (403) 266-5035 Facsimile No.: (403) 265-6368
To the Shareholders:
c/o Suite 890, 151 Bloor St. W. Toronto, Ontario M5S IS4
Phone No.: (416) 927-7000 Facsimile No.: (416) 927-1222
or to such other address or person as may be designated by notice given by one
party to the other. Any such communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by facsimile transmission, on the date of transmission thereof.
7. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein and the
parties hereto attorn to the jurisdiction of the courts of Ontario.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
and year first above written.
ALPHA VENTURES, INC.
PER: /s/ Michael Kraft
------------------------------
Name: Michael Kraft
Title: President & C.E.O.
An authorized signing officer
/s/ /s/ Michael Kraft
- ---------------------- ----------------------------------
Witness Michael Kraft
/s/ /s/ Richard A. Sherman
- ---------------------- -----------------------------------
Witness Richard A. Sherman
1077431 ONTARIO LIMITED KRAFT INVESTMENTS CORP.
Per: /s/ Richard Sherman Per: /s/ Michael Kraft
--------------------- -----------------------------
Name: Richard Sherman Name: Michael Kraft
Title: Title:
An authorized signing officer An authorized signing officer
/s/ /s/ Michael Kraft
- ------------------------ ---------------------------------
Witness Michael Kraft, as beneficiary for
First Marathon Securities Limited RRSP
Account #009516S
/s/ /s/ Richard Sherman
- ------------------------ -------------------------------
Witness Richard Sherman, as beneficiary for Nesbitt
Burns, Inc. RRSP Account #37105025-13