Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 Registration of Securities by a Small-Business 84± 341K
Issuer
2: EX-1 Underwriting Agreement 2± 12K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 2± 11K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 31± 114K
5: EX-4 Instrument Defining the Rights of Security Holders 11± 45K
6: EX-5 Opinion re: Legality 1 6K
7: EX-6 Opinion re: Discount on Capital Shares 2± 11K
8: EX-7 Opinion re: Liquidation Preference 8± 37K
9: EX-8 Opinion re: Tax Matters 31± 115K
10: EX-9 Voting Trust Agreement 12± 45K
EX-9 — Voting Trust Agreement
GENERAL SECURITY AGREEMENT
BETWEEN:
VALUE HOLDINGS INC.
and-
ROYCAP INC.
FOGLER, RUBINOFF LLP
Suite 4400, Box 95
Royal Trust Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1G8
THIS GENERAL SECURITY AGREEMENT dated for reference
August , 2000
BETWEEN:
VALUE HOLDINGS, INC., a corporation incorporated
under the laws of the State of Florida
(the Debtor )
and-
ROYCAP INC., a corporation incorporated under the laws of
the Province of Ontario
(the Secured Party )
Effective Date
The effective date of this Agreement is August , 2000 (the
Effective Date ).
Grant of Security Interest
For valuable consideration (the receipt and sufficiency of which
each of the parties hereto hereby acknowledges), the Debtor hereby
grants to the Secured Party a security interest (to which the
Uniform Commercial Code of the State of Florida, as the same may be
amended from time to time (the UCC ) applies) in and pledges,
assigns and conveys to and in favour of the Secured Party, as
security all of the Debtor s rights, title and interests in and to
each and every property described or, referred to below
(collectively, the Collateral ), all pursuant to and in accordance
with the provisions of this Agreement.
Description of Collateral
The Collateral includes all of the following personal property and,
wherever located fixtures, and all of the leasehold interests and
other property described in paragraph 3.(j) below wherever located:
all goods now or hereafter comprising part of the inventory of the
Debtor and all interests, rights and benefits, both present and
future of the Debtor in or to inventory including, without
limitation, goods now or hereafter held for sale or lease or
furnished or to be furnished under a contract of service or that
are raw materials, work in process or materials used or consumed in
a business or profession or finished goods;
all equipment now or hereafter owned by the Debtor and all
interests, rights and benefits, both present and future, of the
Debtor in or to equipment including, without limitation, office,
warehouse and other furniture, fixtures, machinery, tools, rolling
stock, vehicles, accessories, spare parts, supplies and other
tangible personal property;
all fixtures now or hereafter owned by the Debtor and all
interests, rights and benefits, both present and future, of the
Debtor in or to fixtures;
all chattel paper now or hereafter owned or held by the Debtor and
all interests, rights and benefits, both present and future, of the
Debtor in, under or to chattel paper;
each and every document now or hereafter owned by the Debtor or of
which the Debtor is or becomes a holder, whether negotiable or
non-negotiable, including, without limitation, each and every
warehouse receipt and bill of lading, and all interests, rights and
benefits, both present and future, of the Debtor in, under or to
each and every document of title;
each and every instrument now or hereafter owned by the Debtor or
of which the Debtor is or becomes a holder, and all interests,
rights and benefits, both present and future, of the Debtor in,
under or to each and every instrument;
all investment property now or hereafter owned by the Debtor or of
which the Debtor is or becomes a holder including, without
limitation, all shares, stock, warrants, bonds, debentures,
debenture stock or the like issued by a corporation or other
person, or a partnership, association or government, and all
securities accounts and security entitlements and all interests,
rights and benefits, both present and future, of the Debtor in,
under or to each and every security;
all money of the Debtor and all money hereafter acquired by the
Debtor and each and every account, debt, claim and demand of every
nature and kind which is now due, owing or accruing due or which
may hereafter become due, owing or accruing due to the Debtor, or
which the Debtor now has or may hereafter have and all interests,
rights and benefits, both present and future of the Debtor in or to
each and every account, debt, claim and demand including, without
limitation, claims against any governmental body and claims under
insurance policies;
all goodwill, patents, trade marks, trade names, copyrights and
other intellectual property now or hereafter owned by the Debtor
and all interests, rights and benefits, both present and future, of
the Debtor in, under or to the same;
each and every lease, agreement to lease and leasehold interest of
the Debtor and all interests, rights and benefits, both present and
future, of the Debtor, in, under or to the same, except the last
day of any term of years reserved by any such lease or agreement
therefor of which reversion of one day the Debtor shall stand
possessed upon trust to assign and dispose of the same as the
Secured Party shall direct;
each and every general intangible now or hereafter owned by the
Debtor or of which the Debtor is or becomes a holder, and all
interests, rights and benefits, both present and future, of the
Debtor in, under or to each and every general intangible;
with respect to the property described in each of subparagraphs
3.(a) to 3.(k) inclusive, all substitutions and replacements
thereof, improvements, increases, additions and accessions thereto
and all interests, rights and benefits, both present and future, of
the Debtor in, under or to the same;
with respect to the property described in each of subparagraphs
3.(a) to 3.(l) inclusive, all proceeds in any form derived directly
or indirectly from any dealing with such property or the sale or
other disposition thereof and includes any payment representing
indemnity or compensation for loss of or damage to such property or
proceeds therefrom; and
with respect to the property described in each of subparagraphs
3.(a) to 3.(m) inclusive, all books, accounts, invoices, letters,
deeds, contracts, security, securities, instruments, bills, notes,
writings, papers, documents and records in any form evidencing or
relating thereto, and all other rights and benefits to which the
Debtor is now or may hereafter become entitled in respect thereof;
In this Agreement, the words goods , inventory , equipment ,
chattel paper , documents , instrument , investment property ,
securities account , security entitlement , money , account ,
motor vehicle , proceeds , general intangible and accessions
shall have the same meanings as their defined meanings in the UCC.
In this Agreement, each reference to Collateral shall, unless the
context otherwise requires, include and be read as Collateral or
any part thereof .
Debtor represents and covenants that all of the Collateral, insofar
as the same is not intangible property, is now and will hereafter
be kept at the address set out below and at the following location
and any other locations that the Debtor may specify in writing to
the Secured Party from time to time:
Secured Obligations
The security interests, pledges and assignments granted hereby
secure all of the following (collectively, the Obligations ):
both the performance and the payment to the Secured Party of all
obligations, debts and liabilities (including, without limitation,
on account of damages) of the Debtor to the Secured Party, present
or future, direct or indirect, absolute or contingent, liquidated
or unliquidated, matured or not, wheresoever and howsoever
incurred, arising from a US$1,000,000 principal amount 10%
convertible debenture of the Debtor due August , 2002 and dated as
of the date hereof issued in favour of the Secured Party, as the
same may be amended or replaced from time to time (the
Debenture ), and all interest, commissions, legal and other costs,
charges and expenses payable in connection with any and all of the
foregoing and, in addition thereto, the Expenses (provided for and
defined below).
Attachment
Each of the Debtor and the Secured Party acknowledges and confirms
that the security interests, mortgages and charges granted hereby
shall attach:
forthwith on the Effective Date with respect to each and every
property included in the Collateral and in which the Debtor then
has rights; and
forthwith upon the Debtor first acquiring rights in each and every
property included in the Collateral and in which the Debtor first
acquires such rights subsequent to the Effective Date.
For greater certainty, without in any way limiting the above, each
of the Debtor and the Secured Party acknowledges and confirms that
it has not agreed to postpone the time for attachment of the said
security interests, mortgages and charges.
Debtor s Warranties
The Debtor hereby represents and warrants to and covenants with the
Secured Party as follows and acknowledges that the Secured Party
is, in part, relying upon such representations, warranties and
covenants in accepting the security interests, mortgages and
charges granted upon the terms of this Agreement:
Title to Collateral: Subject to Permitted Encumbrances (as such
term is defined in the Debenture), the Debtor is the absolute and
beneficial owner of the Collateral and none of the Collateral is
held in the name of any person other than the Debtor, whether as
agent, trustee or other nominee for the Debtor, and all
registrations and filings which may be required to preserve the
Debtor s title, rights or other interests in the Collateral others
have been made;
No Encumbrances: The Collateral is and shall at all times be kept
free and clear of any and all security interests, mortgages,
hypothecs, liens, charges, pledges and other encumbrances
whatsoever other than those given by the Debtor to or in favour of
the Secured Party and the Permitted Encumbrances (as such term is
defined in the Debenture); and
Right to Grant: The Debtor has and shall at all relevant times
have the full right, power and authority to enter into and perform
its obligations under this Agreement and to grant the security
interests, pledges and assignables as herein provided.
Debtor s Covenants
The Debtor covenants and agrees with the Secured Party that:
Obligations: The Debtor shall pay, perform, satisfy, fulfil and
discharge the Obligations when due.
Possession/Description: Forthwith upon request by the Secured
Party following the occurrence of an Event of Default (as such term
is defined in the Debenture), and for so long as such Event of
Default shall be continuing, the Debtor shall deliver possession of
the Collateral to the Secured Party and shall, if requested by the
Secured Party, deliver forthwith to the Secured Party such further
details respecting the Collateral and, if the Collateral includes
fixtures or crops, or oil, gas or other minerals to be extracted,
or timber to be cut, identification and legal description (in
registerable form) of the lands concerned. Such further details
and legal description so delivered shall be deemed to be contained
in and form part of this Agreement.
Events of Default
Forthwith upon the occurrence of any Event of Default, and so long
as such Event of Default shall be continuing, the Obligations will,
without the Secured Party being required to give notice or demand,
become due and payable in full and, to the extent applicable, be
required to be fully performed.
Rights and Remedies
Forthwith upon the occurrence of an Event of Default, and so long
as such Event of Default shall be continuing, the security
interests, pledges and assigns granted herein shall be enforceable
and the Debtor and the Secured Party shall have, in addition to any
other rights and remedies provided by law, the rights and remedies
of a debtor and a secured party respectively under the UCC and
those provided by this Agreement. In addition, the Secured Party
may take possession of the Collateral and enforce any rights of the
Debtor in respect of the Collateral by any method available in or
permitted by law and may require the Debtor to assemble the
Collateral and deliver or make the Collateral available to the
Secured Party at any place within as may be designated by the
Secured Party.
Expenses
The reasonable costs and expenses of the Secured Party in the
preparation, execution and delivery of this Agreement, the
registration of this Agreement or of notices, financing statements
or other filings in respect thereof, the reasonable costs and
expenses of the Secured Party in connection with the preparation or
review of waivers, consents, amendments, subordination agreements
or other matters pertaining to the subject matter of this
Agreement, the reasonable costs and expenses expressly provided for
in the UCC and, in addition thereto, the cost of any insurance,
taxes, solicitor's fees, costs and other legal expenses and all
other costs, charges and expenses of or incurred (on a scale as
between a solicitor and his own client) by the Secured Party in
respect of any of the foregoing and in respect of the enforcement
of the Obligations, including taking possession, custody, holding,
preserving, protecting, repairing, using or operating, collecting,
realizing, processing, preparing for disposition and disposing of
the Collateral (collectively, the Expenses ) shall be payable by
the Debtor to the Secured Party forthwith upon demand, shall be
deemed advanced to the Debtor by the Secured Party, shall bear
interest at a rate equal to the Loan Interest Rate (as such term is
defined in the Loan Agreement) calculated, both before and after
demand, maturity, default and judgment, from the date each of the
Expenses, respectively, were incurred until fully paid by the
Debtor and shall be secured by this Agreement.
The Debtor acknowledges and confirms that all costs in connection
with the filing of any financing statements, continuations,
amendments, releases or terminations are and shall be reasonable
and shall form part of the Expenses.
Notice of Disposition
The Secured Party shall give to the Debtor such written notice of
the Secured Party s intention to dispose of the Collateral as may
be required by applicable law in the manner prescribed thereby.
Receiver - Appointment
The Secured Party may take proceedings in any court of competent
jurisdiction for the appointment of a receiver or a receiver and
manager (the Receiver ) of the Collateral or may by instrument in
writing appoint any person to be a Receiver of the Collateral and
may remove any Receiver so appointed by the Secured Party and
appoint another in its stead.
Receiver - Powers
Any Receiver appointed hereunder by instrument in writing shall
have power (a) to take possession of the Collateral and, without
liability or obligation to the Debtor, other than as required by
law, to maintain, preserve and protect the same; (b) to carry on or
concur in carrying on all or any part of the business or businesses
of the Debtor; (c) to borrow money which such Receiver, in its sole
discretion, determines is required in connection with either or
both of the powers provided for in paragraph (a) and (b); and (d)
to dispose of the Collateral in whole or in part, and any such
disposition may be by public sale (whether by auction, tender or
otherwise), private sale, lease or otherwise, and at such time and
place and on such terms and for such price and manner of payment
thereof, all as such Receiver may, in its sole discretion,
determine; provided that any such Receiver shall be and is deemed
to be the agent of the Debtor and, subject to any applicable law,
the Secured Party shall not in any way be responsible for any
misconduct, negligence or non-feasance of any such Receiver.
Appointment of Monitor
If, in the opinion of the Secured Party, acting reasonably, an
adverse change has occurred in the financial condition of the
Debtor, or if the Secured Party in good faith believes that the
ability of the Debtor to pay any of its obligations to the Secured
Party or to perform any other covenant contained herein or in the
Debenture has become impaired or if the Secured Party in good faith
believes that an event of default has occurred, the Secured Party
may, by written notice to the Debtor, appoint a monitor (the
Monitor ) to investigate any or a particular aspect of the Debtor
or its business and affairs for the purpose of reporting to the
Secured Party. The Debtor shall give the Monitor its full
co-operation, including full access to facilities, assets and
records of the Debtor and to its creditors, customers, contractors,
officers, directors, employees, auditors, legal counsel and agents.
The Monitor shall have no responsibility for the affairs of the
Debtor nor shall it participate in the management of the Debtor s
affairs and shall incur no liability in respect thereof or
otherwise in connection with the Debtor, its business and affairs
or the Collateral. The Monitor shall act solely on behalf of the
Secured Party and shall have no contractual relationship with the
Debtor as a consultant or otherwise. The appointment of a Monitor
shall not be regarded as an act of enforcement of the Debenture or
this Agreement. All reasonable fees and expenses of the Monitor
(including legal fees and disbursements on a solicitor and own
client basis) shall be paid by the Debtor upon submission to it of
a written invoice therefor. The Secured Party may at its option
upon the occurrence of an event of default appoint or seek to have
appointed the Monitor as Receiver, receiver and manager,
liquidator, or trustee in bankruptcy of the Debtor or the
Collateral or any part thereof.
Proceeds of Disposition/Deficiency
Any proceeds of any disposition of any of the Collateral shall be
applied by the Secured Party firstly on account of the Expenses,
and any balance of such proceeds shall be applied by the Secured
Party on account of the Obligations (other than the Expenses) in
such order of application as the Secured Party may from time to
time effect and the same shall not be subject to dispute by the
Debtor. If such proceeds fail to satisfy the Obligations, the
Debtor shall be liable for the full amount of the deficiency
resulting to the Secured Party. Any surplus proceeds shall be
applied in accordance with the provisions of the UCC.
General Provisions
Discharge: The Debtor shall not be discharged from the Obligations
by any extension of time, additional advances, renewals, amendments
or extensions to this Agreement, the taking of further security,
releasing security, extinguishment of the security interests,
mortgages and charges as to all or any part of the Collateral, or
any other act except a release or discharge by the Secured Party of
the security interests, mortgages and charges granted hereby upon
the full payment and performance of the Obligations, at which time
the Secured Party shall, at the Debtor's expense, deliver all
necessary discharges and releases of such security interests,
mortgages and charges.
Other Security:
(i) The security constituted by this Agreement is in addition to
and not in substitution for any other security from time to time
held by the Secured Party;
(ii) The Secured Party may realize upon all or part of any security
from time to time held by it in any order they desire and any
realization by any means upon any security shall not bar
realization upon any other security; and
(iii) The taking of any action or proceeding or refraining from
so doing or any other dealings with any other security for the
Obligations shall not release or affect the security provided for
in this Agreement and the taking of the security hereby granted or
any proceedings hereunder for the realization of the security
hereby granted shall not release or affect any other security and
rights held by the Secured Party for the Obligations.
Waiver, etc.: No failure or delay on the part of the Secured Party
to exercise any right provided for in or contemplated by this
Agreement and no waiver as to an Event of Default hereunder shall
operate as a waiver thereof unless made in writing and signed by
the Secured Party and, in that event, such waiver shall operate
only as a waiver of the right or Event of Default expressly
referred to therein. Nothing in this Agreement and nothing
referred to in the Obligations shall preclude any other remedy by
action or otherwise for the enforcement of this Agreement or the
payment and performance in full of the Obligations.
Secured Party Assignment: All rights and obligations of the
Secured Party hereunder shall be assignable in whole or in part in
the manner permitted pursuant to the Loan Agreement, and in any
action brought by any assignee to enforce such rights, the Debtor
shall not assert against such assignee any claim, defence, right of
set-off, or the benefit of any equities which the Debtor now has or
may hereafter have against the Secured Party.
Entire Agreement: This Agreement sets forth the entire intent and
understanding of the parties relating to the subject-matter hereof
and supersedes and replaces all prior agreements and commitments,
whether written or oral, made between the parties and all earlier
discussions and negotiations between them. The parties are not
relying upon and there are no collateral or other representations,
warranties, agreements, or covenants made by any of the parties
hereto which are not contained herein, or in the Loan Agreement.
Further Assurances: Each of the parties hereto shall and will,
from time to time and at all times hereafter upon every reasonable
written request so to do, make, do, execute and deliver, or cause
to be made, done, executed and delivered, all such further acts,
deeds, assurances and things as may be necessary in the opinion of
any party or counsel for any party, acting reasonably, for
implementing and carrying out more effectually the true intent and
meaning of this Agreement including, without limitation, to perfect
or better perfect the security interests, mortgages and charges of
the Secured Party in the Collateral.
Severability: In the event that any covenant or provision
contained in this Agreement is held to be invalid, illegal or
unenforceable in whole or in part, the validity, legality and
enforceability of the remaining covenants and provisions shall not
be affected or impaired thereby and all such remaining covenants
and provisions shall continue in full force and effect. All
covenants and provisions hereof are declared to be separate and
distinct covenants or provisions, as the case may be.
Headings: All headings and titles in this Agreement are for
convenience of reference only and shall not affect the
interpretation of the terms hereof.
Gender, etc.: In construing this Agreement, all words and personal
pronouns relating thereto shall be read and construed as the number
and gender of the party or parties referred to in each case
require, and the verb agreeing therewith shall be construed as
agreeing with the required word and pronoun. Words such as
hereunder , hereto , hereof , herein and other words
commencing with here shall, unless the context clearly indicates
the contrary, refer to the whole of this Agreement and not to any
particular paragraph or part thereof.
Performance of Covenants by the Secured Party: In the event that
the Debtor shall fail to perform any covenant on its part herein
contained, the Secured Party may in its absolute discretion,
perform any such covenant capable of being performed by it, but the
Secured Party shall be under no obligation to do so. If any such
covenant requires the payment of money or if the Collateral or any
part thereof shall become subject to any charge ranking in priority
to the lien hereof, the Secured Party may, in its absolute
discretion, make such payment and/or pay or discharge such charge,
but shall be under no obligation to do so. All sums so paid by the
Secured Party, together with interest at the interest rate
specified in the Debenture, shall be payable by the Debtor on
demand and shall constitute a charge upon the Collateral. No such
performance or payment shall relieve the Debtor from any default
hereunder or any consequences of such default.
Binding Effect: All rights of the Secured Party hereunder shall
enure to the benefit of its respective successors and assigns and
all obligations of the Debtor hereunder shall bind the Debtor, its
successors and assigns. Each reference to the Secured Party in
this Agreement shall be deemed to include a reference to the
Secured Party, its respective successors and assigns and each
reference to the Debtor in this Agreement shall be deemed to
include a reference to the Debtor, its successors and assigns.
Governing Law: This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida,
without giving effect to any conflicts of laws principles that
would require application of another jurisdictions laws.
Notice: Subject to the specific requirements of the UCC, any
demand, notice, consent, approval or other communication required
or permitted to be made or given by any party hereto to any other
party hereto in connection with this Agreement shall be in writing
and may be made or given by personal delivery or by transmittal by
telecopy or similar electronic means of communication to such party
or, if a corporation, to a director thereof or, if postal services
and deliveries are then operating, by mailing the same by prepaid
registered post to such party at its address noted on page 1 of
this Agreement or at such other address which the party to whom
such communication is being given may have designated by notice
given in accordance with the provisions of this paragraph. Any
communication so delivered or transmitted by electronic means of
communication shall be deemed to have been given and received on
the day of delivery or transmittal (if received during normal
business hours), if a business day, or if not a business day or if
not received during normal business hours on the business day next
following the day of delivery or transmittal, and any communication
so mailed shall be deemed to have been given and received on the
third business day following and exclusive of the date of mailing.
In this paragraph, "business day" means any day except a Saturday,
Sunday or holiday in the State of Florida. Either party may give
notice in writing to the other in the manner provided in this
paragraph of any change of address of the party giving such notice,
and from and after the giving of such notice, the address therein
specified shall be deemed to be the address of such party for
purposes of this paragraph.
Failure to Perfect: The Secured Party shall not be liable or
accountable for any negligence or failure to (i) perfect its
security interests, mortgages and charges granted herein, or (ii)
seize, collect, realize, sell or obtain payment for the Collateral
and shall not be bound to institute proceedings for the purpose of
seizing, collecting, realizing or obtaining possession or payment
of the same for the purpose of preserving the rights of the Debtor
or any other person, firm or corporation in respect of same.
No Amendment: This Agreement may not be amended, altered or
qualified except by a memorandum in writing signed by all of the
parties hereto and any amendment, alteration or qualification
hereof shall be null and void and shall not be binding upon any
party who has not signed such memorandum.
Power of Attorney: The Secured Party, or any Receiver appointed
hereunder, is hereby irrevocably constituted as the duly appointed
lawful attorney of the Debtor; with full power to make, do,
execute and deliver all such documents, assignments, acts, matters
or things on behalf of the Debtor as may be required to give full
effect to the security granted pursuant hereto, and the obligations
of the Debtor to the Secured Party under the Loan Agreement, with
the right to use the name of the Debtor whenever and wherever it
may be deemed necessary or expedient, provided, however, that the
Secured Party shall only be entitled to rely upon and exercise the
said power of attorney so long as an Event of Default shall have
occurred and be continuing. The power of attorney hereby granted
is a power coupled with an interest and shall survive the
dissolution, liquidation, winding-up or other termination of
existence of the Debtor. The Debtor hereby ratifies all acts done
and all documents executed and delivered by the Secured Party
pursuant to the power of attorney hereby granted and the Debtor
hereby confirms that the Secured Party and all third parties are
entitled to rely upon such ratification.
Time of Essence: Time shall be strictly of the essence of this
Agreement and of every part thereof and no extension of this
Agreement shall operate as a waiver of this provision.
Debtor s Receipt: The Debtor hereby acknowledges receipt of a
fully signed copy of this Agreement.
This Agreement shall become effective as of the Effective Date when
executed by the Debtor.
IN WITNESS WHEREOF the Debtor has executed this Agreement and
agrees to be bound thereby as of the Effective Date set out above.
EXECUTED by the Debtor on August , 2000.
VALUE HOLDINGS, INC.
Per:
I have the authority to bind the Corporation.
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