1 SHARE PURCHASE AGREEMENT B E T W E E N: "Purchaser" - and - GARDEN CITY FOOD COOPERATIVE "Vendor" LANCASTER BROOKS & WELCH LLP Barristers and Solicitors 80 King Street, Box 790 St. Catharines, ON L2R 6Z1  MAM
2 2 THIS AGREEMENT made as of the day of 2016., an individual residing in the City of St. Catharines, in the Regional Municipality of Niagara, Province of Ontario herein called the "Purchaser" - and - GARDEN CITY FOOD COOPERATIVE, a cooperative duly incorporated under the laws of the Province of Ontario herein called the "Vendor" THIS AGREEMENT WITNESSETH that in consideration of the covenants, agreements, warranties and payments herein set forth and provided for, the parties hereto respectively covenant and agree as follows: SECTION 1 INTERPRETATION 1.1 DEFINITIONS In this Agreement, unless there is something in the subject matter or context inconsistent therewith: (a) "Agreement" means this agreement to, inter alia, purchase and sell Class A and/or Class B shares issued by the Vendor); (b) "Closing Date" means the same as the Termination date defined in Section 3 of the Escrow Agreement attached at Schedule A ; (c) "Purchased Shares" means the Class A/Class B Non-Voting Cumulative Preference Shares, being issued by the Vendor; (d) "Time of Closing" means the time on the Closing Date when the closing
3 3 of the purchase and sale herein provided for shall be completed. 1.2 CANADIAN DOLLARS All dollar amounts referred to in this Agreement are in Canadian funds. 1.3 EXTENDED MEANINGS In this Agreement, words importing the singular number include the plural and vice-versa and words importing the masculine gender include the feminine and neuter genders. 1.4 ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 1.5 HEADINGS Section headings are not to be considered part of this Agreement and are included solely for convenience of reference and are not intended to be full or accurate descriptions of the contents thereof. SECTION 2 REPRESENTATIONS, WARRANTIES, COVENANTS OF THE VENDOR 2.1 REPRESENTATIONS and WARRANTIES AND COVENANTS The Vendor represents and warrants and covenants to the Purchaser that: (a) The Vendor is a valid subsisting cooperative duly incorporated under the laws of Ontario; (b) it is the sole legal and beneficial owner of the Purchased Shares;
4 4 (c) the Purchased Shares shall be transferred to the Purchaser on the Closing Date free and clear of any encumbrance, lien (statutory or otherwise), charge, hypothec, pledge, adverse claim, or security interest of any nature whatsoever; (d) no person, firm or corporation has any right or option to purchase the Purchased Shares or any one or more of them other than the Purchaser hereunder; (e) the Vendor is not a non-resident of Canada within the meaning of Section 116 of the Income Tax Act (Canada) (the Act ); and (f) to the best of his knowledge, after due inquiry, no bankruptcy, insolvency or receivership proceedings have been instituted or are pending or threatened against him and his personal property is not subject to any executions, judgments or other claims of creditors; and acknowledges that the Purchaser is relying upon such representations, warranties and covenants in completing the transaction herein contemplated. SECTION 3 REPRESENTATIONS, WARRANTIES & COVENANTS OF THE PURCHASER 3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS The Purchaser represents, warrants and covenants to the Vendor that: (a) he/she is at least 18 years of age and has all necessary authority and mental capacity to enter into this Agreement for the purchase of shares; (b) the Purchaser is in good standing under the laws of all jurisdictions in which it carries on business or has assets, to the extent that the nature of such business or assets under the laws of said jurisdiction requires registration or qualification; (c) to the best of the knowledge of the Purchaser, after due inquiry, no bankruptcy, insolvency or receivership proceedings have been instituted or are pending or threatened against the Purchaser and its personal property is not subject to any executions, judgments or other claims of creditors. and acknowledges that the Vendor is relying upon such representations, warranties and covenants in completing the transaction herein contemplated.
5 5 SECTION 4 PURCHASE OF SHARES 4.1 PURCHASE PRICE FOR PURCHASED SHARES The Purchaser shall purchase and the Vendor shall sell to the Purchaser the Purchased Shares for an aggregate purchase price of ($ ) (the Purchase Price ) payable by cash or by certified cheque at the Time of Closing. Certified cheques should be made payable to the Escrow Agent, as per the Escrow Agreement attached at Schedule A. 4.2 DELIVERY OF SHARES Subject to the fulfillment of all the terms and conditions hereof (unless waived as herein provided), at the Time of Closing, the Vendor shall deliver to the Purchaser a certificate or certificates representing all the Purchased Shares, duly endorsed in blank for transfer, and will cause the transfer of such shares to be duly and regularly recorded on the books of the Vendor in the name of the Purchaser. All such share certificates shall be fully transferable on the books of the Vendor and endorsed in blank for transfer in a manner satisfactory to counsel for the Purchaser. The delivery of such shares shall be against receipt in full of the consideration specified in Section CONDITIONS The Purchase and Sale of the Shares contemplated herein shall be conditional upon the following: (a) The Vendor enters the Escrow Agreement attached at Schedule A on behalf of the Purchaser. SECTION 5 GENERAL 5.1 GOVERNING LAW of Ontario. This Agreement shall be construed in accordance with the laws of the Province
6 6 5.2 COUNTERPARTS The Agreement may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to bear date as to the date above written. 5.3 INDEPENDENT LEGAL ADVICE Each of the parties hereto acknowledges that this Agreement, and any related closing documents, have been prepared by Lancaster, Brooks & Welch, LL.P. as solicitors for the Vendor and that the said law firm has not been retained by, nor is it providing any advice to, the individual Purchaser herein. The Purchaser acknowledges that he/she has had the opportunity to seek independent legal advice in relation to the negotiation and wording of this Agreement, plus all related transfer documents. It is hereby agreed that the Vendor shall bear responsibility for all legal costs of Lancaster, Brooks & Welch in the preparation of this Agreement and any related closing documents; provided that each party shall bear his own legal costs in respect of independent counsel that may be retained. 5.4 NOTICES Any notice of other instrument required or permitted to be given under the provisions of this Agreement shall be in writing and may be given by mailing the same, postage prepaid, or delivering the same addressed in the case of the Vendor to: 108 St. Paul Street St. Catharines, ON L2R 3M2 and in the case of the Purchaser, to: with a copy to: Lancaster, Brooks & Welch LLP 80 King Street P. O. Box 790 St. Catharines, ON
7 7 L2R 6Z1 and that mail shall be deemed to have been received on the fifth business day following delivery to the post office during a period of uninterrupted mail service. This Agreement shall enure to the benefit of and be binding upon the respective parties hereto and their respective heirs, executors, administrators, successors and/or assigns, as the case may be. hereto. IN WITNESS WHEREOF this Agreement has been executed by the parties SIGNED, SEALED & DELIVERED in the presence of: ) Witness ) Garden City Food Cooperative ) ) ) Name of Authorized Signatory ) ) ) Witness ) Purchaser
8 8 SCHEDULE A E S C R O W A G R E E M E N T THIS AGREEMENT made as of the day of, 2016 B E T W E E N: GARDEN CITY FOOD CO-OP herein called "Co-Op" - and - LANCASTER, BROOKS & WELCH LLP herein called the "Escrow Agent" WHEREAS, the Co-Op intends to raise cash funds from investors pursuant to a public offering (the Offering ) of not less than (a) 220 units, consisting of (i) 70 Class A Shares, having a purchase price of $5, per unit (for an aggregate offering amount of $350,000.00), of the Co-Op; and (ii) 150 Class B Shares, having a purchase price of $1, per unit (for an aggregate offering amount of $150,000.00), of the Co-Op, for a total minimum aggregate amount of $500, (the Minimum Amount ), and not more than (b) 390 units, consisting of (i) 90 Class A Shares, having a purchase price of $5, per unit (for an aggregate offering amount of $450,000.00), of the Co-Op; and (ii) 300 Class B Shares, having a purchase price of $1, per unit (for an aggregate offering amount of $300,000.00), of the Co-Op, for a total maximum aggregate amount of $750, (the Maximum Amount ) (collectively, the Securities ). AND WHEREAS, the sale and acquisition of Membership Shares offered by the Co-Op are not bound by the terms of this Escrow Agreement. AND WHEREAS, the Co-Op and the investors have entered into Share Purchase Agreements, upon certain terms and conditions, whereby the investors
9 acquired a number of shares of the Co-Op (the "Shares"); 9 AND WHEREAS, the investors acquisition of the Shares is contingent upon payment of consideration to the Co-Op in accordance with the terms of the SPA and as set out herein; AND WHEREAS, the Co-Op wishes to enter into this Escrow Agreement to fulfill the relevant terms of the SPAs and Subscription Agreements; AND WHEREAS, the Escrow Agent is willing to accept appointment as Escrow Agent only for the express duties set forth herein NOW THEREFORE this agreement witnesseth that in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. The Co-Op and investors have executed simultaneously with the execution of this agreement, Share Purchase Agreements. 2. On or before the date the Offering Document is declared effective by the Financial Services Commission of Ontario, the Co-Op shall establish an escrow account with the Escrow Agent to be invested in accordance with the Escrow Agreement entitled ESCROW ACCOUNT FOR THE BENEFIT OF INVESTORS OF UNITS OF GARDEN CITY FOOD CO-OP (the Escrow Account ). All checks, wire transfers and other funds received from investors in payment for the Securities ( Investor Funds ) will be delivered to the Escrow Agent within one (1) business day following the day upon which such Investor Funds are received by the Co-Op or its agents, and shall, upon receipt by the Escrow Agent, be retained in escrow by the Escrow Agent. During the term of this Agreement, the Co-Op or its agents shall cause all checks received by and made payable to it for payment for the Securities to be endorsed in favor of the Escrow Agent and delivered to the Escrow Agent for deposit in the Escrow Account. 3. The escrow period shall commence upon the effectiveness of this Agreement and shall terminate upon the earliest to occur of: (a) the close of business on September 1 st, 2016; (b) the date upon which the Escrow Agent receives confirmation
10 10 that the Co-Op has raised the Minimum Amount of at least $500, of gross offering proceeds; (c) the date the Escrow Agent receives written notice from the Co-Op that it is abandoning the sale of the Securities; and (d) the date the Escrow Agent receives notice from the Financial Services Commission of Ontario or any other federal or provincial regulatory authority that a stop or similar order has been issued with respect to the Offering Document and has remained in effect for at least twenty (20) days (the Termination Date ). 4. The Escrow Agent shall have no duty to make any disbursement, investment or other use of Investor Funds until and unless it has good and collected funds. If any checks deposited in the Escrow Account are returned or prove uncollectible after the funds represented thereby have been released by the Escrow Agent, then the Co-Op shall promptly reimburse the Escrow Agent for any and all costs incurred for such, upon request, and the Escrow Agent shall deliver the returned checks to the Co-Op. The Escrow Agent shall be under no duty or responsibility to enforce collection of any check delivered to it hereunder. 5. All investors will be instructed by the Co-Op to remit the purchase price for any purchased Securities in the form of checks payable to the order of, or funds wired in favor of, SCOTIABANK, LANCASTER, BROOKS & WELCH LLP, ESCROW AGENT FOR GARDEN CITY FOOD CO-OP. Any checks made payable to a party other than the Escrow Agent shall be returned to the investor that submitted the check. If any investor for the purchase of Securities is rejected by the Co-Op, then the SPA and check for the purchase of Securities will be returned to the rejected investor within ten (10) business days from the date of rejection. 6. All Investor Funds deposited in the Escrow Account shall not be subject to any liens or charges by the Co-Op or the Escrow Agent, or judgments or creditors claims against the Co-Op, until and unless released to the Co-Op as hereinafter provided. The Co-Op understands and agrees that the Co-Op shall not be entitled to any Investor Funds on deposit in the Escrow Account and no such funds shall become the property of the Co-Op, or any other entity except as released to the Co-Op pursuant to the Escrow Agreement. The Escrow Agent will not use the information provided to it by the Co-Op for any purpose other than to fulfill its obligations as Escrow Agent hereunder. The Escrow Agent will treat all investor information as confidential. 7. The Escrow Agent agrees that the Investor Funds shall not be released from the Escrow Account to the Co-Op until and unless the Minimum Amount of $500, has
11 11 been sold and the Escrow Agent receives written instructions, to release the funds from the Co-Op. 8. If the Minimum Amount of $500, has not been sold on or prior to the Termination Date (as defined above), the Co-Op shall notify the Escrow Agent in writing of such. If the Co-Op notifies the Escrow Agent in writing that the Minimum Amount has not been sold prior to the Termination Date, the Escrow Agent shall, promptly following the Termination Date, but in no event more than thirty (30) days after the Termination Date, refund to each investor by check, funds deposited in the Escrow Account, or shall return the instruments of payment delivered to Escrow Agent if such instruments have not been processed for collection prior to such time, directly to each investor at the address previously provided. Notwithstanding the foregoing, the Escrow Agent shall not be required to remit any payments until funds represented by such payments have been collected by the Escrow Agent. Additionally, at the end of the third (3 rd ) business day following the Termination Date, the Escrow Agent shall notify the Co-Op of the amount of the Investor Funds received. Further, once the Offering has closed, the Co-Op shall notify the Escrow Agent of the same in writing. 9. In the event of any dispute, difference or question arising amongst the Co-Op and any investor in anyway arising out of this Agreement or that investor s Investor Funds, whether during the term of this agreement or after, then in the case of each such dispute, all Investor Funds with respect to the investor in which the dispute, difference or question exists shall be paid into court until such dispute is resolved. All associated fees with respect to depositing that investor s Investor Funds with the court shall be taken from the Investor Funds of that investor. 10. In the event an investor must be returned its respective Investor Funds and said investor cannot be found, all Investor Funds with respect to that investor shall be paid into court until said investor can be located. All associated fees with respect to depositing that investor s Investor Funds with the court shall be taken from the Investor Funds of that investor. 11. If the Escrow Agent receives written notice from the Co-Op that the Co-Op intends to reject an investor s subscription, the Escrow Agent shall pay to the applicable investor, within a reasonable time not to exceed ten (10) business days after receiving notice of the rejection, by first class mail at the address provided on such investor s SPA, or at such other address as shall be furnished to the Escrow Agent by the investor
12 in writing, all collected sums paid by the investor for Securities and received by the Escrow Agent (without interest thereon) If the Escrow Agent receives written notice from the Investor that the investor no longer wants to purchase the Securities, the Escrow Agent shall pay to the applicable investor, within a reasonable time not to exceed ten (10) business days after receiving notice, by first class mail at the address provided on such investor s SPA, or at such other address as shall be furnished to the Escrow Agent by the investor in writing, all collected sums paid by the investor for Securities and received by the Escrow Agent (without interest thereon). 13. After the Termination Date, the Co-Op and its agents shall not deposit, and the Escrow Agent shall not accept, any additional amounts representing payments by prospective investors. 14. Investor Funds shall be deposited in the Escrow Account in accordance with the Escrow Agreement and held uninvested in the Escrow Account, which shall be noninterest bearing. 15. The Escrow Agent shall record the details of all contributions and transactions relating to the Investor Funds and will report to the Co-Op on a weekly basis, giving full particulars of all Investor Funds delivered to the Escrow Agent during the previous week and to the current status of the trust account. 16. The Escrow Agent shall be entitled to receive a fee from the Co-Op for its services, equal to One Hundred and Eighty Canadian Dollars ($180.00) for each hour of work completed by the Escrow Agent in managing and administering this Agreement and the Investor Funds. The Escrow Agent is also entitled to be reimbursed for such expenditures incurred as may be agreed to in writing between the Co-Op and the Escrow Agent. 17. It is understood and agreed that the duties of the Escrow Agent are entirely ministerial being limited to receiving the Investor Funds and holding and disbursing the Investor Funds in accordance with this Escrow Agreement. 18. The Escrow Agent is not a party to, and is not bound by, any agreement between the Co-Op and investors except as may be evidenced by or arises out of the Escrow Agreement.
13 The Escrow Agent shall not be required to take or be bound by notice of any default of the Escrow Agreement, the Offering, or any SPA, of any person or to take any action with respect to such default involving any expense or liability, unless notice in writing of such default by the undersigned or any of them is given to the Escrow Agent at the address of the Escrow Agent listed above, and unless the Escrow Agent is indemnified in a manner satisfactory to it against any expense or liability arising therefrom. 20. The Escrow Agent shall not be responsible or liable for acting on any notice, request, waiver, consent, receipt, or other paper or document believed by the Escrow Agent to be genuine and to have been signed by the proper party or parties, nor shall the Escrow Agent be responsible for the genuineness of any document or signature and may rely conclusively upon any instrument believed in good faith to be genuine or signed by the proper party or parties. The Escrow Agent shall be under no duty to determine whether the Co-Op or the investors are complying with the requirements of this Agreement, the Offering, the SPA, or any applicable securities or other laws in tendering the Investor Funds to the Escrow Agent. The Escrow Agent shall have no responsibility except for the performance of its expressed duties hereunder, and no additional duties shall be implied. No amendment or modification of this Escrow Agreement or waiver of its terms shall affect the duties of the Escrow Agent unless the Escrow Agent consents thereto in writing. The Escrow Agent shall not be liable for any act or omission in the performance of its duties as Escrow Agent unless such act or omission constitutes bad faith, gross negligence or fraud. 21. The Escrow Agent shall not be required to institute or defend any legal action involving matters referred to herein or which affects the duties or liabilities of the Escrow Agent hereunder unless requested to do so by a party to this Escrow Agreement, and then only upon receiving full indemnity satisfactory to the Escrow Agent against any and all claims, liabilities, and expenses related thereto. If a dispute arises among the parties in relation to the Escrow Agent or its duties, the Escrow Agent may act or refrain from acting (a) in reliance upon the advice of its counsel, or (b) until required to do so by an order of court of competent jurisdiction, and shall not be liable for so acting or refraining from acting. 22. By way of supplement to the provisions of any law for the time being relating to Escrow Agents, it is expressly declared and agreed that the Escrow Agent, his employees, servants or agents;
14 14 (a) Shall not incur any liability or responsibility whatsoever for the consequence of any breach on the part of the Co-Op and or the investors of any of the covenants and agreements contained herein; and (b) Shall not be liable for any action taken or suffered in good faith under this Agreement, the Offering, or any SPA entered into between the Co-Op and an investor, whether by direction of the Co-Op or the investor or otherwise and the Co-Op and the investor shall indemnify and save harmless the Escrow Agent from any liability arising pursuant to this Agreement. 23. The Escrow Agent may resign its trust and be discharged from all further duties and liabilities hereunder by giving to the Co-Op thirty day s (30) notice in writing. In the event of the Escrow Agent so resigning or for any other reason becoming incapable of acting hereunder, the Co-Op shall forthwith appoint a new Escrow Agent. Failing such appointment by the Co-Op, the retiring Escrow Agent may apply to a Judge of the Ontario Court (General Division) for an appointment of a new Escrow Agent. On any new appointment, the new Escrow Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Escrow Agent. Any fees and associated costs in appointing a new Escrow Agent shall be borne by and be the responsibility of the Co-Op. 24. The Escrow Agent hereby accepts the trusts in this Agreement provided for and agrees to perform the same upon the terms and conditions herein set forth. 25. In the event of any dispute, difference or question arising amongst the parties hereto in anyway arising out of this agreement, whether during the term of this agreement or after, then in the case of each such dispute, difference or question as to the respective rights and/or obligations of each party, any party shall be entitled to give to the other parties, notice of such dispute and to request arbitration thereof and the parties shall then submit the same to arbitration in accordance with the provisions of the Arbitrations Act of Ontario or any statute which may replace the same. 26. It is hereby agreed that it shall be a condition precedent to any action being instituted by either of the parties hereto against the other or of any liability in connection therewith that the matter must first be referred to arbitration as herein provided for disposition.
15 All notices to be given or forwarded hereunder to any party or parties shall be in writing and sent by registered prepaid post addressed to the party for whom it is intended at his last known address or shall be in writing and delivered personally to the party or parties for whom such notice is intended. Any notices given to the Escrow Agent by the Co-Op under this Escrow Agreement shall be sufficiently given if mailed postage prepaid by the Co-Op to the head office of the Escrow Agent and shall be deemed to have been given on the day that such notice is received by the Escrow Agent. Any notices given by the Escrow Agent to the Co-Op shall be sufficiently given if mailed postage prepaid by the Escrow Agent to the Co-Op at its head office and shall be deemed to have been given on the day of the mailing. 28. The parties hereto agree to vote in favour of all minutes, by-laws, resolutions necessary to carry out the intent and spirit of this Agreement. 29. It is hereby expressly agreed, notwithstanding what is hereinbefore contained that this agreement may be amended, altered modified or cancelled in such manner as the parties hereto by agreement in writing deem advisable at anytime or from time to time. 30. This Agreement is personal in its nature and shall not be assigned or transferred without the written consent of the Co-Op and the Escrow Agent. 31. This Agreement shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties hereto attorn to the jurisdiction of the courts of the Province of Ontario. 32. This Agreement may be executed in any number of counterparts and by facsimile transmission or in pdf format by scanning and delivering by . Each such executed counterpart shall be deemed to be an original. All executed counterparts taken together shall constitute one agreement. 33. Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties hereto and any such attempted assignment without such prior written consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto. Any corporation or association into which the Escrow Agent may be converted
16 16 or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor Escrow Agent under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act. 34. If any provision of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain in full force and effect. 35. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the escrow contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such escrow. IN WITNESS WHEREOF the parties have set their hands and seals as of the day and year first above written. SIGNED, SEALED & DELIVERED ) GARDEN CITY FOOD CO-OP in the presence of: ) Per: ) ) ) Authorized signing officer ) ) LANCASTER, BROOKS & WELCH ) LLP ) Per: ) ) ) Authorized signing officer