UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
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x
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Annual
Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For
the fiscal period ended: December 31,
2005
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o
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Transition
Report under Section 13 or 15(d) of the Exchange Act of
1934
For
the transition period from ________ to
_________
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Commission
File Number: 000-31165
XL
GENERATION INTERNATIONAL INC.
(Name
of
Small Business Issuer as specified in its charter)
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NEVADA
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20-0909393
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(State
or other jurisdiction of
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(IRS
Employer
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incorporation
or organization)
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Identification
Number)
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Sumpfstrasse
32
6304
Zug, Switzerland
(Address
of principal executive offices)
4141
723 1090
(Issuer’s
telephone number, including area code)
Securities
registered
under
Section
12(
b
)
of the
Exchange
Act:
None
Securities
registered
under
Section
12(g) of the
Exchange
Act:
Common
Stock, par value $.001 per share
Check
whether the Issuer is not required to file reports pursuant to Section 13
or
15(d) of the Exchange Act.
o
Check
whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days. Yes
x
No
o
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
o
No
x
State
issuer's revenues for its most recent fiscal year: $2,892,513
State
the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $47,680,698 as of March 31,
2006
The
Issuer had 32,891,444 shares of Common Stock, par value $.001, outstanding
as of
March 31, 2006.
Documents
incorporated by reference: None.
Transitional
Small Business Disclosure format (Check one):
Yes
o
No
x
TABLE
OF CONTENTS
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PART
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I
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3
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Item
1.
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Description
of Business
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3
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Item
2.
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Description
of Property
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5
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Item
3.
|
Legal
Proceedings
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6
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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6
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PART
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II
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6
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Item
5.
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Market
for Common Equity, Related Stockholder Matters and Small Business
Issuer
Purchases of Equity Securities
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6
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Item
6.
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Management’s
Discussion and Analysis or Plan of Operation
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9
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Item
7.
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Financial
Statements
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11
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Item
8.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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11
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Item
8A.
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Controls
and Procedures
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11
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Item
8B.
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Other
Information
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11
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PART
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III
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12
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Item
9.
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Directors,
Executive Officers, promoters and Control Persons; Compliance with
Section
16(a) of the
Exchange
Act
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12
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Item
10.
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Executive
Compensation
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14
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Item
11.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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16
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Item
12.
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Certain
Relationships and Related Transactions
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17
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Item
13.
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Exhibits
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21
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Item
14.
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Principal
Accountant Fees and Services
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24
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Subsequent
Events
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25
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SIGNATURES
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37
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PART
I
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Item
1.
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Description
of Business
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Introduction
XL
Generation International Inc. (referred to herein as “we,” “us,” or the
“Company”) is the holding company of a Swiss entity, XL Generation AG, which is
the manufacturer of an artificial sport surface called “XL Turf.” XL Turf is
designed to reduce accidents while reproducing the natural feeling of
playing on
grass. The Company aspires to become a leading global force in the artificial
turf and flooring markets by building on the strength of the XL Generation
brand
and developing strategic partnerships with key regional turf and flooring
providers.
Business
Development
The
Company was incorporated in the State of Nevada on March 18, 2004, as
Cygni
Systems Corporation. The Company was originally formed with the intent
of
raising funds and entering into business as a software design company.
From the
date of its incorporation until June 17, 2005, the Company was in the
development stage of its business of developing online and network security
management software and online and network security consulting services.
A
change
of control occurred at the Company on June 17, 2005. In connection with
this
change in control, the Company's purpose became to seek, investigate
and, if
such investigation warranted, merge or acquire an interest in business
opportunities presented to it by persons or companies who or which desired
to
seek the perceived advantages of a Securities Exchange Act of 1934 registered
corporation. Our discretion in the selection of business opportunities
was
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
On
June
29, 2005, the Company entered into a Letter of Intent (the “Letter of Intent”)
regarding a share exchange with XL Generation AG. Pursuant to the terms
of the
Letter of Intent, the Company agreed to acquire all of the issued and
outstanding shares of common stock of XL Generation AG in exchange for
the
issuance at closing of an aggregate of 15 Million shares of restricted
common
stock (the “Common Stock”) of the Company (the “Exchange Offer”). The Letter of
Intent provided that in the event that substantially all of XL Generation
AG's
shareholders agreed to participate in the Exchange Offer on that date,
such
shareholders would thereafter collectively own approximately 60% of the
issued
and outstanding shares of the Company's Common Stock as of such date,
and the
Company would hold all or substantially all of the issued and outstanding
shares
of XL Generation AG's common stock. XL Generation AG is domiciled in
Zug,
Switzerland.
On
August
19, 2005, the Company entered into and closed a Share Exchange Agreement
(the
“Share Exchange Agreement”) with XL Generation AG. Pursuant to the terms of the
Share Exchange Agreement, the Company acquired all of the issued and
outstanding
shares of common stock of XL Generation AG. In connection with the closing
of
the Exchange Offer, the Company appointed Mr. Alain Lemieux, as President
and
CEO, Mr. Daniel Courteau, as Secretary, and Mr. Flemming Munck, as Chief
Financial Officer. Four new directors joined Mr. Pellerin on the Company’s Board
of Directors. These new directors were Mr. Lemieux, Mr. Munck, Mr. Courteau,
and
Alexander C. Gilmour.
On
August
23, 2005, the Company filed a Certificate of Amendment with the States
of
Nevada, changing its name to “XL Generation International Inc.” The Company
changed its stock symbol to XLGI. The Company has also changed its fiscal
year
end from April 30
th
to
December 31
st
.
Our
Business
XL
Generation AG, the Company’s sole operating subsidiary, is based in Zug,
Switzerland, and designs specific flooring products for sports, recreational
and
commercial markets. XL Generation AG has developed new artificial turf
systems
for sports fields. XL Generation AG holds the worldwide commercial and
manufacturing rights for the “XL technology.” The “XL technology” consists of
six patents. XL Generation AG produces product lines under the “XL Generation”
trademark, including the “genuine” XLTURF sport systems. XL Generation AG also
distributes its products worldwide through a licensed distribution network,
designing and manufacturing private labeled products using the “XL technology”.
The
Company has no employees other than those employed by XL Generation AG.
XL
Generation AG currently has 18 employees.
At
the
present time, XL Generation AG's core business is the production, distribution
and sales of artificial turf sport surfaces, using Expanded Polypropylen
(EPP)
as a replacement for the usual infill (sand and/or rubber) used in the
installation of artificial sport surfaces (and used by a number of our
competitors). These products can be used for European football (soccer),
field
hockey, baseball, American football, tennis and paintball. At the present
time,
XL Generation AG produces 3 soccer products on a commercial scale, 1
rugby
product, 1 American football product, 1 tennis product, 1 baseball product,
1
paintball product and 1 landscape product. XL Generation AG anticipates
launching playground products in the near future. The XL Turf market
is
presently based mainly in Europe and North America.
XL
Generation AG has a range of all weather and indoor sports surface products
which satisfy the criteria of certain sports organizations including
the
Federation International de Football Association (FIFA) and the Union
des
associations europeennes de football (UEFA), as well as having been endorsed
by
a number of professional soccer players. XL Generation AG believes that
the XL
range of synthetic sports surfaces offer customers a safer, environmentally
friendly, weather resistant and more athlete-friendly option than competitors'
products. In early 2005, UEFA and FIFA approved the use of products with
no
infill (such as rubber and sand), and the ISSS (International sport surfaces
sciences) supported biomechanics standards as developed by XL Generation
AG's
head of product development.
XL
Generation AG's products are distributed through either independent distributors
or direct sales to the end users. XL Generation AG has distribution agreements
in place in the United States, Sweden and South Korea. Distributors have
non-exclusive rights in their own country of residence and some distributors
are
also entitled to sell XL Generation AG products in other countries. These
distribution agreements typically have three (3) year terms, with automatic
renewal in the event that neither party gives notice to the contrary.
Our
distribution agreement for Sweden is for five (5) years.
We
aspire
to become a leading global force in the artificial turf and flooring
markets by
building both the strength of the XL brand and strategic partnerships
with key
regional turf and flooring providers. Our vision is to develop a variety
of
products other than for sports, aimed at all types of play space, including
for
landscape and playgrounds.
Competition
of XL Generation AG
Our
products for soccer, football and rugby compete with companies and brands
including FieldTurf, Tarkett Group, Polytan, Greenfield, Italgreen, Domo,
and
Desso. Our product for tennis competes with Tiger-Turf. Our playground
product
competes with Softile, Sportplay, Rubber-Cal, and Silisport.
Suppliers
of Raw Material
XL
Generation AG is party to a Supply Contract with Febra-Kunststoffe GmbH
(“Febra”) and BASF Aktiengesellschaft (“BASF”). Pursuant to this agreement,
Febra purchases certain raw materials from BASF, and in turn provides
XL
Generation AG with molded EPP padding sheets. XL Generation AG has agreed
to
purchase at least 100 metric tons of padding sheets per year. The term
of this
agreement will end on December 31, 2006.
Polyform
Inc., a Canadian corporation, is our main supplier of molded EPP blocks,
but
these beads can be molded into EPP block of different sizes by other
molders
around the world. XL Generation AG has no written agreement with Polyform
Inc.,
and purchases EPP blocks as needed pursuant to purchase orders.
Polyprod
Inc., a Canadian corporation, provides the assembly of the final product,
using
a combination of turf, glue, and EPP. Pursuant to an Exclusive Manufacturing
License Agreement entered into as of January 2, 2005, between XL Generation
AG
and Polyprod Inc., Polyprod Inc. manufactures XL Generation AG’s products on a
cost plus basis. This Exclusive Manufacturing License Agreement shall
be for a
term of ten (10) years. The Company has determined that Polyprod Inc.
is a
related party due to the control of Polyprod Inc. by XL Generation AG
through
this contractual relationship.
The
fiber
used in XL Generation AG's products is produced by Ten Cate Thiolon,
one of the
main producers of synthetic fiber in the world. XL Generation AG has
no written
agreement with Ten Cate Thiolon. XL Generation AG uses the services of
several
“tufters” based in Dalton, Georgia, who add this fiber to the final product.
The
Company believes that it has adequate alternative suppliers at the present
time.
However, there can be no guarantee that the loss of a supplier would
not have an
adverse impact on the operations of the Company.
Intellectual
Property
The
current relationship between XL Generation AG and the patents, patents
pending
and all the intellectual and industrial property rights (collectively,
the
“Intellectual Property”) which XL Generation AG is currently utilizing is as
follows:
The
Intellectual Property is owned by WKF/5 Ltd, a Maltese corporation controlled
(and majority owned) by a related party, the Alain Lemieux Trust. Mr.
Alain
Lemieux serves as President and CEO of the Company. WKF/5 Ltd owns the
worldwide
commercial and manufacturing rights for the “XL technology.” The “XL technology”
consists of six patents. Of these six patents, one is patented in 38
countries,
with patents pending in 6 more countries; another is patented in 16 countries,
with patents pending in 28 more; two of these patents are pending in
seven
countries; and two of the six patents are pending in one country
each.
XL
Generation AG has been granted a worldwide exclusive license (the “License
Agreement”) to manufacture, assemble, sell, distribute and promote all the
products covered by the Intellectual Property. The License Agreement
shall
continue in full force and effect until it automatically expires upon
the later
of (a) the termination or expiration date of the latest patent granted;
or (b)
the expiration date of any extension made by Licensee pursuant to the
License
Agreement. There is no minimum quota required the License Agreement.
The royalty
rate has been determined at 5% of gross sales of XL Generation AG. It
was agreed
by XL Generation AG and WKF/5 Ltd that an initial lump sum royalty fee
of
$416,047 would be paid by XL Generation AG to WKF/5 Ltd and an annual
renewal
fee of one Euro will be owed. Pursuant to an agreement entered into by
WKF/5
Ltd, the lump sum royalty fee of $416,047 was paid to a Quebec, Canada
trust
controlled by Alain Lemieux which assumed XL Generation AG’s duty to pay WKF/5
Ltd.
XL
Generation AG has granted to Polyprod Inc., an exclusive license only
to
manufacture and assemble certain products at the request of XL Generation
AG.
As
part
of our confidentiality procedures, we generally enter into nondisclosure
agreements with our employees, consultants, distributors and partners
and limit
the dissemination and access to our technical documentation and other
proprietary information.
The
Company has registered, or applied to register, the trademarks “XLTurf” (in 18
countries) and “XLGeneration” (in 14 countries).
|
Item
2.
|
Description
of Property
|
The
Company does not own any real estate. The Company does not plan on investing
in
real estate in the near future.
At
the
present time, the Company's operations are being conducted out of three
locations. One of the Company's directors, Albert Beerli, has been renting
XL
Generation AG office space at his offices in Zug, Switzerland. Mr. Beerli
currently charges 2,000 Swiss Francs per month (approximately U.S. $1,538)
for
this space.
XL
Generation AG is currently renting office space from Polyprod Inc. in
Montreal.
Polyprod Inc. is a Canadian corporation. Pursuant to an Exclusive Manufacturing
License Agreement entered into as of January 2, 2005, between XL Generation
AG
and Polyprod Inc., Polyprod Inc. manufactures XL Generation AG’s products. XL
Generation AG pays Polyprod $2,500 a month in rent. There is no lease.
XL
Generation AG has entered into a lease for office space in New York City.
The
term of this lease shall run until September 14, 2008, and has a base
rent of
$8,046.00 per month.
The
Company believes that the three current office facilities will be sufficient
for
the foreseeable future.
|
Item
3.
|
Legal
Proceedings
|
The
Issuer is not, and has not been during the period covered by this report,
a
party to any legal proceedings.
|
Item
4.
|
Submission
of Matters to a Vote of Security
Holders
|
In
the
fourth quarter of the fiscal year ended December 31, 2005, no matters
were
submitted to the Company's security holders for a vote.
PART
II
|
Item
5.
|
Market
for Common Equity, Related Stockholder Matters and Small Business
Issuer
Purchases of Equity
Securities
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a)
Market Information.
The
Company's common equity is traded on the over-the-counter bulletin board
under
the symbol XLGI.
The
following table sets forth for the periods indicated the high and low
close
prices for the Common Shares in U.S. Dollars. These quotations reflect
only
inter dealer prices, without retail mark up, mark down or commissions
and may
not represent actual transactions.
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Quarter
Ended
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High
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Low
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December
31, 2005
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$4.18
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$2.07
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September
30, 2005
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$2.55
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$2.04
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The
trading data available for the quarter ended June 30, 2005 indicates
that shares
of the Company's stock were traded for $.10 a share and $.12 a share
on June 12,
2005. To the Company’s knowledge, there was no active trading market in the
Company’s stock and no earlier trading data is reasonably
available.
(b)
Holders.
As
of
March 31, 2006, the Company had approximately 10 shareholders of
record.
(c)
Dividends.
The
Company has never declared or paid cash dividends. There are currently
no
restrictions which limit the ability of the Company to pay dividends
in the
future.
(d)
Securities authorized for issuance under equity compensation
plans.
The
Company has never paid equity compensation to any officer, director,
or
employee. During the fiscal year ended December 31, 2005, the Company
did not
have an authorized equity compensation plan. On March 30, 2006, the Company
adopted its 2006 Equity Incentive Plan.
(e)
Stock Recapitalization.
In
connection with the August 19, 2005 Share Exchange Agreement, the Company
commenced actions to provide for the revision of the Company's capital
structure. Pursuant to such actions, DT Crystal Holdings Ltd., the controlling
shareholder of the Company prior to entry into the Share Exchange Agreement,
as
inducement to the shareholders of XL Generation AG to enter into the
Share
Exchange Agreement, agreed to cancel four million shares of the Company’s Common
Stock and accept in consideration thereof an option exercisable for 500,000
shares of the Company. In addition, the Company made a stock dividend
to
shareholders of record of the Company of 9 shares of Common Stock for
each share
of Common Stock currently held, provided, however, each of DT Crystal
Holdings
Ltd. and the Alain Lemieux Trust, a trust formed in the Jersey Islands,
and Mr.
Albert Beerli waived their respective rights to such stock dividend (the
record
date for such dividend was set as August 29, 2005). After giving effect
to this
cancellation of shares, payment of a stock dividend and stock dividend
waivers,
the Alain Lemieux Trust, a trust formed in the Jersey Islands, and Mr.
Albert
Beerli jointly controlled approximately 60% of the Company's issued and
outstanding stock and DT Crystal Holdings Ltd. held the right to acquire
approximately 2% of the Company's issued and outstanding stock upon exercise
of
an option at an exercise price of $1.00 per share.
RECENT
SALES OF UNREGISTERED SECURITIES
August
19, 2005 issuance of Common Stock
On
August
19, 2005, the Company entered into and closed the Share Exchange Agreement
with
XL Generation AG. Pursuant to the terms of the Share Exchange Agreement,
the
Company acquired all of the issued and outstanding shares of common stock
of XL
Generation AG in exchange for the issuance to XL Generation AG's shareholders
of
15,000,000 shares of restricted common stock (the “Common Stock”) of the Company
(the “Exchange Offer”). Upon the issuance of the Common Stock, shares of the
Company’s common stock had most recently traded on the over-the-counter bulletin
board for $.12 per share. No cash compensation was received for the Common
Stock; the consideration received in respect of such issuance consisted
of all
of the issued and outstanding common stock of XL Generation AG.
The
Exchange Offer was made to the shareholders of the common stock of XL
Generation
AG pursuant to the exemption from registration provided by Regulation
S
promulgated under the U.S. Securities Act of 1933, as amended. All of
XL
Generation AG shareholders who have exchanged their shares are non-U.S.
persons.
These shares of common stock of XL Generation AG were acquired from the
Alain
Lemieux Trust, a trust formed in the Jersey Islands, and from Mr. Albert
Beerli,
a resident of Switzerland.
August
19, 2005 issuance of an Option (Option exercised December 19,
2005)
On
August
19, 2005, in connection with the Share Exchange Agreement, DT Crystal
Holdings
Ltd., the controlling shareholder of the Company prior to the closing
of the
Share Exchange Agreement, as inducement to the shareholders of XL Generation
AG
to enter into the Share Exchange Agreement, agreed to cancel four million
shares
of the Company’s Common Stock and accept in consideration thereof an option
exercisable for 500,000 shares of the Company at an exercise price of
$1 per
share (the “Option”). The Company entered into the aforementioned transaction in
reliance upon the exemption from securities registration afforded by
Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, including Regulation S promulgated
thereunder. DT Crystal Holdings Ltd. exercised the Option on December
19, 2005,
paying $500,000 to the Company for 500,000 shares of the Company’s common
stock.
November
8, 2005 issuance of Common Stock and Series A Warrants (Warrants exercised
February 17, 2006 and March 30, 2006)
On
November 8, 2005, the Company entered into a Common Stock Purchase Agreement
with each of Capex Investments Limited, Aton Select Fund Limited and
Asset
Protection Fund Limited (each a “Purchaser,” and collectively, the
“Purchasers”). Pursuant to the Common Stock Purchase Agreements, each Purchaser
agreed to pay one million dollars ($1,000,000) to purchase from the Company
(i)
1,111,111 shares of the Company's common stock; and (ii) Series A Warrants
entitling each Purchaser to purchase up to an additional 1,111,111 shares
of the
Company's common stock at an exercise price initially set at $1.25 per
share.
The Series A Warrants were to expire on November 8, 2007, and contained
customary adjustment provisions in the event of changes in the capitalization
of
the Company. In connection with these Common Stock Purchase Agreements,
the
Company entered into a Registration Rights Agreement with each of the
Purchasers, pursuant to which the Company agreed to register a total
of
2,222,222 shares for each Purchaser, representing the total number of
shares of
common stock sold to such Purchaser and those shares of common stock
to be
issued to the Purchaser upon the exercise of the Series A Warrant.
The
offering price for the aggregate of 3,333,333 shares of the Company's
common
stock and Series A Warrants to purchase up to an additional 3,333,333
shares of
the Company' common stock was a total of $3,000,000 (consisting of $1,000,000
from each of the Purchasers). No underwriting commissions were paid or
discounts
granted to underwriters.
The
Company entered into the aforementioned transaction in reliance upon
the
exemption from securities registration afforded by Section 4(2) of the
U.S.
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, including Rule 506 of Regulation D and Regulation S promulgated
thereunder. Each of the Purchasers have represented in their respective
Common
Stock Purchase Agreements that they are an “accredited investor” (as defined in
Rule 501 of Regulation D) and that they are not a “U.S. Person” (as such term is
defined in Regulation S).
On
December 5, 2005, the Company and two of the three Purchasers agreed
to an
amendment of the terms of the aforementioned transaction. Aton Select
Fund
Limited agreed to the cancellation of the Series A Warrant it was granted
pursuant to the Common Stock Purchase Agreement executed on November
8, 2005,
and relinquished its right to purchase up to an additional 1,111,111
shares of
the Company's common stock at $1.25 per share. Asset Protection Fund
Limited
agreed to reduce the number of shares of the Company's common stock it
is
entitled to purchase pursuant to the Series A Warrants from 1,111,111
to 330,000
shares.
On
February 17, 2006, Asset Protection Fund Limited exercised its Series
A
Warrants, paying the Company $412,500 to acquire 330,000 shares of the
Company’s
common stock.
On
March
30, 2006, Capex Investments Limited exercised its Series A Warrants,
paying the
Company $1,388,888.75 to acquire 1,111,111 shares of the Company’s common
stock.
December
6, 2005 issuance of Common Stock and Series B Warrants (Warrants exercised
January 31, 2006)
On
December 6, 2005, the Company entered into a Common Stock Purchase Agreement
with Professional Trading Services SA. Pursuant to the Common Stock Purchase
Agreements, Professional Trading Services SA agreed to pay four hundred
thousand
dollars ($400,000) to purchase from the Company (i) 400,000 shares of
the
Company's common stock; and (ii) Series B Warrants entitling Professional
Trading Services SA to purchase up to an additional 800,000 shares of
the
Company's common stock at an exercise price initially set at $1.25 per
share.
The Series B Warrants were to expire on June 6, 2006, and contained customary
adjustment provisions in the event of changes in the capitalization of
the
Company. In connection with this Common Stock Purchase Agreement, the
Company
entered into a Registration Rights Agreement with Professional Trading
Services
SA, pursuant to which the Company agreed to register 1,200,000 shares
for
Professional Trading Services SA, representing the total number of shares
of
common stock sold to such Professional Trading Services SA and those
shares of
common stock to be issued to Professional Trading Services SA upon the
exercise
of the Series B Warrant.
The
offering price for the 400,000 shares of the Company's common stock and
Series B
Warrants to purchase up to an additional 800,000 shares of the Company'
common
stock was a total of $400,000. No underwriting commissions were paid
or
discounts granted to underwriters.
The
Company entered into the aforementioned transaction in accordance with
and in
reliance upon the exemption from securities registration afforded by
Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, including Regulation D and Regulation
S
promulgated thereunder. Professional Trading Services SA represented
in the
Common Stock Purchase Agreements that it is an “accredited investor” (as defined
in Rule 501 of Regulation D) and that it is not a “U.S. Person” (as such term is
defined in Regulation S).
On
January 31, 2006, Professional Trading Services SA exercised its Series
A
Warrants, paying the Company $1,000,000 to acquire 800,000 shares of
the
Company’s common stock.
December
27, 2005 issuance of Common Stock and Series B Warrants (Warrants exercised
February 2, 2006)
On
December 27, 2005, the Company entered into an Amended and Restated Common
Stock
Purchase Agreement with Bank Sal. Oppenheim jr. & Cie. (Switzerland)
Limited. Pursuant to this Common Stock Purchase Agreement, Bank Sal.
Oppenheim
jr. & Cie. (Switzerland) Limited agreed to pay three hundred thousand
dollars ($300,000) to purchase from the Company (i) 300,000 shares of
the
Company's common stock; and (ii) Series B Warrants entitling Bank Sal.
Oppenheim
jr. & Cie. (Switzerland) Limited to purchase up to an additional 600,000
shares of the Company's common stock at an exercise price initially set
at $1.25
per share. The Series B Warrants were to expire on June 6, 2006, and
contained
customary adjustment provisions in the event of changes in the capitalization
of
the Company.
The
offering price for the 300,000 shares of the Company's common stock and
Series B
Warrants to purchase up to an additional 600,000 shares of the Company's
common
stock was a total of $300,000. No underwriting commissions were paid
or
discounts granted to underwriters.
The
Company entered into the aforementioned transaction in accordance with
and in
reliance upon the exemption from securities registration afforded by
Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, including Regulation S. Bank Sal.
Oppenheim
jr. & Cie. (Switzerland) Limited represented in the Common Stock Purchase
Agreements that it is not a “U.S. Person” (as such term is defined in Regulation
S).
On
February 2, 2006, Bank Sal. Oppenheim jr. & Cie. (Switzerland) Limited
exercised its Series A Warrants, paying the Company $750,000 to acquire
600,000
shares of the Company’s common stock.
PURCHASES
OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED
PURCHASERS
None.
|
Item
6.
|
Management’s
Discussion and Analysis or Plan of
Operation
|
The
Company's Operations
The
following discussion of the financial condition and results of operations
of XL
Generation International Inc. (referred to herein as the “Company”) should be
read in conjunction with the financial statements and the related notes
thereto
included elsewhere in this Annual Report on Form 10-KSB for the period
ended
December 31, 2005 (this “Report”). This Report contains certain forward-looking
statements and the Company's future operating results could differ materially
from those discussed herein. Certain statements contained in this Report,
including, without limitation, statements containing the words “believes”,
“anticipates,” “expects” and the like, constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). However, as the Company issues “penny stock,” as such term is defined in
Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible
to
rely on these safe harbor provisions. Such forward-looking statements
involve
known and unknown risks, uncertainties and other factors which may cause
the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed
or
implied by such forward-looking statements. Given these uncertainties,
readers
are cautioned not to place undue reliance on such forward-looking statements.
The Company disclaims any obligation to update any such factors or to
announce
publicly the results of any revisions of the forward-looking statements
contained or incorporated by reference herein to reflect future events
or
developments.
The
Company was incorporated in the State of Nevada on March 18, 2004 as
Cygni
Systems Corporation. On August 19, 2005, the Company entered into the
Share
Exchange Agreement with XL Generation AG (“XLG”). Pursuant to the terms of the
Share Exchange Agreement, the Company acquired all of the issued and
outstanding
shares of common stock of XLG in exchange for the issuance at closing
of an
aggregate of 15 Million shares of restricted Common Stock of the Company.
In
connection with the Share Exchange Agreement, the Company commenced actions
to
provide for the revision of the Company's capital structure. Pursuant
to such
actions, DT Crystal Holdings Ltd., the controlling shareholder of the
Company
prior to entry into the Share Exchange Agreement, as inducement to the
shareholders of XLG to enter into the Share Exchange Agreement, agreed
to cancel
four million shares of the Company’s Common Stock and accept in consideration
thereof an option exercisable for 500,000 shares of the Company. In addition,
the Company made a stock dividend to shareholders of record of the Company
of 9
shares of Common Stock for each share of Common Stock held, provided,
however,
each of DT Crystal Holdings Ltd. and the Alain Lemieux Trust, a trust
formed in
the Jersey Islands, and Mr. Albert Beerli waived their respective rights
to such
stock dividend (the record date for such dividend was set as August 29,
2005).
XLG,
based in Zug, Switzerland, designs specific flooring products for sports,
recreational and commercial markets. XLG has developed new artificial
turf
systems for sports fields. XLG holds the worldwide commercial and manufacturing
rights for the “XL technology.” The “XL technology” consists of six patents. XLG
produces its owned product lines under the “XL Generation” trademark, including
the “genuine” XLTURF sport systems. XLG also distributes its products worldwide
through an extensive licensed distribution network, designing and manufacturing
private labeled products using the “XL technology.”
On
August
23, 2005, the Company filed a Certificate of Amendment with the States
of
Nevada, changing its name to “XL Generation International Inc.” The Company also
changed its stock symbol to XLGI.
The
Company now serves as the holding company for XLG. The Company has adopted
XLG's
fiscal year end and the following Management's Discussion and Analysis
of
Financial Condition and Results of Operations describes the financial
condition
and results of operations for XLG. The Company has no other operations
other
than XLG and has no employees other those employed by XLG.
XLG
was
incorporated in 1991, and was inactive until March of 2004, when WKF/5
Ltd
granted it the exclusive worldwide right to manufacture, promote and
sell XL
Turf products. XL Turf is an artificial pitch used primarily in soccer
stadiums
and indoor recreational facilities.
Results
of Operations
Twelve
Months Ended December 31, 2005 and 2004
The
Company posted a net loss of $5,356,281 for the full year ending December
31,
2005, compared to a net loss of $1,570,607 for the year ending December
31,
2004. Total sales for the twelve months ended December 31, 2005 were
$2,892,513,
compared to total sales for the year ended December 31, 2004 of $1,349,319.
Total costs and expenses for the year ended December 31, 2005 were $8,248,794,
compared to total costs and expenses for the nine months ended December
31, 2004
of $2,919,926. The increases in costs and losses were caused in part
by costs
associated with the reorganization of the Company. New staff positions
were
created while the responsibilities of other staff positions were altered
to
improve the Company’s ability to respond to regulatory and market requirements.
Additional management positions were created in the sales & marketing and
operations areas to work towards the Company’s goals of producing quality
products, increasing sales, and lowering prices.
Liquidity
and Capital Resources
At
December 31, 2005, the Company had $262,446 in cash, as opposed to $434,194
in
cash at December 31, 2004.
At
December 31, 2005, the Company had total assets of $1,568,533 compared
to total
assets of $901,364 at December 31, 2004. The increase in is mainly due
to
advances to XL Generation Canada Inc, an operational agent based in Montreal,
providing financial and accounting services for the bureau Liason in
Montreal,
Canada.
At
December 31, 2005, the Company had total current liabilities of $4,328,978
compared to total current liabilities of $2,917,828 at December 31, 2004.
The
increase in liabilities is mainly due to (i) increased operational costs;
and
(ii) warranty costs, in particular for fields in Vancouver, Canada and
Wohlen,
Switzerland, of $500,000.
Since
its
formation, XL Generation AG has received advances from Mr. Albert Beerli,
a
stockholder and (since March of 2006) director, to cover the general
overhead
and running costs of XL Generation AG's offices in Zug, Switzerland.
The total
balance of amounts advanced as of December 31, 2005 was equal to $676,873
(compared to $489,220 at December 31, 2004).
Between
April of 2005 and September of 2005, Capex Investments Limited (which
is
affiliated with Capex Investments (Canada) Limited) loaned the Company
$1,500,000. On September 12, 2005, Capex Investments Limited entered
into a Loan
Agreement with the Company, pursuant to which Capex Investments Limited
loaned
the Company an additional $500,000.
In
late
December of 2005, the Company received an advance of $300,000 on the
exercise of
warrants.
In
the
fourth quarter of 2005, the Company focused considerable resources on
further
developing its outdoor turf products. In addition the Company also experienced
increased costs of sales and marketing, employee travel and operational
expenses
in connection with entering into new sales agreements. Since that time,
the
Company has raised funds through private placements to ensure its
liquidity.
The
financial conditions of the Company raise substantial doubt about the
Company's
ability to continue as a going concern. Management's plan for the Company's
continued existence includes selling additional stock through private
placements
and borrowing additional funds to pay overhead expenses while maintaining
marketing efforts to raise the Company’s sales volume. The future success of the
Company is dependent upon its ability to achieve profitable operations,
generate
cash from operating activities and obtain additional financing. There
is no
assurance that the Company will be able to generate sufficient cash from
operations, sell additional shares of common stock or borrow additional
funds.
The inability of the Company to obtain additional cash could have a material
adverse effect on its financial position, results of operations and its
ability
to continue in existence.
Off-Balance
Sheet Arrangements
The
Company is not a party to any off-balance sheet arrangements.
|
Item
7.
|
Financial
Statements
|
The
information called for by this Item 7 is included under “Financial Statements”
contained on page 27 in this Annual Report on Form 10-KSB.
|
Item 8.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
On
November 2, 2005, the Company dismissed its independent auditor, Malone
&
Bailey, PC.
During
the Company's two most recent fiscal years, the opinion of Malone & Bailey,
PC on the Company's financial statements did not contain an adverse opinion
or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit
scope or accounting principles, except as follows. Each of the independent
auditor's reports of Malone & Bailey, PC dated June 13, 2005 (for the year
ended April 30, 2005) and May 20, 2004 (for the year ended April 30,
2004)
contain “going concern” qualifications. These qualifications stated that the
Company's assets did not provide adequate working capital for the Company,
and
thus raised substantial doubt about the Company's ability to continue
as a going
concern.
There
were no disagreements with Malone & Bailey, PC, whether or not resolved, on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to
Malone
& Bailey, PC's satisfaction, would have caused it to make reference to
the
subject matter of the disagreement(s) in connection with this report.
Effective
as of November 2, 2005, the Company has retained Paritz & Company, P.A., as
its independent auditor.
|
Item 8A.
|
Controls
and
Procedures
|
As
of the
end of the period covered by this report, an evaluation was carried out
under
the supervision and with the participation of the Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the Company’s disclosure controls and procedures, as
defined in Rule 13a-15(e) promulgated under the Securities and Exchange
Act of
1934 (the “Exchange Act”). Based on their evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer have concluded that the
Company’s
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported
within
the time periods specified in Securities and Exchange Commission rules
and
forms.
There
have been no changes in the Company’s internal controls over financial reporting
during the Company’s most recently completed fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal
controls
over financial reporting.
|
Item 8B.
|
Other
Information
|
None.
PART
III
|
Item 9.
|
Directors,
Executive Officers, promoters and Control Persons; Compliance
with Section
16(a) of the Exchange
Act
|
The
following table presents information with respect to our officers, directors
and
significant employees as of the date of this Report:
|
Name
|
Age
|
Position
|
|
Alexander
C. Gilmour CVO
|
74
|
Chairman
of the Board
|
|
Alain
Lemieux
|
47
|
CEO,
President and Director
|
|
Flemming
Munck
|
42
|
CFO
and Director
|
|
Daniel
Courteau
|
49
|
Secretary
and Director
|
|
Claude
Pellerin
|
35
|
Director
|
|
Albert
Beerli
|
64
|
Director
|
|
Eric
Giguere
|
45
|
Chief
Operating Officer of XL Generation AG
(Subsidiary(1))
|
Each
director serves until our next annual meeting of the stockholders or
unless they
resign earlier. The Board of Directors elects officers and their terms
of office
are at the discretion of the Board of Directors.
Each
of
our directors serves until his or her successor is elected and qualified.
Each
of our officers is elected by the board of directors to a term of one
(1) year
and serves until his or her successor is duly elected and qualified,
or until he
or she is removed from office. The board of directors has a compensation
committee consisting of Mr. Gilmour and Mr. Courteau. The board of directors
has
no nominating committee. At the present time, members of the board of
directors
are not compensated for their services to the board. The board has an
audit
committee consisting of Mr. Courteau. The Company does not currently
have an
audit committee financial expert serving on its audit committee, but
intends to
appoint one in the future.
(1)
Mr.
Giguere is Chief Operating Officer of XL Generation AG, and thus may
be deemed
to be a significant employee of the Company. He is not an executive officer
or
director of the Company.
BIOGRAPHICAL
INFORMATION REGARDING OFFICERS AND DIRECTORS
Alexander
Clement Gilmour, Director and Chairman of the Board. Mr. Gilmour has
served as a
director of the Company since August, 2005. Mr. Gilmour was a corporate
finance
stockbroker with Joseph Sebag and Carr Sebag from 1957 until 1982. Since
then he
has served on the Board of several companies in the United Kingdom and
Hungary,
including Konzum, from 1996 until 2000, and Pharma Ltd. from 1997 until
1999.
His other activities have included serving as a Governor of the London
School of
Economics for over 25 years (he is now an Honorary Fellow), Chairman
of the
National Playing Fields Association for 13 years, President of the South
London
Chamber of Commerce, Director of the Tate Gallery Foundation, as well
as being
associated with the Community Foundation movement and other charities
in the
United Kingdom. For his volunteer work he was made a Commander of the
Royal
Victorian Order (CVO). He has recently been made a Trustee of the British
Garden
in Hanover Square, New York. Since 2003, he has served as a consultant
to the
eye2 group of companies in the United Kingdom.
Alain
Lemieux, Director, President and CEO. Mr. Lemieux has served as an officer
and
director of the Company since August, 2005. Mr. Lemieux is also President
and
CEO of XL Generation AG, positions he has held since February of 2004.
Mr.
Lemieux is the inventor of the XL Turf technology used by XL Generation
AG. Mr.
Lemieux continues to oversee XL Generation AG's research and development.
In
1998, Mr. Lemieux founded NuGreen surfaces, a company dedicated to researching
and developing the use of molded Expanded Polypropylene for different
surfaces
which would be used for sports, residential purposes and roofing. From
January
of 2001 until April of 2002, Mr. Lemieux was the Chief Executive Officer
of XL
Turf Inc. From April, 2002 until March, 2004, Mr. Lemieux was the President
and
a director of Symbior Technologies Inc. of Montreal, Canada, which became
bankrupt in October of 2004. In 2005, Mr. Lemieux was appointed Ambassador
Extraordinary Plenipotentiary & Vice-Secretary General of CISRI-ISP, an
Observer Mission to the United Nations.
Flemming
Munck, Director, CFO and Treasurer. Mr. Munck has served as an officer
and
director of the Company since August, 2005. He served as a consultant
to XL
Generation AG from April, 2005 to August, 2005. Mr. Munck is an accountant
who
has held an extensive range of financial management postings for prominent
global corporations. His most recent positions have included serving
as Interim
Finance Director for Business Development for Stagecoach Group from May,
2004 to
February, 2005, Finance Director for the Sheffield Supertram system from
May,
2004 to February, 2005, Corporate Controller for Bookham Technology Inc.
from
December, 2003 to May, 2004, Divisional Finance Director for Serco Group
Plc.
from January, 2003 to December, 2003, Project Manager for Catalyst Housing
Group
from April 2002 to January 2003, and Finance Director for Gate Gourmet
from
March 2001 to March 2002.
Daniel
Courteau, Director and Secretary. Mr. Courteau has served as a director
of the
Company since August, 2005, and is a member of the Company's audit committee.
Mr. Courteau is a tax attorney. Since 2000, Mr. Courteau has also served
as a
Director and Secretary of Junex, an oil and gas corporation, formed in
Quebec
and listed on the Toronto Stock Exchange. From April of 2002 until November,
2003, Mr. Courteau was a director of Symbior Technologies Inc., of Montreal,
Canada, which became bankrupt in October of 2004.
Claude
Pellerin, Director. Mr. Pellerin is a corporate attorney and a partner
in the
law firm of Hovington Pellerin S.e.n.c. Since 2002, Mr. Pellerin has
served as
Director, President, Treasurer and Secretary of Capex Investments (Canada)
Limited, an investments and financing corporation based in Montreal,
Quebec.
From 2001-2002, Mr. Pellerin served as a Secretary for Equilar Capital
Corporation, an Ontario Corporation listed on the Toronto Stock exchange.
Between 2002 and 2004, Mr. Pellerin served as Vice President for legal
affairs
for Manaris Corporation, a Nevada corporation listed on the OTCBB. Since
2003,
Mr. Pellerin has served as Secretary of Gourmet Flash Inc., a Quebec
corporation, and from 2004-2005 served as a Director to Canadian Security
Agency
(2004) Inc. Mr. Pellerin served as the Company's President, Secretary
and
Treasurer from June 17, 2005 until August 19, 2005, at which time he
resigned as
an officer but remained a director of the Company.
Albert
Beerli, Director. Mr. Beerli has served as a director of the Company
since
March, 2006. Mr. Beerli is a scientist, having received his Ph.D in chemical
engineering in 1969. Since 1988 Mr. Beerli has been the Chief Executive
Officer
of Zenwex AG in Zug, Switzerland. Zenwex AG provides consulting services
on
scientific and technical matters.
Eric
Giguere, Chief Operating Officer, XL Generation AG. Mr. Giguere has served
as
Chief Operating Officer of XL Generation AG, the Company’s subsidiary, since
November of 2005. From March, 2004 to November, 2005, Mr. Giguere was
Vice
President for Navigation Systems and Surgical Instruments for Orthosoft
in
Montreal, Quebec. There he was responsible for the overall performance
of the
Orthosoft Navigation Systems and Surgical Instruments business unit.
From March,
2003 until November, 2003, Mr. Giguere was a consultant specializing
in lean
manufacturing and operations strategic planning for Northwestel in Whitehorse,
Yukon. From May, 2000 until March, 2003, Mr. Giguere was General Manager
for
Supply Chain and Strategic Planning for Bell Canada in Montreal, Quebec.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our executive officers and directors,
and
persons who beneficially own more than 10% of our equity securities,
to file
reports of ownership and changes in ownership with the Securities and
Exchange
Commission. Officers, directors and greater than 10% shareholders are
required
by SEC regulation to furnish the Company with copies of all Section 16(a)
forms
they file. Based on our review of the copies of such forms we received,
we
believe that during the fiscal year ended December 31, 2005 all such
filing
requirements applicable to our officers and directors were complied with,
except
that reports were filed late by the following persons:
|
Name
and principal position
|
Number
of Late Reports
|
Transactions
Not Timely Reported
|
Known
Failures to File a Required Form
|
|
Andrea
Meakin (1)
|
2
|
2
|
0
|
|
Kim
Freisen (2)
|
2
|
2
|
0
|
|
Alain
Lemieux Trust (3)
|
1
|
1
|
0
|
|
(1)
|
Andrea
Meakin was an officer, director and 10% shareholder of the
Company until
June 17, 2005, at which time Ms. Meakin sold all of her shares
of the
Company’s common stock to DT Crystal Holdings Ltd. and resigned as
an
officer and director of the Company. Ms. Meakin did not file
a Form 3 in
connection with her status as an officer, director and 10%
shareholder of
the Company until March 1, 2006, which Form 3 was subsequently
amended on
March 20, 2006. Ms. Meakin did not file a Form 4 in connection
with the
June 17, 2005 sale of her shares of the Company’s common stock and her
resignation as an officer and director of the Company until
March 1, 2006,
which Form 4 was subsequently amended on March 20,
2006.
|
|
(2)
|
Kim
Freisen was an officer, director and 10% shareholder of the
Company until
June 17, 2005, at which time Kim Freisen sold all of his shares
of the
Company’s common stock to DT Crystal Holdings Ltd. and resigned as
an
officer and director of the Company. Mr. Freisen did not file
a Form 3 in
connection with his status as an officer, director and 10%
shareholder of
the Company until March 1, 2006, which Form 3 was subsequently
amended on
March 20, 2006. Mr. Freisen did not file a Form 4 in connection
with the
June 17, 2005 sale of his shares of the Company’s common stock and his
resignation as an officer and director of the Company until
March 1, 2006,
which Form 4 was subsequently amended on March 20,
2006.
|
|
(3)
|
The
Alain Lemieux Trust became a 10% shareholder of the Company
on August 19,
2005. The Alain Lemieux Trust did not file a Form 3 until September
6,
2005.
|
CODE
OF ETHICS
The
Company has not adopted a code of ethics at the present time, due to
the
complexities inherent in developing such a code for an entity, which,
like ours,
has offices in Switzerland, Canada and the United States, employs individuals
who are citizens of several different countries, and conducts business
throughout the world. The Company is currently reviewing and assessing
codes for
entities similarly situated to the Company, and intends to adopt such
a code of
ethics in the second quarter of 2006.
|
Item 10.
|
Executive
Compensation
|
The
following table sets forth compensation for each of the past three fiscal
years
with respect to each person who served as Chief Executive Officer of
the Company
and each of the four most highly-compensated executive officers of the
Company
who earned a total annual salary and bonuses that exceeded $100,000 in
any of
the three preceding fiscal years.
Summary
Compensation Table
|
Annual
Compensation (1)
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Other
Annual Compensation
|
|
All
Other Compensation
|
|
|
Name
and Principal
Position
|
|
Year
(2)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
Alain
Lemieux (3)(4)
Director,
President and CEO
|
|
|
2005
|
|
|
60,000(5
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Claude
Pellerin (6)
Director,
President and CEO
|
|
|
2005
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Kim
Friesen (7)
Director,
President and CEO
|
|
|
2005
2004
|
|
|
0
0
|
|
|
0
0
|
|
|
0
0
|
|
|
0
0
|
|
|
(1)
|
|
No
officers earned over $100,000 in any of the three preceding
years. No long
term compensation was paid to any officers.
|
|
(2)
|
|
Prior
to the acquisition of XL Generation AG, the Company's fiscal
year ended
April 30th. XL Generation AG, the Company's wholly-owned subsidiary,
has a
fiscal year ending December 31st. In connection with the acquisition
of XL
Generation AG, the Company has adopted the fiscal year end
of XL
Generation AG.
|
|
(3)
|
|
The
Company has not paid compensation to the officers and directors
listed
herein during the periods covered by this
table.
|
|
(4)
|
|
Mr.
Lemieux has been President and CEO of the Company since August
19, 2005.
He has been President and CEO of XL Generation AG since February,
2004.
|
|
(5)
|
|
Mr.
Lemieux was paid $65,000 in the year ended December 31, 2005
by XL
Generation AG.
|
|
(6)
|
|
Mr. Pellerin was the Company's President, CEO and a Director
from June 17,
2005 until August 19, 2005. He remains a Director of the
Company.
|
|
(7)
|
|
Ms.
Friesen was the Company's President, CEO and a Director from
the date of
its inception, on March 18, 2004, until her resignation on
June 17, 2005.
|
No
Option/SAR Grants have been made by the Company to officers, directors
or
employees in the last fiscal year.
Compensation
of Directors
In
the
year ended December 31, 2005, the Company's directors were not compensated
for
their services to the Company as directors.
Employment
Contracts
During
the fiscal year ended December 31, 2005, the Company did not have employment
agreements with Kim Freisen or Claude Pellerin.
On
March
30, 2006, XL Generation AG, the sole operating subsidiary of XL Generation
International Inc. (the “Company”), entered into employment agreements with
three individuals who are officers and directors of the Company. Set
forth below
is a description of the terms and conditions of these agreements.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Alain
Lemieux. Mr. Lemieux is the President and Chief Executive Officer of
the
Company. Mr. Lemieux is also a director of the Company, and 13,000,000
of the
Company’s outstanding shares (which are held by the Alain Lemieux Trust) may
be
deemed to be beneficially owned by Mr. Lemieux (this represents 39.5%
of the
Company’s currently outstanding common stock). Although this agreement was
executed and delivered as of March 30, 2006, the parties have agreed
that its
terms will be effective retroactive to October 1, 2005. This agreement
has no
set termination date; however, this agreement may be terminated at any
time by
either of the parties, subject to certain termination provisions documented
below. Pursuant to this agreement, Mr. Lemieux is entitled to receive
$240,000
USD annually, indexed according to the rate of the Consumer Price Index.
Mr.
Lemieux is also entitled to a housing allocation of 3,500 Swiss Francs
(approximately $2,695.35) per month and an automobile allowance of 7,500
Swiss
Francs (approximately $5,775.75) per year. In the event that certain
sales
targets are met, Mr. Lemieux will be entitled to an increase in salary
based on
a formula set forth in the agreement. Mr. Lemieux may terminate this
agreement
at any time, with a minimum of six (6) months notice. Mr. Lemieux may
be
terminated without cause, with three (3) months notice. In the event
of Mr.
Lemieux’s termination without cause, he shall be entitled under this agreement
to severance pay for three years equal to his average salary over the
past five
years. Furthermore, in the event of his dismissal without cause, Mr.
Lemieux
shall also be entitled, for every year until his 60
th
birthday, to receive options permitting him to purchase 100,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Daniel
Courteau, the Company’s Vice President, legal affairs. Mr. Courteau is also a
director of the Company. This agreement will commence as of January 1,
2007.
This agreement has no set termination date; however, this agreement may
be
terminated at any time by either of the parties, subject to certain termination
provisions documented below. Pursuant to this agreement, Mr. Courteau
is
entitled to receive $175,000 USD annually. Mr. Courteau is also entitled
to a
housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per
month and
an automobile allowance of 7,500 Swiss Francs (approximately $5,775.75)
per
year. In the event that certain sales targets are met, Mr. Courteau will
be
entitled to an increase in salary based on a formula set forth in the
agreement.
Mr. Courteau may terminate this agreement at any time, with a minimum
of six (6)
months notice. Mr. Courteau may be terminated without cause, with three
(3)
months notice. In the event of Mr. Courteau’s termination without cause, he
shall be entitled under this agreement to severance pay for three years
equal to
his average salary over the past five years. Furthermore, in the event
of his
dismissal without cause, Mr. Courteau shall also be entitled, for every
year
until his 60
th
birthday, to receive options permitting him to purchase 75,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Flemming
Munck, the Company’s Chief Financial Officer. Mr. Munck is also a director of
the Company. Although this agreement was executed and delivered as of
March 30,
2006, the parties have agreed that its terms will be effective retroactive
to
October 1, 2005. This agreement has no set termination date; however,
this
agreement may be terminated at any time by either of the parties, subject
to
certain termination provisions documented below. Pursuant to this agreement,
Mr.
Munck is entitled to receive $150,000 USD annually. Mr. Munck is also
entitled
to a housing allocation of 3,500 Swiss Francs (approximately $2,695.35)
per
month and an automobile allowance of 7,500 Swiss Francs (approximately
$5,775.75) per year. In the event that certain sales targets are met,
Mr. Munck
will be entitled to an increase in salary based on a formula set forth
in the
agreement. Mr. Munck may terminate this agreement at any time, with a
minimum of
six (6) months notice. Mr. Munck may be terminated without cause, with
three (3)
months notice. In the event of Mr. Munck’s termination without cause, he shall
be entitled under this agreement to severance pay for three years equal
to his
average salary over the past five years. Furthermore, in the event of
his
dismissal without cause, Mr. Munck shall also be entitled, for every
year until
his 60
th
birthday, to receive options permitting him to purchase 50,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
XL
Generation AG entered into an employment agreement dated October 20,
2005 with
Eric Giguere, the Chief Operating Officer of XL Generation AG. This agreement
terminates in April of 2007. Pursuant to this agreement, Mr. Giguere
is entitled
to receive 150,000 CAD annually (approximately $128,310) until April
30, 2006,
and then 165,000 CAD annually (approximately $141,141) until April 30,
2007. Mr.
Giguere is also entitled to the use of an automobile at XL Generation
AG’s
expense, has received a signing bonus of 7,500 CAD (approximately $6,416),
and
will be entitled to receive an additional bonus of the same amount in
November
of 2006 if he is still an employee of XL Generation AG at that time.
In the
event that certain sales targets are met, Mr. Giguere will be entitled
to a
bonus of 50,000 CAD (approximately $42,770). Upon the establishment of
a stock
option plan by the Company, Mr. Giguere will be entitled to receive an
option
grant for 50,000 shares during each year of his employment.
|
Item 11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the date of this Report by (i) each director
of
the Company, (ii) each of the Company's officers named in the Summary
Compensation Table, (iii) each person who is known by the Company to
be the
beneficial owner of more than five percent of the Company's outstanding
Common
Stock, and (iv) all directors and executive officers as a group. Except
as
otherwise indicated below, each person named has sole voting and investment
power with respect to the shares indicated. The percentage of ownership
set
forth below reflects each holder's ownership interest in the 32,891,444
shares
of the Company's common stock outstanding as of March 30, 2006.
Amount
and Nature of Beneficial Ownership
|
Name
and Address of Beneficial Owner (1)
|
Shares
|
Options/
Warrants
|
Total
|
Percent
|
|
Alain
Lemieux (2)(3)
|
13,000,000
|
0
|
13,000,000
|
39.5%
|
|
Flemming
Munck (4)
|
0
|
0
|
0
|
0%
|
|
Alexander
C. Gilmour (5)
|
0
|
0
|
0
|
0%
|
|
Daniel
Courteau (2)(6)
|
500,000
|
0
|
500,000
|
1.5%
|
|
Claude
Pellerin (7)
|
0
|
0
|
0
|
0%
|
|
Albert
Beerli (8)
|
1,500,000
|
0
|
1,500,000
|
4.6%
|
|
Capex
Investments Limited (9)
|
2,272,222
|
0
|
2,272,222
|
6.9%
|
|
All
executive officers and directors as a group (6 persons)
|
15,000,000
|
0
|
15,000,000
|
45.6%
|
(1)
The
mailing address for each of the listed individuals is c/o XL Generation
International Inc., Sumpfstrasse 32, 6304 Zug, Switzerland.
(2)
13,500,000 shares of the Company's common stock are held by the Alain
Lemieux
Trust. Of these shares, 13,000,000 may be deemed to be beneficially owned
by Mr.
Lemieux and 500,000 may be deemed to be beneficially owned by Mr. Courteau.
Mr.
Peter Nicole, of Professional Trust Company Limited, has voting and investment
control over the securities held by the Alain Lemieux Trust and is therefore
deemed to be the beneficial owner of such securities.
(3)
CEO,
President, Director and owner of 5% or more of the Company's common
stock.
(4)
CFO
and Director.
(5)
Chairman of the Board of Directors.
(6)
Secretary and Director.
(7)
Director.
(8)
Director.
(9)
Owner
of 5% or more of the Company's common stock. Mr. Robert Clarke, President
and
Sole Director of Capex Investments Limited, has voting and investment
control
over the securities held by Capex Investments Limited, and is therefore
deemed
to be the beneficial owner of such securities.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The
Company, from inception through December 31, 2005, has not paid equity
compensation to any officer, director, or employee. During the fiscal
year ended
December 31, 2005, the Company did not have an authorized equity compensation
plan. On March 30, 2006, the Company adopted its 2006 Equity Incentive
Plan.
|
Item 12.
|
Certain
Relationships and Related
Transactions
|
Advances
from Albert Beerli
Since
the
date of its formation, XL Generation AG has received advances from Mr.
Albert
Beerli to cover general overhead and running costs of XL Generation AG's
offices
in Zug, Switzerland.
Mr.
Beerli provides XL Generation AG office space at his personal offices,
for which
he currently charges 2,000 Swiss Francs per month (approximately US $1,538).
The
total amount charged by Mr. Beerli to XL Generation AG for rent in 2005
was
24,000 Swiss Francs (approximately US $18,454).
The
total balance of amounts advanced as of December 31, 2005 was equal to
US
$676,873.
Pascal
Beerli
Mr.
Pascal Beerli, the son of Albert Beerli, serves on the Board of Directors
of the
Company’s subsidiary, XL Generation AG. For his services to XL Generation AG,
Pascal Beerli received 40,000 Swiss Francs (approximately US $30,757)
from XL
Generation AG in 2005.
Transactions
with Polyprod Inc.
Pursuant
to an Exclusive Manufacturing License Agreement entered into as of January
2,
2005, between XL Generation AG and Polyprod Inc., a Canadian corporation,
Polyprod Inc. manufactures XL Generation AG’s products on a cost plus basis.
This Exclusive Manufacturing License Agreement shall be for a term of
ten (10)
years. In addition, XL Generation AG is currently renting office space
from
Polyprod Inc. in Montreal. XL Generation AG pays Polyprod $2,500 a month
in
rent. There is no lease. The Company has determined that Polyprod Inc.
is a
related party due to the control of Polyprod Inc. by XL Generation AG
through
the contractual relationship.
Share
Exchange Agreement
On
June
29, 2005, the Company entered into a Letter of Intent (the “Letter of Intent”)
regarding a share exchange with XL Generation AG. Pursuant to the terms
of the
Letter of Intent, the Company agreed to acquire all of the issued and
outstanding shares of common stock of XL Generation AG in exchange for
the
issuance of an aggregate of 15 Million shares of restricted common stock
(the
“Common Stock”) of the Company (the “Exchange Offer”). On August 19, 2005, the
Company entered into and closed a Share Exchange Agreement (the “Share Exchange
Agreement”), as contemplated by the Letter of Intent. Pursuant to the terms of
the Share Exchange Agreement, the Company acquired all of the issued
and
outstanding shares of common stock of XL Generation AG. The two stockholders
of
XL Generation AG who entered into the Share Exchange Agreement are (i)
the Alain
Lemieux Trust and (ii) Albert Beerli. The Alain Lemieux Trust, a trust
formed in
the Jersey Islands, holds 13,500,000 shares of the Company's common stock.
Of
the shares owned by the Alain Lemieux Trust, 13,000,000 may be deemed
to be
beneficially owned by Mr. Alain Lemieux (who is currently the Company's
CEO,
President and Director) and 500,000 may be deemed to be beneficially
owned by
Mr. Daniel Courteau (who is currently the Company's Secretary and Director).
Mr.
Albert Beerli (who is currently a Director of the Company) owns 1,500,000
shares
of the Company's common stock. In connection with the Share Exchange
Agreement,
the Company commenced actions to provide for the revision of the Company's
capital structure. Pursuant to such actions, DT Crystal Holdings Ltd.,
the
controlling shareholder of the Company prior to entry into the Share
Exchange
Agreement, as inducement to the shareholders of XL Generation AG to enter
into
the Share Exchange Agreement, agreed to cancel four million shares of
the
Company’s Common Stock and accept in consideration thereof an option exercisable
for 500,000 shares of the Company at an exercise price of $1.00 per share.
In
addition, the Company made a stock dividend to shareholders of record
of the
Company of 9 shares of Common Stock for each share of Common Stock currently
held, provided, however, each of DT Crystal Holdings Ltd. and the Alain
Lemieux
Trust, a trust formed in the Jersey Islands, and Mr. Albert Beerli waived
their
respective rights to such stock dividend (the record date for such dividend
was
set as August 29, 2005). After giving effect to such cancellation, stock
dividend and such dividend waivers, the Alain Lemieux Trust and Mr. Albert
Beerli jointly controlled approximately 60% of the Company's issued and
outstanding stock and DT Crystal Holdings Ltd. held the right to acquire
approximately 2% of the Company's issued and outstanding stock.
Transactions
with Capex Investments (Canada) Limited
In
connection with the completion of the aforementioned Exchange Offer,
the Company
incurred certain legal expenses, and the Company borrowed a total amount
of
$10,000 from Capex Investments (Canada) Limited, a Canadian Federal Corporation.
Claude Pellerin, who was at that time the Company's sole officer and
director
(and currently remains a director of the Company) is also the President
and a
Director of Capex Investments (Canada) Limited.
Between
April of 2005 and September of 2005, Capex Investments Limited (which
is
affiliated with Capex Investments (Canada) Limited) loaned XL Generation
AG
$1,500,000. On September 12, 2005, Capex Investments Limited entered
into a Loan
Agreement with XL Generation AG, pursuant to which Capex Investments
Limited
loaned XL Generation AG an additional $500,000.
On
November 8, 2005, the Company entered into a Common Stock Purchase Agreement
with Capex Investments Limited and certain other purchasers. Pursuant
to the
Common Stock Purchase Agreement, Capex Investments Limited agreed to
pay one
million dollars ($1,000,000) to purchase from the Company (i) 1,111,111
shares
of the Company's common stock; and (ii) Series A Warrants entitling Capex
Investments Limited to purchase up to an additional 1,111,111 shares
of the
Company's common stock at an exercise price initially set at $1.25 per
share.
The Series A Warrants shall expire on November 8, 2007, and contain customary
adjustment provisions in the event of changes in the capitalization of
the
Company. In connection with this Common Stock Purchase Agreement, the
Company
entered into a Registration Rights Agreement with Capex Investments Limited,
pursuant to which the Company agreed to register 2,222,222 shares for
Capex
Investments Limited, representing the total number of shares of common
stock
sold to Capex Investments Limited and those shares of common stock to
be issued
to Capex Investments Limited upon the exercise of the Series A Warrant.
License
Agreement with WKF/5 Ltd
XL
Generation AG has been granted a worldwide exclusive license (the “License
Agreement”) to manufacture, assemble, sell, distribute and promote all the
products (the “Products”) covered by all the intellectual property and
industrial property rights (collectively, the “Intellectual Property”) which XL
Generation AG is currently utilizing. The Intellectual Property is owned
by
WKF/5 Ltd, a Maltese corporation controlled (and majority-owned) by the
Alain
Lemieux Trust, a Jersey trust. The Alain Lemieux Trust is the owner of
13,500,000 shares of the Company's common stock, constituting approximately
41%
of all issued and outstanding common stock as of the date of this report.
Of
such shares owned by the Alain Lemieux Trust, 13,000,000 shares may be
deemed to
be beneficially owned by Mr. Alain Lemieux, who is currently the Company’s CEO,
President and a Director. The balance of 500,000 shares owned by the
Alain
Lemieux Trust may be deemed to be beneficially owned by Mr. Daniel Courteau,
who
serves as the Company's Secretary and Director. The License Agreement
shall
continue in full force and effect until it automatically expires upon
the later
of (a) the termination or expiration date of the latest patent granted
within
the scope of the Intellectual Property; or (b) the expiration date of
any
extension made by the Licensee pursuant to the License Agreement. Pursuant
to
the License Agreement, XL Generation AG must comply with certain quality
control
standards in the production of the Products. Such quality control standards
shall be set by WKF/5 Ltd and must, pursuant to License Agreement, be
reasonable. XL Generation AG may not produce and sell goods which compete
with
the Products. WKF/5 Ltd is obligated to maintain all intellectual property
rights related to the Intellectual Property. The License Agreement required
that
XL Generation pay WKF/5 Ltd (i) an initial lump sum royalty fee, which
was
subsequently mutually set at $416,047; (ii) an annual renewal fee of
one Euro;
and (iii) royalties at rate of 5% of the gross sales of XL Generation
AG, with
no minimum royalty. WKF/5 Ltd has the right to audit the books and records
of XL
Generation AG in connection with such royalties. XL Generation AG advanced
$416,047 to Fiducie Alain Lemieux, a trust in Quebec as to which Alain
Lemieux
is the main beneficiary (the “Quebec Trust”), as of December 31, 2004 as
mutually agreed between XL Generation AG and the Quebec Trust. Pursuant
to a
supplement to the License Agreement, dated June 30, 2005, the Quebec
Trust
agreed to assume the XL Generation AG obligation of payment of $416,047
to WKF/5
Ltd. The Board of Directors of the Company has ratified and approved
of the
foregoing License Agreement transactions among the Company and Messrs.
Lemieux
and Courteau as related parties to the Company. In the course of review
for such
ratification and approval, Messrs. Lemieux and Courteau recused themselves
from
all deliberations and voting. On the basis of its review, the Board of
Directors
concluded that the terms and conditions of the License Agreement and
the related
agreements are fair and reasonable to the Company. The Board of Directors
of the
Company furthermore concluded that the License Agreement and related
agreements
will ultimately benefit the Company’s shareholders notwithstanding the
related-party aspect of the transactions.
Services
received from Greendale Consulting Limited
In
April
of 2005, XL Generation AG entered into a verbal agreement, pursuant to
which
Greendale Consulting Limited, an entity formed in the United Kingdom,
would
provide financial and commercial consulting and support services to the
Company.
Greendale Consulting Limited is controlled by Flemming Munck, who is
a director
of the Company, as well as the Company's CFO and Treasurer. Since May
of 2005,
XL Generation AG has been paying 6,600 GBP (approximately $11,638) per
month to
Greendale Consulting Limited. The total amount received in fees in 2005
by
Greendale Consulting Limited was equal to 52,800 GBP (approximately $93,104).
Greendale Consulting Limited also received the reimbursement of certain
expenses
equaling approximately $53,196.
Law
Firm of Degrandpre, Chait
In
the
fiscal year ended December 31, 2005, the law firm of Degrandpre, Chait
(Montreal) received CAD $110,000 (approximately US $94,050) from XL Generation
AG for legal services rendered. Most of these legal services involved
the
intellectual property utilized by XL Generation AG. Mr. Daniel Courteau,
one of
the Company’s directors, is a partner of the law firm of Degrandpre, Chait,
although the majority of the legal services were provided to XL Generation
AG by
other attorneys at the law firm.
XL
Generation Canada Inc. Management Agreement
In
February of 2004, XL Generation AG entered into a Management Agreement
(the
“Management Agreement”) with XL Generation Canada Inc. (“XL Canada”), a Canadian
company which was, at such date, a wholly-owned subsidiary of XL Generation
AG.
The Management Agreement provided that XL Canada would act as XL Generation
AG’s
representative in Canada. The Management Agreement provided that XL Canada
would
(i) register with Canadian tax authorities; (ii) employ the staff required
by XL
Generation AG in Canada; (iii) pay the salary of XL Generation AG’s Canadian
staff; (iv) reimburse employees of XL Generation AG, upon the approval
of XL
Generation AG; (v) pay certain consulting fees on behalf of XL Generation
AG;
(vi) pay certain fees to Polyprod Inc.; (vii) maintain a separate bank
account;
(viii) represent XL Generation AG in transactions with Polyprod Inc.;
and (ix)
serve as the vendor for any sales of XL Generation AG products in Canada.
The
Management Agreement further provides that in the event of a change of
control,
XL Canada would continue to act on behalf of XL Generation AG in Canadian,
but
any profits would be paid to XL Generation AG. In the event of a change
of
control, XL Generation AG would have the right to appoint another party
to act
as its agent in Canada. The Management Agreement provided that in the
event of a
change of control, in consideration for the services to be rendered by
XL Canada
to XL Generation AG, a fee would be negotiated by the parties which shall
represent the fair market value of services rendered. The Management
Agreement
has no set termination date, but may be terminated at any time by a written
notice sent to the other party at least two (2) months prior to the termination
date. In September of 2004, a change of control occurred, whereby the
ownership
of XL Canada was transferred to Mr. Albert Beerli for a nominal sum.
Mr. Beerli
was at that time a stockholder and director of XL Generation AG, and
is
currently a stockholder and director of the Company. XL Canada has never
charged
a fee to XL Generation AG for services rendered. Mr. Beerli, acting both
on his
own behalf and on behalf of XL Generation AG, has executed a memorandum
(the
“Memorandum”) with XL Generation AG and XL Generation International Inc.,
memorializing certain oral agreements previously reached between the
Company, XL
Generation AG and XL Canada. Pursuant to the Memorandum, Mr. Beerli is
not
entitled to receive any compensation or equity benefit from XL Canada
or for his
ownership of XL Canada. Any profits from the sales of products of XL
Generation
AG in Canada shall pass-through XL Canada to XL Generation AG. All advances
made
to XL Canada shall be allocated solely for the benefit of XL Generation
AG.
The
following documents have been filed as a part of this Report:
|
Exhibit
No.
|
Description
of Exhibits
|
|
|
|
|
Exhibit
3.1
|
Articles
of Incorporation, as amended, incorporated by reference to
Exhibit 3.1 to
the Company's Registration Statement on Form SB-2 filed with
the
Securities and Exchange commission on May 28, 2004.
|
|
|
|
|
Exhibit
3.2
|
Bylaws,
incorporated by reference to Exhibit 3.2 to the Company's
Registration
Statement on Form SB-2 filed with the Securities and Exchange
Commission
on May 28, 2004.
|
|
|
|
|
Exhibit
3.3
|
Certificate
of Amendment to Articles of Incorporation, as filed with
the State of
Nevada on August 23, 2005, incorporated by reference to Exhibit
3.3 to the
Company's Quarterly Report on Form 10-QSB, filed with the
Securities and
Exchange Commission on December 30, 2005.
|
|
|
|
|
Exhibit
3.4
|
Bylaws,
as amended on March 17, 2006.
|
|
|
|
|
Exhibit
10.1
|
Letter
of Intent, dated as of June 29, 2005, between the Company
and XL
Generation AG, incorporated by reference to Exhibit 99.1
to the Company's
Report on Form 8-K, filed with the Securities and Exchange
Commission on
July 6, 2005.
|
|
|
|
|
Exhibit
10.2
|
Share
Exchange Agreement, dated as of August 19, 2005, between
the Company and
XL Generation AG, incorporated by reference to Exhibit 99.1
to the
Company's Report on Form 8-K, filed with the Securities and
Exchange
Commission on August 19, 2005.
|
|
|
|
|
Exhibit
10.3
|
Loan
Agreement, dated as of September 12, 2005, between Capex
Investments
Limited and XL Generation AG, incorporated by reference to
Exhibit 99.1 to
the Company's Report on Form 8-K, filed with the Securities
and Exchange
Commission on September 14, 2005.
|
|
|
|
|
Exhibit
10.4
|
Form
of Indemnification Agreement, entered into between XL Generation
International Inc. and the Company's officers and directors,
incorporated
by reference to Exhibit 10.4 to the Company's Report on Form
8-K/A, filed
with the Securities and Exchange Commission on November 1,
2005.
|
|
|
|
|
Exhibit
10.5
|
Common
Stock Purchase Agreement, dated as of November 8, 2005, by
and among XL
Generation International Inc. and Capex Investments Limited,
incorporated
by reference to Exhibit 10.5 to the Company's Report on Form
8-K, filed
with the Securities and Exchange Commission on November 15,
2005.
|
|
|
|
|
Exhibit
10.6
|
Common
Stock Purchase Agreement, dated as of November 8, 2005, by
and among XL
Generation International Inc. and Aton Select Fund Limited,
incorporated
by reference to Exhibit 10.6 to the Company's Report on Form
8-K, filed
with the Securities and Exchange Commission on November 15,
2005.
|
|
|
|
|
Exhibit
10.7
|
Common
Stock Purchase Agreement, dated as of November 8, 2005, by
and among XL
Generation International Inc. and Asset Protection Fund Limited,
incorporated by reference to Exhibit 10.7 to the Company's
Report on Form
8-K, filed with the Securities and Exchange Commission on
November 15,
2005.
|
|
|
|
|
Exhibit
10.8
|
Series
A Warrant to Purchase Shares of Common Stock of XL Generation
International Inc., issued as of November 8, 2005 to Capex
Investments
Limited, incorporated by reference to Exhibit 10.8 to the
Company's Report
on Form 8-K, filed with the Securities and Exchange Commission
on November
15, 2005.
|
|
|
|
|
Exhibit
10.9
|
Series
A Warrant to Purchase Shares of Common Stock of XL Generation
International Inc., issued as of November 8, 2005 to Aton
Select Fund
Limited, incorporated by reference to Exhibit 10.9 to the
Company's Report
on Form 8-K, filed with the Securities and Exchange Commission
on November
15, 2005.
|
|
Exhibit
10.10
|
Series
A Warrant to Purchase Shares of Common Stock of XL Generation
International Inc., issued as of November 8, 2005 to Asset
Protection Fund
Limited, incorporated by reference to Exhibit 10.10 to the
Company's
Report on Form 8-K, filed with the Securities and Exchange
Commission on
November 15, 2005.
|
|
|
|
|
Exhibit
10.11
|
Registration
Rights Agreement, dated as of November 8, 2005, by and among
XL Generation
International Inc. and Capex Investments Limited, incorporated
by
reference to Exhibit 10.11 to the Company's Report on Form
8-K, filed with
the Securities and Exchange Commission on November 15,
2005.
|
|
|
|
|
Exhibit
10.12
|
Registration
Rights Agreement, dated as of November 8, 2005, by and among
XL Generation
International Inc. and Aton Select Fund Limited, incorporated
by reference
to Exhibit 10.12 to the Company's Report on Form 8-K, filed
with the
Securities and Exchange Commission on November 15,
2005.
|
|
|
|
|
Exhibit
10.13
|
Registration
Rights Agreement, dated as of November 8, 2005, by and among
XL Generation
International Inc. and Asset Protection Fund Limited, incorporated
by
reference to Exhibit 10.13 to the Company's Report on Form
8-K, filed with
the Securities and Exchange Commission on November 15,
2005.
|
|
|
|
|
Exhibit
10.14
|
Amendment
to the Common Stock Purchase Agreement by and between XL
Generation
International Inc. and Aton Select Fund Limited, dated as
of December 5,
2005, incorporated by reference to Exhibit 10.14 to the Company's
Report
on Form 8-K, filed with the Securities and Exchange Commission
on December
8, 2005.
|
|
|
|
|
Exhibit
10.15
|
Amendment
to the Common Stock Purchase Agreement by and between XL
Generation
International Inc. and Asset Protection Fund Limited, dated
as of December
5, 2005, incorporated by reference to Exhibit 10.15 to the
Company's
Report on Form 8-K, filed with the Securities and Exchange
Commission on
December 8, 2005.
|
|
|
|
|
Exhibit
10.16
|
Lease
Agreement, dated as of August, 2005, between 866 U.N. Plaza
Associates LLC
and XL Generation AG, incorporated by reference to Exhibit
10.16 to the
Company's Quarterly Report on Form 10-QSB, filed with the
Securities and
Exchange Commission on December 30, 2005.
|
|
|
|
|
Exhibit
10.17
|
Exclusive
Manufacturing License Agreement and Non
Exclusive Distribution Agreement, dated as of September 23,
2005, by and
between APW Inc. and XL Generation AG, incorporated by reference
to
Exhibit 10.17 to the Company's Quarterly Report on Form 10-QSB,
filed with
the Securities and Exchange Commission on December 30, 2005.
|
|
|
|
|
Exhibit
10.18
|
Common
Stock Purchase Agreement, dated as of December 6, 2005, by
and among XL
Generation International Inc. and Professional Trading Services
SA,
incorporated by reference to Exhibit 10.18 to the Company's
Registration
Statement on Form SB-2 filed with the Securities and Exchange
Commission
on January 13, 2006.
|
|
|
|
|
Exhibit
10.19
|
Series
B Warrant to Purchase Shares of Common Stock of XL Generation
International Inc., issued as of December 6, 2005 to Professional
Trading
Services SA, incorporated by reference to Exhibit 10.19 to
the Company's
Registration Statement on Form SB-2 filed with the Securities
and Exchange
Commission on January 13, 2006.
|
|
|
|
|
Exhibit
10.20
|
Registration
Rights Agreement, dated as of December 6, 2005, by and among
XL Generation
International Inc. and Professional Trading Services SA,
incorporated by
reference to Exhibit 10.20 to the Company's Registration
Statement on Form
SB-2 filed with the Securities and Exchange Commission on
January 13,
2006.
|
|
|
|
|
Exhibit
10.21
|
Amended
and Restated Common Stock Purchase Agreement, dated as of
December 27,
2005, by and among XL Generation International Inc. and Bank
Sal.
Oppenheim jr. & Cie. (Switzerland) Limited, incorporated by reference
to Exhibit 10.21 to the Company's Registration Statement
on Form SB-2
filed with the Securities and Exchange Commission on January
13,
2006.
|
|
Exhibit
10.22
|
Series
B Warrant to Purchase Shares of Common Stock of XL Generation
International Inc., issued as of December 27, 2005 to Bank
Sal. Oppenheim
jr. & Cie. (Switzerland) Limited, incorporated by reference to
Exhibit
10.22 to the Company's Registration Statement on Form SB-2
filed with the
Securities and Exchange Commission on January 13, 2006.
|
|
|
|
|
Exhibit
10.23
|
Agreement
of Withdrawal from Stadium SA, by and between Stadium SA
and XL Generation
AG, incorporated by reference to Exhibit 10.23 to the Company's
Registration Statement on Form SB-2 filed with the Securities
and Exchange
Commission on January 13, 2006.
|
|
|
|
|
Exhibit
10.24
|
License
Agreement, dated January 2005, between XL Generation AG and
WKF/5 Ltd,
incorporated by reference to Exhibit 10.24 to the Company's
Registration
Statement on Form SB-2 filed with the Securities and Exchange
Commission
on January 13, 2006.
|
|
|
|
|
Exhibit
10.25
|
Amendment
to License Agreement, dated June 30, 2005, between XL Generation
AG, WKF/5
Ltd and Alain Lemieux, incorporated by reference to Exhibit
10.25 to the
Company's Registration Statement on Form SB-2 filed with
the Securities
and Exchange Commission on January 13, 2006.
|
|
|
|
|
Exhibit
10.26
|
Form
of Subscription Agreement, incorporated by reference to Exhibit
99.1 to
the Company's Registration Statement on Form SB-2 filed with
the
Securities and Exchange Commission on May 28, 2004.
|
|
|
|
|
Exhibit
10.27
|
Employment
Agreement, dated as of March 30, 2006, by and among XL Generation
AG and
Alain Lemieux.
|
|
|
|
|
Exhibit
10.28
|
Employment
Agreement, dated as of March 30, 2006, by and among XL Generation
AG and
Daniel Courteau.
|
|
|
|
|
Exhibit
10.29
|
Employment
Agreement, dated as of March 30, 2006, by and among XL Generation
AG and
Flemming Munck.
|
|
|
|
|
Exhibit
10.30
|
Employment
Agreement, dated as of October 20, 2005, by and among XL
Generation AG and
Eric Giguère.
|
|
|
|
|
Exhibit
10.31
|
Endorsement
Agreement, by and between La Societe 421 Productions and
XL Generation
AG.
|
|
|
|
|
Exhibit
10.32
|
Summary
of terms and conditions of Oral Consulting Agreement by and
between XL
Generation AG and Greendale Consulting Limited.
|
|
|
|
|
Exhibit
10.33
|
Exclusive
Manufacturing License Agreement, dated as of January 2, 2005,
by and
between XL Generation AG and Polyprod Inc.
|
|
|
|
|
Exhibit
10.34
|
Management
Fee Arrangement, dated as of January 2006, by and between
XL Generation AG
and Polyprod Inc.
|
|
|
|
|
Exhibit
10.35
|
Supply
Contract, effective as of April 1, 2005, by and between Febra-Kunststoffe
GmbH, XL Generation AG and BASF Aktiengesellschaft.
|
|
|
|
|
Exhibit
10.36
|
Loan
Agreement by and between XL Generation AG and Fiducie Alain
Lemieux.
|
|
|
|
|
Exhibit
10.37
|
Confirmation
of Debt, addressed to XL Generation AG.
|
|
|
|
|
Exhibit
10.38
|
Agreement
dated as of May 25, 2005, by and between XL Generation AG
and Daniel
Courteau regarding Repayment of loans to Symbior Technologies
Inc.
|
|
|
|
|
Exhibit
10.39
|
XL
Generation International Inc. 2006 Equity Incentive
Plan.
|
|
|
|
|
Exhibit
10.40
|
Loan
Agreement by and between XL Generation AG and Albert
Beerli.
|
|
Exhibit
10.41
|
Summary
of terms and conditions of Loan Agreement by and between
XL Generation AG
and Albert Beerli.
|
|
|
|
|
Exhibit
10.42
|
Lease
Agreement dated as of April 1, 2004, by and between XL Generation
AG and
Albert Beerli.
|
|
|
|
|
Exhibit
10.43
|
Memorandum
regarding XL Generation Canada Inc.
|
|
|
|
|
Exhibit
10.44
|
Stock
Purchase Agreement, executed as of April 6, 2006, by and
among XL
Generation International Inc., XL Generation AG and Stadium
SA.
|
|
|
|
|
Exhibit
21
|
Subsidiaries
of XL Generation International Inc.
|
|
|
|
|
Exhibit
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley
Act of 2002.
|
|
|
|
|
Exhibit
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of
the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
Exhibit
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002.
|
|
|
|
|
Exhibit
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002.
|
|
Item
14.
|
Principal
Accountant Fees and
Services
|
The
Company’s financial statements for the year ended December 31, 2005 were audited
by Paritz & Company, P.A.
Audit
Fees
The
aggregate fees of Paritz & Company, P.A. for professional services rendered
for the audit of the Company's annual financial statements for the year
ended
December 31, 2005 totaled $25,000.
Audit-Related
Fees
The
aggregate fees billed by
Paritz
& Company, P.A.
for
audit
related services for the year ended December 31
,
2005
,
and
which are not disclosed in ÒAudit FeesÓ above, were $15,000.
Tax
Fees
The
aggregate fees billed by
Paritz
& Company, P.A.
for
tax
compliance for the year ended December 31
,
2005
was
$0.
All
Other Fees
The
aggregate fees billed by
Paritz
& Company, P.A.
or
services other than those described above, for the year ended December
31
,
2005
,
were
$0.
Audit
Committee Pre-Approval Policies
Our
Audit
Committee reviewed the audit and non-audit services rendered by
Paritz
& Company, P.A.
during
the periods set forth above and concluded that such services were compatible
with maintaining the auditors’ independence. All audit and non-audit services
performed by our independent accountants are pre-approved by our Audit
Committee
to assure that such services do not impair the auditors’ independence from
us.
SUBSEQUENT
EVENTS
Employment
Agreements
Subsequent
to the fiscal year ended December 31, 2005, XL Generation AG, the sole
operating
subsidiary of the Company, entered into employment agreements with three
individuals who are officers and directors of the Company, including
Alain
Lemieux, Daniel Courteau and Flemming Munck. Two of these three agreements,
those of Alain Lemieux and Flemming Munck, were entered into on March
30, 2006
but were deemed to be retroactively effective as of October 1, 2005.
Set forth
below is a description of the terms and conditions of these
agreements.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Alain
Lemieux. Mr. Lemieux is the President and Chief Executive Officer of
the
Company. Mr. Lemieux is also a director of the Company, and 13,000,000
of the
Company’s outstanding shares (which are held by the Alain Lemieux Trust) may
be
deemed to be beneficially owned by Mr. Lemieux (representing 39.5% of
the
Company’s currently outstanding common stock). Although the agreement was
executed and delivered as of March 30, 2006, the parties have agreed
that its
terms will be effective retroactive to October 1, 2005. The agreement
has no set
termination date; however, the agreement may be terminated at any time
by either
of the parties, subject to certain termination provisions documented
below.
Pursuant to this agreement, Mr. Lemieux is entitled to receive USD $240,000
annually, indexed according to the rate of the Consumer Price Index.
Mr. Lemieux
is also entitled to a housing allocation of 3,500 Swiss Francs (approximately
$2,695.35) per month and an automobile allowance of 7,500 Swiss Francs
(approximately $5,775.75) per year. In the event that certain sales targets
are
met, Mr. Lemieux will be entitled to an increase in salary based on a
formula
set forth in the agreement. Mr. Lemieux may terminate this agreement
at any
time, with a minimum of six (6) months notice. Mr. Lemieux may be terminated
without cause, with three (3) months notice. In the event of Mr. Lemieux’s
termination without cause, he shall be entitled under this agreement
to
severance pay for three years equal to his average salary over the past
five
years. Furthermore, in the event of his dismissal without cause, Mr.
Lemieux
shall also be entitled, for every year until his 60
th
birthday, to receive options permitting him to purchase 100,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Daniel
Courteau, the Company’s Vice President, legal affairs. Mr. Courteau is also a
director of the Company. This agreement will commence as of January 1,
2007.
This agreement has no set termination date; however, this agreement may
be
terminated at any time by either of the parties, subject to certain termination
provisions documented below. Pursuant to this agreement, Mr. Courteau
is
entitled to receive $175,000 USD annually. Mr. Courteau is also entitled
to a
housing allocation of 3,500 Swiss Francs (approximately $2,695.35) per
month and
an automobile allowance of 7,500 Swiss Francs (approximately $5,775.75)
per
year. In the event that certain sales targets are met, Mr. Courteau will
be
entitled to an increase in salary based on a formula set forth in the
agreement.
Mr. Courteau may terminate this agreement at any time, with a minimum
of six (6)
months notice. Mr. Courteau may be terminated without cause, with three
(3)
months notice. In the event of Mr. Courteau’s termination without cause, he
shall be entitled under this agreement to severance pay for three years
equal to
his average salary over the past five years. Furthermore, in the event
of his
dismissal without cause, Mr. Courteau shall also be entitled, for every
year
until his 60
th
birthday, to receive options permitting him to purchase 75,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
On
March
30, 2006, XL Generation AG entered into an employment agreement with
Flemming
Munck, the Company’s Chief Financial Officer. Mr. Munck is also a director of
the Company. Although this agreement was executed and delivered as of
March 30,
2006, the parties have agreed that its terms will be effective retroactive
to
October 1, 2005. This agreement has no set termination date; however,
this
agreement may be terminated at any time by either of the parties, subject
to
certain termination provisions documented below. Pursuant to this agreement,
Mr.
Munck is entitled to receive $150,000 USD annually. Mr. Munck is also
entitled
to a housing allocation of 3,500 Swiss Francs (approximately $2,695.35)
per
month and an automobile allowance of 7,500 Swiss Francs (approximately
$5,775.75) per year. In the event that certain sales targets are met,
Mr. Munck
will be entitled to an increase in salary based on a formula set forth
in the
agreement. Mr. Munck may terminate this agreement at any time, with a
minimum of
six (6) months notice. Mr. Munck may be terminated without cause, with
three (3)
months notice. In the event of Mr. Munck’s termination without cause, he shall
be entitled under this agreement to severance pay for three years equal
to his
average salary over the past five years. Furthermore, in the event of
his
dismissal without cause, Mr. Munck shall also be entitled, for every
year until
his 60
th
birthday, to receive options permitting him to purchase 50,000 shares
of the
Company’s common stock, for a purchase price equal to 25% of the average closing
price of the Company’s common stock as calculated by reference to the thirty
trading days prior to the date of anniversary of his dismissal.
2006
Equity Incentive Plan
The
Company, from its inception through December 31, 2005, has not paid equity
compensation to any officer, director, or employee. During the fiscal
year ended
December 31, 2005, the Company did not have an authorized equity compensation
plan. On March 30, 2006, the Company adopted a 2006 Equity Incentive
Plan (the
“Plan”). Under the Plan, the Company may issue options, stock appreciation
rights, restricted shares, deferred shares or performance shares. The
maximum
number of such shares of the Company’s common stock that may be issued under the
Plan is 2,000,000 shares. The Company’s officers, directors, employees and
consultants, as well as those of its subsidiaries, may participate in
the Plan,
as the Company’s Compensation Committee may deem to be advisable and in the best
interests of the Company. No one individual may be awarded options to
purchase
more than 500,000 shares in any one fiscal year. No one individual may
be
granted more than 250,000 shares in any one fiscal year. The terms and
conditions of each grant shall be as set forth in an award agreement
approved by
the Compensation Committee.
Stock
Purchase Agreement
On
April
6, 2006, the Company, XL Generation AG and Stadium SA entered into a
Stock
Purchase Agreement (the ÒStock Purchase AgreementÓ) pursuant to which the
Company agreed to exchange a debt of 2,950,000 Euros (approximately $3,584,545)
in exchange for 1,236,824 restricted shares of the Company’s common stock.
Previously, the Terenvi Society had loaned XL Generation AG 1,600,000
euros
pursuant to a loan agreement dated December 16, 2004. The Terenvi Society
subsequently transferred the right to receive re-payment of this loan
to Stadium
SA. In addition, XL Generation AG had entered into a distribution agreement
with
the Soreve Society on April 13, 2004. The Soreve Society also subsequently
transferred its rights to paid pursuant to this distribution agreement
to
Stadium SA. Pursuant to the Stock Purchase Agreement, the Company agreed
to
intervene in the debt of its sole operating subsidiary, XL Generation
AG. The
Company entered into the aforementioned transaction in accordance with
and in
reliance upon the exemption from securities registration afforded by
Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, including Regulation S.
|
Paritz
& Company, P.A.
|
15
Warren Street, Suite 25
Hackensack,
New Jersey 07601
(201)342-7753
Fax:
(201) 342-7598
E-Mail:
paritz @paritz.com
|
|
Certified
Public Accountants
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of
Directors
XL
Generation International Inc.
We
have
audited the accompanying balance sheet
as
of
December 31, 2005 and the related statements of operations, changes
in
stockholders’ deficiency and cash flows for the year ended December 31, 2005.
These financial statements are the responsibility of the Company's
management.
Our responsibility is to express an opinion on these financial statements
based
on our audit. The financial statements of XL Generation International
Inc.,
formerly known as Cygni Systems Corporation, as of April 30, 2005 were
audited
by other auditors whose report dated June 13, 2005 expressed an unqualified
opinion on those statements.
We
conducted our audit in accordance with the standards of the Public
Company
Accounting Oversight Board (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 audit provides
a
reasonable basis for our opinion.
In
our
opinion, the 2005 financial statement referred to above presents fairly,
in all
material respects, the financial position of XL Generation International
Inc. as
of December 31, 2005 and the results of its operations and its cash
flows for
the year then ended in conformity with accounting principles generally
accepted
in the United States of America.
The
accompanying financial statements have been prepared assuming that
the Company
will continue as a going concern. The Company has suffered recurring
net losses
and as of December 31, 2005 its current liabilities exceeded its current
assets
by $2,806,574 and its total liabilities exceed its total assets by
$2,760,446.
These factors raise substantial doubt about the Company’s ability to continue as
a going concern. The accompanying financial statements do not include
any
adjustments that might result from the outcome of this uncertainty.
/s/
Paritz & Company, P.A.
Hackensack,
New Jersey
XL
GENERATION INTERNATIONAL INC.
(formerly
CYGNI SYSTEMS CORPORATION)
BALANCE
SHEET
(Audited)
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash
|
|
$
|
262,446
|
|
$
|
434,194
|
|
|
Inventory
|
|
|
54,971
|
|
|
0
|
|
|
Note
receivable - related party
|
|
|
1,047,643
|
|
|
0
|
|
|
Due
from shareholder
|
|
|
0
|
|
|
416,047
|
|
|
Prepaid
expenses and sundry current assets
|
|
|
157,344
|
|
|
49,355
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
CURRENT ASSETS
|
|
|
1,522,404
|
|
|
899,596
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT, AT COST,
|
|
|
|
|
|
|
|
|
LESS
ACCUMULATED DEPRECIATION
|
|
|
46,128
|
|
|
1,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
1,568,532
|
|
$
|
901,364
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Note
payable stockholders
|
|
$
|
976,873
|
|
$
|
489,220
|
|
|
Note
payable- supplier
|
|
|
2,332,037
|
|
|
2,352,333
|
|
|
Accrued
expenses and sundry current liabilities
|
|
|
1,020,068
|
|
|
76,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
4,328,978
|
|
|
2,917,829
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIENCY
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
92,923
|
|
|
88,390
|
|
|
Additional
paid in capital
|
|
|
4,195,467
|
|
|
|
|
|
Accumulated
Deficit
|
|
|
(7,311,239
|
)
|
|
(1,954,958
|
)
|
|
Other
comprehensive income/(loss)
|
|
|
262,403
|
|
|
(149,897
|
)
|
|
TOTAL
STOCKHOLDERS' DEFICIENCY
|
|
|
(2,760,446
|
)
|
|
(2,016,465
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS
DEFICIENCY
|
|
$
|
1,568,532
|
|
$
|
901,364
|
|
XL
GENERATION INTERNATIONAL INC.
(formerly
CYGNI SYSTEMS CORPORATION)
STATEMENTS
OF STOCKHOLDERS DEFICIENCY
Year
ended December 2005 and 2004
(audited)
Stockholders
Deficiency
|
Stockholders
Deficiency
|
|
Common
stock
|
|
Additional
paid
in
Capital
|
|
Accumulated
Deficit
|
|
Other
Comprehensive
Income
(Loss)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
January 1,2004
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
Proceeds
from
the
issuance of
common
stock
|
|
|
88,390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,390
|
|
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
(1,954,958
|
)
|
|
|
|
|
(1,954,958
|
)
|
|
Other
comprehensive
Loss
|
|
|
|
|
|
|
|
|
|
|
|
(149,897
|
)
|
|
(149,897
|
)
|
|
Balance
January 1,2005
|
|
|
88,390
|
|
|
—
|
|
|
(1,954,958
|
)
|
|
(149,897
|
)
|
|
(2,016,465
|
)
|
|
Proceeds
from
the
issuance of
Common
stock
|
|
|
4,533
|
|
|
4,195,467
|
|
|
—
|
|
|
—
|
|
|
4,200,000
|
|
|
Net
Loss
|
|
|
—
|
|
|
—
|
|
|
(5,356,281
|
)
|
|
|
|
|
(5,356,281
|
)
|
|
Other
comprehensive
Income
|
|
|
|
|
|
|
|
|
|
|
|
412,300
|
|
|
412,300
|
|
|
Balance
December 31,2005
|
|
|
92,923
|
|
|
4,195,467
|
|
|
(7,311,239
|
)
|
|
262,403
|
|
|
(2,760,445
|
)
|
XL
GENERATION INTERNATIONAL INC.
(formerly
CYGNI SYSTEMS CORPORATION)
STATEMENTS
OF OPERATIONS
Year
ended December 2005 and 2004
(audited)
|
|
|
Year
ended
|
|
|
|
|
December
31
|
|
December
31
|
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
SALES
|
|
|
2,892,513
|
|
|
1,349,319
|
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
2,067,412
|
|
|
1,676,785
|
|
|
Selling,
general and administrative
|
|
|
5,989,302
|
|
|
1,042,776
|
|
|
Interest
|
|
|
158,774
|
|
|
50,468
|
|
|
Foreign
exchange loss
|
|
|
33,306
|
|
|
149,897
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
COSTS AND EXPENSES
|
|
|
8,248,794
|
|
|
2,919,926
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(5,356,281
|
)
|
|
(1,570,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
Per Share
|
|
$
|
0.56
|
|
$
|
31.41
|
|
|
|
|
|
|
|
|
|
|
|
Average
weighted Number of Shares
|
|
|
9,533,903
|
|
|
50,000
|
|
XL
GENERATION INTERNATIONAL INC.
(formerly
CYGNI SYSTEMS CORPORATION)
STATEMENTS
OF CASH FLOWS
Year
ended December 31, 2005 and 2004
(audited)
|
|
|
|
December
31
|
|
|
December
31
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(5,356,281
|
)
|
$
|
(1,565,497
|
)
|
|
|
|
|
|
|
|
|
|
|
Adjustment
to reconcile net income to net cash provided
|
|
|
|
|
|
|
|
|
by
operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,004
|
|
|
1,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of stockholders
|
|
|
|
|
|
|
|
|
loan
to royalty fee expense
|
|
|
470,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
(72,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses and sundry current assets
|
|
|
(73,378
|
)
|
|
(49,355
|
)
|
|
Accrued
expenses and sundry current liabilities
|
|
|
1,304,735
|
|
|
76,275
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used by operating activities
|
|
|
(3,724,565
|
)
|
|
(1,537,441
|
)
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
Acquisitions
of property and equipment
|
|
|
(58,703
|
)
|
|
(2,903
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(58,703
|
)
|
|
(2,903
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
to related party
|
|
|
293,573
|
|
|
(539,357
|
)
|
|
Advances
to stockholders
|
|
|
(377,832
|
)
|
|
(416,047
|
)
|
|
Proceeds
from issuance of common stock
|
|
|
4,200,000
|
|
|
88,390
|
|
|
Note
receivable - Related party
|
|
|
(1,378,658
|
)
|
|
|
|
|
Proceeds
of loans payable shareholder
|
|
|
337,262
|
|
|
489,220
|
|
|
Proceeds
(repayments) of loans from suppliers
|
|
|
541,189
|
|
|
2,352,333
|
|
|
Net
cash provide by financing activities
|
|
|
3,615,534
|
|
|
1,974,538
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate on cash
|
|
|
4,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash
|
|
|
(171,748
|
)
|
|
434,194
|
|
|
|
|
|
|
|
|
|
|
|
Cash-
beginning of period
|
|
|
434,194
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Cash-
end of period
|
|
$
|
262,446
|
|
$
|
434,194
|
|
XL
GENERATION INTERNATIONAL INC.
(formerly
CYGNI SYSTEMS CORPORATION)
NOTES
TO
FINANCIAL STATEMENTS
NOTE
1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE
OF
BUSINESS
XL
Generation International Inc. (the "Company") was incorporated in Nevada on
March 18, 2004 as Cygni Systems Corporation and changed its name to XL
Generation International Inc. on August 23, 2005. On August 19, 2005, the
Company entered into a Share Exchange Agreement (”SEA”) with XL Generation AG
("XLG") pursuant to which the Company acquired all of the issued and outstanding
shares of common stock of XLG in exchange for the issuance of 15 Million shares
of restricted common stock (the "Common Stock").
In
connection with the SEA, the Company commenced actions to provide for the
revision of the Company's capital structure. Pursuant to such actions, DT
Crystal Holdings Ltd., the controlling shareholder of the Company prior to
entry
into the Share Exchange Agreement, as inducement to the shareholders of XLG
to
enter into the Share Exchange Agreement, agreed to cancel four million shares
of
the Company’s Common Stock and accept in consideration thereof an option
exercisable for 500,000 shares of the Company. In addition, the Company made
a
stock dividend to shareholders of record of the Company of 9 shares of Common
Stock for each share of Common Stock held, provided, however, each of DT Crystal
Holdings Ltd. and the Alain Lemieux Trust, a trust formed in the Jersey Islands,
and Mr. Albert Beerli waived their respective rights to such stock dividend
(the
record date for such dividend was set as August 29, 2005).
The
Company now serves as the holding company for XLG. The Company has no other
operations other than XLG.
XLG
was
incorporated in 1991, and was inactive until March of 2004, when it was granted
the exclusive worldwide right to manufacture, promote and sell XL Turf products.
XL Turf is an artificial pitch used primarily in soccer stadiums and indoor
recreational facilities. XLG has its operational headquarters in Zug,
Switzerland. XLG is a provider of artificial turf to international soccer clubs,
educational institutions and other leisure providers across North America,
Europe and Asia. XLG has developed new artificial turf systems for sports
fields. XLG holds the worldwide commercial and manufacturing rights for the
"XL
technology." The “XL technology” consists of six patents. Of these six patents,
one is patented in 38 countries, with patents pending in 6 more countries;
another is patented in 16 countries, with patents pending in 28 more; two of
these patents are pending in seven countries; and two of the six patents are
pending in one country each. XLG produces its owned product lines under the
"XL
Generation" trademark, including the "genuine" XLTURF sport systems. XLG also
distributes its products worldwide through an extensive licensed distribution
network, designing and manufacturing private labeled products using the "XL
technology."
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of the Company and its
subsidiary XLG after the elimination of inter-company accounts and transactions
up to the transaction date. As required by the SEC in Reverse Takeover
transactions, the operating entity, in this case XLG, is deemed to be the
acquirer whose results are reported in these financial statements. Any
additional stock issued after August 19, 2005 will be recorded as additional
share capital, as if it was XLG issuing the stock. Any inter company assets,
liabilities and internal transactions are eliminated, including any profit
based
on inter company trading.
CASH
AND
CASH EQUIVALENTS
The
Company considers all highly liquid debt instruments with original maturities
not exceeding three months to be cash equivalents.
INVENTORIES
Inventories,
consisting of finished rolls of artificial turf products, are valued at the
lower of cost determined on the first-in, first-out method or market.
PROPERTY
& OFFICE EQUIPMENT
Equipment
is stated at cost. Depreciation is computed using the straight-line method
over
3 to 10 years.
|
|
|
|
December
31
|
|
|
December
31
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
Computer
equipment--3 yrs.
|
|
$
|
2,904
|
|
$
|
2,904
|
|
|
Furniture
& fixtures--5 yrs
|
|
|
46,364
|
|
|
—
|
|
|
|
|
$
|
49,268
|
|
$
|
2,904
|
|
|
Less:
accumulated depreciation
|
|
$
|
(3,140
|
)
|
$
|
(1,136
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2005
|
|
$
|
46,128
|
|
$
|
1,768
|
|
REVENUE
RECOGNITION
The
Company recognizes revenue when it is realized or realizable and earned. The
Company considers revenue realized or realizable and earned when persuasive
evidence of an arrangement exists, the product has been shipped or the services
have been provided to the customer, the sales price is fixed or determinable
and
collectibles is reasonably assured. The Company reduces revenue for estimated
customer returns, and sales rebates when such amounts can
be estimated. When such amounts cannot be estimated, the Company defers
revenue until the product is sold to the end customer. As part of its product
sales price, the Company provides support, which is generally utilized by the
customer shortly after the sale.
INCOME
TAXES
The
asset
and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences
of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities. The Company records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.
LOSS
PER
COMMON SHARE
The
basic
net loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding.
Diluted
net loss per common share is computed by dividing the net loss, adjusted on
an
"as if converted" basis, by the weighted average number of common shares
outstanding plus potential dilutive securities.
The
Company provides a reserve based upon management view and experience of
potential replacement cost. The management will continue to monitor the
stability of its products and will adjust the provision accordingly.
During
2005 the management undertook a major review of the warranty policies and
reserves required as a consequence of significant warranty request from
customers in North America and Europe. In second half of the year we found
that
our product during warm weather and direct sun did not did not withstand the
expansion of the product’s sub-base. As a result the Company developed a “roll
system” to counter the problem and improved the malleability of the product.
During second half of 2005 we commence a replacement process by replacing
problematic outdoor products with the new roll system. As at December 31, 2005
we were due to replace two products in Switzerland and Vancouver, Canada. The
reserve required to replace these products were estimated at approximate
$500,000.
USE
OF
ESTIMATES
In
preparing financial statements, management makes estimates and assumptions
that
affect the reported amounts of assets and liabilities in the balance sheet
and
revenue and expenses in the income statement. Actual results could differ from
those estimates.
Foreign Currency
For the Company's international operations,
the
local currency is designated as the functional currency. Accordingly, assets
and
liabilities are translated into U.S. Dollars at year-end exchange rates, and
revenues and expenses are translated at average exchange rates prevailing during
the year. Currency translation adjustments from local functional currency
countries resulting from fluctuations in exchange rates are recorded in other
comprehensive income.
RECENT
ACCOUNTING PRONOUNCEMENTS
The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on its results of operations,
financial position or cash flow. For further information regarding recent
accounting pronouncements, please see Note 12.
NOTE
2--GOING CONCERN
The
Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and settlement
of
liabilities and commitments in the normal course of business. During the years
ended December 31, 2005 and 2004, the Company incurred losses of $5,356,281
and
$1,570,607, respectively. The Company had negative working capital of $3,745,098
and $1,537,441 at December 31, 2005 and 2004, respectively and a stockholders
deficiency of $ 2,760,445 and $2,016,465 at December 31, 2005 and 2004. These
factors, among others, raise substantial doubt about the Company's ability
to
continue as a going concern.
Management's
plans for the Company's continued existence include selling additional stock
and
borrowing additional funds to pay overhead expenses while current marketing
efforts continue to raise its sales volume.
The
Company's future success is dependent upon its ability to achieve profitable
operations, generate cash from operating activities and obtain additional
financing. There is no assurance that the Company will be able to generate
sufficient cash from operations, sell additional shares of common stock or
borrow additional funds.
The
Company's inability to obtain additional cash could have a material adverse
effect on its financial position, results of operations and its ability to
continue in existence. The consolidated financial statements do not include
any
adjustments that might result from the outcome of this uncertainty.
NOTE
3
-NOTE RECEIVABLE - Related party
The
Company advanced $1,047,643 to XLG Canada Inc as advances for services. The
note
bear interest at a rate based upon a percentage of sales pursuant to a related
sales agreement and is due on demand. The agreement became effective in December
2005 and no accrual was required as of this date..
NOTE
4--ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES
Accrued
expenses consisted of the following at December 31, 2005:
|
|
|
December
31, 2005:
|
|
December
31 , 2004:
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
interest
|
|
$
|
100,000
|
|
|
23,999
|
|
|
Accrued
operating expenses
|
|
|
420,068
|
|
|
52,276
|
|
|
Warranty
|
|
$
|
500,000
|
|
|
—
|
|
|
|
|
$
|
1,020,068
|
|
$
|
76,275
|
|
NOTE
5--NOTE PAYABLE - SUPPLIER
During
2004, the Company borrowed $2,352,333 note from the former parent company of
its
French distributor. The note bear interest at a rate based upon a percentage
of
sales pursuant to a related sales agreement. The interest charged under this
agreement was $67,000 and $12,000 for the years ended December 31, 2005 and
2004
respectively.
NOTE
6--PAYABLE - SHARE HOLDERS
The
note
payable incurred interest at 4.5% per annum and is payable on demand.
On
the 30
December of 2005 the Company received loans from shareholder, CAPEX Investment
Limited of $300,000. This loan was an advance against the Warrants components
of
the Private Placements which was executed on November 17, 2005. These warrants
executed in first quarter of 2006 (see note 11).The loan carries an interest
of
10% and will be converted to shares during 1sr quarter of 2006.
NOTE
7
-CAPITAL STOCK
The
company is authorized to issue 100,000,000 shares of common stock (par value
$0.001) of which 30,050,333 were issued and outstanding at of December 31,
2005.
During the fourth quarter, the Company issued a total of 4,533,333 new shares
in
connection with various private placements.
NOTE
8
-INCOME TAXES
No
provision for income taxes has been made due to the utilization of net operating
loss carryforwards. The Company has deductible net operating losses of
$7,300,000 at December 31, 2005. These tax losses expire as follows: in 2023
$1,900,000 will expire and in 2024 $5,400,000 will expire.
Components
of deferred tax assets and liabilities at December 31, 2005 are as
follows:
December
31, 2005: December 31 , 2004:
|
|
|
December
31, 2005:
|
|
December
31 , 2004:
|
|
|
|
|
|
|
|
|
|
Net
operating loss carried forward
|
|
$
|
2,768,000
|
|
$
|
626,200
|
|
|
Valuation
allowance
|
|
|
(2,768,000
|
)
|
|
(626,200
|
)
|
|
Net
deferred tax asset
|
|
$
|
0
|
|
$
|
0
|
|
The
Company has recorded a full valuation allowance against its deferred tax asset
since it believes it is more likely than not that such deferred tax asset will
not be realized.
NOTE
9
-COMMITMENTS AND CONTINGENCIES
The
Company is committed under an operating lease for its New York office
that requires for minimum annual rental of approx $96,000 per year and
expire August 2008. Rental expense for the year ended December 31, 2005
approximated $24,000.
NOTE
10
-RELATED PARTY TRANSACTIONS
Mr.
Beerli undertook to advance payments during the year to cover general overheads
and running cost of the of Zug office. The balance as of December 31, 2005
was
$676,873 ($489,220 for 2004).
An
amount
of CAD 150,000 (2004: CAD 476,000) was advanced to Feduciare Alain Lemieux
Trust, Canada for the period January to September 2005. The President and CEO,
H.E. Ambassador Alain Lemieux, of the Company is the trust’s main beneficiary.
There was no outstanding amount as of December 31, 2005 ($0 for
2004).
XLG
was
charged during 2005 $146,300 ($0 for 2004) for fees and expenses for the period
May to December 2005 by Greendale Consult Ltd. The CFO and Director of
the Company, Mr. Flemming Munck, is a significant shareholder in
Greendale Consult Ltd. The outstanding amount owed to Greendale Consult Ltd
as
of December 31, 2005 was $0 ($0 for 2004).
The
Company signed an agreement with Mr. Daniel Courteau for the transfer of his
rights in the bankruptcy of Symbior Technology Ltd for an amount of Canadian
Dollars (CAD) 60,000. The outstanding amount as at December 31, 2005 was
$50,000.
During
2005 the Company decided to write off the balance owed from a related party
of
approximately $170,000. The management viewed the outstanding balance as
uncollectible and for financial prudence made a charge for 100% of the
outstanding receivables.
NOTE
11
-SUBSEQUENT EVENTS
On
February 14, 2006, the Company issued 1,400,000 shares of common stock
previously underlying Series B Warrants. On February 26, 2006, the Company
issued 330,000 shares of common stock previously underlying Series A Warrants.
On March 30, 2006, the Company issued 1,111,111 shares of common stock
previously underlying Series A Warrants. All warrants had at purchase price
of
$1.25 making the proceeds $3,551,388.75. The Company has undertaken to register
for resale all of the foregoing shares.
Note
12 -
RECENTLY ISSUED ACCOUNTING STANDARDS
In
December 2003, the Financial Accounting Standards Board issued FASB
Interpretation Number 46-R ("FIN 46-R") "Consolidation of Variable Interest
Entities." FIN 46-R, which modifies certain provisions and effective dates
of
FIN 46, sets forth criteria to be used in determining whether an investment
in a
variable interest entity should be consolidated. These provisions are based
on
the general premise that if a company controls another entity through interests
other than voting interests, that company should consolidate the controlled
entity. The Company believes that currently, it does not have any material
arrangements that meet the definition of a variable interest entity, which
would
require consolidation.
In
November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment
of
ARB No. 43, Chapter 4" (SFAS No. 151). SFAS No. 151 requires all companies
to
recognize a current-period charge for abnormal amounts of idle facility expense,
freight, handling costs and wasted materials. This statement also requires
that
the allocation of fixed production overhead to the costs of conversion be based
on the normal capacity of the production facilities. SFAS No. 151 will be
effective for fiscal years beginning after June 15, 2005. The Company does
not
expect the adoption of this statement to have a material effect on its
consolidated financial statements.
In
December 2004, the FASB issued SFAS No.123(R), "Share-Based Payment" (SFAS
No.
123(R). This statement replaces SFAS No. 123 and supersedes APB 25. SFAS 123
(R)
requires all stock-based compensation to be recognized as an expense in the
financial statements and that such compensation be measured according to the
grant-date fair value of stock options. SFAS 123 (R) will be effective for
annual periods beginning after June 15, 2005. The Company currently does not
provide for any stock-based compensation and it will evaluate the impact this
statement will have on its consolidated financial statements if such
compensation were to take place in the future.
In
December 2004, the FASB issued SFAS No. 153, "Exchanges on Nonmonetary Assets
An
Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" (SFAS
153) SFAS eliminates the exception from fair value measurement for nonmonetary
exchanges of similar productive assets in paragraph 21(b) of APB Opinion No.
29,
"Accounting for Nonmonetary Transactions," and replaces it with an exception
for
exchanges that do not have commercial substance. SFAS 153 specifies that a
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. SFAS
153 is effective for fiscal periods beginning after June 15, 2005. The Company
does not expect the adoption of this statement to have a material effect on
its
consolidated financial statements.
In
May
2005, the FASB issued SFAS No. 154, "ACCOUNTING FOR CHANGES AND ERROR
CORRECTIONS, A REPLACEMENT OF APB OPINION NO. 20 AND FASB STATEMENT NO. 3"
SFAS
154 applies to all voluntary changes in accounting principle and requires
retrospective application to prior periods' financial statements of changes
in
accounting principle. This statement also requires that a change in
depreciation, amortization, or depletion method for long-lived, nonfinancial
assets be accounted for as a change in accounting estimate effected by a change
in accounting principle. SFAS 154 carries forward without change the guidance
contained in Opinion No. 20 for reporting the correction of an error in
previously issued financial statements and a change in accounting estimate.
This
statement is effective for accounting changes and corrections of errors made
in
fiscal years beginning after December 15, 2005. The Company does not expect
the
adoption of this standard to have a material impact on its financial condition,
results of operations, or liquidity.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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XL
GENERATION INTERNATIONAL INC.
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April
12, 2006
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By:
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/s/ Alain
Lemieux
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Name: Alain Lemieux
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Title:
Principal Financial Officer
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By:
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/s/ Flemming
Munck
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Name: Flemming Munck
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Title:
Principal Financial Officer and
Principal Accounting Officer
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In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the
dates indicated.
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/s/
Alain Lemieux
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Name:
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Alain
Lemieux
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Title:
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CEO,
President and Director
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Dated:
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April
12, 2006
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/s/
Flemming Munck
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Name:
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Flemming
Munck
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Title:
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CFO
and Director
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Dated:
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April
12, 2006
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/s/
Alexander C. Gilmour, CVO
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Name:
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Alexander
C. Gilmour, CVO
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Title:
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Chairman
of the Board
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Dated:
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April
12, 2006
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/s/
Daniel Courteau
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Name:
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Daniel
Courteau
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Title:
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Secretary
and Director
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Dated:
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April
12, 2006
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/s/
Claude Pellerin
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Name:
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Claude
Pellerin
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Title:
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Director
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Dated:
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April
12, 2006
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/s/
Albert Beerli
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Name:
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Albert
Beerli
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Title:
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Director
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Dated:
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April
12, 2006
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BYLAWS
OF
XL
GENERATION INTERNATIONAL INC.
ARTICLE
I. OFFICE
Section
1. Office. The principal office of the Corporation outside the State of Nevada
shall be located at
Sumpfstrasse
32
,
6304
Zug, Switzerland. The Corporation may maintain other offices, either within
or
outside of the State of Nevada, as the Board of Directors may from time to
time
determine.
ARTICLE
II. DIRECTORS
Section
1. Function. All corporate powers shall be exercised by or under the authority
of the Board of Directors. The business and affairs of the Corporation shall
be
managed under the direction of the Board of Directors. Directors must be natural
persons who are at least 18 years of age but need not be shareholders of the
Corporation nor residents of the State of Nevada.
Section
2. Compensation. The shareholders shall have authority to fix the compensation
of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without
compensation.
Section
3. Presumption of Assent. A director who is present at a meeting of the Board
of
Directors or a committee of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken
unless he objects at the beginning of the meeting (or promptly upon arriving)
to
the holding of the meeting or transacting the specified business at the meeting,
or if the director votes against the action taken or abstains from voting
because of an asserted conflict of interest.
Section
4. Number. The Corporation shall have at least two (2) and not more than seven
(7) directors. The number of directors may be increased or decreased from time
to time by the Board of Directors.
Section
5. Election and Term. At each annual meeting of shareholders, the shareholders
shall elect directors to hold office until the next annual meeting or until
their earlier resignation, removal from office or death. Directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in
the
election at a meeting at which a quorum is present.
Section
6. Vacancies. Any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, may be filled by
the
shareholders or by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to
fill
a vacancy shall hold office only until the next election of directors by the
shareholders. If there are no remaining directors, the vacancy shall be filled
by the shareholders.
Section
7. Removal of Directors. At a meeting of shareholders, any director or the
entire Board of Directors may be removed, with or without cause, provided the
notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes cast against
removal.
Section
8. Resignation. A director may resign at any time by delivering written
notification thereof to the President or Secretary of the Corporation. The
resignation shall be effective upon its acceptance by the Board of Directors
provided that if the Board of Directors has not acted on the resignation within
10 days from the date of its delivery, then the resignation shall be deemed
to
be effective upon the 10th day following delivery.
Section
9. Quorum and Voting. A majority of the number of directors fixed by these
Bylaws shall constitute a quorum for the transaction of business. The act of
a
majority of directors present at a meeting at which a quorum is present shall
be
the act of the Board of Directors.
Section
10. Chairman. The Board of Directors, by resolution adopted by a majority of
the
full Board of Directors, may designate from among its members a Chairman who
shall preside at all meetings of the Board of Directors.
Section
11. Executive and Other Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees each of which must have at least two members.
Each committee shall have the authority set forth in the resolution designating
the committee.
Section
12. Place of Meeting. Regular and special meetings of the Board of Directors
shall be held at the principal place of business of the Corporation or at
another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section
13. Time, Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held without notice at the time and on the date designated
by
resolution of the Board of Directors. Written notice of the time, date and
place
of special meetings of the Board of Directors shall be given to each director
by
mail delivery at least two days before the meeting.
Notice
of
a meeting of the Board of Directors need not be given to a director who signs
a
waiver of notice either before or after the meeting. Attendance of a director
at
a meeting constitutes a waiver of notice of that meeting and waiver of all
objections to the place of the meeting, the time of the meeting, and the manner
in which it has been called or convened, unless a director objects to the
transaction of business (promptly upon arrival at the meeting) because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors must be specified in the notice or waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists, may adjourn
any meeting of the Board of Directors to another time and place. Notice of
an
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of the adjourned meeting
are announced at the time of the adjournment, to the other directors. Meetings
of the Board of Directors may be called by the President or the Chairman of
the
Board of Directors. Members of the Board of Directors and any committee of
the
Board may participate in a meeting by telephone conference or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation by these means constitutes presence
in person at a meeting.
Section
14. Action By Written Consent. Any action required or permitted to be taken
at a
meeting of directors may be taken without a meeting if a consent in writing
setting forth the action to be taken and signed by all of the directors is
filed
in the minutes of the proceedings of the Board. The action taken shall be deemed
effective when the last director signs the consent, unless the consent specifies
otherwise.
ARTICLE
III. MEETINGS OF SHAREHOLDERS
Section
1.
Annual
Meeting. An annual meeting of the shareholders of the Corporation for the
election of directors and
for
such
other business as may properly come before the meeting shall be held at such
time and place as
may
be
determined by a majority of the Corporation's Board of Directors.
A
meeting
requested by a
majority
of the Board of Directors shall be called by the President for a date not less
than
10
nor
more
than
60
days
after the request is made.
Section
2. Special Meeting. Special meetings of the shareholders shall be held when
directed by the President or when requested in writing by shareholders holding
at least 10% of the Corporation's stock having the right and entitled to vote
at
such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request
is
made. Only business within the purposes described in the meeting notice may
be
conducted at a special shareholders' meeting.
Section
3. Place. Meetings of the shareholders will be held at the principal place
of
business of the Corporation or at such other place as is designated by the
Board
of Directors.
Section
4. Notice. A written notice of each meeting of shareholders shall be mailed
to
each shareholder having the right and entitled to vote at the meeting at the
address as it appears on the records of the Corporation. The meeting notice
shall be mailed not less than 10 nor more than 60 days before the date set
for
the meeting. The record date for determining shareholders entitled to vote
at
the meeting will be the close of business on the day before the notice is sent.
The notice shall state the time and place the meeting is to be held. A notice
of
a special meeting shall also state the purposes of the meeting. A notice of
meeting shall be sufficient for that meeting and any adjournment of it. If
a
shareholder transfers any shares after the notice is sent, it shall not be
necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section
5. Shareholder Quorum. A majority of the shares entitled to vote, represented
in
person or by proxy, shall constitute a quorum at a meeting of shareholders.
Any
number of shareholders, even if less than a quorum, may adjourn the meeting
without further notice until a quorum is obtained.
Section
6. Shareholder Voting. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting
of
shareholders. An alphabetical list of all shareholders who are entitled to
notice of a shareholders' meeting along with their addresses and the number
of
shares held by each shall be produced at a shareholders' meeting upon the
request of any shareholder.
Section
7. Proxies. A shareholder entitled to vote at any meeting of shareholders or
any
adjournment thereof may vote in person or by proxy executed in writing and
signed by the shareholder or his attorney-in-fact. The appointment of proxy
will
be effective when received by the Corporation's officer or agent authorized
to
tabulate votes. No proxy shall be valid more than 11 months after the date
of
its execution unless a longer term is expressly stated in the
proxy.
Section
8. Validation. If shareholders who hold a majority of the voting stock entitled
to vote at a meeting are present at the meeting, and sign a written consent
to
the meeting on the record, the acts of the meeting shall be valid, even if
the
meeting was not legally called and noticed.
Section
9. Conduct of Business By Written Consent. Any action of the shareholders may
be
taken without a meeting if written consents, setting forth the action taken,
are
signed by at least a majority of shares entitled to vote and are delivered
to
the officer or agent of the Corporation having custody of the Corporation's
records within 60 days after the date that the earliest written consent was
delivered. Within 10 days after obtaining an authorization of an action by
written consent, notice shall be given to those shareholders who have not
consented in writing or who are not entitled to vote on the action. The notice
shall fairly summarize the material features of the authorized action. If the
action creates dissenters' rights, the notice shall contain a clear statement
of
the right of dissenting shareholders to be paid the fair value of their shares
upon compliance with and as provided for by the state law governing
corporations.
ARTICLE
IV. OFFICERS
Section
1. Officers; Election; Resignation; Vacancies. The Corporation shall have the
officers and assistant officers that the Board of Directors appoint from time
to
time provided that the Corporation shall have a President and a Secretary at
all
times and that two or more offices may be held by the same person, including
the
offices of President and Secretary. Officers may also be directors and/or
shareholders of the Corporation. Except as otherwise provided in an employment
agreement which the Corporation has with an officer, each officer shall serve
until a successor is chosen by the directors at a regular or special meeting
of
the directors or until removed. Officers and agents shall be chosen, serve
for
the terms, and have the duties determined by the directors. Any officer may
resign at any time upon written notice to the Corporation. The resignation
shall
be effective upon receipt, unless the notice specifies a later date. If the
resignation is effective at a later date and the Corporation accepts the future
effective date, the Board of Directors may fill the pending vacancy before
the
effective date provided the successor officer does not take office until the
future effective date. Any vacancy occurring in any office of the Corporation
by
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term by the Board of Directors at any regular or special
meeting.
Section
2. Powers and Duties of Officers. The officers of the Corporation shall have
such powers and duties in the management of the Corporation as may be prescribed
by the Board of Directors and, to the extent not so provided, as generally
pertain to their respective offices, subject to the control of the Board of
Directors.
Section
3. Removal of Officers. An officer or agent or member of a committee elected
or
appointed by the Board of Directors may be removed by the Board with or without
cause 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,
agent or member of a committee shall not of itself create contract rights.
Any
officer, if appointed by another officer, may be removed by that
officer.
Section
4. Salaries. The Board of Directors may cause the Corporation to enter into
employment agreements with any officer of the Corporation. Unless provided
for
in an employment agreement between the Corporation and an officer, all officers
of the Corporation serve in their capacities without compensation. No officer
shall be prevented from receiving any salary or compensation by reason of the
fact that he is also a director of the Corporation.
Section
5. Bank Accounts and Loans. The Corporation shall have accounts with financial
institutions as determined by the Board of Directors and the Board of Directors,
in their discretion, may delegate authority to one or more officers to transact
business on any such bank account. Any loan, advance, mortgage, pledge,
hypothecation, or otherwise must be specifically authorized by the Board of
Directors.
Section
6. Agreements. The Board of Directors may authorize one or more officers to
enter into any agreement or execute or deliver any instrument in the name of
and
on behalf of the Corporation and such authority may be general or limited to
specific circumstances.
ARTICLE
V. DISTRIBUTIONS
The
Board
of Directors may, from time to time, declare distributions to its shareholders
in cash, property, or its own shares, unless the distribution would cause (i)
the Corporation to be unable to pay its debts as they become due in the usual
course of business, or (ii) the Corporation's assets to be less than its
liabilities plus the amount necessary, if the Corporation were dissolved at
the
time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution
of
corporate profits, subject to the provisions of law.
ARTICLE
VI. CORPORATE RECORDS
Section
1. Corporate Records. The corporation shall maintain its records in written
form
or in another form capable of conversion into written form within a reasonable
time. The Corporation shall keep as permanent records minutes of all meetings
of
its shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, and a record of all
actions taken by a committee of the Board of Directors on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and
a
record of its shareholders in a form that permits preparation of a list of
the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The
Corporation shall keep a copy of its articles or restated articles of
incorporation and all amendments to them currently in effect; these Bylaws
or
restated Bylaws and all amendments currently in effect; resolutions adopted
by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting
for
the past three years; written communications to all shareholders generally
or
all shareholders of a class of series within the past three years, including
the
financial statements furnished for the last three years; a list of names and
business street addresses of its current directors and officers; and its most
recent annual report delivered to the Department of State.
Section
2. Shareholders' Inspection Rights. A shareholder is entitled to inspect and
copy, during regular business hours at a reasonable location specified by the
Corporation, any books and records of the Corporation. The shareholder must
give
the Corporation written notice of this demand at least five business days before
the date on which he wishes to inspect and copy the record(s). The demand must
be made in good faith and for a proper purpose. The shareholder must describe
with reasonable particularity the purpose and the records he desires to inspect,
and the records must be directly connected with this purpose. This Section
does
not affect the right of a shareholder to inspect and copy the shareholders'
list
described in this Article if the shareholder is in litigation with the
Corporation. In such a case, the shareholder shall have the same rights as
any
other litigant to compel the production of corporate records for
examination.
The
Corporation may deny any demand for inspection if the demand was made for an
improper purpose, or if the demanding shareholder has within the two years
preceding his demand, sold or offered for sale any list of shareholders of
the
Corporation or of any other corporation, had aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used
any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section
3. Financial Statements for Shareholders. Unless modified by resolution of
the
shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one
or
more of its subsidiaries, as appropriate, that include a balance sheet as of
the
end of the fiscal year, an income statement for that year, and a statement
of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
If
the
annual financial statements are reported upon by a public accountant, his report
must accompany them. If not, the statements must be accompanied by a statement
of the President or the person responsible for the Corporation's accounting
records stating his reasonable belief whether the statements were prepared
on
the basis of generally accepted accounting principles and, if not, describing
the basis of preparation and describing any respects in which the statements
were not prepared on a basis of accounting consistent with the statements
prepared for the preceding year. The Corporation shall mail the annual financial
statements to each shareholder within 120 days after the close of each fiscal
year or within such additional time thereafter as is reasonably necessary to
enable the Corporation to prepare its financial statements. Thereafter, on
written request from a shareholder who was not mailed the statements, the
Corporation shall mail him the latest annual financial statements.
Section
4. Other Reports to Shareholders. If the Corporation indemnifies or advances
expenses to any director, officer, employee or agent otherwise than by court
order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if
the
indemnification or advance occurs after the giving of the notice but prior
to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at
the
time of such payment of the litigation or threatened litigation.
If
the
Corporation issues or authorizes the issuance of shares for promises to render
services in the future, the Corporation shall report in writing to the
shareholders the number of shares authorized or issued, and the consideration
received by the corporation, with or before the notice of the next shareholders
meeting.
ARTICLE
VII. STOCK CERTIFICATES
Section
1. Issuance. The shares of the Corporation shall be represented by certificates
prepared by the Board of Directors. Each certificate issued shall be signed
by
the President and the Secretary (or the Treasurer) and sealed with the seal
of
the Corporation or a facsimile thereof. 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 shall be consecutively numbered or otherwise
identified.
Section
2. Registered Shareholders. No certificate shall be issued for any share until
the share is fully paid. The capital stock of the Corporation shall be issued
for such consideration, but not less than the par value thereof, as shall be
fixed from time to time by the Board of Directors. In the absence of fraud,
the
determination by the Board of Directors as to the value of any property or
services received in full or partial payment of shares shall be conclusive.
The
Corporation shall be entitled to treat the holder of record of shares as the
holder in fact and, except as otherwise provided by law, shall not be bound
to
recognize any equitable or other claim to or interest in the shares. 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.
Section
3. Transfer of Shares. Shares of the Corporation shall be transferred on its
books only after the surrender to the Corporation of the share certificates
duly
endorsed by the holder of record or attorney-in-fact. If the surrendered
certificates are cancelled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the
Corporation.
Section
4. Transfer Agent and Registrar. The Board of Directors 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 be countersigned and registered by one or more such transfer agents
and registrars.
Section
5. Lost, Stolen or Destroyed Certificates. If a shareholder claims to have
lost
or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the Corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
ARTICLE
VIII. INDEMNIFICATION
Section
1. Right to Indemnification. The Corporation hereby indemnifies each person
(including the heirs, executors, administrators, or estate of such person)
who
is or was a director or officer of the Corporation to the fullest extent
permitted or authorized by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and expenses,
including attorneys' fees, arising out of his or her status as a director,
officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking
an
indemnification may be entitled. The Corporation may maintain insurance, at
its
expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Corporation would have
the
legal power to indemnify them directly against such liability.
Section
2. Advances. Costs, charges and expenses (including attorneys' fees) incurred
by
a person referred to in Section 1 of this Article in defending a civil or
criminal proceeding shall be paid by the Corporation in advance of the final
disposition thereof upon receipt of an undertaking to repay all amounts advanced
if it is ultimately determined that the person is not entitled to be indemnified
by the Corporation as authorized by this Article, and upon satisfaction of
other
conditions required by current or future legislation.
Section
3. Savings Clause. If this Article or any portion of it is invalidated on any
ground by a court of competent jurisdiction, the Corporation nevertheless
indemnifies each person described in Section 1 of this Article to the fullest
extent permitted by all portions of this Article that have not been invalidated
and to the fullest extent permitted by law.
ARTICLE
IX. AMENDMENT
These
Bylaws may be altered, amended or repealed, and new Bylaws adopted, by a
majority vote of the directors or by a vote of the shareholders holding a
majority of the shares.
ARTICLE
X. DIVIDENDS
In
their
discretion, the Board of Directors may at any regular or special meeting declare
dividends payable out of the unreserved and unrestricted earned surplus of
the
Corporation and any such dividend shall be disbursed in accordance with Nevada
Revised Statutes Section 78.288 through 78.300.
ARTICLE
XI. FISCAL YEAR
The
fiscal year of the Corporation shall be March 31 and may be varied by resolution
of the Board of Directors.
ARTICLE
XII. CORPORATE SEAL
The
corporate seal may be used by causing it or a facsimile thereof to be impressed
, affixed, reproduced, or otherwise.
#
#
#
EMPLOYMENT
AGREEMENT
|
BETWEEN
:
|
XLGENERATION
AG.
,
corporation legally constituted according to the
Laws
of Switzerland
and
having its head office at Sumpfstrasse 32, Zug, Switzerland
|
(Hereinafter
referred to as the
« Employer »
)
|
AND
:
|
ALAIN
LEMIEUX
,
domiciled and residing at 12, Industriestrasse, Zug,
Switzerland
|
(Hereinafter
referred to as the
« Employee »
)
PREAMBLE
|
WHEREAS
|
the
Employer agrees to retain the services of the Employee following
the terms
mentioned below;
|
|
WHEREAS
|
the
Employee declares knowing the policies and employment conditions
of the
Employer and is satisfied with the employment conditions following
the
present agreement.
|
THEREFORE,
THE PARTIES AGREE UPON THE FOLLOWING TERMS :
|
1.
|
PREAMBLE
AND SCHEDULES
|
|
|
1.1.
|
The
Preamble and Schedules form an integral part
hereof.
|
|
|
2.1.
|
The
present Agreement will be valid for an indefinite time and may be
terminated at any time by either of the parties as provided herein.
Notwithstanding the date of execution hereof, this Agreement shall
be
deemed to be effective as of October 1st,
2005.
|
|
3.
|
DESCRIPTION
OF THE EMPLOYMENT AND
TASKS
|
|
|
3.1.
|
The
Employee shall fulfill the position of Chief Executive Officer and
President of the Employer.
|
|
|
3.2.
|
The
Employee will be under the direction and the supervision of the board
of
directors of the Employer.
|
|
|
3.3.
|
The
Employee shall respect the deadlines, orientations, functioning criteria
and directives given by the
Employer.
|
|
|
3.4.
|
The
Employee acknowledges and accepts that the Employer may unilaterally
modify his tasks, functions, job description, hierarchical relationship
and geographical position of his workplace without any of these
modifications affecting or modifying another part of the present
agreement. The Employer commits to inform the Employee of these
modifications. However, the modification shall not be interpreted
as an
indirect termination of the employment agreement without
cause
|
|
4.
|
SALARY,
BONUS AND EXPENSES
|
|
|
4.1.1.
|
The
base salary is 240 000 USD and, subject to paragraph 4.1.2, shall
be
indexed each year according to the Consumer Price
Index;
|
|
|
4.1.2.
|
The
base salary for a given year shall be increased according to the
formula
provided in Schedule 4.1.2 based on the bonus received and the gross
sales
of the Employer of the preceding year. Consequently, the base salary
may
also decrease but in no circumstances, the base salary should be
lower
than the amount provided in paragraph 4.1.1. The Employee and the
Employer
may negotiate an amount different of the amount determined pursuant
to
this paragraph.
|
|
|
4.1.3.
|
The
Employee acknowledges that the Employer is a public company and that
the
bonus package should be governed and ruled by a regime applicable
to each
employee. In consequence, the Employer has undertaken to implement
a Bonus
package for high level staff employee The Bonus Package will enter
into
force during year 2006.
|
|
|
4.1.4.
|
The
performance of the Employee shall be evaluated at the end of each
year and
the results of the evaluation shall be communicated to the Employee.
During the performance appraisal all other relevant matters shall
also be
discussed.
|
|
|
4.1.5.
|
The
Employee can, upon agreement between the Parties, split his monthly
salary
with a charge to a designated corporate entity duly registered in
a legal
jurisdiction. The Employer can request copy of registration document
and
list of Directors.
|
|
|
4.2.
|
ALLOCATION
FOR APPARTEMENT AND
CAR
|
|
|
4.2.1.
|
The
Employee will be entitled to an Housing allocation of 3 500 CHF per
month
and a Car allowance of 7 500 CHF per
year.
|
|
|
4.3.1.
|
The
Employee shall benefit from a stock option plan that will be implemented
during year 2006.
|
|
|
4.4.1.
|
The
Employer shall reimburse all reasonable and authorized expenses of
the
Employee required in carrying out her functions (including representation
fees, transportation, parking, conference
fees).
|
|
|
5.1.
|
The
Employee shall be entitled to an annual leave of five (5)
weeks
|
|
|
5.2.
|
The
dates regarding the period of holidays should be discussed with the
chairman of the Board of the
Employer.
|
|
6.
|
POLICIES
OF THE EMPLOYER
|
|
|
6.1.
|
The
Employee shall comply with the Employer's policies, rules, regulations,
systems and procedures.
|
|
|
6.2.
|
The
Employee acknowledges and accepts that the Employer may modify his
policies, rules, regulations, systems and procedures at any
moment.
|
|
7.
|
EXCLUSIVE
RIGHTS OF SERVICES
|
|
|
7.1.
|
During
the whole duration of his employment, the Employee devotes all his
time,
energies, dynamism and abilities to carry out her functions for the
Employer.
|
|
|
7.2.
|
The
Employee can not occupy another employment without having previously
obtained the written consent of the Employer, which consent can be
revoked
at any time.
|
|
8.
|
CONFIDENTIAL
INFORMATIONS
|
|
|
8.1.
|
The
Employee acknowledges that, in carrying on or in the course of his
work,
he will receive confidential informations concerning the Employer
and the
past, present and future activities of the Employer. The Employee
acknowledges that the disclosing of such confidential informations
could
be detrimental for the Employer and against the Employer’s
interests.
|
|
|
8.2.
|
Consequently,
the Employee commits, during the course of his work and for a period
of
twelve (12) months beginning at the termination of the present employment
agreement, to respect the confidential character of these informations
and
not to disclose or discuss with any person, neither to use these
informations, otherwise than in the course of her work for the
Employer.
|
|
|
8.3.
|
The
term
" confidential
informations "
is
defined as follows : financial informations, marketing launch
strategies, lists of suppliers and clients, ideas, concepts, processes,
designs, formulas, data compilations, procedures as well as any other
information related to the Employer, whether or not such information
has
been communicated verbally or in writing, in any form whatsoever,
including audiotapes, videocassettes, diskettes, images, prototypes,
designs, plans and specifications, drawings or any other medium which
can
be read, decoded or interpreted by individuals, by machine or by
any type
of technological equipment.
|
|
|
8.4.
|
The
word
" person "
includes all individuals, corporate bodies, partnerships, trusts
or other
associations duly constituted.
|
|
|
9.1.
|
Except
for the obligations surviving the termination of this agreement,
the
parties acknowledge and expressly accept that the present employment
agreement can be terminated :
|
|
|
o
|
At
any time for cause by the Employer by given a written notice to the
Employee, without any other notice, indemnity in lieu of notice or
any
other indemnity whatsoever, except if required by
law;
|
|
|
o
|
At
any time, by the Employee, by given a written notice of six (6)
months to
the other party. However, the Employer can at its sole discretion
replace
the said notice by a compensatory indemnity equal to six (6) months
of
salary. The six (6) month notice or the indemnity, as the case
may be,
will be in lieu of any notice to which the Employee is entitled
to and,
consequently, subject to the following
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or indemnity
.
|
|
|
o
|
At
any time without cause, by the Employer, by given a written notice
of
three (3) months to the other party. However, the Employer can at
its sole
discretion replace the said notice by a compensatory indemnity equal
to
three (3) months of salary. In addition of the compensatory indemnity,
the
Employer shall pay to the Employee, as liquidated damages for termination
without cause, an amount determined pursuant Schedule 9.1 attached
hereto.
The three (3) month notice and the additional indemnity will be in
lieu of
any notice to which the Employee is entitled to and, consequently,
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or indemnity
.
|
|
|
9.2.
|
Upon
termination of this agreement, the Employee will return to the Employer
all documents, material, equipment, software material, programs or
any
other item used, obtained or produced during the execution of the
present
employment agreement. Such items must also be considered confidential
by
the parties.
|
|
|
10.1.
|
The
present employment agreement shall be construed and enforced in accordance
with the laws of Switzerland.
|
|
|
10.2.
|
If
a section, phrase, paragraph, or part of this agreement is, for any
reason, declared invalid by a competent court, the decision will
not
modify the rest of the agreement or nullify
it.
|
|
|
10.3.
|
All
the words and terms used within the present agreement must be interpreted
as including masculine and feminine, and the singular and plural,
following the context or the meaning of this
agreement.
|
|
|
10.4.
|
The
titles used in the present agreement are only used as reference and
for
convenience. They do not affect or change the meaning or the extent
the
sections they designate.
|
|
|
10.5.
|
The
present employment agreement shall not be amended or modified except
by
another written document duly signed by all the
parties.
|
|
|
10.6.
|
The
parties undertake not to disclose any information or document, any
information or conversation relating to the present agreement, unless
express authorization is obtained from the other party and/or if
it is
otherwise required by the law.
|
|
|
10.7.
|
The
Employee acknowledges that he has had the necessary time to examine
the
present agreement and that he was able to ask all pertinent questions
and
verify the extent of her rights and obligations. Moreover, the Employee
acknowledges that many elements of the present agreement intervened
following negotiations and consequently, he understands and accepts
the
nature and the extent of his rights and obligations pursuant to the
terms
and conditions of the present
agreement.
|
|
|
10.8.
|
The
present agreement replace and supersede any previous written or verbal
agreement.
|
|
|
10.9.
|
The
parties hereto have expressly agreed that the present employment
agreement
as well as all other documents relating thereto be drawn up only
in
English. Les parties ont expressément convenu que ce contrat de même que
tous les documents s'y rattachant soient rédigés en anglais
seulement.
|
SIGNED,
SEALED AND DELIVERED IN MONTREAL, THIS 30th DAY OF MARCH
2006.
|
|
XLGENERATION
AG
|
|
|
|
|
|
/s/
Flemming Munck
|
|
|
/s/
Alain Lemieux
|
|
By:
|
Flemming
Munck
|
|
|
Alain
Lemieux
|
SCHEDULE
4.1.2
FORMULA
FOR DETERMINATION
OF
THE
BASE SALARY
FOR
A
GIVEN YEAR
1%
x
(
A
+
B)
2
A
is
equal to the amount of bonus received for the preceding year
B
is the
amount of increase or decrease of the Gross Sales in the preceding year compare
to the year before the preceding year.
Example
in ($000)
|
|
A
|
B
|
C
|
D
|
E
|
F
|
G
|
H
|
|
ANNÉE
|
Base
salary
Year
-1
|
Gross
income of year minus 1
|
Gross
income of year minus 2
|
Difference
Delta
|
Bonus
of year
-1
|
Result
E+D
2
|
1%
of F
|
New
base salary
|
|
2006
|
|
3,000
|
—
|
—
|
—
|
—
|
|
240
|
|
2007
|
240
|
20,000
|
3,000
|
17,000
|
—
|
8500
|
85
|
325
|
|
2008
|
325
|
25,000
|
20,000
|
5,000
|
150
|
2,575
|
25,75
|
350,75
|
|
2009
|
350
|
20,000
|
25,000
|
-5000
|
0
|
2,500
|
25
|
325,75
|
It
is
understood that this formula is only to determine the base salary for a given
year. The bonus has to be determined on a yearly basis according to the
provisions of the agreement by the board of directors or the remuneration
committee
as the
case may be.
SCHEDULE
9.1
LIQUIDATED
DAMAGES IN
CASE
OF
TERMINATION WITHOUT CAUSE
|
1-
|
Any
option that is not vested at the time of the termination without
cause
shall be considered as vested for the Employee so that the Employee
shall
be entitled to levy all his options net yet vested at the time of
the
termination without cause at any time after such a
termination.
|
|
2-
|
The
Employer undertakes to pay the Employee an amount for each of the
three
years following the termination, each amount being equivalent
to:
|
|
|
a.
|
The
annual average salary paid to the Employee during the last 5 years,
including any bonuses and any other advantages.
|
|
|
b.
|
If
the Employee has not been employed for 5 years, the amount shall
be the
annual average salary paid since the beginning of his
employment
|
|
3-
|
The
Employer shall grant to the Employee options to buy, a certain number
of
shares of the Employer determined as
follows:
|
|
|
a.
|
100
000 shares per annum during a certain number of years determined
as
follows: the number "60" less the age of the
Employee.
|
|
|
b.
|
The
price of the levy of the option shall be determined each year for
the
shares to be allocated for a given year and shall be fixed at 25% of
the aggregate market value of the last thirty trading days preceding
the
date of anniversary of the dismissal.
|
|
|
c.
|
If
the Employer has decided to proceed to a “split” of the shares of its
capital stock or a reorganization or consolidation of shares, the
number
of shares provided in a) will be adjusted
consequently.
|
|
4.
|
The
foregoing grant of options and shares underlying such options shall
be
made to Employee under exemption from registration by the Securities
Act
of 1933, as amended (the "Securities Act") provided by Regulation
S
promulgated under the Securities Act. For purposes of such grant
the
issuance of shares underlying such options, Employee represents and
warrants to the Employer that Employee is not a "U.S. Person" as
defined
under Rule 902 of Regulation S, a copy of which is appended hereto.
Notwithstanding anything to the contrary herein, the obligation of
the
Employer to grant such options and issue the shares underlying such
options shall be subject to the continuing qualification of Employee
as a
"Non-U.S. Person" and the continuing availability of exemption from
registration of the issuance by the Company of such options and shares
underlying such options as otherwise required by the Securities Act.
|
EMPLOYMENT
AGREEMENT
|
BETWEEN
:
|
XLGENERATION
AG.
,
corporation legally constituted according to the
Laws
of Switzerland
and
having its head office at Sumpfstrasse 32, Zug, Switzerland
|
(Hereinafter
referred to as the
« Employer »
)
|
AND
:
|
DANIEL
COURTEAU
,
domiciled and residing at 5135 A Jeanne-Mance, in the city of Montréal,
province of Québec, Canada;
|
(Hereinafter
referred to as the
« Employee »
)
PREAMBLE
|
WHEREAS
|
the
Employer agrees to retain the services of the Employee following
the terms
mentioned below;
|
|
WHEREAS
|
the
Employee declares knowing the policies and employment conditions
of the
Employer and is satisfied with the employment conditions following
the
present agreement.
|
THEREFORE,
THE PARTIES AGREE UPON THE FOLLOWING TERMS :
|
1.
|
PREAMBLE
AND SCHEDULES
|
|
|
1.1.
|
The
Preamble and Schedules form an integral part
hereof.
|
|
|
2.1.
|
The
present Agreement will be valid for an indefinite time and may be
terminated at any time by either of the parties as provided herein.
Notwithstanding the date of execution hereof
.
|
|
3.
|
DESCRIPTION
OF THE EMPLOYMENT AND
TASKS
|
|
|
3.1.
|
The
Employee shall fulfill the position of Vice President, legal
affairs.
|
|
|
3.2.
|
The
Employee will be under the direction and the supervision of the Chief
Executive Officer of the Employer.
|
|
|
3.3.
|
The
Employee shall respect the deadlines, orientations, functioning criteria
and directives given by the
Employer.
|
|
|
3.4.
|
The
Employee acknowledges and accepts that the Employer may unilaterally
modify his tasks, functions, job description, hierarchical relationship
and geographical position of his workplace without any of these
modifications affecting or modifying an other part of the present
agreement. The Employer commits to inform the Employee of these
modifications. However, the modification shall not be interpreted
as an
indirect termination of the employment agreement without
cause
|
|
4.
|
SALARY,
BONUS AND EXPENSES
|
|
|
4.1.1.
|
The
base salary is 175 000$ USD
|
|
|
4.1.2.
|
The
Employee acknowledges that the Employer is a public company and that
the
bonus package should be governed and ruled by a regime applicable
to each
employee. In consequence, the Employer has undertaken to implement
a Bonus
package for high level staff employee The Bonus Package will enter
into
force during year 2006
|
|
|
4.1.3.
|
The
performance of the Employee shall be evaluated at the end of each
year and
the results of the evaluation shall be communicated to the Employee.
During the performance appraisal all other relevant matters shall
also be
discussed.
|
|
|
4.1.4.
|
Your
official employment for which a salary will be paid will begin on
January
1
st
2007, or at any earlier date mutually consent depending of the needs
of
the Employer.
|
|
|
4.1.5.
|
The
Employee can, upon agreement between the Parties, split his monthly
salary
with a charge to a designated corporate entity duly registered in
a legal
jurisdiction. The Employer can request copy of registration document
and
list of Directors.
|
|
|
o
|
The
Employee shall benefit from a stock option plan that will be implemented
during year 2006.
|
|
|
4.3.
|
ALLOCATION
FOR APPARTEMENT AND
CAR
|
|
|
4.3.1
|
The
Employee, if he moves to Switzerland to work at the head office,
will be
entitled to a Housing allocation of 3 000 CHF per month and a Car
allowance of 7 500 CHF per year.
|
|
|
4.4.1.
|
The
Employer shall reimburse all reasonable and authorized expenses of
the
Employee required in carrying out his functions (including representation
fees, transportation, parking, conference
fees).
|
|
|
5.1.
|
The
Employee shall be entitled to an annual leave of five (5)
weeks
|
|
|
5.2.
|
The
dates regarding the period of holidays should be discussed with the
CEO of
the Employer.
|
|
6.
|
POLICIES
OF THE EMPLOYER
|
|
|
6.1.
|
The
Employee shall comply with the Employer's policies, rules, regulations,
systems and procedures.
|
|
|
6.2.
|
The
Employee acknowledges and accepts that the Employer may modify his
policies, rules, regulations, systems and procedures at any
moment.
|
|
7.
|
EXCLUSIVE
RIGHTS OF SERVICES
|
|
|
7.1.
|
During
the whole duration of his employment, the Employee devotes all his
time,
energies, dynamism and abilities to carry out her functions for the
Employer.
|
|
|
7.2.
|
The
Employee can not occupy another employment without having previously
obtained the written consent of the Employer, which consent can be
revoked
at any time.
|
|
8.
|
CONFIDENTIAL
INFORMATIONS
|
|
|
8.1.
|
The
Employee acknowledges that, in carrying on or in the course of his
work,
he will receive confidential informations concerning the Employer
and the
past, present and future activities of the Employer. The Employee
acknowledges that the disclosing of such confidential informations
could
be detrimental for the Employer and against the Employer’s
interests.
|
|
|
8.2.
|
Consequently,
the Employee commits, during the course of his work and for a period
of
twelve (12) months beginning at the termination of the present employment
agreement, to respect the confidential character of these informations
and
not to disclose or discuss with any person, neither to use these
informations, otherwise than in the course of her work for the
Employer.
|
|
|
8.3.
|
The
term
" confidential
informations "
is
defined as follows : financial informations, marketing launch
strategies, lists of suppliers and clients, ideas, concepts, processes,
designs, formulas, data compilations, procedures as well as any other
information related to the Employer, whether or not such information
has
been communicated verbally or in writing, in any form whatsoever,
including audiotapes, videocassettes, diskettes, images, prototypes,
designs, plans and specifications, drawings or any other medium which
can
be read, decoded or interpreted by individuals, by machine or by
any type
of technological equipment.
|
|
|
8.4.
|
The
word
" person "
includes all individuals, corporate bodies, partnerships, trusts
or other
associations duly constituted.
|
|
|
9.1.
|
Except
for the obligations surviving the termination of this agreement,
the
parties acknowledge and expressly accept that the present employment
agreement can be terminated :
|
|
|
o
|
At
any time for cause by the Employer by given a written notice to the
Employee, without any other notice, indemnity in lieu of notice or
any
other indemnity whatsoever, except if required by
law;
|
|
|
o
|
At
any time, by the Employee, by given a written notice of six (6)
months to
the other party. However, the Employer can at its sole discretion
replace
the said notice by a compensatory indemnity equal to six (6) months
of
salary. The six (6) month notice or the indemnity, as the case
may be,
will be in lieu of any notice to which the Employee is entitled
to and,
consequently, subject to the following
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or indemnity
.
|
|
|
o
|
At
any time without cause, by the Employer, by given a written notice
of
three (3) months to the other party. However, the Employer can at
its sole
discretion replace the said notice by a compensatory indemnity equal
to
three (3) months of salary. In addition of the compensatory indemnity,
the
Employer will pay to the Employee, as liquidated damages for termination
without cause, an amount represented the annual salary of the Employee,
including the Bonus, for the last completed calendar year, payable
on an
annual basis until the employee reach the age of 65 years old. The
three
(3) month notice and the additional indemnity, will be in lieu of
any
notice to which the Employee is entitled to and, consequently,
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or indemnity
.
|
|
|
9.2.
|
Upon
termination of this agreement, the Employee will return to the Employer
all documents, material, equipment, software material, programs or
any
other item used, obtained or produced during the execution of the
present
employment agreement. Such items must also be considered confidential
by
the parties.
|
|
|
10.1.
|
The
present employment agreement shall be construed and enforced in accordance
with the laws of Switzerland.
|
|
|
10.2.
|
If
a section, phrase, paragraph, or part of this agreement is, for any
reason, declared invalid by a competent court, the decision will
not
modify the rest of the agreement or nullify
it.
|
|
|
10.3.
|
All
the words and terms used within the present agreement must be interpreted
as including masculine and feminine, and the singular and plural,
following the context or the meaning of this
agreement.
|
|
|
10.4.
|
The
titles used in the present agreement are only used as reference and
for
convenience. They do not affect or change the meaning or the extent
the
sections they designate.
|
|
|
10.5.
|
The
present employment agreement shall not be amended or modified except
by
another written document duly signed by all the
parties.
|
|
|
10.6.
|
The
parties undertake not to disclose any information or document, any
information or conversation relating to the present agreement, unless
express authorization is obtained from the other party and/or if
it is
otherwise required by the law.
|
|
|
10.7.
|
The
Employee acknowledges that he has had the necessary time to examine
the
present agreement and that she was able to ask all pertinent questions
and
verify the extent of her rights and obligations. Moreover, the Employee
acknowledges that many elements of the present agreement intervened
following negotiations and consequently, he understands and accepts
the
nature and the extent of his rights and obligations pursuant to the
terms
and conditions of the present
agreement.
|
|
|
10.8.
|
The
present agreement replace and supersede any previous written or verbal
agreement.
|
|
|
10.9.
|
The
parties hereto have expressly agreed that the present employment
agreement
as well as all other documents relating thereto be drawn up only
in
English. Les parties ont expressément convenu que ce contrat de même que
tous les documents s'y rattachant soient rédigés en anglais
seulement.
|
SIGNED,
SEALED AND DELIVERED IN MONTREAL, THIS 30TH DAY OF MARCH
2006.
|
|
XLGENERATION
AG
/s/
Alain Lemieux
|
|
|
/s/
Daniel
Courteau
|
|
By:
|
Alain
Lemieux
|
|
|
Daniel
Courteau
|
SCHEDULE
4.1.2
FORMULA
FOR DETERMINATION
OF
THE
BASE SALARY
FOR
A
GIVEN YEAR
1%
x
(
A
+
B)
2
A
is
equal to the amount of bonus received for the preceding year
B
is the
amount of increase or decrease of the Gross Sales in the preceding year compare
to the year before the preceding year.
Example
in ($000)
|
|
A
|
B
|
C
|
D
|
E
|
F
|
G
|
H
|
|
ANNÉE
|
Base
salary
Year
-1
|
Gross
income of year minus 1
|
Gross
income of year minus 2
|
Difference
Delta
|
Bonus
of year
-1
|
Result
E+D
2
|
1%
of F
|
New
base salary
|
|
2006
|
|
3,000
|
—
|
—
|
—
|
—
|
|
240
|
|
2007
|
240
|
20,000
|
3,000
|
17,000
|
—
|
8500
|
85
|
325
|
|
2008
|
325
|
25,000
|
20,000
|
5,000
|
150
|
2,575
|
25,75
|
350,75
|
|
2009
|
350
|
20,000
|
25,000
|
-5000
|
0
|
2,500
|
25
|
325,75
|
It
is
understood that this formula is only to determine the base salary for a given
year. The bonus has to be determined on a yearly basis according to the
provisions of the agreement by the board of directors or the remuneration
committee
as the
case may be.
SCHEDULE
9.1
LIQUIDATED
DAMAGES IN
CASE
OF
TERMINATION WITHOUT CAUSE
|
1-
|
Any
option that is not vested at the time of the termination without
cause
shall be considered as vested for the Employee so that the Employee
shall
be entitled to levy all his options net yet vested at the time of
the
termination without cause at any time after such a
termination.
|
|
2-
|
The
Employer undertakes to pay the Employee an amount for each of the
three
years following the termination, each amount being equivalent
to:
|
|
|
a.
|
The
annual average salary paid to the Employee during the last 5 years,
including any bonuses and any other advantages.
|
|
|
b.
|
If
the Employee has not been employed for 5 years, the amount shall
be the
annual average salary paid since the beginning of his
employment
|
|
3-
|
The
Employer shall grant to the Employee options to buy, a certain number
of
shares of the Employer determined as
follows:
|
|
|
a.
|
75
000 shares per annum during a certain number of years determined
as
follows: the number "60" less the age of the
Employee.
|
|
|
b.
|
The
price of the levy of the option shall be determined each year for
the
shares to be allocated for a given year and shall be fixed at 25% of
the aggregate market value of the last thirty trading days preceding
the
date of anniversary of the dismissal.
|
|
|
c.
|
If
the Employer has decided to proceed to a “split” of the shares of its
capital stock or a reorganization or consolidation of shares, the
number
of shares provided in a) will be adjusted
consequently.
|
|
4.
|
The
foregoing grant of options and shares underlying such options shall
be
made to Employee under exemption from registration by the Securities
Act
of 1933, as amended (the "Securities Act") provided by Regulation
S
promulgated under the Securities Act. For purposes of such grant
the
issuance of shares underlying such options, Employee represents and
warrants to the Employer that Employee is not a "U.S. Person" as
defined
under Rule 902 of Regulation S, a copy of which is appended hereto.
Notwithstanding anything to the contrary herein, the obligation of
the
Employer to grant such options and issue the shares underlying such
options shall be subject to the continuing qualification of Employee
as a
"Non-U.S. Person" and the continuing availability of exemption from
registration of the issuance by the Company of such options and shares
underlying such options as otherwise required by the Securities
Act.
|
EMPLOYMENT
AGREEMENT
|
BETWEEN
:
|
XLGENERATION
AG.
,
corporation legally constituted according to the
Laws
of Switzerland
and
having its head office at Sumpfstrasse 32, Zug, Switzerland
|
(Hereinafter
referred to as the
« Employer »
)
|
AND
:
|
Flemming
Munck
,
domiciled and residing at Greendale House Bodicote, in the city of
Banbury, district of Oxfordshire, United
Kingdom
|
(Hereinafter
referred to as the
« Employee »
)
PREAMBLE
|
WHEREAS
|
the
Employer agrees to retain the services of the Employee following
the terms
mentioned below;
|
|
WHEREAS
|
the
Employee declares knowing the policies and employment conditions
of the
Employer and is satisfied with the employment conditions following
the
present agreement.
|
THEREFORE,
THE PARTIES AGREE UPON THE FOLLOWING TERMS :
|
1.
|
PREAMBLE
AND SCHEDULES
|
|
|
1.1.
|
The
Preamble and Schedules form an integral part
hereof.
|
|
|
2.1.
|
The
present Agreement will be valid for an indefinite time and may be
terminated at any time by either of the parties as provided herein.
Notwithstanding the date of execution hereof, this Agreement shall
be
deemed to be effective as of October 1st,
2005.
|
|
3.
|
DESCRIPTION
OF THE EMPLOYMENT AND
TASKS
|
|
|
3.1.
|
The
Employee shall fulfill the position of Chief Financial
Officer.
|
|
|
3.2.
|
The
Employee will be under the direction and the supervision of the Chief
Executive Officer of the Employer.
|
|
|
3.3.
|
The
Employee shall respect the deadlines, orientations, functioning criteria
and directives given by the
Employer.
|
|
|
3.4.
|
The
Employee acknowledges and accepts that the Employer may unilaterally
modify his tasks, functions, job description, hierarchical relationship
and geographical position of his workplace without any of these
modifications affecting or modifying another part of the present
agreement. The Employer commits to inform the Employee of these
modifications. However, the modification shall not be interpreted
as an
indirect termination of the employment agreement without
cause.
|
|
4.
|
SALARY,
BONUS AND EXPENSES
|
|
|
4.1.1.
|
The
base salary is $150,000 USD
|
|
|
4.1.2.
|
The
employer will also provide cost towards Housing and car allowance.
The
amount must be agreed between the Parties in advance of costs
incurred.
|
|
|
4.1.3.
|
The
Employee can, upon agreement between the Parties, split his monthly
salary
with a charge to a designated corporate entity duly registered in
a legal
jurisdiction. The Employer can request copy of registration document
and
list of Directors.
|
|
|
4.1.4.
|
The
Employee acknowledges that the Employer is a public company and that
the
bonus package should be governed and ruled by a regime applicable
to each
employee. In consequence, the Employer has undertaken to implement
a Bonus
package for high level staff employee The Bonus Package will enter
into
force during year 2006.
|
|
|
4.1.5.
|
The
performance of the Employee shall be evaluated at the end of each
year and
the results of the evaluation shall be communicated to the Employee.
During the performance appraisal all other relevant matters shall
also be
discussed.
|
|
|
4.2.1.
|
The
Employee shall benefit from a stock option plan that will be implemented
during year 2006.
|
|
|
4.3.1.
|
The
Employer shall reimburse all reasonable and authorized expenses of
the
Employee required in carrying out her functions (including representation
fees, transportation, parking, conference
fees).
|
|
|
5.1.
|
The
Employee shall be entitled to an annual leave of five (5)
weeks
|
|
|
5.2.
|
The
dates regarding the period of holidays should be discussed with the
CEO of
the Employer.
|
|
6.
|
POLICIES
OF THE EMPLOYER
|
|
|
6.1.
|
The
Employee shall comply with the Employer's policies, rules, regulations,
systems and procedures.
|
|
|
6.2.
|
The
Employee acknowledges and accepts that the Employer may modify his
policies, rules, regulations, systems and procedures at any
moment.
|
|
7.
|
EXCLUSIVE
RIGHTS OF SERVICES
|
|
|
7.1.
|
During
the whole duration of his employment, the Employee devotes all his
time,
energies, dynamism and abilities to carry out his functions for the
Employer.
|
|
|
7.2.
|
The
Employee can not occupy another employment without having previously
obtained the written consent of the Employer, which consent can be
revoked
at any time.
|
|
8.
|
CONFIDENTIAL
INFORMATIONS
|
|
|
8.1.
|
The
Employee acknowledges that, in carrying on or in the course of his
work,
he will receive confidential informations concerning the Employer
and the
past, present and future activities of the Employer. The Employee
acknowledges that the disclosing of such confidential informations
could
be detrimental for the Employer and against the Employer’s
interests.
|
|
|
8.2.
|
Consequently,
the Employee commits, during the course of his work and for a period
of
twelve (12) months beginning at the termination of the present employment
agreement, to respect the confidential character of these informations
and
not to disclose or discuss with any person, neither to use these
informations, otherwise than in the course of his work for the
Employer.
|
|
|
8.3.
|
The
term
" confidential
informations "
is
defined as follows : financial informations, marketing launch
strategies, lists of suppliers and clients, ideas, concepts, processes,
designs, formulas, data compilations, procedures as well as any other
information related to the Employer, whether or not such information
has
been communicated verbally or in writing, in any form whatsoever,
including audiotapes, videocassettes, diskettes, images, prototypes,
designs, plans and specifications, drawings or any other medium which
can
be read, decoded or interpreted by individuals, by machine or by
any type
of technological equipment.
|
|
|
8.4.
|
The
word
" person "
includes all individuals, corporate bodies, partnerships, trusts
or other
associations duly constituted.
|
|
|
9.1.
|
Except
for the obligations surviving the termination of this agreement,
the
parties acknowledge and expressly accept that the present employment
agreement can be terminated :
|
|
|
o
|
At
any time for cause by the Employer by given a written notice to the
Employee, without any other notice, indemnity in lieu of notice or
any
other indemnity whatsoever, except if required by
law;
|
|
|
o
|
At
any time, by the Employee, by given a written notice of six (6) months
to
the other party. However, the Employer can at its sole discretion
replace
the said notice by a compensatory indemnity equal to six (6) months
of
salary. The six (6) month notice or the indemnity, as the case may
be,
will be in lieu of any notice to which the Employee is entitled to
and,
consequently, subject to the following
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or
indemnity
|
|
|
o
|
At
any time without cause, by the Employer, by given a written notice
of
three (3) months to the other party. However, the Employer can at
its sole
discretion replace the said notice by a compensatory indemnity equal
to
three (3) months of salary. In addition of the compensatory indemnity,
the
Employer shall pay to the Employee, as liquidated damages for termination
without cause, an amount determined pursuant Schedule 9.1 attached
hereto.
The three (3) month notice and the additional indemnity will be in
lieu of
any notice to which the Employee is entitled to and, consequently,
the
Employee renounces to exercise or institute any recourse against
the
Employer regarding the said notice or indemnity
.
|
|
|
9.2.
|
Upon
termination of this agreement, the Employee will return to the Employer
all documents, material, equipment, software material, programs or
any
other item used, obtained or produced during the execution of the
present
employment agreement. Such items must also be considered confidential
by
the parties.
|
|
|
10.1.
|
The
present employment agreement shall be construed and enforced in accordance
with the laws of Switzerland.
|
|
|
10.2.
|
If
a section, phrase, paragraph, or part of this agreement is, for any
reason, declared invalid by a competent court, the decision will
not
modify the rest of the agreement or nullify
it.
|
|
|
10.3.
|
All
the words and terms used within the present agreement must be interpreted
as including masculine and feminine, and the singular and plural,
following the context or the meaning of this
agreement.
|
|
|
10.4.
|
The
titles used in the present agreement are only used as reference and
for
convenience. They do not affect or change the meaning or the extent
the
sections they designate.
|
|
|
10.5.
|
The
present employment agreement shall not be amended or modified except
by
another written document duly signed by all the
parties.
|
|
|
10.6.
|
The
parties undertake not to disclose any information or document, any
information or conversation relating to the present agreement, unless
express authorization is obtained from the other party and/or if
it is
otherwise required by the law.
|
|
|
10.7.
|
The
Employee acknowledges that she has had the necessary time to examine
the
present agreement and that she was able to ask all pertinent questions
and
verify the extent of her rights and obligations. Moreover, the Employee
acknowledges that many elements of the present agreement intervened
following negotiations and consequently, she understands and accepts
the
nature and the extent of her rights and obligations pursuant to the
terms
and conditions of the present
agreement.
|
|
|
10.8.
|
The
present agreement replace and supersede any previous written or verbal
agreement.
|
|
|
10.9.
|
The
parties hereto have expressly agreed that the present employment
agreement
as well as all other documents relating thereto be drawn up only
in
English. Les parties ont expressément convenu que ce contrat de même que
tous les documents s'y rattachant soient rédigés en anglais
seulement.
|
SIGNED,
SEALED AND DELIVERED IN MONTREAL, THIS 30th DAY OF MARCH
2006.
|
|
XLGENERATION
AG
/s/
Daniel Courteau
|
|
|
/s/
Flemming
Munck
|
|
By:
|
Daniel
Courteau
|
|
|
Flemming
Munck
|
SCHEDULE
4.1.2
FORMULA
FOR DETERMINATION
OF
THE
BASE SALARY
FOR
A
GIVEN YEAR
1%
x
(
A
+
B)
2
A
is
equal to the amount of bonus received for the preceding year
B
is the
amount of increase or decrease of the Gross Sales in the preceding year compare
to the year before the preceding year.
Example
in ($000)
|
|
A
|
B
|
C
|
D
|
E
|
F
|
G
|
H
|
|
ANNÉE
|
Base
salary
Year
-1
|
Gross
income of year minus 1
|
Gross
income of year minus 2
|
Difference
Delta
|
Bonus
of year
-1
|
Result
E+D
2
|
1%
of F
|
New
base salary
|
|
2006
|
|
3,000
|
—
|
—
|
—
|
—
|
|
240
|
|
2007
|
240
|
20,000
|
3,000
|
17,000
|
—
|
8500
|
85
|
325
|
|
2008
|
325
|
25,000
|
20,000
|
5,000
|
150
|
2,575
|
25,75
|
350,75
|
|
2009
|
350
|
20,000
|
25,000
|
-5000
|
0
|
2,500
|
25
|
325,75
|
It
is
understood that this formula is only to determine the base salary for a given
year. The bonus has to be determined on a yearly basis according to the
provisions of the agreement by the board of directors or the remuneration
committee
as the
case may be.
SCHEDULE
9.1
LIQUIDATED
DAMAGES IN
CASE
OF
TERMINATION WITHOUT CAUSE
|
1-
|
Any
option that is not vested at the time of the termination without
cause
shall be considered as vested for the Employee so that the Employee
shall
be entitled to levy all his options net yet vested at the time of
the
termination without cause at any time after such a
termination.
|
|
2-
|
The
Employer undertakes to pay the Employee an amount for each of the
three
years following the termination, each amount being equivalent
to:
|
|
|
a.
|
The
annual average salary paid to the Employee during the last 5 years,
including any bonuses and any other advantages.
|
|
|
b.
|
If
the Employee has not been employed for 5 years, the amount shall
be the
annual average salary paid since the beginning of his
employment
|
|
3-
|
The
Employer shall grant to the Employee options to buy, a certain number
of
shares of the Employer determined as
follows:
|
|
|
a.
|
50
000 shares per annum during a certain number of years determined
as
follows: the number "60" less the age of the
Employee.
|
|
|
b.
|
The
price of the levy of the option shall be determined each year for
the
shares to be allocated for a given year and shall be fixed at 25% of
the aggregate market value of the last thirty trading days preceding
the
date of anniversary of the dismissal.
|
|
|
c.
|
If
the Employer has decided to proceed to a “split” of the shares of its
capital stock or a reorganization or consolidation of shares, the
number
of shares provided in a) will be adjusted
consequently.
|
|
4.
|
The
foregoing grant of options and shares underlying such options shall
be
made to Employee under exemption from registration by the Securities
Act
of 1933, as amended (the "Securities Act") provided by Regulation
S
promulgated under the Securities Act. For purposes of such grant
the
issuance of shares underlying such options, Employee represents and
warrants to the Employer that Employee is not a "U.S. Person" as
defined
under Rule 902 of Regulation S, a copy of which is appended hereto.
Notwithstanding anything to the contrary herein, the obligation of
the
Employer to grant such options and issue the shares underlying such
options shall be subject to the continuing qualification of Employee
as a
"Non-U.S. Person" and the continuing availability of exemption from
registration of the issuance by the Company of such options and shares
underlying such options as otherwise required by the Securities Act.
|
1
Sumpfstrasse
32
Postfach
4158
|
CH-6304
Zug, Switzerland
|
Thursday,
20th of October 2005
|
TEL :
+41-41-723-1090
FAX :
+41-41-710-1648
Mr.Eric
Giguere
83,
27th
avenue Nord
Bois-des-Filions
(Quebec)
6JZ
4J6
CONFIDENTIAL
Re :
COO position (Chief Operating Officer) at XL Generation AG
*******************************
Sir,
We
wish
to follow up from our meeting last week regarding our desire to fill the
position of COO (Chief Operating Officer) within the entreprise.
It
is
with pleasure that we propose to you the position of COO within the corporation
XL Generation AG. As discussed, we are about to complete the transaction of
Polyprod corporation. Consequently, you will be the COO of the former unless
XL
Generation AG merges the activities of Polyprod to its own
activities.
You
shall
report to the CEO Alain Lemieux.
We
offer
a salary of 150,000$ per year up until April 30
th
2006,
and of 165,000$ per year from May 1
st
2006 to
April 30
th
2007.
Additionally, your salary shall be revised annually following discussions with
the CEO or the Board of administrators. Furthermore, for the first fiscal year
ending April 30
th
,
in
which the consolidated annual sales of XL Generation International Inc., on
all
XL Turf products (not only on artificial turf but on any other flooring products
(gymnasium, residential, commercial type “Resilient Floor”)) but excluding the
stand alone sales of the “XL EPP Pads”, will amount to a minimun of $50,000,000
USD, your annual salary shall be increased by an amount of $50,000 for the
following years. You will also be entitled to an automobile, the cost of which
does not exceed $40,000 before taxes. Your salary shall be deposited every
week
in the bank account of your choice. You will be entitled to 20 days of vacations
per year, as well as to statutory holidays of the province of Quebec. The first
year shall begin on January 1
st
2006,
within which you will be entitled to take your vacations. The attribution of
these vacations shall be discussed with the CEO in order to avoid a prolonged
absence during critical periods.
2
As
we
have discussed in our meeting, the corporation shall put into place by the
end
of the year a bonus regime and/or a stock option regime for XL Generation
International Inc. As you are aware, the shares of the former are listed on
the
OTC BB exchange in the United States and are subject to the Securities and
Exchange Commission regulations. You shall benefit from these
regimes.
|
·
|
Regarding
the stock purchase plan, we shall guarantee you that a minimum of 150,000
shares options shall be provided on a 3 year period on a 50,000 shares
options basis per year as long as you will be employed during each
of
these years;
|
|
·
|
The
exercice price of each shares option, notwithstanding the exercice
period,
will be the value of the shares listed on the OTC BB exchange during
the
entry into force of the regime on January 1
st
2006;
|
|
·
|
The
regime shall forsee in case of an acquistion for the control of XLGI
during a buy-out offer, you shall be entitled to exercise immediately
the
remainings of your options.
|
As
a COO,
you shall have the responsibility to provide advices and counselling to the
Board of administrators with regards to the setting up of an employment salary
and health insurance programs as well as for any other regimes of insurances
for
certain employees of the corporation including yourself.
XL
Generation will hold you free of any proceedings, lawsuits, or judgements
against you from a third party, including any shareholders, creditors or
employees of XLGeneration with regards to any acts undertaken or not during
the
exercice of your functions or within the mandate of your functions as long
as
these undertakings have been done in good faith.
Furthermore,
XL Generation commits itself to take at its own responsibility all judicial
and
extra-judicial fees and costs( including reasonable fees for a lawyer and
expertise costs), as long as XL Generation will have been able to designate
a
lawyer of its choice. This clause shall survive at the end of the present
agreement.
XL
Generation commits itself to subscribe at your benefit, a directors and
administrators’ liability insurance similar to the liability insurance offered
to other directors and administrators of XL Generation.
If
the
corporation were to end your employment without reasonable motives, the
corporation shall have to pay you, as a severance benefit, an amount equivalent
to 9 months of your salary as damages incurred for which you shall commit not
to
claim in any possible ways with additional amounts.
If
our
offer is acceptable to you, you may affix your signature at the indicated place
hereinafter. If you were to accept our offer and that you began employment
on
Monday 21
st
2005, we
shall pay you a fixed amount of $15,000 which you shall receive as a $7,500
payment on the 21
st
of
November 2005, and a final $7,500 payment on the 21
st
of
November 2006 if you are still under employment from the corporation. Up until
the 21
st
of
November 2005, you will have to have spent at least 2 days (the 4
th
and
7
th
of
November) with Mr. Alain Lemieux and other members of the team.
3
If
it
were to happen that you present employer claims against you any amounts for
early severance of employment, we could be willing to disburse the maximum
amount $15,000 faster to your employer, or in any other ways which might fit
you
best.
Following
your acceptatance, an employment agreement in duly form shall be drafted, which
shall encompass all the provisions of this present letter plus the usual non
competition and confidentiality clauses inherent to your function.
Wishing
that these conditions shall be at your satisfaction and anticipating to see
you
joining the XL Generation team in the shortest delays. If you have any further
questions, feel free to communicate to the undersigned.
/s/
Daniel Courteau
Me
Daniel
Courteau,
Vice
president, legal affairs
READ
AND
ACCEPTED
GOOD
FOR
AGREEMENT
/s/
Eric
Giguere
Eric
Giguere, eng.
1
AGREEEMENT
|
BETWEEN:
|
LA
SOCIETE 421 PRODUCTIONS, anonymous
Partnership
and legal person lawfully established under Belgian law, having its
headquarters at 479 avenue Louise in Brussels, represented by its
Chief
Executive, Mr. Henri Leconte.
(hereinafter
designated as “PRODUCTIONS”.)
|
|
|
|
|
AND:
|
|
|
|
XL
GENERATION AG, legal person lawfully established under Swiss law,
having
its headquarters at 32 Sumfpstrasse, Zug, Switzerland, represented
by
Alain Lemieux, its president, duly authorized under the present as
declared by signing this agreement;
(hereinafter
designated as “XLG”.)
|
IT
HAS
BEEEN PREVIOUSLY EXPOSED WHAT FOLLOWS:
|
|
·
|
Mr.
Henri Leconte ceded to PRODUCTIONS, the exclusivity in every country
of
the world for his professional and athletic involvements, notably
the
right to use his name and image for marketing and publicity
purposes.
|
|
|
·
|
XLG
has developed a patented technology in synthetic sport flooring used
notably for the practice of tennis but as well for other sports such
as
football and rugby. (the “PRODUCTS”).
|
|
|
·
|
PRODUCTIONS
has assured XLG that it could help it to promote and market the synthetic
sport flooring to tennis courts(hereinafter designated as “Tennis
Product”) by using the name and image of Henri Leconte in his quality as
a
professional athlete.
|
2
|
|
·
|
It
is in these conditions that XLG proposed to PRODUCTIONS to enter
in
agreement with the latter to use, exclusively, the name and image
of Henri
Leconte in his quality as a professional athlete, for usage towards
the
promotion and marketing of the tennis product (synthetic sport
flooring).
|
|
|
·
|
As
well, it has been proposed to Mr. Henri Leconte to intervene in the
capacity of a negotiator to initiate and promote the marketing of
the
Tennis Product amongst all natural and legal persons, following the
conditions and modalities foreseen
hereinafter.
|
THEREFORE,
THE PARTIES HAVE AGREED AS FOLLOWS:
|
|
1.1
|
Rights
Ceded:
The
reproductions rights of the juridical personality by printing press,
photography, and any other known or unknown technical means to this
day.
|
|
|
1.2
|
Exploitation:
Usage
and exclusive exploitation , marketing, or promotional
material.
|
|
|
1.3
|
Material:
Any
marketing and/or promotional material concerning the Tennis Product,
patented technologies, or benefiting of an intellectual property
for
synthetic sport flooring used for tennis courts excluding any other
usages.
|
|
|
1.4
|
Personality:
The
name, person, and image of Mr. Henri Leconte, ceded originally to
PRODUCTIONS, Intervener, as
es
quality
representative of any and/or all attributes of the personality of
Henry
Leconte.
|
|
|
1.5
|
Prestation
concerned
:
Usage of the name, image of the player Mr. Henri Leconte, as well
as the
Intervention of Mr. Henri Leconte via PRODUCTIONS in his capacity
as
intermediary and negotiator in the commercialization of the Tennis
Product.
|
|
|
1.6
|
Territory:
The
whole world.
|
|
|
2.
|
OBJECT
AND REMUNERATION
|
2.1
Subject to the terms and conditions established hereinafter, the present
agreement
purposely entails on a double account to Mr. Henri Leconte via PRODUCTIONS
to be
aware that:
|
|
2.1.1.
|
Regarding
the Rights Ceded, the usage of the image of Mr. Henri Leconte
to
promote and commercialize the Tennis Product against a remuneration
convened hereinafter;
|
3
|
|
2.1.2.
|
The
personal intervention of Mr. Henri Leconte via PRODUCTIONS in the
negotiation and commercialization of the Tennis Product amongst any
persons, against a sales commission, distinct from the remuneration
foreseen in 2.1.1, convened hereinafter;
|
|
|
2.1.3.
|
The
parties recognize that these are two separate agreements, the termination
or cancellation of one will not automatically bring forth the termination
or cancellation of the other.
|
|
3.
|
USAGE
OF THE NAME AND IMAGE OF MR.HENRI
LECONTE
|
|
3.1
|
PRODUCTIONS
commit itself in providing, to XLG, under the conditions of exclusivity
defined hereinafter for the Territory, the prestation of Mr. Henri
Leconte:
|
|
|
·
|
For
the takings of photographic shots necessary to the usage of the name
and
image of Mr. Henri Leconte and to the promotion of the concerned
prestation accordingly to a concerted choice and following an agreement
between parties.
|
|
|
·
|
For
any other promotional, marketing or press event required by XLG or
by any
of its manufacturers or distributors where the presence of Mr. Henri
Leconte would be desired.
|
|
3.2
|
The
takings of photographic shots will take place on the day and hour
arranged
by
agreement
between parties unless XLG acquires directly from a photographic
agency
designated by Mr. Henri Leconte the foresaid rights of usage and
exploitation of the photographic shots for the reproduction of the
image
of Mr. Henri Leconte.
|
|
3.3
|
The
usage of the name and image of Mr. Henri Leconte will be permitted
towards
any
publicity, promotion, marketing of any sort whether it includes the
website of
XLG,
manufacturers or distributors authorized by XLG, solely and exclusively
for
towards
the promotion and commercialization of the Tennis
Product.
|
|
3.4
|
The
entirety of the material using the name and image of Mr. Henri Leconte
shall
require
the latter’s for approval before any use, which can be upheld only
under
reasonable
circumstances.
|
|
3.5
|
PRODUCTION
assures XLG of the availability and agreement from Mr. Henri Leconte
towards participating to exhibition games or tournaments, within
any
places in the Territory, for a distinct remuneration to those mentioned
in
the said agreement
|
.
4
|
|
3.5.1.
|
The
games or tournament will be fixed upon mutual agreement bearing in
consideration
the professional and/or personal availability of Mr. Henri Leconte
and
following a previously agreed calendar within at least six (6) weeks
prior
to the occurring of the said
activities.
|
|
|
3.5.2.
|
XLG
will take financial responsibility of the travel expenses, including
local
transfers and stays of Mr. Henri Leconte and two accompanying individuals
at the latter’s discretion but still requiring the approval from XLG which
can be upheld only under reasonable
circumstances.
|
|
|
3.5.3.
|
XLG
reserves itself the right to demand a budget of expenses before any
events
or tournament and XLG reserves itself the right, without any
justification, to decline the presence of Mr. Henri Leconte towards
any
games or tournaments.
|
|
|
3.5.3.1.
|
All
air transportation shall be done in Business
class.
|
|
|
3.5.3.2.
|
Hotel
accommodation shall in 4 Star Hotels, including full board, as recognized
by international standards.
|
|
|
3.5.3.3.
|
All
motorized transportation shall be with a chauffeur and with a luxury
vehicle.
|
|
|
3.5.3.4.
|
All
train transportation shall be done in first class.
|
|
3.6.
|
Depending
on the availability of Mr. Henri Leconte, whenever his presence shall
be
required by XLG, a manufacturer of XL or a distributor with the exception
of exhibition games and tournament, no remuneration shall be me made
to
PRODUCTIONS or to Mr. Henri Leconte except those mentioned in par.
3.5.3.1
to 3.5.3.4.
|
|
3.7.
|
XLG
commits itself to pay to Mr. Henri Leconte a sum of 1 euro for every
meter
square of Tennis product sold and paid across the Territory against
the
rights for XLG, the manufacturers , the distributors and authorized
agents
to use the image and name of Mr. Henri Leconte towards the promotion
of
the Tennis product.
|
5
|
4.
|
MR.
HENRI LECONTE VIA PRODUCTIONS ACTINGS A NEGOTIATOR AND INTERVENANT
IN THE
CONTEXT OF THE SELLING OF THE TENNIS
PRODUCT
|
|
4.1
|
Without
creating any obligations for Mr. Henri Leconte and PRODUCTIONS, the
two
parties commit, under their best efforts, to initiate and promote
the
selling of the Tennis Product, precisely in the following places,
notably
France, Benelux, Poland, Italy, Bulgaria, Morocco, the United Kingdom,
within the European Union, and the Middle East. The parties shall
not be
limited to any given region and may proceed towards endeavors and
completions of sales within the Territory.
|
|
4.2
|
XLG
shall be obliged to advise all manufacturers and distributors located
within
the
Territory of the existence of the present agreement and of their
respective obligations towards Mr. Henri Leconte regarding the payments
of
royalties. These persons shall be advised of their possible required
collaboration with PRODUCTIONS or Mr. Henri Leconte in the purpose
for
selling to a specific client.
|
|
4.3
|
For
any sales initiated and rendered by Mr. Henri Leconte for which he
would
have had an active function in the negotiations, PRODUCTIONS shall
be paid
a royalty of 5 euros for every square meter
sold.
|
|
4.4
|
The
royalty shall be payable by the distributor or the responsible
intermediary for sales. In addition, every earned royalty and payable
to
PRODUCTIONS is, by the present agreement, is guaranteed by XLG.
|
|
5.
|
PAYMENTS
METHOD FOR FEES AND
ROYALTIES
|
|
5.1
|
The
fees and royalties foreseen in the Image and Sales section shall
be
payable 4 times per year notably on the 15
th
of
April, 15
th
of
August, 15
th
of
October and 15
th
of
February for the respective periods of the 31
st
of
March, 31
st
of
July, 30
th
of
September and 31
st
of
December.
|
|
5.2
|
XLG
shall send a report with all the figures containing both the global
sales
of the Tennis product for the given period (Image section) and the
details
of the sales for which PRODUCTIONS is entitled to a royalty. (Commission
Section)
|
|
5.3
|
Nothing
in this agreement forbids Mr. Henri Leconte or PRODUCTIONS to associate
itself with other Tennis professionals as long as Mr. Henri Leconte
will
be responsible for any royalties to be paid to his
associates.
|
6
|
5.4
|
PRODUCTIONS
shall have the right to retain the services of accounting professionals
to
verify the periodic reports from XLG. This professional shall solely
have
access to XLG’s Gross Revenues with regards to the section on Image and
Sales.
|
|
5.5
|
The
purpose of the accounting verification is solely to insure the accuracy
of
the financials metrics inscribed on the sales reports of Tennis products
beneficial to PRODUCTIONS. The designated auditor by PRODUCTIONS
shall be
obliged to sign a letter of confidentiality over all financial information
that it will have access to.
|
|
5.6
|
The
auditing shall occur at the will of PRODUCTIONS and will require
a written
notice before the end of the calendar year following the previous
period
ending on 31
st
of
December. PRODUCTIONS will have to send a written request allowing
a
reasonable delay for the auditing which must occur within regular
office
hours.
|
|
5.7
|
Royalties
pertaining to Mr. Henri Leconte’s participation in the commercialization
of the Tennis product shall be exigible at the time when the client
shall
pay the Tennis product.
|
|
5.8
|
Any
royalty foreseen in section 2 and 3 is deemed awarded when the selling
price of the Tennis product has been paid by the client or when any
other
financial arrangements have been made with the
client.
|
|
6.
|
TECHNICAL
CONSULTATIONS
|
|
6.1
|
During
the life of this agreement, XLG shall be entitled to request from
PRODUCTIONS to provide the services of Mr. Henri Leconte, depending
on his
availability, as an Expert Intervenant and as Technical Consultant
in the
fields of Tennis, in order to develop and optimize the Tennis
product.
|
|
6.2
|
Nor
PRODUCTIONS, nor Mr. Henri Leconte will be able to refuse, without
reasonable motives, their intervention in the context of the present
section 6.
|
|
6.3
|
In
matters of expertise, were Mr. Henri Leconte to accept to participate,
such involvement would have to be for a minimum of 3 days for a total
amount of twenty thousand (20 000) Euros, without tax, and for a
maximum
of 5 days for a total of twenty-eight thousand Euros (28 000) Euros,
without tax.
|
7
|
7.
|
LENGTH
AND RESILIATION
|
Image
Section
|
7.1
|
The
“Image” section of the present agreement is for a period of 5 years ending
on the 30
th
of
June 2010 except in case of an anticipated resiliation reached by
common
agreements between parties or by judicial recourse or by the disposition
of the present agreement.
|
|
7.2
|
At
the end of this delay, there will be neither continuation nor automatic
renewal but parties shall be able to negotiate a new agreement; however
nothing in this agreement provides vested rights towards the renewal
of
the present agreement.
|
|
7.3
|
At
the end of the present agreement, including any new agreements or
possible
renewal, XLG commits to withdraw, within 15 days from the expiry
date of
the agreement, from its website any reference to the image of Mr.
Henri
Leconte. Additionally, XLG shall have a period of 2 months to dispose
and
withdraw from the market its marketing inventory. At the expiry of
this 2
months delay, any kind of publicity, relative to the image of Mr.
Henri
Leconte, will be withdrawn from the market and/or
destroyed.
|
Promotion
and Sales Section
|
7.4
|
With
regards to the “Promotion and Sales Section” , the present agreement shall
be effective for an indefinite period since no exclusivity has been
awarded to Mr. Henri Leconte.
|
|
7.5
|
Mr.
Henri Leconte shall be able to resiliate the present agreement with
regards to the royalty by a 30 days in advance written notice, with
no
need of reasonable motives.
|
|
7.6
|
XLG
will only be able to resiliate the present agreement only if, clearly
and
even though there is no obligations on his behalf to sell Tennis
product,
Mr. Henri Leconte makes no efforts to search for potential buyers
and to
conclude sales. However, considering the notoriety of Mr. Henri Leconte,
XLG cannot request him to modify his career to become a full-time
sales
representative of XLG. XLG shall take these matters into consideration
when evaluating efforts of Mr. Henri Leconte, since the latter desires
punctually to conclude sales of the Tennis
product.
|
|
7.7
|
At
the end of the present agreement, each party commit themselves to
recognize and accept not to claim any amounts or damages of any sorts
whether resulting from the ending, resiliation, or expiry of the
present
agreement. Therefore, without imposing any limits to the reach of
foreseen
sections, nothing in the present agreement authorizes a party to
claim to
the other any amounts for damages or loss of earnings regarding the
development of sales, contacts, clients, or forgone and/or future
business
opportunities due to the ending or expiry of any of the sections
described
in Section 7 of the present
agreement.
|
8
|
7.8
|
Furthermore,
nothing in this document must be understood as prohibiting a party,
notably Mr. Henri Leconte, to claim, even after the expiry of this
agreement, any amounts caused by the ending date and pertaining to
the
realized sales not yet paid, at the date of the ending, of the Tennis
product, whether for the “Image section” or the “Royalty”.
|
Other
cases of resiliation
|
7.9
|
The
present agreement can be the subject of resiliation by PRODUCTIONS,
de
plano
and with immediate effect, without indemnity from all parties, and
without
requiring any judicial formalities, solely by sending a written notice
as
registered mail with proof of
reception:
|
|
|
7.9.1
|
in
case of violation by XLG of the present agreement obligations’, and only
if the violation hasn’t been rectified within a period of 15 working days
of the receipt of the registered mail or of the formal notice to
remedy
the situation or the violation or in case of renewal of the same
violation
or default being the object of the formal notice within six (6) of
the
default of or of the precedent
violation;
|
|
|
7.9.2
|
in
case of denial or defamation from XLG against Mr. Henri Leconte or
its
activities as well in cases where XLG would pose an act that would
damage
the reputation, prestige or notoriety of Mr. Henri
Leconte;
|
|
|
7.9.3
|
in
case of resiliation for any motives in either subsection 7.9.1 or
7.9.2,
XLG will cease immediately to use the Material and shall ask distributors,
manufacturers, or other agents to return the Material or to destroy
it,
within a maximum delay of ten working (10) days starting from the
notification of the resiliation.
|
|
|
7.9.4
|
However,
at no time shall XLG be responsible for acts, speeches, attitudes
from
third parties such as manufacturers, distributors, and other agents
in
light of section 6.9. Furthermore, the parties shall see to themselves
to
take the necessary measures for any ceasing of default or violations
foreseen in section 6.9 and perpetrated by third
parties.
|
9
8.
EXPLOITATION
ET PROMOTION
|
8.1
|
XLG
shall insure to the quality of the publicity and marketing materials
and
the aesthetics of catalogues, brochures, where are reproduced the
name and
image of Mr. Henri Leconte. The latter will be selected and designed
in
order not to damage in any possible ways the integrity of the image
of Mr.
Henri Leconte.
|
|
8.2
|
PRODUCTIONS
shall retain an absolute veto right over the utilization that XLG
wishes
to make of the Material, if this utilization would pose damage to
the
elite athlete image of Mr. Henri
Leconte.
|
|
8.3
|
In
any case, XLG will maintain at the disposition of PRODUCTIONS the
drafts
of Material upon their availability and at the latest thirty (30)
days
before their usage. XLG shall inform PRODUCTIONS in order to allow
it to
control prior to the envisioned date for their usage as well as their
execution and presentation according to aesthetics requirements and
the
good taste of the image of Mr. Henri
Leconte.
|
9.
PERSONAL
AGREEMENT
|
9.1
|
The
present agreement is
intuitu
personae
.
In no case, can it be ceded or transferred to a third party neither
directly or indirectly in any possible ways without prior written
authorization from PRODUCTIONS or Mr. Henri
Leconte.
|
|
9.2
|
Section
8.1 does not apply in the context of corporate restructuring as long
as
XLG’s control is not modified.
|
|
9.3
|
PRODUCTIONS
and Henri Leconte, with the present agreement, recognize and accept
that
section 8 does not apply as well if XLG registers to a stock exchange
within the Territory.
|
Mr.
Henri
Leconte confirms having been advised that XLG is actually in negotiations to
register directly or indirectly shares from its common stock at a stock exchange
located in the Territory.
10
10.
NON
COMPETITION
|
10.1
|
Throughout
the life of this present agreement, PRODUCTIONS commits itself and
guarantees to XLG that Mr. Henri Leconte will not lend his contribution
(image section, royalty section, technical consultation section)
to other
publicity campaigns or promotions related to the commercialization
to
similar products as the Tennis product. Moreover, PRODUCTIONS and
Mr.
Henri Leconte, commit themselves, under penalty of resiliation (as
foreseen in section 7.9.1) not to sale directly or indirectly products
that could be competitors to Tennis
products.
|
11.
GENERAL
PROVISIONS
|
11.1
|
The
parties convene that the present document contains the complete and
entire
wording of the agreement that took place between themselves with
regards
to its objects. The parties recognize that no other promises or
representations have been made and that no other agreements, verbal
or any
other, took place between the parties, with regards to the objects
of the
contract. Consequently, the present agreement replaces and puts an
end to
any other prior agreements, representation or negotiation or proposition
relative to the objects of the contract. No waiver, adjunction, or
modification of the clauses of the agreement can bind the parties
unless
it is done in writing and duly signed by the parties or representatives
of
the parties.
|
|
11.2
|
The
titles of the sections are used to facilitate the comprehension of
the
text, but are not part of the
agreement.
|
|
11.3
|
In
case part of the agreement, a section, a subsection, or a sub-subsection,
for any reasons, would be declared null or invalid, it would not
affect in
any ways the validity of the other clauses of the agreement which
will
remain in effect as if the agreement had been signed without the
invalid
clauses.
|
|
11.4
|
The
parties convene that Swiss law applies to the contract and it shall
determine its application and interpretation. Any dispute with regards
to
the execution and interpretation of the present agreement or to its
ending
will be deferred to a Swiss court, being the only forum to receive
and
hear such case.
|
|
11.5
|
Default
by one of the parties to request the strict accomplishment of any
of the
commitments in the present agreement or the complete respect to any
conditions it establishes or the failure to exercise a right that
is
devolved to it from the agreement, cannot be understood as a renunciation
or abandonment for the future to exercise this right, since in such
circumstances, the commitment or the condition that hasn’t been fulfilled
or respected, or the right that hasn’t been exercised, maintains its full
force and effect.
|
11
|
11.6
|
The
observation of the different clauses of the agreement remain subject
to
the restrictions imposed by any law or regulation of public order
as well
as any impediment stemming from superior force including wars, strikes,
fires, or any other conditions outside the control of the parties,
in
which case the parties will have the right to resiliate the present
agreement or to differ its
execution.
|
|
11.7
|
The
present agreement binds the parties as well as their heirs, legatees,
assignees, and any other legal representatives and their
beneficiaries.
|
|
11.8
|
The
parties to this agreement declare having read all the conditions
in the
present agreement, that they understood all the modalities, that
they
have, if necessary, made examine the modalities of the present agreement
by their legal counsel and that they consent to be bound by
it.
|
|
11.9
|
No
clause of this agreement can be understood as being a party like
the
representative, mandatory, employee or associate of the other party.
It
has been specifically recognized that no party can take commitments
of any
kind or enter obligations or debts that could bind the other party,
without having received a written consent. As well, any commitments,
obligations or debs undertaken or contracted by a party do not bind
the
other party unless given prior
consent.
|
READ,
APPROVED, READY FOR CONSENT
|
|
|
|
|
Henri
Monsieur Henri Leconte
|
|
XL
GENERATION AG
|
|
(Personnellement)
|
|
|
|
|
|
|
|
/s/ Henri Leconte
|
|
/s/
Alain Lemieux
|
|
|
|
Par H.E. Amb. Alain Lemieux
|
|
|
|
President & CEO
|
|
|
|
|
|
SOCIETE 421
|
|
CIBERNIA
TRADING
|
|
|
|
|
|
|
|
|
|
/s/ Henri Leconte
|
|
/s/ Claudio Campagnolo
|
|
Henri Leconte
|
|
Claudio
Campagnolo
|
|
President
|
|
President
|
|
|
|
|
Exhibit
10.32
Summary
of terms and conditions of Consulting Agreement by and between XL Generation
AG
and Greendale Consulting Limited
In
April
of 2005, XL Generation AG, a wholly owned subsidiary of XL Generation
International Inc. (the “Corporation”) entered into a verbal agreement with
Greendale Consulting Limited (the “Greendale Agreement”), pursuant to which
Greendale Consulting Limited agreed to provide financial and commercial
consulting and support services (the “Services”) to XL Generation AG. It was
agreed that Greendale Consulting Limited would provide the Services on a
month-to-month basis at a monthly fee equal to a pro-rata portion of an annual
fee of GBP 80,000 (which is equal to approximately $11,638 per month as of
March
31, 2006).
Greendale
Consulting Limited is 90% owned by Mr. Flemming Munck, a member of the
Corporation’s Board of Directors, as well as the Corporation’s CFO and
Treasurer. The Corporation’s Board of Directors, acting with Mr. Munck
abstaining, has ratified the Greendale Agreement. The Corporation and Greendale
Consulting Limited continued the Greendale Agreement on a month-to-month basis
until March 30, 2006, at which time Mr. Munck entered into an employment
agreement (the “Employment Agreement”) with the Corporation. As permitted by the
Employment Agreement, a portion of Mr. Munck’s current salary is currently being
paid to Greendale Consulting Limited.
#
#
#
EXCLUSIVE
MANUFACTURING LICENSE AGREEMENT
|
EFFECTIVE AS JANUARY 2nd,
2005
|
|
|
|
XL
Generation AG,
a
company duly created and organized under the legislation of Switzerland,
having represented by Mr Alain Lemieux who declares being authorized
to
sign the present document.
Hereinafter
referred to as the “Licensor”)
|
|
|
|
|
AND:
|
POLYPROD
INC.,
a
company duly created under the Laws of Canada
,
having
represented by Mr. Domenico Malatesta who declares being authorized
to
sign the present document;
(Hereinafter
referred to as the
“Licensee”)
|
RECITALS
A.
Licensor
has been granted by WKF 5 Ltd, the right to sell, promote, manufacture and
commercialize including the right to grant licenses under the letters patent
and
the patent applications (and any patents that may issue there from) owned by
WKF
5 Ltd. Said patents and patent applications (all of which are collectively
referred to herein as the “Patents”);
B.
Licensee
desires to obtain, and Licensor desires to grant, an exclusive worldwide license
to manufacture all the product that could be covered from time to time by the
Patents but limited to turf and non turf sport surfaces including landscape
and
playground surfaces.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing, the agreements contained herein,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
|
1.
|
EXCLUSIVE
MANUFACTURING LICENSE
|
|
1.1.
|
The
Licensor hereby grants to Licensee, and Licensee hereby accepts from
Licensor, upon the terms and conditions specified herein, the worldwide
(hereinafter the “Territory”) exclusive right and non-transferable license
to manufacture, under license, the inventions covered by the Patents
but
limited to turf and non turf sport surfaces including landscape and
playground surfaces. Licensee agrees to use its best efforts and
invest a
reasonable and fair amount in its Corporation to provide the necessary
equipment and human resources to manufacture the licensed products
in the
Territory covered by this Agreement.
|
.2
|
1.2.
|
The
Licensee agrees that the product will be manufactured according to
the
specifications provided by the Licensor and will meet its quality
standards.
|
|
1.3.
|
The
Licensee recognizes that the Licensor is the licensee of the exclusive
worldwide right to manufacture, distribute, sell and promote the
products
covered by the Patents and other Intellectual Properties. The Licensee
recognizes that all the purchase order will come from XLGENERATION
AG or
designated person by XLGENERATION
AG.
|
|
1.4.
|
The
Licensee agrees and undertakes not to sell, promote, distribute the
Product covered by the Patent rights (the right granted being exclusively
for manufacturing) except pursuant to this
Agreement.
|
|
1.5.
|
WKF
5 Ltd. by its representative, Alain Lemieux, intervenes to this Agreement
to accept and to be informed of this manufacturing license
agreement.
|
|
2.
|
MANUFACTURING
AGREEMENT
|
|
2.1.
|
XLGENERATION
hereby appoints and designates Polyprod as its exclusive worldwide
manufacturer of any XLGeneration’s products covered by the Patents for
turf and non turf sport surfaces including landscape and playground
products
|
|
2.2.
|
The
Licensor and the Licensee shall agree on a "modus operandi" regarding
the
purchase order from XLGENERATION AG. The parties agree that for the
beginning of the execution of this agreement, Polyprod shall be on
a "Cost
Plus" basis. The parties agree that in the 120 days following the
signature of this agreement, the Licensee shall provide the costs
and the
mark up needed to perform its obligation. The parties may postpone
the
delivery of this obligation by mutual
consent
|
|
2.3.
|
The
Licensee shall use its best effort to maintain its cost as low as
possible
and shall work with XLGeneration, at XLGeneration’s option, to implement a
program of reducing the costs.
|
|
3.1.
|
Royalty
.
For the rights and privileges granted under this license, Licensee
will
pay to Licensor during the term of this Agreement and subject to
the other
terms and conditions of this Agreement, a royalty of $1,00 per
year
|
|
4.1.
|
Records
.
Licensee shall keep full, true and accurate books of account containing
all particulars which may be necessary to show the amount of its
costs for
each purchase order. The parties may agree on a different
metho
d
to establish the cost or may
agree
on a fixed amount. Such books of account shall be kept at the Licensee's
principal place of business. Such books and the supporting data shall
be
open during normal business hours at reasonable times for one year
following the end of the calendar year to which they pertain, to
the
inspection of an independent certified public accountant retained
by
Licensor for the purpose of verifying Licensee’s royalty statements, or
Licensee’s compliance in other respects with this license. Only one such
inspection shall be made in any calendar
year.
|
.3
|
4.2.
|
Reports
:
Payment of Product manufactured
.
The payment of each purchase order shall be made FOB Montreal at
Polyprod’s site unless agreed otherwise on a case by case situation.
|
|
4.3.
|
Effect
of Termination
.
Upon any termination of this Agreement, Licensee shall be relieved
of all
duties and obligations hereunder except to deliver the work and
progress.
|
The
term
of this Agreement shall be for the period of 10 years automatically renew for
period of one year every year unless terminate earlier by a written notice
sent
to the other party at least 12 months of the termination date. In the case
of a
termination or non renewal by the Licensor for no reason or for a reason other
than a material breach of contract not remedied in due time, Licensor shall
compensate the Licensee for the loss of its exclusive right.
The
amount of the loss of its exclusive right should be determined in good faith
by
the parties taking into consideration the previous sales of the Licensee and
its
expectation of sales for the future taking into account the remaining protection
rights conferred by the Patent.
|
6.
|
WARRANTIES
0F LICENSOR and licensee
|
Licensor
warrants and represents to Licensee that the following are true and
correct:
|
6.1.
|
Licensor
is the beneficiary under a duly signed license of the entire right,
title
and interest in and to the Patents and has the right to grant the
license
granted under this Agreement;
|
|
6.2.
|
Licensor
has not at any time prior to the effective date of this Agreement
issued
any license, grant or other working right to any person or entity
under
any or all of the Patents with regard to the manufacturing in North
America;
|
|
6.3.
|
There
are no claims, actions, suits or proceedings pending or, to Licensor’s
knowledge, threatened against Licensor or relating to any or all
of the
claims contained in the Patents. There are no judgments or tax or
other
liens outstanding and unsatisfied against Licensor or any of Licensor’s
assets (including but not limited to the
Patents);
|
|
6.4.
|
Licensee
is a corporation duly created, validly existing and in good standing
under
the law of the province of Québec
.
Licensee
has the power and authority to own, lease, license, or operate all
properties and assets now owned Licensee has heretofore delivered
to
Licensor complete and correct copies of its organizational documents,
as
amended and in effect on the effective date of this
Agreement.
|
The
foregoing warranties and representations shall survive the execution of this
Agreement.
Licensor
shall hold Licensee harmless from and against any claims, demands, actions,
threatened actions, causes of action, judgments, damages, losses (which shall
include any diminution in value), liabilities, costs of expenses (including,
without limitation, interest, penalties and reasonable attorney’ s and experts
fees and disbursements), including Tax liabilities (collectively, the “Losses”)
which may be made against Licensee which any of them may suffer or incur as
a
result of, arising out of or relating to infringement actions brought against
Licensee on account of the manufacture, use, marketing, sale and installation
of
products containing the patented improvements covered by this Agreement,
provided that such suit is based on the licensed inventions. This indemnity
shall survive any termination of this Agreement. In such case, the Licensor
should have the exclusive right to appoint the attorney.
.4
Subject
to the right of the Licensee in this section, in case of any infringement,
the
Licensor shall defend the Patents at his own cost. In the event that Licensee
becomes aware of any infringement of any Patents under which it is licensed
or
agreed to be licensed hereunder by Licensor, Licensee shall notify promptly
Licensor. The omission to notify shall not relieve the Licensor from any duty
to
defend Patens or indemnify and hold armless the Licensee. Licensor shah act
within fifteen (15) calendar days of such receipt from the Licensee, in order
to
take any action necessary to stop the infringement, protect and defend Patents.
Licensor shall keep informed the Licensee of any actions that will be taken
from
time to time to stop the infringement, protect and defend the
patents.
Licensor
shall hold the Licensee harmless from and against any damages, losses, costs
of
which Licensee may suffer or incur as a result of, arising out of or relating
to
any infringement of Patents. If the Licensor do not take any action to stop
the
infringement, or to protect and defend Patents against any infringement, the
Licensor consent and agree to, automatically and irrevocably, transfer the
property of Patents, and all rights and privileges attached to Licensee for
a
nominal amount of one dollars US ($1,000US).
|
9.
|
USE
0F LICENSOR’S NAME
|
Licensee
shall not in any circumstances use the name XLTURF, XLGENERATION or other trade
name, trademark or service mark of Licensor with is prior written
consent.
The
Licensee's rights are strictly limited to manufacturing under License the
Product covered by the Patents and described above, that could be purchased
from
time to time by XLGENERATION AG or other designated person by XLGENERATION
AG
|
10.1.
|
If
Licensee becomes bankrupt or insolvent or if Licensee’s business is placed
in the hands of a receiver, assignee or trustee, whether by Licensee’s
voluntary act or not, the license granted under this Agreement shall
immediately terminate;
|
|
10.2.
|
Upon
any material breach or default by Licensee under this Agreement,
including
but not limited to, the non payment of royalties (where payable)
for 3
months consecutive periods unless explained and detailed in the report
or
the non production of the said report, Licensor may terminate the
license
granted hereunder by giving written notice to Licensee of such default
under the notice provisions of Section 13 below. Such notice shall
become
effective at the end of twenty business days from the giving of such
notice, unless during such period Licensee cures any such breach
or
default.
|
.5
|
11.
|
EFFECT
0F PATENT LITIGATION
|
If
any
claim or claims of the Patents is held invalid, or the scope of such claim
or
claims is limited or defined by any judicial decree, order or judgment final
beyond further right of appeal, no royalties shall thereafter be paid by
Licensee with respect to the claim or claims held invalid, and the limitation
or
definition placed upon the claim or claims shall thereafter be followed in
determining whether or not royalties are payable on products sold by Licensee
and for all other purposes of this Agreement. Royalties which are terminated
in
accordance with this Section shall include all subject royalties accrued and
unpaid as of the date of such final decree, order or judgment. and also all
subject royalties on products manufactured but not sold as of such date.
However, Licensor shall not be required to reimburse Licensee for the license
issue fee or any royalties paid under this Agreement previous to the date of
such final decree, order or judgment.
|
12.
|
KNOW-HOW
COMMITMENT AND
RE-ENGINEERING
|
|
12.1.
|
Licensee
shall from time to time, and to the extent it is reasonably necessary
for
the performance of this Agreement. furnish to Licensor at its
manufacturing facility all information and specifications required
as to
design. engineering, manufacturing, and other operations, processes,
or
experience incidental to the manufacture of the products licensed
under
this Agreement.
|
|
12.2.
|
Any
improvement or new Patent developed by the Licensee regarding the
Product
or the manufacturing process, shall be assigned and transferred to
the
Licensor. In consideration of this transfer the Licensor will grant
an
exclusive or non exclusive License (to be determined between the
parties)
for the world that will be deem to be included in the License granted
by
this Agreement.
|
Furthermore,
any improvement or development of new Patent regarding the Product by the
Licensor will be deem to be included in this License without any further
royalties or fees.
|
13.
|
ASSIGNMENT;
SUBLICENSE; SALE 0F
SHARES;
|
|
13.1.
|
The
license granted under this Agreement may not be assigned or sublicensed
by
Licensee without the prior written consent and authorization of the
Licensor who can refuse at its own discretion. The Licensee may,
without
the payment of an additional license issue fee; sublicense any firm
or
corporation directly or indirectly controlled by, controlling, or
under
common control with Licensee, to practice any or all of the inventions
covered by the Patents in the manufacture, use, marketing, sale and
installation of synthetic turf and of small-size and artificial large-size
golf and other sporting facilities, to the same extent Licensee is
permitted under this Agreement; and
provided
further, that
upon
prior written notice, this Agreement may be assigned by Licensee
to the
corporate successor to its entire business. in the manufacture of
products
under the license granted hereunder. Each such notice shall be accompanied
by an acceptance in writing of the terms of this Agreement executed
on
behalf of the entity referred to in the notice. The licensor consents
that
any assignment or sublicensee shall be conditional upon the licensor
receiving full disclosure of the terms of such assignment or sublicense
so
that the licensor can satisfy itself that it will receive the full
royalty
fee to which it is entitled.
|
.6
|
13.2.
|
Any
sales of shares of the capital stock of the Licensee by any of its
shareholders shall be approved by the Licensor, who can refuse at
his own
discretion. In case where the control of Licensee would be changed,
the
Licensor will have the absolute right to renegotiate the terms and
conditions of this Agreement.
The
actual shareholding of the Licensee is in the essence of this License
Agreement and the change of control of the Licensee, unless approved
by
XLG, shall be considered as a material breach of
contract
.
|
Any
offer, acceptance, rejection, notice, consent, request. authorization,
permission, direction or other instrument required or permitted to be given
hereunder shall be in writing and given by delivery or sent by fax or similar
telecommunications device and addressed:
If
addressed to the Licensee:
|
|
POLYPROD
INC.
335
Broadway
Montreal,
Canada
Attention:
Domenico
Malatesta
|
If
addressed to Licensor:
|
14.
|
XLGeneration
AG
Sumfptrasse
32
Zug,
Switzerland
Attention:
Albert
Beerli
|
or
such
other address or telephone number as the party to whom such notice or other
communication is to be given shall have specified in writing to the other party
pursuant to this Section. Any notice or communication given under this Section
shall be deemed to have been given as of the date it was SO placed in the hands
of any express courier service, or faxed, or as of the date of delivery in
person.
|
15.
|
ALL
PARTIES REPRESENTED BY
COUNSEL
|
All
parties have retained their own respective independent legal counsel for
representation in connection with this Agreement; and the parties knowingly
and
voluntarily, of their own free will and without any duress, accept all of the
terms of this Agreement and sign the same as their own free act.
.7
The
warrant parties represent that they have taken all necessary corporate actions
to authorize the execution, delivery and performance of this Agreement and
the
transactions contemplated thereby, and that the respective representative
executing this Agreement on their behalf is duly authorized to act in such
capacity. Licensor further warrants and represents that the execution, delivery
and performance of this Agreement and the transactions contemplated thereby
have
been duly authorized and approved by Licensor’s Board of Directors and by
Licensor’ s shareholders.
|
17.
|
LEGAL
REPRESENTATION; UNDERSTANDING 0F
AGREEMENT
|
In
entering into this Agreement, the parties represent that they have relied upon
the legal advice of their own respective attorneys, who are the attorneys of
their own choice. The parties further represent that the terms of this Agreement
have been completely read and explained to them by their respective attorney
and
that such terms are fully understood and voluntarily accepted by said
parties.
|
18.
|
ATTORNEY’S
FEES AND OTHER COSTS
|
The
parties shall bear all of their own attorney's fees, costs and other expenses
incurred or arising in connection with the negotiation, review and execution
of
this Agreement and attached exhibit. If a party to this Agreement should file
suit as a result of or in connection with this Agreement, the prevailing party
shall be entitled to recover reasonable attorney's fees and expenses from the
other party.
This
Agreement shall be binding upon. and inure to the benefit of, the undersigned
parties and their respective officers, directors, shareholders, employees,
agents. attorneys, independent contractors, successors and assigns.
|
20.
|
ENTIRE
AGREEMENT; AMENDMENT
|
This
Agreement and the attached exhibit contain the entire agreement of the parties
with respect to the subject matter of this Agreement and supersede all prior
agreements or understandings, written or oral, between the parties with respect
thereto. Any waiver of any term or condition of this Agreement, or any
amendment, modification or supplementation of this Agreement shall be effective
only if it is in writing and signed by all of the parties.
If
a
court of competent jurisdiction finds that any part of this Agreement is
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
the
remaining provisions of this Agreement shall not, at the election of the party
for whose benefit the provision exists, be in any way impaired.
.8
The
headings used in this Agreement are for convenience of reference only and shall
not be used in construing the provisions of the Agreement.
This
Agreement shall be governed by and interpreted in accordance with the laws
in
force in Switzerland except that no doctrine of choice of law shall be used
to
apply the laws of any other state or jurisdiction.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall be deemed one and the same
instrument.
EXECUTED
in FOUR (2) original copies and on the respective dates appearing under the
parties’ signatures below and effective as of the date upon which all of the
parties have signed this Agreement.
|
/s/
Alain Lemieux
Alain
Lemieux
|
LICENSEE
POLYPROD
/s/
Domenico Malatesta
Domenico
Malatesta
|
|
|
|
|
|
|
|
INTERVENTION
WKF
5 LTD
/s/
Alain Lemieux
Alain
Lemieux
|
|
MANAGEMENT
FEE AGREEMENT
EFFECTIVE
AS January,
2006
|
|
XL
Generation AG,
a
company duly created and organized under the legislation of Switzerland,
duly represented by Mr Alain Lemieux who declares being authorized
to sign
the present document.
Hereinafter
referred to as the
“XLG”)
|
|
AND:
|
Polyprod
inc.,
a
company duly created under the Laws of Canada
,
duly
represented by Mr. Domenico Malatesta who declares being authorized
to
sign the present document;
(Hereinafter
referred to as the
“Polyprod”)
|
RECITALS
A.
XLG
has
appointed Polyprod to manufacture turf and non turf sport surfaces including
landscape and playground.
B.
XLG
maintains a bureau of “liaison” in Montreal mainly for customer after sale
support, support to agent and distributor and for marketing and to oversee
Polyprod’s manufacturing process.
C.
XLG
staff
in Montreal, has no power of any kind to close sales with client.
D.
Some
sales of XLG may be closed with Canadian Customer and GST and PST should be
collected by the Vendor but XLG does not have Registration Number for GST and
PST.
E
Polyprod
is willing, in consideration of a fee, to act as the representative of XLG
in
Canada for some technical or clerical issue regarding its activity in Canada
which does not attract business income but which is important for XLG.
AGREEMENT
.2
NOW,
THEREFORE, in consideration of the foregoing, the agreements contained herein,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
|
1.
|
POLYPROD
AS THE REPRESENTATIVE OF XLG IN POLYPROD
|
|
1.1.
|
XLG
hereby appoints Polyprod, which accept, as the representative of XLG
for
the following financial issues:
|
|
1.1.1.
|
To
use Polyprod’s registration number with the Tax Authorities in respect of
Payroll taxes, GST and PST. Polyprod shall be the representative of
XLG in
Canada for the purpose of the said
legislations.
|
|
1.1.2.
|
To
employ, under the name of Polyprod, all the staff required by XLG to
be
hired in Canada.
|
|
1.1.3.
|
To
pay the salary of XLG’s staff appointed to Polyprod and including all the
payroll taxes and other similar taxes payable by Canadian employees
in
normal circumstance.
|
|
1.1.4.
|
To
reimburse expenses, from time to time, to the employees of XLG upon
authorization of XLG.
|
|
1.1.5.
|
To
pay other fees, including consulting fees, required by XLG to third
parties.
|
|
1.1.6.
|
To
pay administrative fee charged by Polyprod for the use of the premises
of
Polyprod by XLG and other charges related to the
premises.
|
|
1.1.7.
|
To
maintain a separate bank account related to issues addressed in this
document.
|
|
1.1.8.
|
Generally
to act as the representative of XLG regarding Polyprod and regarding
transfer of money that can be transferred on behalf of XLG to Polyprod
by
third parties.
|
|
2.
|
POLYPROD
AS VENDOR OF XLG’S PRODUCT IN
CANADA
|
|
2.1.
|
For
all the sales in the Canadian territory, Polyprod shall be the Vendor
in
order to avoid any GST and PST problems with the Tax Authorities. Polyprod
shall act as the representatives of XLG.
|
|
2.2.
|
The
profit derived form the Canadian sales will be the ownership of
XLG.
|
|
2.3.
|
However,
section 2.2 shall apply as long as Polyprod will remain an independent
legal entity. If, after negotiation, Polyprod becomes the subsidiary
of
XLG, the profit from the Canadian sales shall remain the ownership
of
Polyprod.
|
.3
|
2.4.
|
As
long as Polyprod is not a subsidiary of XLG, XLG hereby reserves its
right
to appoint another a third party to make to sales for the Canadian
territory to keep those sales for itself.
|
|
3.1.
|
In
consideration for the services to be rendered by Polyprod to XLG, XLG
is
entitled to a fee to be determined between the parties but that shall
represent the fair market value of such services if those services
would
be rendered by a third party.
|
|
3.2.
|
However,
in the determination of the fees payable under section 3.1, Polyprod
shall
considered the fact that XLG may grant Polyprod with the right of doing
sales in Canada, and keeps the profits to compensate in whole or in
part
the services to be rendered in Article 1.
|
The
term
of this Agreement shall be for an indefinite time but may be terminated at
any
time by a written notice sent to the other party at least 2 months of the
termination date.
Any
offer, acceptance, rejection, notice, consent, request. authorization,
permission, direction or other instrument required or permitted to be given
hereunder shall be in writing and given by delivery or sent by fax or similar
telecommunications device and addressed:
|
5.
|
If
addressed to XL Generation Polyprod inc.:
335
Broadway
Montreal,
Polyprod
Attention:
Daniel Chaussé
If
addressed to XL Generation AG:
Sumfptrasse
32
Zug,
Switzerland
Attention:
Albert Beerli
|
.4
or
such
other address or telephone number as the party to whom such notice or other
communication is to be given shall have specified in writing to the other party
pursuant to this Section. Any notice or communication given under this Section
shall be deemed to have been given as of the date it was
SO
placed
in
the hands of any express courier service, or faxed, or as of the date of
delivery in person.
The
warrant parties represent that they have taken all necessary corporate actions
to authorize the execution, delivery and performance of this Agreement and
the
transactions contemplated thereby, and that the respective representative
executing this Agreement on their behalf is duly authorized to act in such
capacity. Licensor further warrants and represents that the execution, delivery
and performance of this Agreement and the transactions contemplated thereby
have
been duly authorized and approved by Licensor’s Board of Directors and by
Licensor’ s shareholders.
|
7.
|
LEGAL
REPRESENTATION; UNDERSTANDING 0F
AGREEMENT
|
In
entering into this Agreement, the parties represent that they have relied upon
the legal advice of their own respective attorneys, who are the attorneys of
their own choice. The parties further represent that the terms of this Agreement
have been completely read and explained to them by their respective attorney
and
that such terms are fully understood and voluntarily accepted by said
parties.
This
Agreement shall be binding upon. and inure to the benefit of, the undersigned
parties and their respective officers, directors, shareholders, employees,
agents. attorneys, independent contractors, successors and assigns.
|
9.
|
ENTIRE
AGREEMENT; AMENDMENT
|
This
Agreement and the attached exhibit contain the entire agreement of the parties
with respect to the subject matter of this Agreement and supersede all prior
agreements or understandings, written or oral, between the parties with respect
thereto. Any waiver of any term or condition of this Agreement, or any
amendment, modification or supplementation of this Agreement shall be effective
only if it is in writing and signed by all of the parties.
If
a
court of competent jurisdiction finds that any part of this Agreement is
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
the
remaining provisions of this Agreement shall not, at the election of the party
for whose benefit the provision exists, be in any way impaired.
The
headings used in this Agreement are for convenience of reference only and shall
not be used in construing the provisions of the Agreement.
This
Agreement shall be governed by and interpreted in accordance with the laws
in
force in Switzerland except that no doctrine of choice of law shall be used
to
apply the laws of any other state or jurisdiction.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall be deemed one and the same
instrument.
EXECUTED
in
FOUR
(2)
original copies and on the respective dates appearing under the parties’
signatures below and effective as of the date upon which all of the parties
have
signed this Agreement.
|
XLGENERATION AG
|
POLYPROD INC.
|
|
|
|
|
/s/ Alain Lemieux
|
/s/ Domenico Malatesta
|
|
Alain Lemieux
|
Domenico
Malatesta
|
Supply
Contract
Between
Febra-Kunststoff
GmbH, 74336 Brackenheim-Dürrenzimmem, Germany
|
-
|
hereinafter
referred to as “
Febra
”
-
|
and
XL
Generation AG, CH-6304 Zug, Switzerland
|
-
|
hereinafter
referred to as “
XLG
”
-
|
and
BASF
Aktiengesellschaft, 67056 Ludwigshafen, Germany
|
-
|
hereinafter
referred to as “
BASF
”
-
|
Febra
and
XLG hereinafter also referred to as “
Party
”
or
“
Parties
”.
WHEREAS
XLG is willing to purchase and take Molded EPP-Sheets (“
Padding
Sheets
”)
from
Febra for sport-field surfaces and other types or surfaces.
WHEREAS
Febra needs Neopolen® P (“
Product
”)
for
the production of Padding sheets.
WHEREAS
under the terms of an other agreement (“
Agreement
”)
BASF
shall sell to Febra and Febra shall purchase and take from BASF such
Product.
WHEREAS
Febra needs certain tools (“
Tools
”)
for
the production of the Padding Sheets that have to be acquired just for the
purpose of the Supply Contract.
WHEREAS
under a third agreement BASF and Febra shall agree to finance such Tools
jointly.
THEREFORE,
the Parties - and concerning §2 the Parties and BASF - agree as
follows:
§
1
Subject
of the Supply Contract
Febra
shall sell and deliver Padding Sheets to XLG and XLG shall purchase and take
Padding Sheets from Febra in accordance with the terms and conditions set forth
in this supply contract (“
Supply
Contract
”).
§
2
Quantity
XLG
shall
purchase and take from Febra at least 100 metric tons (“
mt
”)
Padding Sheets per year.
§
3
Quality
The
Padding Sheets shall have the quality as set forth in
Annex
1
.
§
4
Price
The
purchase price for Padding Sheets shall be as set forth in
Annex
2
.
§
5
Payment
term
Payments
shall be made within 30 days after date of invoice.
§
6
Delivery
Terms
EXW
according to incoterms 2000 of ICC.
§
7
Title
Ownership
of the Padding Sheets is transferred to XLG upon full payment for the particular
delivery.
§
8
Liability
Febra’s
total liability for any cause of action associated with the Supply Contract,
whether based in tort, contract, strict liability or any other legal theory
is
expressly limited to replacement of nonconforming Padding Sheets or payment
in
amount not to exceed the purchase price of the specific Padding Sheets for
which
damages are claimed, at Febra’s option. In no event shall Febra be liable for
any other damages including, without limitation, incidental, special, punitive
or consequential damages.
§
9
Inspection
of the Padding Sheets
XLG
shall
inspect the Padding Sheets supplied hereunder immediately after delivery and
prior to processing it. XLG must raise any claims concerning quality or quantity
deficiencies which can be discovered by reasonable examination within 10 (ten)
days from the arrival of each delivery at the designated delivery site in
writing, all other deficiencies must be claimed in writing within 6 (six) months
after arrival of each delivery at the designated delivery site.
After
expiration of these periods the Padding Sheets concerned are deemed to be
approved.
If
complaints are justified, in the case of shortages, these will be rectified
by
further delivery and in the case of defective products these will be exchanged
by replacement delivery.
§
10
Ineffectiveness,
Amendments
Should
provisions of this Supply Contract or a provision to be included herein at
a
later date be or become legally ineffective or unworkable, wholly or in part,
this shall not affect the validity of the remaining provisions of this Supply
Contract. In place of the ineffective or unworkable provision, or to fill the
loophole, an appropriate provision shall apply which, so far as legally
possible, most closely approximates the business intention of the Parties or
what the Parties would have intended within the meaning and purpose of this
Supply Contract, had they considered this issue on concluding the contract
or on
later including a provision.
Amendments
and additions to this Supply Contract including the annexes hereto, and
including this written form clause, require the written form.
§
11
Force
majeure
Any
events and circumstances whose occurrence is beyond the control of the Parties,
such as acts of nature, war, labour disputes, shortages or raw materials or
power, unavoidable transport and plant stoppages, fire or explosion, order
of
authority - including where such events make performance of the affected
business uneconomical for the foreseeable future - and all other cases of force
majeure, including those affecting upstream suppliers, shall discharge the
affected Party for the period of interruption and to the extent of their effects
from its obligations under this contract. In a case of force majeure, BASF
is
not obliged to buy in Product for delivery from third parties.
The
affected Party shall immediately notify the other Party of the anticipated
duration and extent of the interruption and shall take all reasonable measures
to forthwith remedy the interruption. The affected Party shall make reasonable
efforts to make good nonperformed services within its capacity.
§
12
Law
and Arbitration
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12.1
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This
Supply Contrtact shall be governed by and construed in accordance
with
German Law excluding however the UN Convention on the International
Sale
of Goods (CISG).
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12.2
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Prior
to submission of any matter to arbitration, the parties shall attempt
in
good faith to resolve the matter by discussion, negotiation and mediation.
Any dispute, controversy or claim arising out of or relating to this
Supply Contract or to breach of it, including but limited to, its
interpretation, performance or termination that the parties are unable
to
resolve within ninety (90) days after written notice by a party to
the
other shall be submitted to final and binding arbitration. Arbitration
shall take place in accordance with the Arbitration Code of the Deutsche
Institution für Schiedsgerichtsbarkeit e.V. (German Institution and
Arbitration) excluding jurisdiction of the ordinary courts. Arbitration
shall take place in Ludwigshafen/Rhein, Germany. The language of
arbitration proceedings is English.
|
§
13
Term
This
Suply Contract shall enter into force on 01.04.2005 and shall remain in force
and effect until 31.12.2006. At least, 60 days before the expiration date of
this agreement, the parties will negotiate in good faith, based on the
experience after one year, about the conclusion of a new agreement.
|
Brackenheim-Dürrenzimmem,
/s/
Hans Woerthwein
Febra-Kunststoffe
GmbH
|
Dated
23.05.05
|
|
|
|
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Zug,
/s/
Albert Beerli
XL
Generation AG
|
Dated
01.06.05
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Ludwigshafen,
/s/
Hammes /s/ Gragert
BASF
Aktiengesellschaft
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Dated
20.05.05
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Annex
1
To
the Supply Contract between XLG and Febra and BASF
Quality
of the Padding sheets
The
Padding Sheets have a high resistance of breaking
Breaking
could be defined by
Elongation
of break
Tensile
strength
Flexing
test (visually
Annex
2
To
the Supply Contract between XLG and Febra and BASF
Price
of
the Padding sheets varies accordingly to the thickness and density of the
Padding Sheet.
Density:
30kg/m
3
;
Dimension of the sheet: 1220 x 1220 x 15 mm
3
Prince
of
the Padding sheet: 6,00 Euro
Density:
40kg/m
3
;
Dimension of the sheet: 1220 x 1220 x 20 mm
3
Prince
of
the Padding sheet: 9,35 Euro
Other
combinations of density and thicknesses are possible as well depending on the
specific requirements of the application.
LOAN
AGREEMENT BETWEEN SIGNED IN MONTREAL
|
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XLGENERATION
AG,
a
Swiss corporation, having its head office in Zug, Switzerland, herein
represented by Mr. Albert Beerli, duly authorized as he so
declares;
(hereinafter
referred to as “XLGeneration")
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AND
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FIDUCIE
ALAIN LEMIEUX
,
a
Trust organized under the law of the province of Quebec (Canada),
herein
represented by Mr. Alain Lemieux and Mr. Daniel Courteau, duly authorized
as they declare;
(hereinafter
referred to as “FIDUCIE”)
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WITNESSETH:
WHEREAS
the beneficiaries of Fiducie are namely Mr. Alain Lemieux and the members of
his
family.
WHEREAS
XL Generation, may from time, lend money to Fiducie, the said amount being
for
the purpose of investment or for the benefit of one or more beneficiaries of
Fiducie at the complete discretion of the trustees.
WHEREAS
one of the beneficiary of the Trust, Alain Lemieux may, from time to time,
have
financial needs on a short term basis that require from the Trust that it may
borrow a certain amount of money through the Trust with the obligation of
reimbursing any amount outstanding pursuant term and conditions previously
negotiated between the parties.
FOR
GOOD
AND VALUABLE CONSIDERATION, THE PARTIES AGREE AS FOLLOWS:
|
1.
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UNDERTAKINGS
OF XL GENERATION
|
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1.1.
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XL
Generation accepts and undertakes that, XL Generation, may, from time
to
time, at its own discretion, lend money to the
Trust.
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1.2.
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Any
outstanding amount of loan will be at an interest rate of 4% per year
payable once a year at the anniversary date of this Agreement or otherwise
as determined between the parties. The interest rate is determined
on the
capital of the loan outstanding on January 1
st
of
each calendar year.
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2.
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UNDERTAKINGS
OF THE TRUST
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2.1.
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Any
amount of the debt shall be reimburse by Fiducie to XL Generation as
follows:
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2.1.1.
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By
the Royalties, dividend or any other income that will received Fiducie
from the profit derived by the business of XL
Generation.
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2.1.2.
|
Alain
Lemieux himself may from time to time, reimburse on behalf of the Fiducie,
portion of the outstanding debt.
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2.2.
|
XL
Generation may from time to time, following a mutual agreement between
Alain Lemieux and XL Generation, compensate any amount payable to Alain
Lemieux in reduction of the outstanding debt.
|
If
any
provision hereof shall be adjudged by a court to be void and unenforceable,
the
same shall not affect any other provision hereof or its validity or
enforceability.
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4.
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APPLICABLE
LAWS AND JURISDICTION
|
This
Agreement shall be governed and construed in accor-dance with the laws of the
Provinc-e of Quebec and the laws of Canada applicable therein, or the laws
of
Switzerland, if more convenient, as determined in XLGeneration's sole
discretion. In the event of any dispute under the agreement, a suit may be
brought only in a court of competent jurisdiction of the Province of Quebec,
Canada, or of Switzerland as determined in XLGeneration's sole
discretion.
IN
WITNESS WHEREOF, THE PARTIES HAVE SIGNED THIS
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By:
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/s/
Daniel Courteau
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By:
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/s/
Alain Lemieux
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Daniel Courteau
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Alain Lemieux
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ACCEPTED BY:
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|
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XLGENERATION AG
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By:
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/s/
Albert Beerli
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Albert
Beerli
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CONFIRMATION
OF DEBT
We,
Daniel Courteau and Alain Lemieux, acting as the sole trustees of the Lemieux
Trust, hereby confirmed that the Lemieux Trust is indebted to XL Generation
AG
of the amount of $470,695.14 as of December 31
st
,
2004.
The
amount has been received directly from XL Generation Canada inc, on behalf
of XL
Generation AG.
The
term
and conditions of the reimbursement of this outstanding debt are provided in
the
Agreement dated January 10
th
,
2004.
Dated
March 15
th
,
2005.
|
/s/ Alain Lemieux
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/s/ Daniel Courteau
|
|
Alain Lemieux
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Daniel
Courteau
|
|
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Sumpfstrasse 32
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Postfach 4158
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CH-6304 Zug,
Switzerland
|
North
America Bureau de
Liaison
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TEL: +41 41 723 10
90
|
TEL :
1 514 846
8001
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|
FAX: +41 41 710 16
48
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FAX :
1 514 846
1679
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Zug,
May
25th, 2005
Personnal
et Confidential
Daniel
Courteau
5135
A
Jeanne Mance
Montréal
Canada,
H2V 4K2
Subject:
Repayment
of loans to Symbior Technologies inc.
************************************
Dear
Mr.
Courteau,
The
following is a summary and a confirmation of our discussion regarding your
employment with XL Generation AG as Vice President, Legal Affairs.
You
have
mentioned to us that you have invested an amount in excess of $150,000 CDN
as
several loans to Symbior Technologies inc namely for its R&D (intellectual
property) and for its on going business. You have raised the fact that Symbior
Technologies went bankrupted in October 2004.
Although
XL Genreration does not have any obligation, either contractually or legally,
to
repay you with your investment, we may understand that our company may have
indirectly benefit from the business of Symbior Technologies in the
past.
Consequently,
we have then decided to pay to you, in order to reduce your capital losses
in
Symbior Technologies, an amount of $60,000 CDN which is a portion of your
investment. However, the reimbursement of your capital losses is conditional
for
you to accept the employment agreement as Vice President, Legal
Affairs.
We
also
understand that XL Generation AG will be subrogated to your rights to receive
any amount from the trustee to the bankruptcy of Symbior Technologies in
respect
of any amount received from the liquidation of the assets of the said company.
We also understand that your debt is considered as a priority debt. It means
that any amount received from the trustee to the bankruptcy will be paid
in
priority to any other ordinary creditors.
Your
employment will start on November 1
st
,
2005
and an official employment agreement will be provided to you shortly, the
terms
and conditions having already discussed with you previously.
On
behalf
of the board of Directors of XL Generation AG, I wish to thank you for the
great
interest shown to join our team and we hope that this proposals is to your
satisfaction. Consequently, would you please sign this document to bind together
with our understandings.
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XL
Generation
AG
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/s/
Alain Lemieux
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Alain
Lemieux, President
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Accepted,
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/s/ Daniel Courteau
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Daniel
Courteau
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XL
GENERATION INTERNATIONAL INC.
2006
EQUITY INCENTIVE PLAN
1.
Purpose.
The
purpose of the XL GENERATION INTERNATIONAL INC. 2006 Equity Incentive Plan
(the
“Plan”) is to attract and retain employees, consultants and non-employee
directors for XL GENERATION INTERNATIONAL INC. and its subsidiaries and to
provide such persons with incentives and rewards for superior
performance.
2.
Definitions.
As
used
in this Plan, the following terms shall be defined as set forth
below:
2.1.
“Award” means any Performance Shares, Performance Units, Options, Stock
Appreciation Rights, Restricted Shares or Deferred Shares granted under the
Plan.
2.2.
“Award Agreement” means an agreement, certificate, resolution or other form of
writing or other evidence approved by the Committee that sets forth the terms
and conditions of an Award. An Award Agreement may be in paper form, electronic
medium, or may be limited to a notation on the Company’s books or records, but
shall be signed by a representative of the Company and the Participant unless
otherwise approved by the Committee.
2.3.
“Base Price” means the price used as the basis for determining the Spread upon
the exercise of Stock Appreciation Right.
2.4.
“Board” means the Board of Directors of the Company.
2.5.
“Cause” means, (a) if the applicable Participant is party to an effective
employment, consulting, severance or similar agreement with the Company or
any
of its Subsidiaries, “Cause” shall have the same meaning as such term is defined
therein; (b) if the applicable Participant is not a party to an effective
employment, consulting, severance or similar agreement or if no definition
of
“Cause” is set forth in the applicable employment, consulting, severance or
similar agreement, “Cause” shall have the same meaning as such term is defined
in the applicable Award Agreement; and (c) if the applicable Participant is
not
a party to any effective employment, consulting, severance or similar agreement
or no definition of “Cause is set forth in the applicable employment,
consulting, severance or similar agreement, and no definition of “Cause” is set
forth in the applicable Award Agreement, the existence of “Cause” shall be
determined in good faith by the Committee from time to time as circumstances
dictate; provided that the Committee shall provide notice to the Participant
of
such determination and an opportunity for the Participant to cure such event
(if
the Committee determines such event is reasonably curable).
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
2.6.
“Change in Control” means, after the effective date of the Plan:
(i)
the
acquisition, directly or indirectly, by a “person” (within the meaning of
Section 13(d)(3) of the Exchange Act) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 20% of the combined voting power of the voting securities of the Company
entitled to vote generally in the election of directors (the “Voting
Securities”); provided, however, that the following acquisitions shall not
constitute a Change in Control: (a) any acquisition by or from the Company
or
any Subsidiary, or by any employee benefit plan (or related trust) sponsored
or
maintained by the Company or any Subsidiary, (b) any acquisition by an
individual who as of the effective date of the Plan is a member of the Board,
(c) any acquisition by any underwriter in any firm commitment underwriting
of
securities to be issued by the Company, or (d) any acquisition by any
corporation (or other entity) if, immediately following such acquisition, 65%
or
more of the then outstanding shares of common stock (or other equity unit)
of
such corporation (or other entity) and the combined voting power of the then
outstanding voting securities of such corporation (or other entity), are
beneficially owned, directly or indirectly, by all or substantially all of
the
individuals or entities who, immediately prior to such acquisition, were the
beneficial owners of the then outstanding Shares and the Voting Securities
in
substantially the same proportions, respectively, as their ownership immediately
prior to the acquisition of the Stock and Voting Securities; or
(ii)
the
consummation of the sale or other disposition of all or substantially all of
the
assets of the Company, other than to a wholly-owned Subsidiary or to a holding
company of which the Company is a direct or indirect wholly owned subsidiary
prior to such transaction; or
(iii)
the
approval by stockholders of the Company of a reorganization, merger or
consolidation of the Company, other than a reorganization, merger or
consolidation, which would result in the Voting Securities outstanding
immediately prior to the transaction continuing to represent (whether by
remaining outstanding or by being converted to voting securities of the
surviving entity) 65% or more of the Voting Securities or the voting power
of
the voting securities of such surviving entity outstanding immediately after
such transaction; or the approval by stockholders of the Company of a plan
of
complete liquidation or substantial dissolution of the Company; or
(iv)
the
following individuals cease for any reason to constitute a majority of the
Board: individuals who, as of the effective date of the Plan, constitute the
Board and any new director (other than a director whose initial assumption
of
office is in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation relating to the election
of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved and
recommended by a vote of at least two-thirds of the directors then still in
office who either were directors on the effective date of the Plan or whose
appointment, election or nomination for election was previously so approved
or
recommended; or
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
(v)
the
sale, transfer, assignment, distribution or other disposition by the Company
and/or one of its Subsidiaries, in one transaction, or in a series of related
transactions within any period of 18 consecutive calendar months (including,
without limitation, by means of the sale, transfer, assignment, distribution
or
other disposition of the capital stock of any Subsidiary or Subsidiaries),
of
assets which account for an aggregate of 80% or more of the consolidated
revenues of the Company and its Subsidiaries, as determined in accordance with
U.S. generally accepted accounting principles, for the fiscal year most recently
ended prior to the date of such transaction (or, in the case of a series of
transactions as described above, the first such transaction); provided, however,
that no such transaction shall be taken into account if substantially all the
proceeds thereof (whether in cash or in kind) are used after such transaction
in
the ongoing conduct by the Company and/or its Subsidiaries of the business
conducted by the Company and/or its Subsidiaries prior to such transaction;
or
(vi)
notwithstanding Sections 2.6(i) through 2.6(vi) above, in the case of a
distribution under the Plan of an amount which is subject to section 409A of
the
Code, an event which constitutes a “change in control event” as defined under
Section 409A of the Code.
2.7.
“Code” means the Internal Revenue Code of 1986, as amended from time to time and
the regulations and other guidance issued thereunder.
2.8.
“Committee” means the Committee appointed by duly resolution of the Board. The
Committee shall have at least two members, each of whom shall be a “non-employee
director” as defined in Rule 16b-3 under the Exchange Act and an “outside
director” as defined in Section 162(m) of the Code and the regulations
thereunder, and, if applicable meet the independence requirements of the
applicable stock exchange, quotation system or other self-regulatory
organization on which the Shares are traded.
2.9.
“Company” means XL GENERATION INTERNATIONAL INC., a Nevada corporation, or any
successor corporation.
2.10.
“Consultant” means an individual (other than an Employee or a Non-employee
Director) who renders services to the Company or a Subsidiary, including an
independent contractor or an advisor.
2.11.
“Deferral Period” means the period of time during which Deferred Shares are
subject to deferral limitations under Section 9.
2.12.
“Deferred Shares” means an Award pursuant to Section 9 of the right to receive
Shares at the end of a specified Deferral Period.
2.13.
“Employee” means any person, including an officer, employed by the Company or a
Subsidiary.
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
2.14.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, including rules thereunder and successor provisions and rules
thereto.
2.15.
“Fair Market Value” means, on any given date, unless otherwise determined by the
Committee, the closing sale prices reported as having occurred on the quotation
system or other principal exchange or market on which the Shares are traded
or
listed on such date, or, if no sale was made on such date on such principal
exchange or market, on the last proceeding day on which the Shares were traded
or listed.
2.16.
“Grant Date” means the date specified by the Committee on which a grant of an
Award shall become effective, which shall not be earlier than the date on which
the Committee takes action with respect thereto.
2.17.
“Incentive Stock Option” means any Option which meets the requirements of
Section 422 of the Code and which is designated as an Incentive Stock Option
by
the Committee.
2.18.
“Non-employee Director” means a member of the Board who is not an
Employee.
2.19.
“Nonqualified Stock Option” means an Option that is not intended to qualify as
an Incentive Stock Option, and designated as a Nonqualified Stock Option by
the
Committee.
2.20.
“Option” means any option to purchase Shares granted under Section
6.
2.21.
“Optionee” means the person so designated in an agreement evidencing an
outstanding Option.
2.22.
“Option Price” means the purchase price payable upon the exercise of an
Option.
2.23.
“Participant” means an Employee, Non-employee Director or Consultant who is
selected by the Committee to receive Awards, provided that only Employees may
receive grants of Incentive Stock Options.
2.24.
“Performance Objectives” means the performance objectives established in the
sole discretion of the Committee for Participants who are eligible to receive
Awards under the Plan. Performance Objectives may be described in terms of
Company-wide objectives or objectives that are related to the performance of
the
individual Participant or the Subsidiary, division, department or function
within the Company or Subsidiary in which the Participant is employed.
Performance Objectives may be measured on an absolute, time or relative basis.
Relative performance may be measured by a group of peer companies or by a
financial market index. Any Performance Objectives applicable to a Qualified
Performance-Based Award shall be limited to: specified levels of or increases
in
the Company’s, a division’s or a Subsidiary’s return on capital, equity or
assets; earnings measures/ratios (on a gross, net, pre-tax or post-tax basis),
including basic earnings per share, diluted earnings per share, total earnings,
operating earnings, earnings growth, earnings before interest and taxes and
earnings before interest, taxes, depreciation and amortization; net economic
profit (which is operating earnings minus a charge to capital); net income;
operating income; sales; sales growth; gross margin; direct margin; Share price
(including but not limited to growth measures and total stockholder return);
operating profit; per period or cumulative cash flow (including but not limited
to operating cash flow and free cash flow) or cash flow return on investment
(which equals net cash flow divided by total capital); inventory turns;
financial return ratios; market share; balance sheet measurements such as
receivable turnover; improvement in or attainment of expense levels; improvement
in or attainment of working capital levels; debt reduction; strategic
innovation; customer or employee satisfaction; individual objectives; and any
combination of the foregoing. If the Committee determines that a change in
the
business, operations, corporate structure or capital structure of the Company,
or the manner in which it conducts its business, or other events or
circumstances render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum acceptable level
of
achievement, in whole or in part, as the Committee deems appropriate and
equitable.
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
2.25.
“Performance Period” means a period of time established under Section 5 within
which the Performance Objectives relating to Awards are to be achieved.
2.26.
“Performance Share” means a bookkeeping entry that records the equivalent of one
Share awarded pursuant to Section 5.
2.27.
“Performance Unit” means a bookkeeping entry that records a unit equivalent to
$1.00 awarded pursuant to Section 5.
2.28.
“Qualified Performance-Based Award” means an Award or portion of an Award that
is intended to satisfy the requirements for “qualified performance-based
compensation” under Code Section 162(m). The Committee shall designate any
Qualified Performance-Based Award as such at the time of grant.
2.29.
“Restricted Shares” mean Shares granted under Section 8 subject to a substantial
risk of forfeiture.
2.30.
“Shares” means shares of the Common Stock of the Company, $.001 par value, or
any security into which Shares may be converted by reason of any transaction
or
event of the type referred to in Section 14.
2.31.
“Spread” means, in the case of a Stock Appreciation Right, the amount by which
the Fair Market Value on the date when any such right is exercised exceeds
the
Base Price specified in such right.
2.32.
“Stock Appreciation Right” means a right granted under Section 7.
2.33.
“Subsidiary” means a corporation or other entity in which the Company owns or
controls directly or indirectly at least 50 percent of the total combined voting
power represented by all classes of stock issued by such corporation, or in
the
case of a non-corporate entity, at least 50% of the profits or capital interest
in such entity, at the time of such grant.
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
3.
Shares Available Under the Plan.
3.1.
Reserved Shares. Subject to adjustment as provided in Section 14, the maximum
number of Shares that may be (a) issued upon the exercise of Options or Stock
Appreciation Rights, (b) issued as Restricted Shares and released from
substantial risk of forfeiture, or (c) issued in payment of Deferred Shares
or
Performance Shares, shall not in the aggregate exceed the
following:
2,000,000
Shares.
Such
Shares may be Shares of original issuance, Shares held in Treasury, or Shares
that have been reacquired by the Company.
In
addition:
(i)
To
the extent any Shares covered by an Award are not issued to a Participant (or,
if applicable, his heir, legatee or permitted transferee) because the Award
is
forfeited or canceled, such Shares shall not be deemed to have been issued
for
purposes of determining the maximum number of Shares available for issuance
under the Plan.
(ii)
Shares issued under the Plan in settlement, assumption or substitution of
outstanding awards (or obligations to grant future awards) under the plans
or
arrangements of another entity shall not reduce the maximum number of Shares
available for issuance under the Plan, to the extent that such settlement,
assumption or substitution is a result of the Company acquiring another entity
(or an interest in another entity).
3.2.
Reduction Ratio. For purposes of Section 3.1, each Share issued pursuant to
an
Award other than an Option shall reduce the number of Shares available for
issuance under the Plan by one Share.
3.3.
ISO
Maximum. In no event shall the number of Shares issued upon the exercise of
Incentive Stock Options exceed 300,000 Shares, subject to adjustment as provided
in Section 14, provided, however, nothing herein shall be construed to require
that any such Shares be reserved for grant as Incentive Stock Options or that
any Incentive Stock Options be issued under the Plan.
3.4.
Maximum Annual Award. No Participant my receive Awards (including
performance-based Awards) representing more than 500,000 Shares underlying
Option grants (or 250,000 Shares underlying any Award, except for Options)
in
any one fiscal year, subject to adjustment as provided in Section 14. The
maximum Qualified Performance-Based Award that may be granted to a Participant
in any one Performance Period is 250,000 Shares (subject to adjustment as
provided in Section 14).
4.
Plan Administration.
4.1.
Committee Administration. This Plan shall be administered by the Committee.
The
interpretation and construction by the Committee of any provision of this Plan
or of any Award Agreement and any determination by the Committee pursuant to
any
provision of this Plan or any such agreement, notification or document, shall
be
final and conclusive. No member of the Committee shall be liable to any person
for any such action taken or determination, other than one made in bad faith.
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
4.2.
Committee Powers. The Committee shall have full authority to interpret the
Plan;
to establish and amend rules and regulations relating to the Plan; to select
the
Participants and determine the type of Awards to be made to Participants, the
number of shares subject to Awards and the terms, conditions, restrictions
and
limitations of Awards; and to make all other determinations as are necessary
or
advisable for the administration of the Plan.
4.3.
Committee Delegation. The Committee may delegate to one or more officers of
the
Company the authority to grant Awards to Participants who are not subject to
the
requirements of Section 16 of the Exchange Act or Section 162(m) of the Code
and
the rules and regulations thereunder, provided that the Committee shall have
fixed the total number of Shares subject to such grants. Any such delegation
shall be subject to the limitations of applicable laws of the State of Nevada.
The Committee may revoke any such allocation or delegation at any time for
any
reason with or without prior notice.
5.
Performance Shares and Performance Units.
The
Committee may authorize grants of Performance Shares and Performance Units,
which shall vest and become payable to the Participant upon the achievement
of
specified Performance Objectives during a specified Performance Period, upon
such terms and conditions as the Committee may determine in accordance with
the
following provisions:
5.1.
Terms and Conditions of Performance Share/Performance Unit Awards. Each grant
shall specify the number of Performance Shares or Performance Units to which
it
pertains. The Performance Period with respect to each Performance Share or
Performance Unit shall commence on the Grant Date and may be subject to earlier
termination in the event of a Change in Control or other similar transaction
or
event. Each grant shall specify the Performance Objectives that are to be
achieved by the Participant. Each grant may specify in respect of the specified
Performance Objectives a minimum acceptable level of achievement below which
no
payment will be made and may set forth a formula for determining the amount
of
any payment to be made if performance is at or above such minimum acceptable
level but falls short of the maximum achievement of the specified Performance
Objectives.
5.2.
Payment of Performance Shares and Units. Each grant shall specify the time
and
manner of payment of Performance Shares or Performance Units that shall have
been earned, and shall be paid by the Company in Shares.
5.3.
Maximum Payment. Subject to Section 3.4 of the Plan, any grant of Performance
Shares may specify that the Shares payable with respect thereto may not exceed
a
maximum specified by the Committee on the Grant Date. Any grant of Performance
Units may specify the number of Shares issued, with respect thereto may not
exceed maximums specified by the Committee on the Grant Date.
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5.4.
Adjustment of Performance Objectives. The Committee may adjust Performance
Objectives and the related minimum acceptable level of achievement if, in the
sole judgment of the Committee, events or transactions have occurred after
the
Grant Date that are unrelated to the performance of the Participant and result
in distortion of the Performance Objectives or the related minimum acceptable
level of achievement.
5.5.
Qualified Performance-Based Awards. In the case of a Qualified Performance-Based
Award the following provisions shall apply in addition to, and where necessary,
in lieu of other provisions of the Plan, including the provisions of Sections
5.1 through 5.4:
(i)
Only
Employees who are “Covered Employees” within the meaning of Section 162(m) of
the Code shall be eligible to receive Qualified Performance-Based Awards. The
Committee shall designate in its sole discretion which Covered Employees will
be
Participants for a Performance Period within the earlier of the (a) first 90
days of a Performance Period and (b) the lapse of 25% of the Performance
Period.
(ii)
The
Committee shall establish in writing within the earlier of the (a) first 90
days
of a Performance Period and (b) the lapse of 25% of the Performance Period,
and
in any event, while the outcome is substantially uncertain, (x) Performance
Objectives for the Performance Period, and (y) in respect of such Performance
Objectives, a minimum acceptable level of achievement below which no Award
will
be made, and an objective formula or other method for determining the Award
to
be made if performance is at or above such minimum acceptable level but falls
short of the maximum achievement of the specified Performance
Objectives.
(iii)
Following the completion of a Performance Period, the Committee shall review
and
certify in writing whether, and to what extent, the Performance Objectives
for
the Performance Period have been achieved and, if so, to also calculate and
certify in writing the amount of the Qualified Performance- Based Awards earned
for the period based upon the Performance Objectives and the related formulas
or
methods as determined pursuant to Section 5.5(ii). The Committee shall then
determine the actual number of Shares issuable under each Participant’s Award
for the Performance Period, and, in doing so, may reduce or eliminate, unless
otherwise and/or to the extent provided in the Award Agreement, the amount
of
the Award. In no event shall the Committee have the authority to increase Award
amounts to any Covered Employee.
(iv)
Subject to Section 20.2, Awards granted for a Performance Period shall be made
to Participants within a reasonable time after completion of the certification
described in Section 5.5(iii).
5.6.
Other Awards. Any grant of an Award under Sections 6, 7, 8 or 9, and/or the
vesting or exercise thereof, may be further conditioned upon the attainment
of
Performance Objectives established by the Committee in accordance with the
applicable provisions of this Section 5 regarding Performance Shares and
Performance Units.
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6.
Options.
The
Committee may from time to time authorize grants of Options to Participants
upon
such terms and conditions as the Committee may determine in accordance with
the
following provisions:
6.1.
Number of Shares. Each grant shall specify the number of Shares to which it
pertains.
6.2.
Option Price. Each grant shall specify an Option Price per Share, which shall
be
equal to or greater than the Fair Market Value per Share on the Grant Date;
provided that in the case of any Incentive Stock Option granted to a person
who
on any given date owns, either directly or indirectly (taking into account
the
attribution rules contained in Section 424(d) of the Code), stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or any Subsidiary, the Option Price shall not be less than 110%
of the Fair Market Value of a Share on the date of grant.
6.3.
Consideration. Each grant shall specify the form of consideration to be paid
in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check
or
other cash equivalent, in each such case as is acceptable to the Company, (ii)
subject to approval by the Committee, non-forfeitable, unrestricted Shares
owned
by the Optionee, (iii) any other legal consideration that the Committee may
deem
appropriate, including without limitation any form of consideration authorized
under Section 6.4 and (iv) any other cashless exercise, in each case on such
basis as the Committee may determine at its sole discretion in accordance with
each such grant and this Plan, or (v) any combination of the
foregoing.
6.4.
Payment of Option Price in Restricted Shares. On or after the Grant Date of
any
Option other than an Incentive Stock Option, the Committee may determine that
payment of the Option Price may also be made in whole or in part in the form
of
Restricted Shares or other Shares that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Committee, whenever
any Option Price is paid in whole or in part by means of any of the forms of
consideration specified in this Section 6.4, the Shares received by the Optionee
upon the exercise of the Options shall be subject to the same risks of
forfeiture or restrictions on transfer as those that applied to the
consideration surrendered by the Optionee, provided that such risks of
forfeiture and restrictions on transfer shall apply only to the same number
of
Shares received by the Optionee as applied to the forfeitable or restricted
Shares surrendered by the Optionee.
6.5.
Broker Assisted Exercise. To the extent such program is permitted by the Company
and permitted by applicable law, rule or regulations, the Option Price may
be
satisfied from the proceeds of a sale through a bank or broker on the date
of
exercise of some or all of the Shares to which the exercise relates pursuant
to
a broker assisted exercise program provided by such bank or broker.
6.6.
Exercise Period. No Option granted may be exercised more than ten years after
the Grant Date; provided that in the case of any Incentive Stock Option granted
to a person who on any given date owns, either directly or indirectly (taking
into account the attribution rules contained in Section 424(d) of the Code),
stock possessing more than 10 percent of the total combined voting power of
all
classes of stock of the Company or any Subsidiary, such Option shall be
exercised within five years after the Grant Date.
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6.7.
Disqualifying Dispositions of ISOs. Each Participant awarded an Incentive Stock
Option under the Plan shall notify the Company in writing immediately after
the
date he or she makes a disqualifying disposition (as defined in Section 421(b)
of the Code) of any Shares acquired pursuant to the exercise of such Incentive
Stock Option. The Company may, if determined by the Committee and in accordance
with procedures established by it, retain possession of any Shares acquired
pursuant to the exercise of an Incentive Stock Option as agent for the
applicable Participant until the end of the period described in the preceding
sentence, subject to complying with any instructions from such Participant
as to
the sale of such Shares.
7.
Stock Appreciation Rights.
The
Committee may also authorize grants to Participants of Stock Appreciation
Rights. A Stock Appreciation Right is the right of the Participant to receive
from the Company an amount, which, shall be determined by the Committee and
shall be expressed as a percentage (not exceeding 100 percent) of the Spread
at
the time of the exercise of such right. Any grant of Stock Appreciation Rights
shall be upon such terms and conditions as the Committee may determine in
accordance with the following provisions:
7.1.
Payment in Shares. Any amount payable upon the exercise of a Stock Appreciation
Right shall be paid by the Company in Shares. Any grant may specify that the
Shares payable upon the exercise of a Stock Appreciation Right shall not exceed
a maximum specified by the Committee on the Grant Date.
7.2.
Exercise Period. Any grant may specify (a) a waiting period or periods before
Stock Appreciation Rights shall become exercisable and (b) permissible dates
or
periods on or during which Stock Appreciation Rights shall be exercisable;
provided that no Stock Appreciation Right granted may be exercised more than
ten
years after the Grant Date. A grant may specify that a Stock Appreciation Right
may be exercised only in the event of a Change in Control or other similar
transaction or event.
7.3.
Base
Price. Each grant shall specify in respect of each Stock Appreciation Right
a
Base Price per Share, which shall be equal to or greater than the Fair Market
Value on the Grant Date.
7.4.
Deemed Exercise. The Committee may provide that a Stock Appreciation Right
shall
be deemed to be exercised at the close of business on the scheduled expiration
date of such Stock Appreciation Right if at such time the Stock Appreciation
Right by its terms remains exercisable and, if so exercised, would result in
a
payment of Shares to the holder of such Stock Appreciation Right.
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8.
Restricted Shares.
The
Committee may also authorize grants to Participants of Restricted Shares upon
such terms and conditions as the Committee may determine in accordance with
the
following provisions:
8.1.
Transfer of Shares. Each grant shall constitute an immediate transfer of the
ownership of Shares to the Participant in consideration of the performance
of
services, subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 10. Each grant may be made without additional
consideration from the Participant or in consideration of a payment by the
Participant that is less than the Fair Market Value on the Grant
Date.
8.2.
Dividends. Any grant may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be reinvested in additional Shares or held in cash, which
additional Shares or cash, as the case may be, may be subject to the same
restrictions as the underlying Award or such other restrictions as the Committee
may determine.
9.
Deferred Shares.
The
Committee may authorize grants of Deferred Shares to Participants upon such
terms and conditions as the Committee may determine in accordance with the
following provisions:
9.1.
Deferred Transfer of Shares. Each grant shall constitute the agreement by the
Company to issue or transfer Shares to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may
specify.
9.2.
Consideration. Each grant may be made without additional consideration from
the
Participant or in consideration of a payment by the Participant that is less
than the Fair Market Value on the Grant Date.
10.
Vesting.
10.1.
In
General. Each grant of Options and Stock Appreciation Rights shall specify
the
period of continuous employment by the Company or any Subsidiary, or service
to
the Company or any Subsidiary (and in the case of a Non-employee Director,
service on the Board), of the Participant that is necessary before such Options
or Stock Appreciation Rights, or installments thereof, shall become exercisable.
Each grant of Restricted Shares shall specify the period during which such
Restricted Shares shall be subject to a “substantial risk of forfeiture” within
the meaning of Code Section 83, and each grant of Deferred Shares shall specify
the Deferral Period to which such Deferred Shares shall be subject. Each grant
of such Award may provide for the earlier exercise of rights, termination of
a
risk of forfeiture or termination of a Deferral Period in the event of a Change
in Control or similar transaction or event.
10.2.
Restrictions on Transfer of Restricted Shares. Each grant of Restricted Shares
shall provide that, during the period for which a substantial risk of forfeiture
is to continue, the transferability of the Restricted Shares shall be prohibited
or restricted in the manner and to the extent prescribed by the Committee on
the
Grant Date. Such restrictions may include, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the hands
of
any transferee.
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11.
Dividends and Other Ownership Rights.
11.1.
Restricted Shares. Unless otherwise determined by the Committee, an Award of
Restricted Shares shall entitle the Participant to dividend, voting and other
ownership rights during the period for which a substantial risk of forfeiture
is
to continue.
11.2.
Deferred Shares. Unless otherwise determined by the Committee, during the
Deferral Period, the Participant shall not have any right to transfer any rights
under an Award of Deferred Shares, shall not have any rights of ownership in
the
Deferred Shares and shall not have any right to vote such Shares.
12.
Transferability.
12.1.
Transfer Restrictions. Except as provided in Section 12.2, no Award granted
shall be transferable by a Participant other than by will or the laws of descent
and distribution, and Options and Stock Appreciation Rights shall be exercisable
during a Participant’s lifetime only by the Participant or, in the event of the
Participant’s legal incapacity, by his or her guardian or legal representative
acting in a fiduciary capacity on behalf of the Participant under state law.
Any
attempt to transfer an Award in violation of this Plan shall render such Award
null and void.
12.2.
Limited Transfer Rights. The Committee may expressly provide in an Award
Agreement (or an amendment to an Award Agreement) that a Participant may
transfer such Award (other than an Incentive Stock Option), in whole or in
part,
to a spouse or lineal descendant (a “Family Member”), a trust for the exclusive
benefit of Family Members, a partnership or other entity in which all the
beneficial owners are Family Members, or any other entity affiliated with the
Participant that may be approved by the Committee. Subsequent transfers of
Awards shall be prohibited except in accordance with this Section 12.2. All
terms and conditions of the Award, including without limitation provisions
relating to termination of the Participant’s employment or service with the
Company or a Subsidiary, shall continue to apply following a transfer made
in
accordance with this Section 12.2. In order for a transfer to be effective,
a
Participant must agree in writing prior to the transfer on a form provided
by
the Company to pay any and all payroll and withholding taxes due upon exercise
of the transferred Option. In addition, prior to the exercise of a transferred
Option by a transferee, arrangements must be made by the Participant with the
Company for the payment of all payroll and withholding taxes. Finally, the
Company shall be under no obligation to provide a transferee with any notice
regarding the transferred Awards held by the transferee upon forfeiture or
any
other circumstance.
12.3.
Restrictions on Transfer. Any Award granted may provide that all or any part
of
the Shares that are (a) to be issued or transferred by the Company upon the
exercise of Options or Stock Appreciation Rights, upon termination of the
Deferral Period applicable to Deferred Shares or upon payment under any grant
of
Performance Shares or Performance Units, or (b) no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 10, shall be subject to further restrictions upon transfer, including
restrictions relating to any minimum Share ownership requirements imposed by
the
Company with respect to a Participant.
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13.
Award Agreement.
Each
grant under the Plan shall be evidenced by an Award Agreement, which shall
describe the subject Award, state that the Award is subject to all of the terms
and conditions of this Plan and contain such other terms and provisions as
the
Committee may determine consistent with this Plan.
14.
Adjustments.
The
Committee shall make or provide for appropriate adjustments in the (a) number
of
Shares covered by outstanding Options, Stock Appreciation Rights, Deferred
Shares, Restricted Shares and Performance Shares granted hereunder, (b) prices
per Share applicable to such Options and Stock Appreciation Rights, and (c)
kind
of Shares covered thereby (including Shares of another issuer), as the Committee
in its sole discretion may in good faith determine to be equitably required
in
order to prevent dilution or enlargement of the rights of Participants that
otherwise would result from (x) any stock dividend, stock split, combination
or
exchange of Shares, recapitalization or other change in the capital structure
of
the Company, (y) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization, partial or complete liquidation or other distribution
of assets (other than a normal cash dividend), issuance of rights or warrants
to
purchase securities, or (z) any other corporate transaction or event having
an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Committee may provide in substitution for any or
all
outstanding Awards such alternative consideration as it may in good faith
determine to be equitable under the circumstances and may require in connection
therewith the surrender of all Awards so replaced. The Committee may also make
or provide for such adjustments in each of the limitations specified in Section
3 as the Committee in its sole discretion may in good faith determine to be
appropriate in order to reflect any transaction or event described in this
Section 14. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding
for
all purposes.
15.
Fractional Shares.
The
Company shall not be required to issue any fractional Shares pursuant to this
Plan. The Committee may provide for the elimination of fractions or for the
settlement thereof in cash.
16.
Withholding Taxes.
The
Company shall be entitled to deduct from any payment under the Plan, regardless
of the form of such payment, the amount of all applicable income and employment
taxes required by law to be withheld with respect to such payment or may require
the Participant to pay to it such tax prior to and as a condition of the making
of such payment. In accordance with any applicable administrative guidelines
it
establishes, the Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from an Award by withholding from any payment
of
Shares due as a result of such Award, or by permitting the Participant to
deliver to the Company Shares having a Fair Market Value, as determined by
the
Committee, equal to the minimum amount of such required withholding taxes.
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17.
Certain Terminations of Employment, Hardship and Approved Leaves of
Absence.
In
the
event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Committee, other
termination of employment or a leave of absence that is approved by the
Committee, or in the event of hardship or other special circumstances that
are
approved by the Committee, of a Participant who holds an Option or Stock
Appreciation Right that is not immediately and fully exercisable, any Restricted
Shares as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, any Deferred Shares as to which the
Deferral Period is not complete, any Performance Shares or Performance Units
that have not been fully earned, or any Shares that are subject to any transfer
restriction pursuant to Section 12.3, the Committee may, in its sole discretion,
take any action that it deems to be equitable under the circumstances or in
the
best interests of the Company, including without limitation waiving or modifying
any limitation or requirement with respect to any Award and providing for
post-termination exercise periods with respect to any Option or Stock
Appreciation Right.
18.
Termination for Cause.
A
Participant who is terminated for Cause shall, unless otherwise determined
by
the Committee, immediately forfeit, effective as of the date the Participant
engages in such conduct, all unexercised, unearned, and/or unpaid Awards,
including, but not by way of limitation, Awards earned but not yet paid or
exercised, all unpaid dividends and all interest, if any, accrued on the
foregoing.
19.
Foreign Participants.
In
order
to facilitate the making of any grant or combination of grants under this Plan,
the Committee may provide for such special terms for Awards to Participants
who
are foreign nationals, or who are employed by or perform services for the
Company or any Subsidiary outside of the United States of America, as the
Committee may consider necessary or appropriate to accommodate differences
in
local law, tax policy or custom. Moreover, the Committee may approve such
supplements to, or amendments, restatements or alternative versions of, this
Plan as it may consider necessary or appropriate for such purposes without
thereby affecting the terms of this Plan as in effect for any other
purpose.
20.
Amendments and Other Matters.
20.1.
Plan Amendments. This Plan may be amended from time to time by the Board, but
no
such amendment shall: (a) increase any of the limitations specified in Section
3, other than to reflect an adjustment made in accordance with Section 14,
(b)
change the class of persons eligible to receive grants of Awards or the types
of
Awards available under the Plan, or (c) increase the benefits to Participants
under the Plan, in any such case without the further approval of the
stockholders of the Company. The Board will also condition any amendment on
the
approval of the stockholders of the Company if such approval is necessary with
respect to the applicable listing or other requirements of a national securities
exchange or other applicable laws, policies or regulations, and the Board may
condition any amendment on the approval of the stockholders of the Company
if
such approval is deemed advisable to comply with such requirements.
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20.2.
Award Deferrals. An Award Agreement may provide that payment of any Award,
dividend, or any portion thereof, may be deferred by a Participant until such
time as the Committee may establish. All such deferrals shall be accomplished
by
the delivery of a written, irrevocable election by the Participant prior to
the
time established by the Committee for such purpose, on a form provided by the
Company. Deferred Awards may also be credited with interest, at such rates
to be
determined by the Committee.
20.3.
Conditional Awards. The Committee may condition the grant of any Award or
combination of Awards on the surrender or deferral by the Participant of his
or
her right to receive a cash bonus or other compensation otherwise payable by
the
Company or any Subsidiary to the Participant.
20.4.
Repricing Prohibited. No Award may be repriced, replaced, regranted through
cancellation, or modified, directly or indirectly, without the approval of
the
stockholders of the Company, provided that nothing herein shall prevent the
Committee from taking any action provided for in Section 14.
20.5.
Amendments to Awards. Subject to the requirements of Section 20.4, the Committee
may at any time unilaterally amend any unexercised, unearned, or unpaid Award,
including, but not by way of limitation, Awards earned but not yet paid, to
the
extent it deems appropriate (including for the purposes of compliance with
local
laws and regulations or to avoid costly government filings); provided, however,
that except to the extent that the Committee determines that an amendment is
necessary to avoid a penalty tax under Section 409A of the Code, any such
amendment which, in the opinion of the Committee, is adverse to the Participant
shall require the Participant’s consent.
20.6.
No
Employment Right. This Plan shall not confer upon any Participant any right
with
respect to continuance of employment or other service with the Company or any
Subsidiary and shall not interfere in any way with any right that the Company
or
any Subsidiary would otherwise have to terminate any Participant’s employment or
other service at any time.
20.7.
Compliance with Section 409A of the Code. Notwithstanding any other provision
of
the Plan to the contrary, (a) to the extent that any payment of or in connection
with an Award constitutes a payment under a “non-qualified deferred compensation
plan,” as defined in Section 409A of the Code, such payment shall be made in
compliance with Section 409A of the Code and (b) any adjustment of Shares or
prices per Share or substitution of Awards pursuant to Section 14 and any
modification of Awards pursuant to Section 17 shall not cause the affected
Award
to violate the requirements of Section 409A of the Code.
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21.
Change in Control.
Except
as
otherwise provided at the time of grant in an Award Agreement relating to a
particular Award and subject to the requirements of Section 14, if a Change
in
Control occurs, then:
21.1.
The
Participant’s Restricted Shares, Deferred Shares, Performance Shares,
Performance Units or other Share-based Awards that were forfeitable shall,
unless otherwise determined by the Committee prior to the occurrence of the
Change in Control, become nonforfeitable and, to the extent applicable, shall
be
converted into Shares.
21.2.
Any
unexercised Option or Stock Appreciation Right, whether or not exercisable
on
the date of such Change in Control, shall thereupon be fully exercisable and
may
be exercised, in whole or in part.
21.3.
Notwithstanding Sections 21.1 and 21.2, in the event of a Change in Control,
the
Committee may in its discretion cancel any outstanding Awards and (a) pay to
the
holders thereof, in cash or stock, or any combination thereof, the value of
such
Awards based upon the price per share of Stock received or to be received by
other stockholders of the Company in the event or (b) arrange for fully vested
substitute awards to be granted to the holders thereof, denominated in the
equity of the acquirer or an affiliate thereof, provided such substitute awards
substantially preserve the value of the substituted Awards.
21.4.
If
a Change in Control occurs during the term of one or more Performance Periods
for which the Committee has granted performance-based Awards pursuant to the
provisions of Section 5, the term of each such Performance Period (hereinafter
a
“current Performance Period”) shall immediately terminate upon the occurrence of
such Change in Control. Upon a Change in Control, for each current Performance
Period and each completed Performance Period for which the Committee has not
on
or before such date made a determination as to whether and to what degree the
Performance Objectives for such period have been attained (hereinafter a
“completed Performance Period”), it shall be assumed that the Performance
Objectives have been attained at a level of one hundred percent (100%) or the
equivalent thereof. A Participant in one or more current Performance Periods
shall be considered to have earned and, therefore, be entitled to receive,
a
prorated portion of the Award previously granted to him for each such current
Performance Period. Such prorated portion shall be determined by multiplying
the
number of Performance Shares or Performance Units (or other performance-based
Awards), as the case may be, granted to the Participant by a fraction, the
numerator of which is the total number of days that have elapsed since the
beginning of the current Performance Period, and the denominator of which is
the
total number of days in such current Performance Period. A Participant in one
or
more completed Performance Periods shall be considered to have earned and,
therefore, be entitled to receive all the Performance Shares or Performance
Units (or other performance-based Awards), as the case may be, previously
granted to him during each such completed Performance Period.
21.5.
Unless otherwise provided by the Committee, at any time, upon a Change in
Control, any Awards deferred by a Participant under Section 20.2, but for which
he or she has not received payment as of such date, shall be paid by the 90th
day following the Change in Control.
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22.
Effective Date.
This
Plan
shall become effective upon adoption by the Board of Directors. The grant of
Incentive Stock Options under the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted excluding Incentive Stock Options issued in substitution
for
outstanding Incentive Stock Options pursuant to Section 424(a) of the Code.
Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws. The Administrator may grant Incentive Stock Options under
the
Plan prior to approval by the stockholders, but until such approval is obtained,
no such Incentive Stock Option shall be exercisable. In the event that
stockholder approval is not obtained within the twelve (12) month period
provided above, all Incentive Stock Options previously granted under the Plan
shall be exercisable as Non-Qualified Stock Options.
23.
Termination.
This
Plan
shall terminate on the tenth anniversary of the date upon which it is approved
by the stockholders of the Company, and no Award shall be granted after that
date.
24.
Arbitration of Disputes.
Any
and
all disputes arising out of or relating to the Plan or any Award Agreement
(or
breach thereof) shall be resolved exclusively through binding arbitration in
the
State of New York in accordance with the rules of the American Arbitration
Association then in effect.
25.
Regulatory Approvals and Listings.
Notwithstanding
anything contained in this Plan to the contrary, the Company shall have no
obligation to issue or deliver certificates of Shares evidencing Awards or
any
other Award resulting in the payment of Shares prior to (i) the obtaining of
any
approval from any governmental agency which the Company shall, in its sole
discretion, determine to be necessary or advisable, (ii) the admission of such
Shares to listing on the stock exchange or market on which the Shares may be
listed, and (iii) the completion of any registration or other qualification
of
said Shares under any state or federal law or ruling of any governmental body
which the Company shall, in its sole discretion, determine to be necessary
or
advisable. The Committee may, from time to time, impose additional restrictions
upon an Award, including but not limited to, restrictions regarding tax
withholdings and restrictions regarding the Participant’s ability to exercise
Awards under the Company’s broker-assisted stock option exercise
program.
26.
No Right, Title, or Interest in Company Assets.
No
Participant shall have any rights as a stockholder of the Company as a result
of
participation in the Plan until the date of issuance of a stock certificate
in
his or her name, and, in the case of Restricted Shares, such rights are granted
to the Participant under the Plan. To the extent any person acquires a right
to
receive payments from the Company under the Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific assets of
the
Company. All of the Awards granted under the Plan shall be
unfunded.
|
XL
GENERATION INTERNATIONAL INC.
|
2006
EQUITY INCENTIVE PLAN
|
27.
No Guarantee of Tax Consequences.
Notwithstanding
any other provision of the Plan, no person connected with the Plan in any
capacity, including, but not limited to, the Company and its directors,
officers, agents and employees, makes any representation, commitment, or
guarantee that any tax treatment, including, but not limited to, federal, state
and local income, estate and gift tax treatment, will be applicable with respect
to the tax treatment of any Award, any amounts deferred under the Plan, or
paid
to or for the benefit of a Participant under the Plan, or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan, or that any of the foregoing amounts will not be
subject to the 20% penalty tax and interest under Section 409A of the
Code.
28.
Governing Law.
The
validity, construction and effect of this Plan and any Award hereunder will
be
determined in accordance with the laws of the State of Nevada.
#
#
#
AGREEMENT
REGARDING THE ADVANCES AND LOANS
BY
ALBERT
BEERLI FOR THE XL TURF PROJECT
The
undersigned, Alain Lemieux and Albert Beerli, hereby make the following
statement:
|
1.
|
Alain
Lemieux accepts and recognizes that the amount of CHF 108,000 is owed
to
Albert Beerli for the advances made to the project XL TURF during the
calendar year 2003. This amount of CHF 108,000 includes an amount of
CHF
55,000 that has already been addressed and treated in a separate document
dated November 2003.
|
|
2.
|
Alain
Lemieux accepts and recognizes that an additional amount of CHF 45,000
is
owed to Albert Beerli for the advances made to the project XL TURF
for the
period beginning January 1, 2004 and ending March 11,
2004.
|
|
3.
|
Alain
Lemieux as the representative of the holders of 90% of the shares of
the
capital of XL GENERATION AG undertakes that XL GENERATION AG will honor
and pay the amount of 153,000 CHF at a date where the cash flow of
XL
GENERATION AG will be in a position to pay that amount without any
adverse
effect on the financial situation of XL GENERATION AG for its day to
day
operation and business.
|
|
4.
|
The
loan Agreement regarding the amount of 55,000 CHF dated November, 2003
is
hereby cancelled and replaced by the present
agreement.
|
|
5.
|
If
for any reason, XL GENERATION AG, is closed or otherwise not used in
the
project XL TURF, Alain Lemieux undertakes that any other company used
in
the project XL TURF will undertake to be bound by covenant and obligations
provided in this agreement.
|
|
/s/ Alain Lemieux
|
|
/s/
Albert Beerli
|
|
Alain
Lemieux
|
|
Albert
Beerli
|
|
November 25, 2004
|
|
November
25,
2004
|
Exhibit
10.41
Summary
of terms and conditions of Loan Agreement by and between XL Generation AG and
Albert Beerli
In
November of 2004, XL Generation AG, a wholly owned subsidiary of XL Generation
International Inc. (the “Corporation”) entered into an agreement with Mr. Albert
Beerli (the “Agreement”). Mr. Beerli is a stockholder of the Corporation who
became a director of the Corporation on March 17, 2006. The Agreement
acknowledges that XL Generation AG had received loans totaling 153,000 Swiss
Francs (approximately US $117,644) from Mr. Beerli during the period from the
inception of XL Generation AG until March 11, 2004. During 2004 and 2005, Mr.
Beerli continued to support XL Generation AG with additional funds through
the
payments of overhead for XL Generation AG’s offices in Zug, Switzerland.
Mr.
Beerli provides XL Generation AG office space at his offices pursuant to a
written lease dated April 1, 2004, for which he currently charges 2,000 Swiss
Francs per month (approximately $1,538). The total amount charged by Mr. Beerli
to XL Generation AG for rent in 2005 was 24,000 Swiss Francs (approximately
$18,454), which amounts are added each month to the total amount due to
Beerli.
The
total balance due to Mr. Beerli at December 31, 2005 was $676,873.
XL
Generation AG and Mr. Beerli intend to continue these advances by Mr. Beerli
on
a month-to-month basis. XL Generation AG and Mr. Beerli do not currently have
any plans to enter into a written agreement regarding advances by Mr. Beerli
to
XL Generation AG.
#
#
#
Office
Lease Agreement
|
Landlord:
|
Albert
Beerli, Industriestrasse 12, 6304 Zug
|
|
|
|
|
Tenant:
|
XL
Generation AG
|
|
Property:
|
Industriestrasse
12, 6300 Zug
|
|
|
|
|
To
rent:
|
Office,
3 rooms, furnished
|
|
|
with
telephone, fax, Internet connection
|
|
|
and
3 computers
|
|
|
|
|
Access
to:
|
Kitchen,
toilet
|
|
|
|
|
To
be used for:
|
Office
for 5 Employees of XL Generation AG
|
|
Commencement
Date:
|
April
1, 2004
|
|
|
|
|
Termination:
|
Notice
of termination may be given by either party with at least one calendar
month’s notice, with the effectiveness of such termination as of the
end
of such calendar quarter.
|
|
|
|
|
Earliest
cancellation:
|
September
30, 2004
|
|
Monthly
rent:
|
As
set forth on Schedule A attached hereto and subject to increases
as set
forth therein.
|
|
|
Office
services such as heating, water, cleaning and electricity are included
in
the monthly rent.
|
This
Office Lease Agreement (this “Agreement”) may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
This
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof. This Agreement
cannot be waived, modified, altered or amended except by a writing signed by
all
the parties, specifically referencing this Agreement.
This
Agreement shall be governed by the laws of Switzerland.
Dated
as of:
April
1,
2004
|
Landlord:
|
|
|
Tenant:
|
|
|
|
|
|
|
Albert Beerli
|
|
|
XL Generation
AG
|
|
|
|
|
|
|
/s/ Albert
Beerli
|
|
|
/s/ Albert
Beerli
|
Albert
Beerli
|
|
|
Name:
Albert Beerli
|
|
|
|
|
Title:
Director
|
Schedule
A
|
|
|
|
|
Rental
Period
|
|
Rental
Rate Charged During Rental Period (in Swiss
Francs)
|
|
To
March 31 , 2004
|
|
1,000
|
|
April
1, 2004 - December 31, 2004
|
|
1,500
|
|
January
1, 2005 -
|
|
2,000
|
MEMORANDUM
The
undersigned hereby acknowledge the following in respect of that certain company
incorporated under Part 1A of the Quebec Companies Act as
XL
Generation Canada Inc.
(“XLGC”):
|
1.
|
XLGC
is wholly owned by Mr. Albert
Beerli;
|
|
2.
|
XLGC
is a corporation without any active operating activities on its
own;
|
|
3.
|
XLGC
owns a bank account and acts solely as an agent in respect of such
bank
account to facilitate pass-through transactions on behalf of XL Generation
AG (“XLGAG”) and XL Generation International, Inc. (“XLGI”) (collectively,
the “Pass-Through Transactions”);
|
|
4.
|
XLGC
has not, directly or indirectly, entered into any agreement, either
written or verbal, with Mr. Beerli for any purpose during any of
the
periods which are included in any of the consolidated audited financial
statements of XLGI;
|
|
5.
|
XLGC
has not, directly or indirectly, paid, delivered or granted to Mr.
Beerli
any compensation or remuneration of any nature or kind for any purpose,
reason or matter whatsoever, including, without limitation, assuming
any
liability or paying any obligation on behalf of Mr. Beerli, during
any of
the periods which are included in the audited financial statements
of
XLGI;
|
|
6.
|
Mr.
Beerli has not, directly or indirectly, received any equity dividends
or
distributions of any nature or kind from XLGC within any of the periods
which are included in the audited financial statements of
XLGI;
|
|
7.
|
Mr.
Beerli will not receive any financial, equitable or beneficial interest
in
respect of the Pass-Through Transactions and Mr. Beerli irrevocably
disclaims any such interest therein, to the benefit of
XLGI.
|
|
8.
|
XLGC
undertakes not to enter into any active operating activities other
than
the Pass-Through Transactions without written consent from
XLGI;
|
|
9.
|
Mr.
Albert Beerli undertakes not to directly or indirectly enter into
any
transactions of any nature or kind with or through XLGC or obtain
any
equitable or beneficial interest of any nature derived, directly
or
indirectly, from or through XLGC, except with the written consent
of
XLGI.
|
|
10.
|
It
is possible that in the near future the ownership of XLGC will return
to
XLGeneration AG for $1,00 and that the management agreement of 2005
will
be extended for 2006.
|
Confidential
Memorandum re XL Generation Canada Inc.
|
11.
|
The
undersigned acknowledge and agree that this document and all related
documents are drafted in English only/ Vous consentez à ce que le présent
document et les documents afférents soient rédigés uniquement en
anglais.
|
[
Continued ]
Confidential
Memorandum re XL Generation Canada Inc.
THIS
CONFIDENTIAL MEMORANDUM IS HEREBY DULY ACKNOWLEDGED BY THE UNDERSIGNED AS OF
THIS 10TH DAY OF APRIL 2006:
XL
GENERATION CANADA INC.
|
By:
|
/s/
Albert Beerli
|
|
|
|
Name: Albert Beerli
|
|
ALBERT
BEERLI, INDIVIDUALLY
|
By:
|
/s/
Albert Beerli
|
|
|
|
Name: Albert Beerli
|
|
XL
GENERATION INTERNATIONAL INC.
|
By:
|
/s/
A.C. Gilmour
|
|
|
|
Name: A.C. GIlmour
Title: Board of Directors
|
|
XL
GENERATION INTERNATIONAL INC.
|
By:
|
/s/ F.
Munck
|
|
|
|
Name: F Munck
Title: CFO
|
|
XL
GENERATION AG.
|
By:
|
/s/
Albert Beerli
|
|
|
|
Name: Albert Beerli
Title: Director
|
|
Exhibit
A to
Confidential
Memorandum re XL Generation Canada Inc.
Management
Agreement
The
terms
of the attached Management Agreement, entered into effective as of February
of
2004, have been subsequently altered by the transfer of the ownership of XL
Generation Canada Inc. from XL Generation AG to Mr. Albert Beerli, as set forth
in the Confidential Memorandum.
MANAGEMENT
FEE AGREEMENT
EFFECTIVE
AS OF February, 2004
|
|
XL
Generation AG,
a
company duly created and organized under the legislation of Switzerland,
having represented by Mr. Alain Lemieux who declares being authorized
to
sign the present document;
(Hereinafter
referred to as the “XLG”)
|
|
AND:
|
|
|
|
XL
Generation Canada inc.,
a
company duly created under the Laws of Canada, having represented
by Mr.
Daniel Chaussé who declares being authorised to sign the present
documents;
(Hereinafter
referred to as the “Canada”)
|
RECITALS
A.
XLG
has
appointed Polyprod to manufacture turf and non turf sport surfaces
including
landscape and playground.
B.
XLG
maintains a bureau of “liaison” in Montreal mainly for customer after sale
support,
support to agent and distributor and for marketing and to oversee Polyprod’s
manufacturing process.
C.
XLG
staff
in Montreal, has no power of any kind to close sales with client.
D.
Some
sales of XLG may be closed with Canadian Customer and GST and PST
should
be
collected by the Vencor but XLG does not have Registration Number for GST and
PST.
E.
Canada
is
willing, in consideration of a fee, to act as the representative of XLG in
Canada
for some technical or clerical issue regarding its activity in Canada which
does
not attract business income but which is important for XLG.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing, the agreements contained herein,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1.
CANADA
AS THE REPRESENTATIVE OF XLG IN CANADA
|
1.1
|
XLG
hereby appoints Canada, which accept, as the representative of XLG
for the
following financial issues:
|
|
|
1.1.1
|
To
register Canada with the Tax Authorities in respect of Payroll
taxes,
GST
and PST;
|
|
|
1.1.2
|
To
employ, under its name, all the staff required by XLG to be hired
in
Canada;
|
|
|
1.1.3
|
To
pay the salary of XLG’s staff appointed to Canada and including all the
payroll taxes and other similar taxes payable by Canadian employees
in
normal circumstances;
|
|
|
1.1.4
|
To
reimburse expenses, from time to time, to the employees of XLG upon
authorization of XLG;
|
|
|
1.1.5
|
To
pay other fees, including consulting fees, required by XLG to third
parties;
|
|
|
1.1.6
|
To
pay administrative fee charged by Polyprod for the use of the premises
of
Polyprod by XLG and other charges related to the
premises;
|
|
|
1.1.7
|
To
maintain a separate bank account related to issues addressed in this
document;
|
|
|
1.1.8
|
Generally
to act as the representative of XLG regarding Polyprod and regarding
transfer of money that can be transferred on behalf of XLG to Canada
and
from Canada to Polyprod
|
2.
CANADA
AS VENDOR OF XLG’S PRODUCT IN CANADA
|
2.1
|
For
all the sales in the Canadian territory, Canada shall be the Vendor
in
order to avoid any GST and PST problems with the Tax
Authorities.
|
|
2.2
|
The
profit derived from the Canadian sales will be the ownership of
Canada.
|
|
2.3
|
Section
2.2 shall apply as long as Canada will remain the subsidiary of XLG.
In
such a circumstances, Canada may continue acting on behalf of XLGeneration
AG for any sales in Canada or which, Canada will use its own registration
number although the proceed of the sales would remain the ownership
of
XLGeneration AG. For the period ending December 31
st
of
each year, Canada shall provide to XLGeneration AG with a summary
of the
net amount (gross sales minus all cost paid by Canada on behalf of
XLGeneration AG). This summary shall be provided to XLGeneration
AG before
January 31st of the following year.
|
|
2.4
|
From
the moment Canada is not a subsidiary of XLG, XLG hereby reserves
its
right to appoint another a third party to make to sales for the Canadian
territory to keep those sales for
itself.
|
3.
MONEY
CONSIDERATION
|
3.1
|
In
consideration for the services to be rendered by Canada to XLG, XLG
is
entitled to a fee to be determined between the parties but that shall
represent the fair market value of such services if those services
would
be rendered by a third party.
|
|
3.2
|
However,
in the determination of the fees payable under section 3.1, Canada
shall
consider the fact that XLG is granting Canada with the right of doing
sales in Canada to compensate in whole or in part the services to
be
rendered in Article 1 as long as Canada remains a subsidiary of
XLGenration AG.
|
4.
TERM
The
term
of this Agreement shall be for an indefinite time but may be terminated at
any
time by a written notice sent to the other party at least 2 months of the
termination date.
5.
NOTICES
Any
offer, acceptance, rejection, notice, consent, request, authorization,
permission, direction or other instrument required or permitted to be given
hereunder shall be in writing and given by delivery or sent by fax or similar
telecommunications device and addressed:
If
addressed to XL Generation Canada inc.:
335
Broadway
Montreal,
Canada
Attention:
Daniel Chaussé
If
addressed to XL Generation AG:
Sumfptrasse
32
Zug,
Switzerlang
Attention:
Albert Beerli
or
such
other address or telephone number as the party to whom such notice or other
communication is to be given shall have specified in writing to the other party
pursuant to this Section. Any notice or communication given under this Section
shall be deemed to have been given as of the date it was so placed in the hands
of any express courier service, or faxed, or as of the date of delivery in
person.
6.
CORPORATE
AUTHORITY
The
warrant parties represent that they have taken all necessary corporate actions
to authorize the execution, delivery and performance of this Agreement and
the
transactions contemplated thereby, and that the respective representative
executing this Agreement on their behalf is duly authorized to act in such
capacity. Licensor further warrants and represents that the execution, delivery
and performance of this Agreement and the transactions contemplated thereby
have
been duly authorized and approved by Licensor’s Board of Directors and by
Licensor’s shareholders.
7.
LEGAL
REPRESENTATION; UNDERSTANDING OF AGREEMENT
In
entering into this Agreement, the parties represent that they have relied upon
the legal advice of their own respective attorneys, who are the attorneys of
their own choice. The parties further represent that the terms of this Agreement
have been completely read and explained to them by their respective attorney
and
that such terms are fully understood and voluntarily accepted by said
parties.
8.
BINDING
AGREEMENT
This
Agreement shall be binding upon and inure to the benefit of, the undersigned
parties and their respective officers, directors, shareholders, employees,
agents, attorneys, independent contractors, successors and assigns.
9.
ENTIRE
AGREEMENT; AMENDMENT
This
Agreement and the attached exhibit contain the entire agreement of the parties
with respect to the subject matter of this Agreement and supersede all prior
agreements or understandings, written or oral, between the parties with respect
thereto. Any waiver of any term or condition of this Agreement, or any
amendment, modification or supplementation of this Agreement shall be effective
only if it is in writing and signed by all of the parties.
10.
SEVERABILITY
If
a
court of competent jurisdiction finds that any part of this Agreement is invalid
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and the
remaining provisions of this Agreement shall not, at the election of the party
for whose benefit the provision exists, be in any way impaired.
11.
HEADINGS
The
headings used in this Agreement are for convenience of reference only and shall
not be used in construing the provisions of the Agreement.
12.
GOVERNING
LAW
This
Agreement shall be governed by and interpreted in accordance with the laws
in
force in Switzerland except that no doctrine of choice of law shall be used
to
apply the laws of any other state or jurisdiction.
13.
COUNTERPARTS
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall be deemed one and the same
instrument.
EXECUTED
in FOUR (2) original copies and on the respective dates appearing under the
parties’ signatures below and effective as of the date upon which all of the
parties have signed this Agreement.
|
XLGENERATION AG
|
XL
GENERATION CANADA INC.
|
|
|
|
|
(s) Alain Lemieux
|
(s)
Daniel Chaussé
|
|
|
|
|
Alain Lemieux
|
Daniel
Chaussé
|
STOCK
PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), dated February 23
rd
,
2006,
is entered into by and between Stadium SA, an entity organized pursuant to
the
laws of France and having its principal office at Le Zand Put Houck, France
(“Stadium”), XL Generation AG, an entity established pursuant to the laws of
Switzerland and having its principal office at 32 Sumfpstrasse, Zug, Switzerland
(“XLG”) and XL Generation International Inc., a Nevada corporation having its
principal offices at
460
Saint-Gabriel, Suite 21, Montreal, Quebec H2Y 2Z9 Canada
(the
“Company”).
W
I T N E
S S E T H :
WHEREAS,
on or about July 28, 2005, XLG and Stadium executed an agreement (the “July 28,
2005 Agreement”) setting forth their relative rights and obligations, and the
relative rights and obligations of the Terenvi Society (“Terenvi”) in connection
with certain transactions;
WHEREAS,
the Company is the holding corporation of XLG, and has agreed to intervene
in
the July 28, 2005 Agreement;
WHEREAS,
Terenvi loaned XLG 1,600,000 euros pursuant to a loan agreement dated December
16, 2004 (the “Terenvi Loan Agreement”);
WHEREAS,
Terenvi has transferred its rights and obligations pursuant to the Terenvi
Loan
Agreement to Stadium;
WHEREAS,
the Soreve Society (“Soreve”) and XLG entered into an exclusive distribution
agreement on April 13, 2004 (the “Soreve Distribution Agreement”);
WHEREAS,
Soreve has transferred its rights and obligations pursuant to the Soreve
Distribution Agreement to Stadium;
WHEREAS,
on August 19, 2005, the Company entered into a Share Exchange Agreement with
XLG, pursuant to which the Company acquired all of the issued and outstanding
shares of common stock of XLG in exchange for the issuance at closing of an
aggregate of 15 Million shares of restricted common stock of the Company;
and
WHEREAS,
the parties hereto hereby wish to modify Stadium’s obligations to the Company,
so as to exchange such obligations for shares of restricted common stock of
the
Company.
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1.
Purchase
and Sale of Restricted Common Stock.
(a)
Subject
to the terms and conditions stated herein, at the Closing (as defined below),
the Company hereby agrees to issue to Stadium an aggregate of 1,236,824 shares
(the “Shares”) of the restricted common stock of the Company, in lieu of any and
all amounts owed by the Company or XLG as follows:
(1)
846,884
shares of the restricted common stock of the Company in lieu of the sum in
the
amount of 1,600,000 euros (which amount the parties hereto hereby deem to be
equal to $1,875,000, based on exchange rate of 1.1719 euros to $1.00) and in
respect of which such number of the shares of restricted common stock of the
Company have a purchase price of $2.214 per share.
(2)
389
940
shares of the restricted common stock of the Company in lieu of the sum in
the
amount of 1,350,000 euros (which amount the parties hereto hereby deem to be
equal to $1,616,105, based on exchange rate of 1.1971 euros to $1.00) and in
respect of which such number of the shares of restricted common stock of the
Company have a purchase price of $4.051 per share.
(b)
In
consideration for the issuance and delivery of the Shares, t
he
parties hereto agree that the Shares issued to Stadium are deemed satisfy any
and all amounts and obligations due and owed to Stadium by XLG and the Company,
and
Stadium
hereby releases and discharges XLG and the Company and each of their respective
officers, directors, affiliates, administrators, successors and assigns from
all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law or equity, against which
Stadium, its successors and assigns ever had, now have or hereafter can, shall
or may, have for, upon, or by reason of any matter, cause or thing whatsoever
at
any time prior to the date of this Agreement or hereafter. For purposes of
clarity, the satisfaction and release by Stadium of all obligations of XLG
and
the Company
shall
include, but not be limited to, any and all amounts advanced or incurred by
Stadium for the following purposes:
|
|
(1)
|
Financing
of the development of sports facilities, including those at Dunfermline
and Vancouver;
|
|
|
(2)
|
Advertising
expenses; and
|
|
|
(3)
|
Expenses
incurred pursuant to, or in connection with the Soreve Distribution
Agreement.
|
(c)
The
Closing
.
The
closing (the "Closing") of the transactions contemplated hereunder shall take
place simultaneously with the execution of this Agreement at such place as
the
parties may agree.
2.
Representations
and Warranties of Stadium.
Stadium
hereby
represents and warrants to the Company as follows as of the date hereof and
as
of the Closing Date:
(a)
Organization
and Standing
.
Stadium
is duly incorporated or organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization.
(b)
Authorization
and Power
.
Stadium
has the
requisite power and authority to enter into and perform this Agreement and
to
purchase the Shares being sold to it hereunder. The execution, delivery and
performance of this Agreement by
Stadium
and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate or partnership action, and no further
consent or authorization of
Stadium
or its
Board of Directors, stockholders, or partners, as the case may be, is required.
When executed and delivered by
Stadium
,
this
Agreement shall constitute the valid and binding obligation of
Stadium
enforceable against
Stadium
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c)
No
Conflict
.
The
execution, delivery and performance of this Agreement by
Stadium
and the
consummation by
Stadium
of the
transactions contemplated thereby and hereby do not and will not (i) violate
any
provision of
Stadium
’s
charter or organizational documents; (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which
Stadium
is a
party or by which Stadium’s respective properties or assets are bound; or (iii)
result in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to
Stadium
or by
which any property or asset of
Stadium
are
bound or affected, except, in all cases, other than violations pursuant to
clauses (i) or (iii) (with respect to federal and state securities laws) above,
except, for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
materially and adversely affect
Stadium
’s
ability to perform its obligations under this Agreement.
(d)
Acquisition
for Investment
.
Stadium
is purchasing the Shares for the purpose of investment and not with a view
to or
for sale in connection with distribution. Stadium does not have a present
intention to sell any of the Shares, and will only dispose of the Shares in
accordance with federal and state securities laws applicable to such
disposition.
Stadium
acknowledges that it (i) has such knowledge and experience in financial and
business matters such that
Stadium
is
capable of evaluating the merits and risks of
Stadium’
s
investment in the Company; (ii) is able to bear the financial risks associated
with an investment in the Shares; and (iii) has been given full access to such
records of the Company and the Subsidiaries and to the officers of the Company
and the Subsidiaries as it has deemed necessary or appropriate to conduct its
due diligence investigation.
(e)
Rule
144
.
Stadium
understands that the Shares must be held indefinitely unless such Shares are
registered under the Securities Act of 1933 as amended (the "Securities Act")
or
an exemption from registration is available.
Stadium
acknowledges that it is familiar with Rule 144 of the rules and regulations
of
the Commission, as amended, promulgated pursuant to the Securities Act
("
Rule
144
"),
and
that
Stadium
has been
advised that Rule 144 permits resales only under certain circumstances.
Stadium
understands that to the extent that Rule 144 is not available,
Stadium
will be
unable to sell any Shares without either registration under the Securities
Act
or the existence of another exemption from such registration
requirement.
(f)
General
.
Stadium
understands that the Shares are being offered and sold in reliance on a
transactional exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of
Stadium
set
forth herein in order to determine the applicability of such exemptions and
the
suitability of
Stadium
to
acquire the Shares.
Stadium
understands that no United States federal or state agency or any government
or
governmental agency has passed upon or made any recommendation or endorsement
of
the Shares.
(g)
No
General Solicitation
.
Stadium
acknowledges that the Shares were not offered to
Stadium
by means
of any form of general or public solicitation or general advertising, or
publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio;
or
(ii) any seminar or meeting to which
Stadium
was
invited by any of the foregoing means of communications.
Stadium
,
in
making the decision to purchase the Shares, has relied upon independent
investigation made by it and has not relied on any information or
representations made by third parties.
(h)
Qualified
Investor and Suitable Investment
.
Stadium
has
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Shares.
Stadium
is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and
Stadium
is not a
broker-dealer.
Stadium
acknowledges that an investment in the Shares is speculative and involves a
high
degree of risk.
(i)
Certain
Fees
.
Stadium
has not
employed any broker or finder or incurred any liability for any brokerage or
investment banking fees, commissions, finders' structuring fees, financial
advisory fees or other similar fees in connection with this
Agreement.
(j)
Independent
Investment
.
Stadium
has not
agreed to act with any other purchaser for the purpose of acquiring, holding,
voting or disposing of the Shares purchased hereunder for purposes of Section
13(d) under the Exchange Act, and
Stadium
is
acting independently with respect to its investment in the Shares.
(k)
Regulation
S Representations
.
Stadium
understands and acknowledges that the Shares have not been registered under
the
Securities Act and are being offered in reliance upon the exemptions provided
in
Regulation S of the Securities Act and the Rules and Regulations adopted
thereunder. Accordingly, the Shares may not be offered or sold in the U.S.
or to
U.S. persons (as such term is used in Regulation S) unless the Shares are
registered under the Securities Act, or an exemption for the regulation
requirements is available. Furthermore, hedging transactions involving the
Shares may not be conducted unless in compliance with the Securities Act.
Stadium
makes
the following representations and warranties to the Company with the intent
that
the same may be relied upon in determining the suitability of
Stadium
as a
purchaser of the Shares:
(1)
Stadium
did not
receive the offer for the Company for the Shares (the “Offer”), nor was it
solicited to purchase the Shares, in the United States; that this Agreement
has
not been executed or delivered by
Stadium
in the
United States, and neither
Stadium
nor any
person acting on behalf of
Stadium
has
engaged, directly or indirectly, in any negotiations with respect to the Offer
or this Agreement in the United States;
(2)
Stadium
is not a
U.S. person (i.e., (i) not an individual resident in the U.S.; (ii) a
partnership or corporation organized or incorporated in the United States;
(iii)
an estate of which any executor or administrator is a U.S. person; (iv) a trust
of which any trustee is a U.S. person; (v) a dealer holding an account for
a
customer; (vi) an agency or branch of a foreign entity located in the U.S.;
or
(vii) a partnership or corporation (A) organized or incorporated under the
laws
of any foreign jurisdiction and (B) formed by a U.S. person principally for
the
purpose of investing in securities not registered under the Securities Act
and
is not acquiring the Shares for the account or benefit of a U.S.
person;
(3)
Stadium
is not
purchasing the Shares as a result of or subsequent to (i) any advertisement,
article, notice or other communication published in any newspaper, magazine
or
other publication or broadcast over television or radio in the U.S.; (ii) any
promotional seminar or meeting in the U.S.; or (iii) any solicitation by a
person not previously known to him or it in connection with investments in
securities generally;
(4)
The
Shares have not been registered under the Securities Act or under any state
securities laws and that
Stadium
agrees
to transfer his, her or its Shares in the U.S. or to, or for the account or
benefit of, U.S. persons only if (i) the Shares are duly registered under the
Securities Act and all applicable state securities laws; or (ii) there is an
exemption from registration under the Securities Act, including any exemption
from the registration requirements of the Securities Act which may be available
pursuant to Rule 903 or Rule 904 under Regulation S, and all applicable state
securities laws; that prior to any such transfer the Company may require, as
a
condition affecting a transfer of the Shares, an opinion of counsel in form
and
substance satisfactory to the Company as to the registration or exemption
therefrom under the Securities Act and applicable state securities laws; that
the Company is under no obligation to register the Shares under the Securities
Act or any applicable state securities laws on its or his or her behalf or
to
assist it or him or her in complying with any exemption from such
registration;
(5)
Except
as
distributed by
Stadium
in
accordance with the requirements and provisions of Rule 903 of Regulation S
(i.e., the Shares may be allocated and distributed to
Stadium
’s
managed accounts so long as such distribution is made by
Stadium
in the
manner specified by Rule 903), the Shares will be acquired solely for the
account of
Stadium
,
for
investment purposes only, and not with a view to, or for sale in connection
with, any distribution thereof and with no present intention of distributing
or
reselling any part of the Shares; and
(6)
Stadium
agrees
not to sell, pledge, transfer, dispose of, or otherwise deal with or engage
in
hedging transactions involving, his or her Shares or any portion thereof except
as otherwise permitted herein, unless and until counsel for the Company shall
have determined that the intended disposition or action is permissible and
does
not violate the Securities Act or any applicable state securities laws, or
the
rules and regulations thereunder.
(l)
Jurisdiction
of Residence
.
Stadium’s
jurisdiction of corporate domicile as set forth herein is true and
correct.
(m)
Section
13(d) Compliance
.
Stadium
hereby
states that he/she is acquainted with the requirements of Section 13(d) of
the
Securities Exchange Act of 1934 and the rules and regulations issued thereunder.
Stadium
understands that, as a result of its acquisition of Shares, and in order to
comply with Section 13(d) and the rules and regulations issued thereunder,
Stadium
may be
required to file a Schedule 13D and hereby agrees to make such filing if so
required.
3.
Stock
Legend.
Each
certificate representing the Securities shall be stamped or otherwise imprinted
with legends substantially in the following form (in addition to any legend
required by applicable state securities or "blue sky" laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF AGREES THAT: (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE SHARES EXCEPT (A) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S; OR (B) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR ANOTHER THEN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND
STATE SECURITIES LAWS OR; (C) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS; OR (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER, IT WILL FURNISH TO XL GENERATION
INTERNATIONAL INC. AND THE TRANSFER AGENT FOR THE SHARES SUCH CERTIFICATIONS,
LEGAL OPINIONS, OR OTHER INFORMATION AS XL GENERATION INTERNATIONAL INC. OR
SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR STATE SECURITIES LAWS; AND
(3) IT WILL DELIVER TO EACH PERSON TO WHOM THE SHARES ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. FURTHERMORE, HEDGING TRANSACTIONS
INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
The
Company agrees to reissue certificates representing any of the Shares, without
the legend set forth above if at such time, prior to making any transfer of
any
such Shares, such holder thereof shall give written notice to the Company
describing the manner and terms of such transfer and removal as the Company
may
reasonably request. Such proposed transfer and removal will not be effected
until: (a) either (i) the Company has received an opinion of counsel reasonably
satisfactory to the Company, to the effect that the registration of the Shares
under the Securities Act is not required in connection with such proposed
transfer, (ii) a registration statement under the Securities Act covering such
proposed disposition has been filed by the Company with the Commission and
has
become effective under the Securities Act, (iii) the Company has received other
evidence reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the holder provides the Company with reasonable assurances
that such security can be sold pursuant to Rule 144 under the Securities Act;
and (b) either (i) the Company has received an opinion of counsel reasonably
satisfactory to the Company, to the effect that registration or qualification
under the securities or "blue sky" laws of any state is not required in
connection with such proposed disposition, or (ii) compliance with applicable
state securities or "blue sky" laws has been effected or a valid exemption
exists with respect thereto. The Company will respond to any such notice from
a
holder within five (5) business days. In the case of any proposed transfer
under
this Section 5.1, the Company will use reasonable efforts to comply with any
such applicable state securities or "blue sky" laws, but shall in no event
be
required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Company. The restrictions on transfer
contained in this Section 5.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement. W
henever
a
certificate representing the Shares is required to be issued to a purchaser
without a legend, in lieu of delivering physical certificates representing
the
Shares, provided the Company's transfer agent is participating in the Depository
Trust Company (
"
DTC")
Fast Automated Securities Transfer program, the Company shall use its reasonable
best efforts to cause its transfer agent to electronically transmit the Shares
to a purchaser by crediting the account of such purchaser's Prime Broker with
DTC through its Deposit Withdrawal Agent Commission ("DWAC") system (to the
extent not inconsistent with any provisions of this Agreement).
4.
Miscellaneous.
(a)
Choice
of Law
.
This
Agreement shall be governed, construed and enforced in accordance with the
laws
of the State of New York and the federal laws of United States applicable
therein, without giving effect to principles of conflicts of law.
(b)
Jurisdiction
.
The
parties hereby irrevocably consent to the in personam jurisdiction of the state
or federal courts located in the State of New York, in connection with any
action or proceeding arising out of or relating to this Agreement or the
transactions and the relationships established thereunder. The parties hereby
agree that such courts shall be the venue and exclusive and proper forum in
which to adjudicate such matters and that they will not contest or challenge
the
jurisdiction or venue of these courts.
(c)
Entire
Agreement
.
This
Agreement sets forth the entire agreement and understanding of the parties
in
respect of the transactions contemplated hereby and supersedes all prior and
contemporaneous agreements, arrangements and understandings of the parties
relating to the subject matter hereof. No representation, promise, inducement,
waiver of rights, agreement or statement of intention has been made by any
of
the parties which is not expressly embodied in this Agreement, such other
agreements, notes or instruments related to this transaction executed
simultaneously herewith, or the written statements, certificates, schedules
or
other documents delivered pursuant to this Agreement or in connection with
the
transactions contemplated hereby.
(d)
Assignment
.
Each
party's rights and obligations under this Agreement shall not be assigned or
delegated, by operation of law or otherwise, without the other party's prior
consent, and any such assignment or attempted assignment shall be void, of
no
force or effect, and shall constitute a material default by such
party.
(e)
No
Third Party Beneficiaries
.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(f)
Amendments
.
This
Agreement may be amended, modified, superseded or cancelled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by each party, in the case of
a
waiver, by the party waiving compliance.
(g)
Interpretation
.
This
Agreement shall not be interpreted or construed with any presumption against
the
party causing this Agreement to be drafted.
(h)
Waivers
.
The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of any condition, or the breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach
or a
waiver of any other term, covenant, representation or warranty of this
Agreement.
(i)
Severability
.
The
provisions of this Agreement are severable and, in the event that any court
of
competent jurisdiction shall determine that any one or more of the provisions
or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part
of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
(j)
Headings
.
The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose
and
shall not be deemed to limit or affect any of the provisions
hereof.
(k)
Counterparts
.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.
(l)
Further
Assurances
.
From and
after the date of this Agreement, upon the request of
Stadium
or the
Company, the Company and
Stadium
shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
date first set forth above.
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STADIUM
SA
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By:
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/s/ Michel
Delbaere
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Name:
Michel Delbaere
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Title:
President
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XL
GENERATION
AG
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By:
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/s/ Alain
Lemieux
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Name:
Alain Lemieux
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Title:
President
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XL
GENERATION
INTERNATIONAL INC.
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By:
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/s/ Alain
Lemieux
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Name:
Alain Lemieux
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Title:
President
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Exhibit
21
Subsidiaries
of XL Generation International Inc.
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Name
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Jurisdiction
of Incorporation
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Names
under which the subsidiary operates
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XL Generation
AG
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Switzerland
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XL Generation
AG
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XL
Generation International Canada Inc.
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Quebec,
Canada
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XL
Generation International Canada
Inc.
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Exhibit
31.1
Certification
Pursuant to
Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
Amended
I,
Alain
Lemieux, certify that:
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1.
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I
have reviewed this annual report on Form 10-KSB of XL Generation
International Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such
statements
were made, not misleading with respect to the period covered by
this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material respects
the
financial condition, results of operations, and cash flows of
the small
business issuer as of, and for, the periods presented in this
report;
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4.
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The
small business issuer’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small
business issuer and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the small business issuer,
including
its consolidated subsidiaries, is made known to me by others within
those
entities, particularly during the period in which this report is
being
prepared;
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b)
|
Evaluated
the effectiveness of the small business issuer’s disclosure controls and
procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of
the period covered by this report based on such evaluation;
and
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c)
|
Disclosed
in this report any change in the small business issuer’s internal control
over financial reporting that occurred during the small business
issuer’s
most recent fiscal quarter (the small business issuer’s fourth fiscal
quarter in the case of an annual report) that has materially affected,
or
is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting;
and
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5.
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The
small business issuer’s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’s board of directors (or persons performing
the equivalent functions):
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a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer’s ability
to record, process, summarize and report financial information;
and
|
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b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer’s
internal control over financial
reporting.
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Date: April
12, 2006
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By:
|
/s/
Alain Lemieux
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Name: Alain Lemieux
Title:
Principal Executive Officer
President,
CEO and Director
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Exhibit
31.2
Certification
Pursuant to
Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
Amended
I,
Flemming Munck, certify that:
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1.
|
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I
have reviewed this annual report on Form 10-KSB of XL Generation
International Inc.;
|
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2.
|
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Based on my knowledge, this
report does
not contain any untrue statement of a material fact or omit to
state a
material fact necessary to make the statements made, in light
of the
circumstances under which such statements were made, not misleading
with
respect to the period covered by this
report;
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3.
|
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Based
on my knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material respects
the
financial condition, results of operations, and cash flows
of the small
business issuer as of, and for, the periods presented in
this
report;
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4.
|
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The
small business issuer’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small
business issuer and
have:
|
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a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the small business issuer,
including
its consolidated subsidiaries, is made known to me by others within
those
entities, particularly during the period in which this report is
being
prepared;
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b)
|
Evaluated
the effectiveness of the small business issuer’s disclosure controls and
procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures, as of
the end of
the period covered by this report based on such evaluation;
and
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c)
|
Disclosed
in this report any change in the small business issuer’s internal control
over financial reporting that occurred during the small business
issuer’s
most recent fiscal quarter (the small business issuer’s fourth fiscal
quarter in the case of an annual report) that has materially affected,
or
is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting;
and
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5.
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The
small business issuer’s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’s board of directors (or persons performing
the equivalent
functions):
|
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a)
|
All
significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer’s ability
to record, process, summarize and report financial information;
and
|
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b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer’s
internal control over financial
reporting.
|
|
Date:
April 12, 2006
|
By:
|
/s/Flemming
Munck
|
|
|
Name:
Title:
|
Flemming
Munck
Principal
Financial Officer
CFO
and Director
|
|
|
|
|
Exhibit
32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of XL Generation International Inc. (the
“Registrant”) on Form 10-KSB for the period ending December 31, 2005, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”),
the undersigned, Alain Lemieux, President and Chief Executive Officer of the
Registrant, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to ss. 906 of the Sarbanes-Oxley Act of 2002, that to his
knowledge:
|
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
|
|
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant.
|
|
Date:
April 12, 2006
|
By:
|
/s/Alain
Lemieux
|
|
|
Name:
Title:
|
Alain
Lemieux
President,
Chief Executive Officer,
and
Director
|
|
|
|
|
Exhibit
32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of XL Generation International Inc. (the
“Registrant”) on Form 10-QSB for the period ending December 31, 2005, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”),
the undersigned, Flemming Munck, Chief Financial Officer of the Registrant,
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to ss. 906
of
the Sarbanes-Oxley Act of 2002, that to his knowledge:
|
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
|
|
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant.
|
|
Date:
April 12, 2006
|
By:
|
/s/
Flemming Munck
|
|
|
|
Name:
Flemming Munck
T
itle:
Chief Financial Officer and
Director
|
|
|
|
|
