Document:

Exhibit 10.3

Exhibit 10.3

IRIDEX CORPORATION

1995 DIRECTOR OPTION PLAN

(As amended February 24, 2004)

1.   Purposes of the Plan. The purposes of this 1995 Director Option Plan are to attract and retain the best available personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside Directors of the Company to serve as Directors, and to encourage their continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

2.   Definitions. As used herein, the following definitions shall apply:

(a)   "Board" means the Board of Directors of the Company.

(b)   "Code" means the Internal Revenue Code of 1986, as amended.

(c)   "Common Stock" means the common stock of the Company.

(d)   "Company" means Iridex Corporation, a Delaware corporation.

(e)   "Director" means a member of the Board.

(f)   "Employee" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director's fee by the Company shall not be sufficient in and of itself to constitute "employment" by the Company.

(g)   "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(h)   "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:

(i)   If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market of the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable;

(ii)   If the Common Stock is quoted on the NASDAQ System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable, or;

	
 

	 	 	 
	

	 

(iii)   In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board.

(i)   "Inside Director" means a Director who is an Employee.

(j)   "Option" means a stock option granted pursuant to the Plan.

(k)   "Optioned Stock" means the Common Stock subject to an Option.

(l)   "Optionee" means a Director who holds an Option.

(m)   "Outside Director" means a Director who is not an Employee.

(n)   "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.

(o)   "Plan" means this 1995 Director Option Plan.

(p)   "Share" means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan.

(q)   "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of 1986.

3.   Stock Subject to the Plan. Subject to the provisions of Section 10 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 220,000 Shares of Common Stock (the "Pool"). The Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan.

4.   Administration and Grants of Options under the Plan.

(a)   Procedure for Grants. The provisions set forth in this Section 4(a) shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. All grants of Options to Outside Directors under this Plan shall be automatic and nondiscretionary and shall be made strictly in accordance with the following provisions:

	
 

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(i)   No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of Shares to be covered by Options granted to Outside Directors.

(ii)   Each Outside Director shall be automatically granted an Option to purchase 11,250 Shares (the "First Option") on the date on which the later of the following events occurs: (A) the date of adoption of this plan, or (B) the date on which such person first becomes an Outside Director, whether through election by the shareholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option.

(iii)   Thereafter, each Outside Director shall be automatically granted an Option to purchase 3,750 Shares (a "Subsequent Option") on July 1 of each year provided he or she is then an Outside Director, and if as of such date, he or she shall have served on the Board for at least the preceding six (6) months.

(iv)   Notwithstanding the provisions of subsections (ii) and (iii) hereof, any exercise of an Option granted before the Company has obtained shareholder approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such shareholder approval of the Plan in accordance with Section 16 hereof.

(v)   The terms of a First Option granted hereunder shall be as follows:

(A)   the term of the First Option shall be ten (10) years.

(B)   the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof.

(C)   the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option. In the event that the date of grant of the First Option is not a trading day, the exercise price per Share shall be the Fair Market Value on the next trading day immediately following the date of grant of the First Option.

(D)   subject to Section 10 hereof, the First Option shall become exercisable as to one-twelfth (1/12) of the Shares subject to the First Option on the last day of each calendar quarter (i.e., March 31, June 30, September 30 and December 31) after its vesting start date as defined in the Option Agreement, provided that the Optionee continues to serve as a Director on such dates and provided that on the first such vesting date the Director has served as a Director for at least 60 days prior thereto.

(vi)          The terms of a Subsequent Option granted hereunder shall be as follows:

(A)   the term of the Subsequent Option shall be ten (10) years.

(B)   the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof.

	
 

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(C)   the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option. In the event that the date of grant of the Subsequent Option is not a trading day, the exercise price per Share shall be the Fair Market Value on the next trading day immediately following the date of grant of the Subsequent Option.

(D)   subject to Section 10 hereof, the Subsequent Option shall become exercisable as to one-fourth (1/4) of the Shares subject to the Subsequent Option on the last day of each calendar quarter (i.e. March 31, June 30, September 30 and December 31) commencing one quarter after the First Option and any previously granted Subsequent Options have become fully exercisable, provided that the Optionee continues to serve as a Director on such dates.

(vii)        In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the number of Shares previously purchased under Options to exceed the Pool, then the remaining Shares available for Option grant shall be granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made until such time, if any, as additional Shares become available for grant under the plan through action of the Board or the shareholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder.

5.   Eligibility. Options may be granted only to Outside Directors. All Options shall be automatically granted in accordance with the terms set forth in Section 4 hereof.

The Plan shall not confer upon any Optionee any right with respect to continuation of service as a Director or nomination to serve as a Director, nor shall it interfere in any way with any rights which the Director or the Company may have to terminate the Director's relationship with the Company at any time.

6.   Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 16 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 11 of the Plan.

7.   Form of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (iv) delivery of a properly executed exercise notice together with such other documentation as the Company and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (v) any combination of the foregoing methods of payment.

8.   Exercise of Option.

(a)   Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times as are set forth in Section 4 hereof; provided, however, that no Options shall be exercisable until shareholder approval of the Plan in accordance with Section 16 hereof has been obtained.

	
 

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An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)   Rule 16b-3. Options granted to Outside Directors must comply with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any successor thereto and shall contain such additional conditions or restrictions as may be required thereunder to qualify Plan transactions, and other transactions by Outside Directors that otherwise could be matched with Plan transactions, for the maximum exemption from Section 16 of the Exchange Act.

(c)   Termination of Continuous Status as a Director. Subject to Section 10 hereof, in the event an Optionee's status as a Director terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option, but only within three (3) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

(d)   Disability of Optionee. In the event Optionee's status as a Director terminates as a result of his or her disability (as such term is defined in Section 22(3) (3) of the Code), the Optionee may exercise his or her Option, but only within twelve (12) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of termination, or if he or she does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

	
 

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(e)   Death of Optionee. In the event of an Optionee's death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following the date of death, and only to the extent that the Optionee was entitled to exercise it on the date of death (but in no event later than the expiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of death, and to the extent that the Optionee's estate or a person who acquired the right to exercise such Option does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

9.   Non-Transferability of Options. The Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

10.   Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of Control.

(a)   Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per Share covered by each such outstanding Option, and the number of Shares issuable pursuant to the automatic grant provisions of Section 4 hereof shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option.

(b)   Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action.

(c)   Merger or Asset Sale. In the event of a merger of the Company with or into another corporation where following such merger the stockholders of the Company prior to such merger own less than 50% of the voting securities of the surviving corporation (a "change of control"), or the sale of all or substantially all of the assets of the Company, each outstanding Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. The Board shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the date of such notice, and upon the expiration of such period the Option shall terminate. In the event of a merger with or into another corporation where there is no change of control of the Company, each outstanding Option may be assumed or equivalent options may be substituted by the successor corporation or a Parent or Subsidiary thereof.

	
 

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For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).

11.   Amendment and Termination of the Plan.

(a)   Amendment and Termination. Except as set forth in Section 4, the Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act (or any other applicable law or regulation), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required.

(b)   Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Options already granted and such Options shall remain in full force and effect as if this Plan had not been amended or terminated.

12.   Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date determined in accordance with Section 4 hereof.

13.   Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated there under, state securities laws, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

	
 

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14.   Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

15.   Option Agreement. Options shall be evidenced by written option agreements in such form as the Board shall approve.

16.   Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company at or prior to the first annual meeting of shareholders held subsequent to the granting of an Option hereunder. Such shareholder approval shall be obtained in the degree and manner required under applicable state and federal law.

	
 

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STOCK PURCHASE AGREEMENT

       This Stock Purchase Agreement (the "Agreement") is made and entered into this 29th day of July 2004, by and among DeBas Chocolate, Inc., a California corporation (the "Company"), Guy Debbas and Wendy Debbas (collectively "Seller" or "Debbas") and House of Brussels Chocolates Inc., a Nevada corporation ("Purchaser" or "Brussels").

WHEREAS, the Seller owns 10,000 shares of common stock, no par value (the "Shares") of the Company, which Shares represent all of the shares of capital stock of the Company presently outstanding; and

WHEREAS, Guy Debbas serves as President of the Company; and

WHEREAS, the Seller desires to sell the Shares of the Company to Brussels on the terms and conditions set forth herein; and

WHEREAS, Brussels desires to purchase the Shares of the Company from Seller on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements and the respective representations and warranties herein contained, and on the terms and subject to the conditions herein set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF THE SHARES

Section 1.1   Sale of the Shares. Subject to the terms and conditions set forth in this Agreement, at the Closing (as hereinafter defined) the Seller hereby agrees to sell, transfer, convey and deliver to Brussels all of the Shares of common stock of the Company, free and clear of all encumbrances, which represents all of the outstanding capital stock of the Company, and shall deliver to Brussels stock certificates representing the Shares, duly endorsed to Brussels or accompanied by duly executed stock powers in form and substance satisfactory to Brussels.

Section 1.2   Purchase Price. As consideration for the purchase of the Shares, Brussels shall pay to Seller total consideration of $1,130,000 (the "Purchase Price") payable as follows:

	1)	$200,000 payable to the Seller by check, or wire transfer at the Closing (as hereinafter defined), of which $150,000 shall be set aside in escrow (the "Escrow Cash") to secure the Purchaser as set out in the Escrow Agreement as provided for herein; and

	2)	$930,000 payable in restricted shares of common stock of Brussels (the "Brussels Common Stock"), $.001 par value. The number of shares to be issued in satisfaction of the Purchase Price shall be calculated using the average market closing price for Brussels Common Stock for the five (5) consecutive business days preceding the Closing (as hereinafter defined). Shares representing a value of $650,000 of the shares issued by Brussels shall be set aside in escrow (the "Escrow Shares") for one (1) year to secure Purchaser against the risk of undocumented liabilities and non-performance under the guarantees contained herein.

	  
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    Section 1.3   Cancellation of Company Indebtedness. With respect to the Purchase Price, all indebtedness owed by the Company to any related party as of July 29, 2004, shall be cancelled and forgiven in conjunction with the transaction contemplated herein, except as follows: 

	 	(i)	That credit card debt amounting to approximately $126,764, personally guaranteed by Guy Debbas shall remain an indebtedness of the Company subsequent to Closing. Brussels shall have the obligation to make all payments related to the credit card debt on a timely basis and shall use its best efforts to extinguish such debt as soon as it is practicable. 

	 	(ii)	The proceeds from that bank debt from World Savings advanced by Guy Debbas and amounting to approximately $283,091 (personally guaranteed by Guy Debbas and collateralized by his personal property) shall be settled by Brussels. Brussels shall have ninety (90) days from Closing to replace Guy Debbas as principal guarantor and substitute the collateral belonging to Guy Debbas, or alternatively to pay $283,091 of the indebtedness.

	 	(iii)	Advances and loans in the amount of $70,000 due and payable to Donald and Betty Warnes to be paid in full at Closing. All other indebtedness to Donald or Betty Warnes shall be cancelled and forgiven in conjunction with the transaction. 

 

ARTICLE II

CLOSING

Section 2.1   The Closing. The closing of the transactions contemplated by this Agreement shall take place on July 29, 2004 (the "Closing Date"), at the offices of Debas, or at such other time and place as agreed upon among the parties hereto (the "Closing").

Section 2.2   Delivery and Execution. At the Closing: (a) the Seller shall deliver to Brussels certificates evidencing the Shares of the Company, free and clear of any liens, claims, equities, charges, options, rights of first refusal or encumbrances, duly endorsed to Brussels or accompanied by duly executed stock powers in form and substance satisfactory to Brussels against delivery by Brussels to the Seller of payment in an amount equal to the Purchase Price of the Shares being purchased by Brussels in the manner set forth herein; (b) the Related Transactions (as defined below) shall be consummated concurrently with the Closing; and (c) the Conditions to Closing of the Seller and Brussels as set forth in Article V and VI, respectively, shall have been satisfied or waived in writing by the party authorized to waive such condition.

	  
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Section 2.3   Related Transactions. In addition to the purchase and sale of the Shares, the following actions shall take place contemporaneously at the Closing (collectively, the "Related Transactions"):

	 	(i)	Purchaser will enter into a five (5) year employment agreement with Guy Debbas at an annual compensation of $100,000 (the "Employment Agreement"), a copy of which is attached hereto as Exhibit 2.3(i); 

	 	(ii)	Guy Debbas and Wendy Debbas will execute any and all documents necessary to convey to the Company all right, title and interest which Guy Debbas and Wendy Debbas have to the Company’s operating facilities located at 5877 E. Brown, Fresno, CA 93727 (the "Building") free and clear of any liens claims or encumbrances, except for the first lien mortgage with Business Loan Center, Inc. (in the approximate amount of $732,000) and except for obligations disclosed to Brussels by the Sellers which have become liens on title and exceptions to title which are normal utility, tax or other similar title exceptions and any rights they may have under any leases relating to the Building between them and the Company;

	 	(iii)		Guy Debbas and Wendy Debbas shall cancel and terminate any existing leases between them and the Company relating to the Building;

	 	(iv)		Seller will enter into a Revenue Guarantee Agreement to provide an annual $3,000,000 "Minimum Revenue Guarantee" to Purchaser for one (1) year following the Closing (the "Revenue Guarantee"), a copy of which is attached hereto as Exhibit 2.3(iv). In the event Seller fails to meet the Minimum Revenue Guarantee, Shares representing a value of $98,000 of the Escrow Shares shall be forfeited to Purchaser and shall be immediately cancelled by Brussels;

	 	(v)		Seller and Purchaser will enter into the Escrow Agreement (the "Escrow Agreement") pursuant to which the Escrow Shares and the Escrow Cash shall be delivered in the name of the Seller to be held and distributed by the Escrow Agent in accordance with the terms of the Escrow Agreement in the form attached hereto as Exhibit "A"; and

	 	(vi)		Seller shall provide evidence of cancellation and forgiveness of related party debt, all as reflected in Exhibit 2.3(vi) hereto.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER AND THE COMPANY

The Seller and the Company, jointly and severally, hereby represent and warrant to Brussels as follows:

	  
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Section 3.1.   Organization, Good Standing and Qualification. The Company (i) is an entity duly organized, validly existing and in good standing under the laws of the state of California, (ii) has all requisite power and authority to carry on its business, and (iii) is duly qualified to transact business and is in good standing in all jurisdictions where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to do so would not have a material adverse effect to the Seller or the Company. 

At Closing, the authorized capital stock of the Company consists of 10,000 shares of common stock, no par value, of which 10,000 shares are validly issued and outstanding. There are no shares of preferred stock authorized or issued and there is no other class of capital stock authorized or issued by the Company. All of the issued and outstanding shares of common stock of the Company are owned by the Seller and are fully paid and non-assessable. None of the shares issued are in violation of any preemptive rights. The Company has no obligation to repurchase, reacquire, or redeem any of its outstanding capital stock. There are no outstanding securities convertible into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company, there are no outstanding or authorized options, warrants, calls, subscriptions, rights, commitments or any other agreements of any character obligating the Company to issue any shares of its capital stock or any securities convertible into or evidencing the right to purchase or subscribe for any shares of such stock, and there are no agreements or understandings with respect to the voting, sale, transfer or registration of any shares of capital stock of the Company.

Section 3.2   Subsidiaries. The Company has no subsidiaries. 

Section 3.3  Ownership of the Shares. The Seller owns, beneficially and of record, all of the Shares of the Company free and clear of any liens, claims, equities, charges, options, rights of first refusal, or encumbrances. The Seller has the unrestricted right and power to transfer, convey and deliver full ownership of the Shares without the consent or agreement of any other person and without any designation, declaration or filing with any governmental authority. Upon the transfer of the Shares to Brussels as contemplated herein, Brussels will receive good and valid title thereto, free and clear of any liens, claims, equities, charges, options, rights of first refusal, encumbrances or other restrictions (except those imposed by applicable securities laws).

Section 3.4   Authorization. Seller represents that he is a person of full age of majority, with full power, capacity, and authority to enter into this Agreement and perform the obligations contemplated hereby by for himself and his spouse. All action on the part of Seller necessary for the authorization, execution, delivery and performance of this Agreement by him has been taken and will be taken prior to Closing. This Agreement, when duly executed and delivered in accordance with its terms, will constitute legal, valid and binding obligations of Seller enforceable against him in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization and other similar laws of general application affecting creditors’ rights generally or by general equitable principles.

	  
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All corporate action on the part of the Company necessary for the authorization, execution, delivery and performance of this Agreement by the Company has been taken or will be taken prior to the Closing. The Company has the requisite corporate power and authority to execute, deliver and perform this Agreement. This Agreement, when duly executed and delivered in accordance with its terms, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, and other similar laws of general application relating to or affecting creditors’ rights and to general equitable principles.

Section 3.5  Seller’s Access to Information. The Seller hereby confirm and represent that he (a) has received a copy of Purchaser’s Form 10-KSB for the year ended April 30, 2003, and a copy of Purchaser’s Form 10-QSB for the quarters ended July 31, 2003, October 31, 2003 and January 31, 2004; (b) has been afforded the opportunity to ask questions of and receive answers from representatives of the Purchaser concerning the business and financial condition, properties, operations and prospects of the Purchaser; (c) has such knowledge and experience in financial and business matters so as to be capable of evaluating the relative merits and risks of the transactions contemplated hereby; (d) has had an opportunity to engage and is represented by an attorney of its choice; (e) has had an opportunity to negotiate the terms and conditions of this Agreement; (f) has been given adequate time to evaluate the merits and risks of the transactions contemplated hereby; and (g) has been provided with and given an opportunity to review all current information about the Purchaser. The Seller has asked such questions about the Purchaser as it desires to ask and all such questions have been answered to the full satisfaction of the Seller.

Section 3.6  Acquisition of Stock for Investment. The Seller understands that any issuance of Brussels Common Stock (as referenced in Section 1.2 herein) will not have been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities acts, and are accordingly, are restricted securities, and the Seller represents and warrants to the Purchaser that the Seller’s present intention is to receive and hold the Brussels Common Stock for investment only and not with a view to the distribution or resale thereof. 

Additionally, the Seller understands that any sale of any Brussels Common Stock issued, under current law, will require either (a) the registration of the Brussels Common Stock under the Act and applicable state securities acts; (b) compliance with Rule 144 of the Act; or (c) the availability of an exemption from the registration requirements of the Act and applicable state securities acts. 

 

To assist in implementing the above provisions, the Seller hereby consent to the placement of the legend, or a substantially similar legend, set forth below, on all certificates representing ownership of the Brussels Common Stock acquired hereby until the Brussels Common Stock has been sold, transferred, or otherwise disposed of, pursuant to the requirements hereof. The legend shall read substantially as follows:

	 	
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
	 

	  
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Section 3.7  No Breaches or Defaults. The execution, delivery, and performance of this Agreement by the Seller and the Company does not: (i) conflict with, violate, or constitute a breach of or a default under, (ii) result in the creation or imposition of any lien, claim, or encumbrance of any kind upon the Shares, or (iii) require any authorization, consent, approval, exemption, or other action by or filing with any third party or Governmental Authority under any provision of: (a) any applicable Legal Requirement, or (b) any credit or loan agreement, promissory note, or any other agreement or instrument to which the Seller or the Company is a party or by which the Shares may be bound or affected. For purposes of this Agreement, "Governmental Authority" means any foreign governmental authority, the United States of America, any state of the United States, and any political subdivision of any of the foregoing, and any agency, department, commission, board, bureau, court, or similar entity, having jurisdiction over the parties hereto or their respective assets or properties. For purposes of this Agreement, "Legal Requirement" means any law, statute, injunction, decree, order or judgment (or interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority.

Section 3.8  Accounts Receivable of the Company. Seller and the Company represent that the account receivable balances of the Company are current and fully collectible. The Accounts Receivable of the Company as of July 19, 2004 are set forth in Exhibit 3.8. In the event more than five percent (5%) of such receivables prove uncollectible, the Seller shall forfeit for cancellation to Purchaser shares from its Escrow Shares equal in dollar value to the amount of all uncollectible receivables in excess of five percent (5%) of the receivables outstanding at the Closing (the "Receivable Guarantee"). The number of shares of Brussels Common Stock to be forfeited and cancelled in satisfaction of this Receivable Guarantee shall be calculated using the average market closing price for shares of Brussels Common Stock for the five (5) consecutive business days preceding the date(s) at which such receivables are written off from Purchaser’s accounting records.

Section 3.9  Consents. No permit, consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority or any other person or entity is required on the part of the Seller or the Company in connection with the execution and delivery by the Seller or the Company of this Agreement or the consummation and performance of the transactions contemplated hereby.

Section 3.10     Pending Claims. There is no claim, suit, arbitration, investigation, action or other proceeding, whether judicial, administrative or otherwise, now pending or, to the best of the Seller’s or the Company’s knowledge, threatened before any court, arbitration, administrative or regulatory body or any governmental agency which may result in any judgment, order, award, decree, liability or other determination which will or could reasonably be expected to have any effect upon Seller or the Company or the transfer by Seller to Brussels of the Shares under this Agreement, nor is there any basis known to Seller for any such action. No litigation is pending, or, to Seller’s or the Company’s knowledge, threatened against Seller or the Company, or their assets or properties which seeks to restrain or enjoin the execution and delivery of this Agreement or any of the documents referred to herein or the consummation of any of the transactions contemplated thereby or hereby. Neither Seller nor the Company is subject to any judicial injunction or mandate or any quasi-judicial or administrative order or restriction directed to or against them or which would affect the Company or the Shares to be transferred under this Agreement. 

	  
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Section 3.11     Taxes. Except as set forth in Exhibit 3.11, the Company has timely and accurately filed all federal, state, foreign and local tax returns and reports required to be filed prior to such dates and have timely paid all taxes shown on such returns as owed for the periods of such returns, including all sales taxes and withholding or other payroll related taxes shown on such returns. The Company has made adequate provision for the payment of all taxes accruable for all periods ending on or before the Closing Date to any taxing authority and is not delinquent in the payment of any tax or governmental charge of any nature. No assessments or notices of deficiency or other communications have been received by the Company with respect to any tax return which has not been paid, discharged or fully reserved against and no amendments or applications for refund have been filed or are planned with respect to any such return. There are no agreements between the Company and any taxing authority, including, without limitation, the Internal Revenue Service, waiving or extending any statute of limitations with respect to any tax return. 

Section 3.12     Financial Statements. Seller and the Company have delivered to Brussels the unaudited balance sheets of the Company as of March 31, 2004, December 31, 2002 and 2003, together with the related unaudited statements of income, for the periods then ended (collectively referred to as the "Financial Statements"). Such Financial Statements, including the related notes, are in accordance with the books and records of the Company and fairly represent the financial position of the Company and the results of operations and changes in financial position of the Company as of the dates and for the periods indicated, in each case in conformity with generally accepted accounting principles applied on a consistent basis. Except as, and to the extent reflected or reserved against in the Financial Statements, the Company, as of the date of the Financial Statements, has no material liability or obligation of any nature, whether absolute, accrued, continued or otherwise, not fully reflected or reserved against in the Financial Statements. As of the Closing Date, Seller and the Company represent there have been no adverse changes in the financial condition or other operations, business, properties or assets of the Company in excess of $5,000 from that reflected in the latest financial statements of the Company as furnished pursuant to this Agreement.

Section 3.13     Labor Matters. The Company is not a party or otherwise subject to any collective bargaining agreement with any labor union or association. There are no discussions, negotiations, demands or proposals that are pending or have been conducted or made with or by any labor union or association, and there are not pending or threatened against the Company any labor disputes, strikes or work stoppages. To the best of Seller’s and the Company’s knowledge, the Company is in compliance with all federal and state laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and, to its knowledge, is not engaged in any unfair labor practices. Except as set forth in Exhibit 3.13, the Company is not a party to any written or oral contract, agreement or understanding for the employment of any officer, director or employee of the Company.

	  
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Section 3.14     Compliance with Laws. The Company is, and at all times prior to the date hereof have been, to the best of their knowledge, in compliance with all statutes, orders, rules, ordinances and regulations applicable to it or to the ownership of their assets or the operation of their businesses, except for failures to be in compliance that would not have a material adverse effect on the business, properties, condition (financial or otherwise) or prospects of the Company. Seller and the Company have no basis to expect, nor have they received, any order or notice of any such violation or claim of violation of any such statute, order, rule, ordinance or regulation by the Company. Exhibit 3.14 sets forth all licenses and permits held by the Company used in the operation of their businesses. These licenses and permits represent all of the licenses and permits required by the Company for the operation of their business.

Section 3.15     Title to Properties; Encumbrances. With the exception of items listed on Exhibit 3.15, the Company has good and marketable title to all of its properties and assets, real and personal, tangible and intangible, that are material to the condition (financial or otherwise), business, operations or prospects of the Company, free and clear of all mortgages, claims, liens, security interests, charges, leases, encumbrances and other restrictions of any kind and nature, except (i) as disclosed in the Financial Statements of the Company, (ii) statutory liens not yet delinquent, and (iii) such liens consisting of zoning or planning restrictions, imperfections of title, easements, pledges, charges and encumbrances, if any, as do not materially detract from the value or materially interfere with the present use of the property or assets subject thereto or affected thereby. At the time of Closing, the assets of the Company shall include, but shall not be limited to, those set forth in Exhibit 3.15, and all plant equipment and machinery located on the premises at the Company’s facility as of July 1, 2004, or thereafter purchased by the Company, including the specialized equipment developed by Debbas to make wine-filled chocolates.

Section 3.16     No Pending Transactions. Except for the transactions contemplated by this Agreement, neither Seller nor the Company is a party to or bound by or the subject of any agreement, undertaking, commitment or discussions or negotiations with any person that could result in (i) the sale, merger, consolidation or recapitalization of the Company, (ii) the sale of any of the assets of the Company except in the ordinary course of business, or (iii) the sale of any shares of the outstanding capital stock of the Company.

Section 3.17     No Undisclosed Liabilities. To the best of Seller’s and the Company’s knowledge, the Company does not have any obligation or liability (contingent or otherwise) that would be required to be reflected in the financial statements of the Company in accordance with GAAP except as reflected in the Company Balance Sheet.

Section 3.18     Contracts and Leases. Except as disclosed in Exhibit 3.18, the Company (i) has no leases of personal property relating to the assets of the Company, whether as lessor or lessee; (ii) has no contractual or other obligations relating to the assets of the Company, whether written or oral; and (iii) has not given any power of attorney to any person or organization for any purpose relating to the assets of the Company. The Company has furnished Purchaser a copy of each and every contract, lease or other document relating to the assets of the Company to which they are subject or are a party or a beneficiary. To Seller’s and the Company’s knowledge, such contracts, leases or other documents are valid and in full force and effect according to their terms and constitutes a legal, valid and binding obligation of the Company and the other respective parties thereto and are enforceable in accordance with their terms. Seller and the Company have no knowledge of any default or breach under such contracts, leases or other documents or of any pending or threatened claims under any such contracts, leases or other documents. Neither the execution of this Agreement, nor the consummation of all or any of the transactions contemplated under this Agreement, will constitute a breach or default under any such contracts, leases or other documents which would have a material adverse effect on the financial condition of the Company for the operation of its business after the Closing.

	  
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Section 3.19     Material Agreements; Action. There are no material contracts, agreements, commitments, understandings or proposed transactions, whether written or oral, to which Seller or the Company is a party or by which they are bound that involve or relate to: (i) any of the respective officers, directors, stockholders or partners of the Company; (ii) the sale of any of the assets of the Company other than in the ordinary course of business; (iii) covenants of Seller and the Company not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with the Company in any line of business or in any geographical area; (iv) the acquisition by the Company of any operating business or the capital stock of any other Person; (v) the borrowing of money; or (vi) the expenditure of more than $5,000 in the aggregate or the performance by the Company extending for a period more than one year from the date hereof, other than in the ordinary course of business. 

Section 3.20     No Default. Neither Seller nor the Company is in default under any term or condition of any instrument evidencing, creating or securing any indebtedness of Seller or the Company, and there has been no default in any material obligation to be performed by Seller or the Company under any other contract, lease, agreement, commitment or undertaking to which it is a party or by which it or its assets or properties are bound, nor have Seller or the Company waived any material right under any such contract, lease, agreement, commitment or undertaking.

Section 3.21     Books and Records. The books of account, minute books, stock record books and other records of the Company, all of which have been made available to Brussels, are accurate and complete and have been maintained in accordance with sound business practices. Upon Closing, all books and records will be in the possession of Seller or the Company.

Section 3.22     Insurance Policies. Copies of all insurance policies maintained by the Company relating to the operation of its business have been delivered or will be made available to Purchaser. The policies of insurance held by the Company are in such amounts, and insure against such losses and risks, as the Company and Seller reasonably deem appropriate for its property and business operations. All such insurance policies are in full force and effect, and all premiums due thereon have been paid. Valid policies for such insurance will be outstanding and duly in force at all times prior to the Closing. Copies of all such policies are attached hereto as Exhibit 3.22.

Section 3.23     Employee Benefit Plans. The Company does not have or contribute to any pension, profit-sharing, option, other incentive plan, or other Employee Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974), or have any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, insurance, or other benefits except as set forth in Schedule 3.23. Schedule 3.23 is a list of each employee and consultant and the compensation paid to each employee and consultant.

Section 3.24     Absence of Certain Changes. Since the date of the Financial Statements, the Company has not:

	  
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	 	(a)	suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition of the Company, taken as a whole, or made any disposition of any of its material properties or assets other than in the ordinary course of business; 

	 	(b)	made any change or amendment in each of their respective certificate of incorporation and or formation or Bylaws, or other governing instruments; 

	 	(c)	issued or sold any equity securities or other securities, acquired, directly or indirectly, by redemption or otherwise, any such equity securities, reclassified, split-up or otherwise changed any such equity security, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto; 

	 	(d)	paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business; 

	 	(e)	prepaid any material obligation having a maturity of more than ninety (90) days from the date such obligation was issued or incurred; 

	 	(f)	cancelled any material debts or waived any material claims or rights, except in the ordinary course of business; 

	 	(g)	made any capital expenditures or additions to property, plant or equipment or acquired any other property or assets (other than materials and supplies) at a cost in excess of $5,000 in the aggregate; 

	 	(h)	written off or been required to write off any notes or accounts receivable.

Section 3.25     Disclosure. No representation or warranty of the Seller or the Company contained in this Agreement (including the exhibits hereto) contains any untrue statement or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

Section 3.26     Brokerage Commission. No broker or finder has acted on behalf of Seller or the Company in connection with this Agreement or the transactions contemplated hereby, and no person is entitled to any brokerage or finder’s fee or compensation in respect thereof based in any way on agreements, arrangements or understandings made by or on behalf of Seller or the Company. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF BRUSSELS

Brussels hereby represents and warrants to the Seller and the Company as follows:

	  
	 	Stock Purchase Agreement - Page 10	 
	

	 

Section 4.1   Authorization. Brussels is a corporation duly organized in the state of Nevada and has full power, capacity, and authority to enter into this Agreement and perform the obligations contemplated hereby. All action on the part of Brussels necessary for the authorization, execution, delivery and performance of this Agreement by it has been taken and will be taken prior to Closing. This Agreement, when duly executed and delivered in accordance with its terms, will constitute legal, valid, and binding obligations of Brussels enforceable against Brussels in accordance with its terms, except as may be limited by bankruptcy, insolvency, and other similar laws affecting creditors' rights generally or by general equitable principles.

 

Section 4.2   Valid Issuance. The shares of Brussels Common Stock to be issued to the Seller pursuant to the terms of Section 1.2 above, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, and entitled to all of the benefits and rights stated in Brussels’ Articles of Incorporation and other charter documents.

 

Section 4.3   Restricted Stock. The shares of Brussels Common Stock to be issued to the Seller pursuant to the terms of Section 1.2 above are restricted securities and may only be sold, under current law, either by (a) the registration of the Shares under the Act and applicable state securities acts; (b) compliance with Rule 144 of the Act; or (c) the availability of an exemption from the registration requirements of the Act and applicable state securities acts. Brussels will use its best efforts to maintain current information by complying with its reporting requirements under The Securities Exchange Act of 1934, as amended. 

Section 4.4   No Breaches or Defaults. The execution, delivery, and performance of this Agreement by Brussels does not: (i) conflict with, violate, or constitute a breach of or a default under or (ii) require any authorization, consent, approval, exemption, or other action by or filing with any third party or Governmental Authority under any provision of: (a) any applicable Legal Requirement, or (b) any credit or loan agreement, promissory note, or any other agreement or instrument to which Brussels is a party. 

Section 4.5   Consents. No permit, consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority or any other person or entity is required on the part of Brussels in connection with the execution and delivery by Brussels of this Agreement or the consummation and performance of the transactions contemplated hereby other than as required under the federal securities laws.

Section 4.6   Disclosure. No representation or warranty of Brussels contained in this Agreement (including the exhibits hereto) contains any untrue statement or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

Section 4.7   No Additional Representations. Seller and the Company acknowledge that the Purchaser has made no representations or warranties to Seller or the Company as to the financial condition or otherwise of the Purchaser other than as contained in the Form 10-KSB of the Purchaser for the fiscal year ended April 30, 2003 and the Form 10-QSB for the quarters ended July 31, 2003, October 31, 2003 and January 31, 2004.

	  
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Section 4.8   Brokerage Commission. No broker or finder has acted on behalf of Brussels in connection with this Agreement or the transactions contemplated hereby, and no person is entitled to any brokerage or finder’s fee or compensation in respect thereof based in any way on agreements, arrangements or understandings made by or on behalf of Brussels. 

ARTICLE V

ESCROW OF BRUSSELS COMMON STOCK AND CASH

Seller understands and acknowledges that the purchase of the Shares by Brussels is based, to a material degree, upon the representations and warranties made by Seller and the Company as set forth and contained herein regarding, among other things, the Minimum Revenue Guarantee, the collectibility of accounts receivable and the amount of certain liabilities. Therefore, as additional comfort and assurance to Brussels, Seller agrees to have shares representing the value of $650,000 of the Brussels Common Stock issued to the Seller by Brussels and $150,000 of the cash consideration provided for in Section 1.2.1 ("Escrow Cash") held by the Escrow Agent. The Escrow Agreement shall provide, among other things, that: 

 

	 	
a)
	
$100,000 of the Escrow Cash shall be held pending the completion of the transfer of good title to the Company by Guy and Wendy Debbas as provided for in Section 2.3(ii), free from any liens, judgments or other claims, except for the first lien mortgage with Business Loan Center, Inc., in the approximate amount of $732,000;

	 	 	 
	 	
b)
	
$50,000 shall be held against settlement of labor disputes and claims made by any third party for participation in the proceeds of the sale by the Sellers of the Shares;

	 	 	 
	 	
c)
	
In the event the Minimum Revenue Guarantee is not met to the satisfaction of Brussels within the escrow period, the Seller shall forfeit to Brussels shares representing value of $98,000 of its Escrow Shares.

	 	 	 
	 	
d)
	
In the event more than five percent (5%) of the accounts receivable of the Company ($241,869 at the date of closing) prove to be uncollectible, the Seller shall forfeit to Brussels shares from its Escrow Shares equal in dollar value to the amount of all uncollectible receivables in excess of five percent (5%) of the receivables outstanding at the Closing (the "Receivable Guarantee"). The number of shares of Brussels Common Stock to be forfeited and cancelled in satisfaction of this Receivable Guarantee shall be calculated using the average market closing price for shares of Brussels Common Stock for the five (5) consecutive business days preceding the date(s) at which such receivables are written off from Purchaser’s accounting records.

	 	 	 
	 	
e)
	
The Escrow Shares shall be used, in part, to offset increases in certain liabilities identified subsequent to the Memorandum of Understanding dated May 27, 2004. Such increases in liabilities total $376,876.97 and consist in detail of:

	  
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	 	i.	$36,740.44 in held or post-dated checks;

	 	ii.	$105,000 identified as a default judgement granted against Debas in the matter of Peter Van der Vort vs. Debas;

	 	iii.	$155,825.60 in amounts payable to Schokinag Chocolate in excess of the amounts previously disclosed ( $181,677.40 at March 31, 2004); and 

	 	iv.	$79,310.93 in payroll related taxes payable in excess of the amounts previously disclosed ( $168,513.07 at March 31, 2004). 

Both Brussels and Debbas will use their best efforts to negotiate reductions in the amount due in connection with these liabilities. Such reductions, if any, shall reduce Brussel’s offset against Escrow Shares. In the event further increases in these liabilities are identified, such increases, if any, shall increase Brussel’s offset against Escrow Shares. 

Additionally, in the event Brussels becomes obligated for any of Seller’s or the Company’s liabilities in addition to those discussed herein, then the Escrow Shares shall be used as an offset by Brussels for such liabilities. A determination will be made as to the amount owed by Seller or the Company for such liabilities and the number of shares of Brussels Common Stock to be forfeited and cancelled in satisfaction of any such liability shall be calculated using the average market closing price for shares of Brussels Common Stock for the five (5) consecutive business days preceding the date(s) at which such liability is paid by Purchaser. By way of illustration, if the amount of liabilites of Seller or the Company was $1,000 and the stock price of Brussels was $1.00, then the number of shares to be forfeited and cancelled would be reduced by 1,000 shares.

ARTICLE VI

CONDITIONS TO CLOSING OF SELLER

AND THE COMPANY

Each obligation of Seller and the Company to be performed on the Closing Date shall be subject to the satisfaction of each of the conditions stated in this Article VI, except to the extent that such satisfaction is waived by Seller and the Company in writing.

Section 6.1   Representations and Warranties Correct. The representations and warranties made by Brussels contained in this Agreement shall be true and correct as of the Closing Date.

Section 6.2   Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by Brussels on or prior to the Closing Date shall have been performed or complied with in all respects.

Section 6.3   Delivery of Certificate. Brussels shall provide to Seller and the Company Certificates, dated the Closing Date and signed by the President or Chief Financial Officer of Brussels to the effect set forth in Section 6.1 and 6.2 for the purpose of verifying the accuracy of such representations and warranties and the performance and satisfaction of such covenants and conditions.

Section 6.4   Consents. All necessary consents and approvals of governmental bodies, lenders, lessors and other third parties shall have been obtained.

	  
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Section 6.5   Payment of Purchase Price. Brussels shall have tendered the Purchase Price for the Shares as referenced in Section 1.2 to the Seller concurrently with the Closing.

Section 6.6   Related Transactions. The Related Transactions as set forth in Section 2.3 shall be consummated concurrently with the Closing.

Section 6.7   Corporate Resolutions. Brussels shall provide corporate resolutions of the Board of Directors of Brussels which approve the transactions contemplated herein and authorize the execution, delivery and performance of this Agreement and the documents referred to herein to which it is or is to be a party dated as of the Closing Date.

Section 6.8   Absence of Proceedings. No action, suit or proceeding by or before any court or any governmental or regulatory authority shall have been commenced and no investigation by any governmental or regulatory authority shall have been commenced seeking to restrain, prevent or challenge the transactions contemplated hereby or seeking judgments against Brussels.

ARTICLE VII

CONDITIONS TO CLOSING OF

BRUSSELS

Each obligation of Brussels to be performed on the Closing Date shall be subject to the satisfaction of each of the conditions stated in this Article VII, except to the extent that such satisfaction is waived by Brussels in writing.

Section 7.1   Representations and Warranties Correct. The representations and warranties made by the Seller and the Company hereof shall be true and correct as of the Closing Date.

Section 7.2   Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Seller and the Company on or prior to the Closing Date shall have been performed or complied with in all respects.

Section 7.3   Delivery of Certificate. Seller and the Company shall provide to Brussels certificates, dated the Closing Date and signed by the Seller and by the President of the Company, respectively, to the effect set forth in Section 7.1 and 7.2 for the purpose of verifying the accuracy of such representations and warranties and the performance and satisfaction of such covenants and conditions.

Section 7.4   Delivery of Shares. Seller shall have delivered certificates evidencing the Shares of the Company, duly endorsed to Brussels or accompanied by duly executed stock powers in form and substance satisfactory to Brussels.

Section 7.5   Corporate Resolutions. The Company shall provide to Brussels a corporate resolution of the Board of Directors of the Company, which approves the transactions contemplated herein and authorizes the execution, delivery and performance of this Agreement and the documents referred to herein to which it is or is to be a party dated as of the Closing Date.

	  
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Section 7.6   Consents; Transfer of Licenses. All necessary consents and approvals of governmental bodies, lenders, lessors and other third parties, and any transfer of licenses and leases required for the continued operation of the business of the Company.

Section 7.7   Related Transactions. The Related Transactions as set forth in Section 2.3 shall be consummated concurrently with the Closing, except for the transfer of the Building which shall occur as soon as possible after the Closing, and provided further that in the event that the Sellers fails to use their best efforts to consummate the transfer, then Brussels may sue Sellers for specific performance for the transfer of the Building.

Section 7.8     Resignation. The Officers and Directors of the Company shall have provided to Brussels their written resignations.

Section 7.9                  Ability to Audit. The Purchaser shall be satisfied that the Seller’s financial statements can be audited in compliance with Regulation S-B promulgated under the Securities Act of 1933, as amended. 

Section 7.10       Absence of Proceedings. No action, suit or proceeding by or before any court or any governmental or regulatory authority shall have been commenced and no investigation by any governmental or regulatory authority shall have been commenced seeking to restrain, prevent or challenge the transactions contemplated hereby or seeking judgments against the Company or any of its assets.

ARTICLE VIII

INDEMNIFICATION

Section 8.1   Indemnification from Seller and the Company. Seller and the Company, jointly and severally, hereby agree to and shall indemnify, defend (with legal counsel reasonably acceptable to Brussels), and hold Brussels, its officers, directors, employees, affiliates, assigns, agents and legal counsel (collectively, the "Brussels Group") harmless at all times after the date of this Agreement, from and against any and all actions, suits, claims, demands, debts, liabilities, obligations, losses, damages, costs, expenses, penalties or injury (including reasonable attorneys= fees and costs of any suit related thereto) suffered or incurred by any of the Brussels Group arising from: (a) any misrepresentation by, or breach of any covenant or warranty of the Seller or the Company contained in this Agreement, or any exhibit, certificate, or other instrument furnished or to be furnished by Seller or the Company hereunder; (b) any nonfulfillment of any agreement on the part of Seller or the Company under this Agreement; (c) from any material misrepresentation in or material omission from, any certificate or other instrument furnished or to be furnished to Brussels hereunder; or (d) any suit, action, proceeding, claim or investigation against Brussels which arises from or which is based upon or pertaining to Seller’s or the Company’s conduct or the operation or liabilities of the business of the Company prior to the Closing Date.

	  
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Section 8.2   Indemnification from Brussels. Brussels agrees to and shall indemnify, defend (with legal counsel reasonably acceptable to the Seller) and hold Seller, the Company, its officers, directors, employees, agents, affiliates, legal counsel, successors and assigns (collectively, the "Seller’s Group") harmless at all times after the date of the Agreement from and against any and all actions, suits, claims, demands, debts, liabilities, obligations, losses, damages, costs, expenses, penalties or injury (including reasonably attorney’s fees and costs of any suit related thereto) suffered or incurred by any of the Seller’s Group, arising from (a) any misrepresentation by, or breach of any covenant or warranty of Brussels contained in this Agreement or any exhibit, certificate, or other agreement or instrument furnished or to be furnished by Brussels hereunder; (b) any nonfulfillment of any agreement on the part of Brussels under this Agreement; or (c) from any material misrepresentation in or material omission from, any exhibit, certificate or other agreement or instrument furnished or to be furnished to the Seller hereunder; or (d) any suit, action, proceeding, claim or investigation against Sellers which arises from or which is based upon or pertaining to Brussels conduct or the operation of the business of the Company subsequent to the Closing Date.

 

Section 8.3   Defense of Claims. If any lawsuit or enforcement action is filed against any party entitled to the benefit of indemnity hereunder, written notice thereof shall be given to the indemnifying party as promptly as practicable (and in any event not less than fifteen (15) days prior to any hearing date or other date by which action must be taken); provided that the failure of any indemnified party to give timely notice shall not affect rights to indemnification hereunder except to the extent that the indemnifying party demonstrates actual damage caused by such failure. After such notice, the indemnifying party shall be entitled, if it so elects, to take control of the defense and investigation of such lawsuit or action and to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's cost, risk and expense; and such indemnified party shall cooperate in all reasonable respects, at its cost, risk and expense, with the indemnifying party and such attorneys in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom; provided, however, that the indemnified party may, at its own cost, participate in such investigation, trial and defense of such lawsuit or action and any appeal arising therefrom. The indemnifying party shall not, without the prior written consent of the indemnified party, effect any settlement of any proceeding in respect of which any indemnified party is a party and indemnity has been sought hereunder unless such settlement of a claim, investigation, suit, or other proceeding only involves a remedy for the payment of money by the indemnifying party and includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 

Section 8.4   Default of Indemnification Obligation. If an entity or individual having an indemnification, defense and hold harmless obligation, as above provided, shall fail to assume such obligation, then the party or entities or both, as the case may be, to whom such indemnification, defense and hold harmless obligation is due shall have the right, but not the obligation, to assume and maintain such defense (including reasonable counsel fees and costs of any suit related thereto) and to make any settlement or pay any judgment or verdict as the individual or entities deem necessary or appropriate in such individuals or entities absolute sole discretion and to charge the cost of any such settlement, payment, expense and costs, including reasonable attorneys= fees, to the entity or individual that had the obligation to provide such indemnification, defense and hold harmless obligation and same shall constitute an additional obligation of the entity or of the individual or both, as the case may be.

	  
	 	Stock Purchase Agreement - Page 16	 
	

	 

Section 8.5   Right to Offset. In the event that the Brussels Group is entitled to indemnification in accordance with Section 8.1 hereof, then Brussels shall have the right to offset any such amount from any obligations that are then due and payable to the Seller or the Company, or, if the Escrow Agreement is still in place, Brussels shall have the right to reduce the number of shares of Brussels Common Stock then held in escrow in accordance with the terms and conditions of the Escrow Agreement.

Section 8.6   Termination. Indemnification obligations of the Company, Seller, and Brussels shall terminate two (2) years after the date of the signing of this Agreement.

ARTICLE IX

TERMINATION

This Agreement shall terminate upon the occurrence of any of the following events:

	 	(i)	the transactions contemplated by this Agreement are not consummated on or before the Closing Date (as defined in Section 2.1 (unless extended by all of the parties hereto in writing); 

	 	(ii)	all of the parties mutually agree in writing to terminate this Agreement; or

	 	(iii)	any state or federal agency having jurisdiction over approval of this transaction shall disapprove of any part of the proposed transaction.

 

ARTICLE X

MISCELLANEOUS

Section 10.1   Amendment; Waiver. Neither this Agreement nor any provision hereof may be amended, modified or supplemented unless in writing, executed by all the parties hereto. Except as otherwise expressly provided herein, no waiver with respect to this Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any party, and no course of dealing between or among any of the parties, shall constitute a waiver of, or shall preclude any other or further exercise of, any right, power or remedy.

Section 10.2   Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing and delivered in Person, transmitted by facsimile transmission (fax) or sent by registered or certified mail (return receipt requested) or recognized overnight delivery service, postage pre-paid, addressed as follows, or to such other address has such party may notify to the other parties in writing:

	  
	 	Stock Purchase Agreement - Page 17	 
	

	 

	 	
(a)
	
if to the Seller
	 
	 	 	
or the Company:
	
Guy Debbas

	 	 	 	
5877 E. Brown

	 	 	 	
Fresno, California 93727

	 	 	 	 
	 	 	
with a copy to:
	
Robert Koligian, Jr.

	 	 	 	
Attorney at Law

	 	 	 	
5200 N. Palm Avenue, Ste. 301

	 	 	 	
Fresno, California 93704

	 	 	 	 
	 	
(b)
	
if to Brussels:
	
Grant Petersen, Chief Executive Officer

	 	 	 	
One Riverway, Suite 1700

	 	 	 	
Houston, Texas 77056

	 	 	 	 
	 	 	
with a copy to:
	
Robert D. Axelrod

	 	 	 	
Axelrod, Smith & Kirshbaum

	 	 	 	
5300 Memorial Drive, Suite 700

	 	 	 	
Houston, Texas 77007

A notice or communication will be effective (i) if delivered in Person or by overnight courier, on the business day it is delivered, (ii) if transmitted by telecopier, on the business day of actual confirmed receipt by the addressee thereof, and (iii) if sent by registered or certified mail, three (3) business days after dispatch.

Section 10.3   Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

Section 10.4   Assignment; Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the parties hereto. No party hereto may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other parties hereto, which consent will not be unreasonably withheld.

Section 10.5   Survival of Representations, Warranties and Covenants. All representations and warranties made in, pursuant to or in connection with this Agreement shall survive the execution and delivery of this Agreement for the maximum period allowed by law.

Section 10.6   Public Announcements. The parties hereto agree that prior to making any public announcement or statement with respect to the transactions contemplated by this Agreement, the party desiring to make such public announcement or statement shall consult with the other parties hereto and exercise their best efforts to (i) agree upon the test of a joint public announcement or statement to be made by all of such parties or (ii) obtain approval of the other parties hereto to the text of a public announcement or statement to be made solely by the party desiring to make such public announcement; provided, however, that if any party hereto is required by law to make such public announcement or statement, then such announcement or statement may be made without the approval of the other parties.

	  
	 	Stock Purchase Agreement - Page 18	 
	

	 

Section 10.7   Entire Agreement. This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede and cancel all prior representations, alleged warranties, statements, negotiations, undertakings, letters, acceptances, understandings, contracts and communications, whether verbal or written among the parties hereto and thereto or their respective agents with respect to or in connection with the subject matter hereof.

Section 10.8   Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without regard to principles of conflict of laws. In any action between or among any of the parties, whether arising out of this Agreement or otherwise, each of the parties irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in Harris County, Texas.

Section 10.9   Counterparts and Facsimiles. This Agreement may be executed in multiple counterparts and in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute and be deemed to be one and the same instrument and each of which shall be considered and deemed an original for all purposes. This Agreement shall be effective with the facsimile signature of any of the parties set forth below and the facsimile signature shall be deemed as an original signature for all purposes and the Agreement shall be deemed as an original for all purposes. 

Section 10.10       Costs and Expenses. Each party shall pay their own respective fees, costs and disbursements incurred in connection with this Agreement.

Section 10.11             Section Headings. The section and subsection headings in this Agreement are used solely for convenience of reference, do not constitute a part of this Agreement, and shall not affect its  interpretation.

Section 10.12       No Third-Party Beneficiaries. Nothing in this Agreement will confer any third party beneficiary or other rights upon any person (specifically including any employees of The Company) or any entity that is not a party to this Agreement.

Section 10.13       Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

Section 10.14       Further Assurances. Each party covenants that at any time, and from time to time, after the Closing Date, it will execute such additional instruments and take such actions as may be reasonably be requested by the other parties to confirm or perfect or otherwise to carry out the intent and purposes of this Agreement.

Section 10.15       Exhibits Not Attached. Any exhibits not attached hereto on the date of execution of this Agreement shall be deemed to be and shall become a part of this Agreement as if executed on the date hereof upon each of the parties initialing and dating each such exhibit, upon their respective acceptance of its terms, conditions and/or form.

	  
	 	Stock Purchase Agreement - Page 19	 
	

	 

IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase Agreement to become effective as of the date first set forth above.

 

	 	 	 
	 	
HOUSE OF BRUSSELS CHOCOLATES INC.

	 
 	 
 	 
 
		By:  	/s/ 
	 	

	 	
Robert Wesolek, Chief Financial Officer

and Secretary

Date: __________________________

	 	 	 
	 	DEBAS CHOCOLATES, INC. 
	 
 	 
 	 
 
		By:  	/s/ 
	 	

	 	
By: Guy Debbas, President

Date: __________________________

	 	 	 
	 	GUY DEBBAS 
	 
 	 
 	 
 
		By:  	/s/ 
	 	

	 	
Guy Debbas, Individually

Sole Shareholder of DeBas Chocolates, Inc.

d/b/a DeBas Chocolatier

	 	 	 
	 	WENDY DEBBAS 
	 
 	 
 	 
 
		By:  	/s/ 
	 	

	 	Wendy Debbas, Individually

	 
	 	Stock Purchase Agreement - Page 20	 
	

	 

EXHIBITS

	
Exhibit "A"
	
Escrow Agreement

	 	 
	
Exhibit 2.3(i)
	
Employment Agreement

	 	 
	
Exhibit 2.3(iv)
	
Minimum Revenue Guarantee Agreement

	 	 
	
Exhibit 2.3(vi)
	
Agreement of Donald and Betty Warnes (Evidence of cancellation and forgiveness of related party debt)

	 	 
	
Exhibit 3.8 
	
Accounts Receivable of DeBas Chocolates, Inc. as of July 19, 2004

	 	 
	
Exhibit 3.11
	
Taxes due and filings in arrears

	 	 
	
Exhibit 3.13
	
Employee or labor contracts or disputes

	 	 
	
Exhibit 3.15
	
Title to Properties; Encumbrances

	 	 
	
Exhibit 3.18
	
Commercial Lease Agreement (Contracts, leases, powers of attorney or other obligations relating to assets)

	 	 
	
Exhibit 3.22
	
Insurance Plans

	 	 
	
Exhibit 3.23
	
Employee Benefit Plans

	 
	 	Stock Purchase Agreement - Page 21

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