EXHIBIT 10.46
PURCHASE AGREEMENT
Between
Data Business Forms Limited
and
Xxx Xxxxxxx
and
517244 Alberta Ltd.
and
Sundog Printing Limited
made effective as of March 1, 1999
TABLE OF CONTENTS
Page No.
ARTICLE 1 INTERPRETATION
1.1 Definitions................................................2
1.2 Headings...................................................7
1.3 Extended Meanings..........................................7
1.4 Currency...................................................7
1.5 Accounting Principles......................................7
1.6 Schedules..................................................8
1.7 Best of Knowledge..........................................9
ARTICLE 2 DISCLOSURE
2.1 Disclosure.................................................9
ARTICLE 3 PURCHASE AND SALE OF THE SHARES AND ASSIGNMENT OF
SHAREHOLDERS' LOANS
3.1 Purchase and Sale of Shares................................9
3.2 Assignment of Shareholders' Loans.........................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
4.1 Vendors' Representations and Warranties...................11
4.2 Xxxxxxx'x Representations and Warranties..................38
ARTICLE 5 PURCHASERS REPRESENTATIONS AND WARRANTIES
5.1 Purchasers Representations................................41
ARTICLE 6 COVENANTS
6.1 Taxes.....................................................42
6.2 Accounts Receivable.......................................43
6.3 Related Party Agreements..................................43
6.4 Cooperation...............................................43
6.5 Access to Information; Confidentiality; Public Disclosure.44
6.6 Conduct of Business Pending Closing.......................45
6.7 Prohibited Activities.....................................45
6.8 Exclusivity...............................................47
6.9 Notification of Certain Matters...........................48
ARTICLE 7 CONDITIONS
7.1 Conditions for the Benefit of the Purchaser...............48
7.2 Conditions for the Benefit of the Vendor, the Company and
408446....................................................50
7.3 Conditions for the Benefit of the Vendor, Purchaser,
Company and 40844.........................................51
ARTICLE 8 INDEMNIFICATION
8.1 General Indemnification by the Vendor.....................52
8.2 Limitation and Expiration.................................53
8.3 Indemnification Procedures................................54
8.4 General Indemnification by the Purchaser..................56
8.5 Survival of Representations, Warranties and Covenants.....56
8.6 Remedies Cumulative.......................................56
8.7 Right to Set Off..........................................57
ARTICLE 9 NON-COMPETITION
9.1 Prohibited Activities.....................................57
9.2 Confidentiality...........................................58
9.3 Damages...................................................58
9.4 Reasonable Restraint......................................59
9.5 Severability; Reformation.................................59
9.6 Independent Covenant......................................59
9.7 Materiality...............................................59
ARTICLE 10CLOSING
10.1 Closing...................................................60
10.2 Deliveries at Funding Time................................60
10.3 Purchaser Post-Closing Obligations........................61
10.4 Xxxxxxx Contract..........................................62
ARTICLE 11 GENERAL
11.1 Termination...............................................62
11.2 Effect of Termination.....................................63
11.3 Successors and Assigns....................................63
11.4 Entire Agreement; Amendment; Waiver.......................63
11.5 Counterparts..............................................63
11.6 Brokers and Agents........................................64
11.7 Expenses..................................................64
11.8 Specific Performance; Remedies............................64
11.9 Notices...................................................64
11.10 Governing Law.............................................66
11.11 Severability..............................................67
11.12 Absence of Third Party Beneficiary Rights.................67
11.13 Mutual Drafting...........................................67
11.14 Further Representations...................................67
11.15 Further Assurances........................................68
PURCHASE AGREEMENT
THIS AGREEMENT made as of the 1st day of March, 1999.
BETWEEN:
DATA BUSINESS FORMS LIMITED, a Corporation governed by
the laws of Ontario (hereinafter referred to as the
"Purchaser")
OF THE FIRST PART
- and -
XXX XXXXXXX, an individual residing in the City of Calgary, in the
Province of Alberta (hereinafter referred to as the "Vendor" or
"Ramenda")
OF THE SECOND PART
- and -
SUNDOG PRINTING LIMITED, a corporation governed by the
laws of Alberta (hereinafter referred to as the
"Company")
OF THE THIRD PART
- and -
517244 ALBERTA LTD., a corporation governed by the laws of Alberta
(hereinafter referred to as "517244")
OF THE FOURTH PART
WHEREAS the Vendor is the beneficial and registered owner of all
of the 517244 Shares;
AND WHEREAS 517244 is the beneficial and registered owner of
63 Class A common shares in the capital of the Company;
AND WHEREAS, at the Funding Time, the sole assets held by 517244
will be common shares in the capital of the Company;
AND WHEREAS 408446, Xxxxxxx and 517244 in the aggregate own all of
the issued and outstanding shares of the Company;
AND WHEREAS Ramenda desires to sell his shareholder loans and the
517244 Shares to the Purchaser and pursuant to the "Remenda Agreement", Xxx
Xxxxxxx, the sole shareholder of 517244, desires to sell all of his shares in
517244 and his shareholder loans and the Purchaser desires to purchase same such
that the Purchaser becomes the sole direct and indirect shareholder of the
Company;
NOW THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, including any recitals and schedules hereto,
unless something in the subject matter or context is inconsistent therewith:
(a) "408446" means 000000 Xxxxxxx Inc., a body corporate incorporated
under the laws of the Province of Alberta;
(b) "517244" means 000000 Xxxxxxx Ltd, a body corporate incorporated
under the laws of the Province of Alberta;
(c) "1999 Bonus" has the meaning set forth in Section 7.3(d) hereof;
(d) "517244 Shares" means 100 Class "A" Shares in the capital of 517244
owned by Remenda;
(e) "517244 Shareholder Loan" means the amount of $250,448 advanced by
Vendor to 517244 by way of a shareholder's loan and remaining unpaid
as at the Funding Time;
(f) "Account Receivable" has the meaning set forth in Section 4.1(p);
(g) "Affiliates" has the meaning set forth in the Business Corporations
Act (Alberta) or the Business Corporations Act
(Ontario), as the case may be;
(h) "Agreement" means this agreement and all amendments made hereto by
written agreement between the Vendor, 517244, Company and the
Purchaser;
(i) "Balance Sheet Date" means July 31, 1998;
(j) "Benefit Plan" has the meaning set out in Section 4.1(aa)(i)(A);
(k) "Closing" means the consummation of the transactions contemplated by
this Agreement.
(l) "Company" means Sundog Printing Limited, a body corporate
incorporated under the laws of the Province of Alberta;
(m) "Company Financial Statements" has the meaning set out in Section
4.1(l) hereof;
(n) "Confidential Information" has the meaning set out in Section 9.2
hereof;
(o) "Copyright" means any Canadian or foreign copyright owned by the
Company as of the date of this Agreement, including any registration
of copyrights, in Canada or in any foreign county, as well as any
application for a Canadian or foreign copyright registration made by
the Company;
(p) "Effective Date" means March 1, 1999;
(q) "ETA" shall mean Part IX of the Excise Tax Act (Canada), as now in
effect;
(r) "Funding Date" means March 31, 1999 or such other date as may be
agreed to between the Vendor and the Purchaser;
(s) "Funding Time" means 4:00 p.m. (Calgary Time) on the Funding Date;
(t) "Governmental Authority" has the meaning set out in
Section 4.1(y)(i)(F) hereof;
(u) "Xxxxxxx" means Xxxx X. Xxxxxxx, an individual residing in the City
of Calgary, in the Province of Alberta and the sole shareholder of
408446;
(v) "Xxxxxxx Agreement" means that agreement of even date whereunder
inter xxxx Xxxxxxx sells all of the shares Xxxxxxx owns in 408446
and the Comapny to the Purchaser;
(w) "Income Statement" has the meaning set out in Section 4.1(l) hereof;
(x) "Income Tax Act" means the Income Tax Act (Canada), as amended;
(y) "Indemnified Party" has the meaning set out in Section 8.1 hereof;
(z) "Indemnifying Party" has the meaning set out in Section 8.3 hereof;
(aa) "Xxxxxxx Employment Contract" means that certain employment contract
entered into between the Company and Xxxxxx Xxxxxxx as set forth and
described in Schedule 4.1(aa) hereof;
(bb) "Xxxxxxx Pension Obligation" means the obligation of the Company to
fund and to pay an amount of $290,827 to Xxxxxx Xxxxxxx'x registered
defined benefit pension plan;
(cc) "Xxxxxxx Xxxxxxxxx Obligation" means the obligation of the Company
to pay to Xxxxxxx a retirement allowance and severance payment, as
set forth in Schedule 4.1(aa);
(dd) "Landlords" means the landlords under the N.E. Lease and the Parking
Lot Lease;
(ee) "Leased Premises" means the N.E. Warehouse Property, the Parking Lot
and the Sundog Premises;
(ff) "Leases" means, collectively, the N.E. Lease, the Parking Lot Lease
and the Sundog Leases;
(ii) "Lien" means any mortgage, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge, preference, priority or other
security agreement, option, warrant, attachment, right of first
refusal, preemptive, conversion, put, call or other claim or
right, restriction on transfer (other than restrictions imposed by
securities laws), or preferential arrangement of any kind or
nature whatsoever (including any restriction on the transfer of
any assets, any conditional sale or other title retention
agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any
financing statement under the Personal Property Security Act
(Alberta) or comparable law of any jurisdiction);
(jj) "Xxxx" means all right, title and interest in and to any Canadian
or foreign trademarks, service marks and trade names now held by
the Company, including any registration or application for
registration of any trademarks and services marks in Canada or in
any foreign country, as well as any unregistered marks used by the
Company, and any trade dress (including logos, designs, company
names, business names, fictitious names and other business
identifiers) used by the Company in Canada or any foreign country;
(kk) "Material Contracts" has the meaning set out in Section 4.1(u)(ii)
hereof;
(ll) "NASDAQ National Market" means the United States National Market
automated quotation system of the National Association of Securities
Dealers, Inc.;
(mm) "N.E. Lease" means that lease relating to that portion of N.E.
Warehouse Property, dated November 26, 1996 between Xxxxx Holdings
Limited and Sundog Printing Limited, as amended by a lease amending
agreement dated on or about March 1st, 1997 between Xxxxx Holdings
Limited and Sundog Printing Limited respecting premises located on
lands municipally described as 0000 - 00xx Xxxxxx X.X., Xxxxxxx,
Xxxxxxx, leased to the Company;
(nn) "N.E. Warehouse Property" means those lands and buildings located in
the City of Calgary, in the Province of Alberta legally described
as: Plan 7410187, Block 6, Lot 7, Excepting thereout all mines and
minerals;
(oo) "Parking Lot" means that portion of those lands located in the City
of Calgary, in the Province of Alberta legally described as Plan
9412695, Block 45, Lot 3, Excepting thereout all mines and minerals,
leased to the Company;
(pp) "Parking Lot Lease" means that lease relating to the Parking Lot
dated December 22, 1997 between Xxxxxxx Xxxxxxxxxxx as agent for
Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxxxxxxxx and Sundog Printing Limited
respecting lands municipally described as 0000 - 0xx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx;
(qq) "Patent" means any Canadian or foreign patent to which the Company
has title as of the date of this Agreement, as well as any
application for a Canadian or foreign patent made by the Company.
(rr) "Person" has the meaning set out in Section 4.1(y)(i)(H) hereof;
(ss) "Preferred Shares" means the preferred shares held by the Company
in 387177 Alberta Ltd., 000000 Xxxxxxx Inc. and X. Xxxxxxx
Investments Ltd. as more particularly set forth in Schedule
1.1(pp) hereof;
(tt) "Purchase Price" means the aggregate amount payable to the Vendor
pursuant to Section 3.1 hereof;
(uu) "Purchaser" means Data Business Forms Limited;
(vv) "Purchased Interests" means the Shares and the Shareholders' Loans;
(ww) "Related Party Agreements" has the meaning set out in Section
4.1(u)(ii) hereof;
(xx) Intentionally deleted;
(yy) "Remenda" or "Vendor" means Xxx Xxxxxxx, an individual residing in
the City of Calgary in the Province of Alberta, the sole shareholder
of 517244;
(zz) "Remenda Employment Contract" means that certain employment contract
entered into between the Company and Remenda as set forth and
described in Schedule 1.1(t) hereof;
(aaa) "Remenda Insurance" means the policies set forth in Schedule
1.1(u) insofar as they relate to Remenda;
(bbb) "Shareholder" means Remenda;
(ccc) "Shareholders' Loans" means the Sundog Shareholder Loan and the
517244 Shareholder Loan;
(ddd) "Shares" means the 517244 Shares;
(eee) "Significant Customers" has the meaning set out in Section
4.1(u)(i) hereof;
(fff) "Significant Suppliers" has the meaning set out in Section
4.1(u)(i) hereof;
(ggg) "Subsidiaries" has the meaning set forth in the Business
Corporations Act (Alberta) or the Business Corporations Act
(Ontario), as the case may be;
(hhh) "Sundog Leases" means, collectively, the lease between the Company
and 387177 Alberta Inc. and 000000 Xxxxxxx Inc. with respect to the
lands municipally described as 0000 - 0xx Xxxxxx X.X., Xxxxxxx,
Xxxxxxx and the lease between the Company and 566657 Alberta Ltd.
with respect to the lands municipally described as 0000 - 0xx Xxxxxx
X.X., Xxxxxxx, Xxxxxxx;
(iii) "Sundog Shareholder Loan" means the amount of $420,305 advanced by
Vendor to the Company by way of a shareholder's loan and remaining
unpaid as at the Funding Time;
(jjj) "Sundog Premises" means the premises of the Company located at
0000 - 0 Xxxxxx X.X., and 0000 - 0 Xxxxxx X.X., Xxxxxxx, Xxxxxxx;
(kkk) "Tax" shall mean all governmental taxes, levies, duties,
assessments, reassessments and other charges of any nature
whatsoever, whether direct or indirect, including, but not limited
to, income tax, profit tax, gross receipts tax, corporation tax,
sales and use tax, wage tax, payroll tax, employer health tax,
workers' compensation levy, capital tax, stamp duty, real and
personal property tax, land transfer tax, customs or excise duty,
excise tax, turnover or value added tax on goods sold or services
rendered, withholding tax, social security and unemployment
insurance charges and retirement contributions, and any interest,
fines, additions to tax and penalties thereon;
(lll) "Tax Return" shall mean any return (including any information
return, report, statement, schedule, notice, form, estimate, or
declaration of estimated tax) relating to or required to be filed
with any governmental entity in connection with the determination,
assessment, collection or payment of any Tax;
(mmm)"Third Party Claim" has the meaning set out in Section 8.3(b)(i);
(nnn) "Third Party Consents" has the meaning set out in Section
4.1(u)(iv);
(ooo) "TPI Receivable" means the amount of $963,600 owing by The Pacific
Institute to the Company as of January 31, 1999;
(ppp) "Vendor" means Xxx Xxxxxxx;
(qqq) "Vendor's Portion" means 25%, being the percentage of common shares
of the Company directly or indirectly held by the Vendor; and
(rrr) "Year 2000 Compliant and Ready" means that the computer systems and
the presses used in the Company's operations contain the
functionality need for the December 31, 1999 "millennium" date
change.
1.2 Headings
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 Extended Meanings
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine and neuter genders and vice versa and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.
1.4 Currency
All references to currency herein are to lawful money of Canada.
1.5 Accounting Principles
Except as otherwise expressly provided herein or in the Schedules or
agreed between by the parties hereto in writing, all accounting terms used in
this Agreement shall be interpreted, and all financial statements, Schedules,
certificates and reports as to financial matters required to be delivered
hereunder shall be prepared, in accordance with Canadian GAAP consistently
applied
1.6 Schedules
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule 1.1(t) - Remenda Employment Contract
Schedule 1.1(u) - Remenda Insurance
Schedule 3.1(a)(iii) - First Earn-Out
Schedule 3.1(a)(v) - Second Earn-Out
Schedule 3.2(a) - Form of Assignment of 517244
Shareholder Loan
Schedule 4.1(h)(iii) - Promissory Notes
Schedule 4.1(k)(ii) - Add-backs
Schedule 4.1(k)(iv) - Related Party Debt since July 31, 1998
Schedule 4.1(l) - Company Financial Statements
Schedule 4.1(m)(iii) - Plans
Schedule 4.1(o) - Bank Accounts, Powers of Attorney
Schedule 4.1(p) Accounts Receivable
Schedule 4.1(r) - Leases of Real Property
Schedule 4.1(s)(i) - Personal Property
Schedule 4.1(s)(ii) - Liens on Personal Property
Schedule 4.1(t)(i) - Trade Marks and Trade Names
Schedule 4.1(t)(ii) - Patents and Copyrights
Schedule 4.1(t)(iii) - Other Rights
Schedule 4.1(t)(iv) - Third Party Rights
Schedule 4.1(u)(i) - Significant Customers and Suppliers
Schedule 4.1(u)(ii) - Material Contracts
Schedule 4.1(u)(iii) - Reductions and Cancellations
Schedule 4.1(u)(iv) - Third Party Consents
Schedule 4.1(u)(v) - Related Party Commitments
Schedule 4.1(u)(vi) - Exception to Acceleration
Schedule 4.1(x) - Insurance Policies
Schedule 4.1(y)(ii) - Environmental Matters
Schedule 4.1(z) - Employees/Compliance
Schedule 4.1(z)(viii) - Employee List
Schedule 4.1(aa) - Employee Benefit Plans
Schedule 4.1(bb) - Tax Exceptions
Schedule 4.1(cc)(ii) - Conformity with Law, Litigation
Schedule 4.1(cc)(iii) - Litigation
Schedule 4.1(ee) - Changes
Schedule 4.1(gg) - Predecessor Status
Schedule 4.1(jj) - Year 2000 Compliance
Schedule 7.2(d) - Lease of Sundog Premises
Schedule 8.2(d) - Indemnity Schedule
1.7 Best of Knowledge
Any reference herein to "the best of the knowledge" of the Vendor
and the Shareholder or words of similar import shall mean the actual knowledge
of the Vendor and the Shareholder or in the case of 517244 shall mean the actual
knowledge of the Shareholder, directors and officers of 517244. Any reference
herein to "knowledge of the Company" or "Company's knowledge", or words of
similar import means the actual knowledge of the Vendor, Shareholders, directors
and officers of the Company.
ARTICLE 2
DISCLOSURE
2.1 Disclosure
Certain matters may be disclosed on a Schedule hereto that are not
strictly required to be disclosed thereon pursuant to the terms of this
Agreement. Such disclosure is for information purposes only, and should not
constitute an indication or admission of the materiality thereof or create a
standard for disclosure. The Vendor, Company and 517244 shall not be liable for
a breach of any representation or warranty that might result from the failure to
disclose any item on any one Schedule if such item has been disclosed on any
other Schedule hereto in such a manner that a review of such other Schedule
would put Purchaser on notice that such item exists.
ARTICLE 3
PURCHASE AND SALE OF THE SHARES
AND ASSIGNMENT OF THE SHAREHOLDERS' LOANS
3.1 Purchase and Sale of Shares
Subject to the terms and conditions of this Agreement, at the
Funding Time and effective as of the Effective Date, the Vendor will sell to
Purchaser, and Purchaser will purchase from the Vendor, the Shares, for the
Purchase Price.
(a) The Purchase Price for the Shares shall be comprised of and shall be
paid and satisfied by:
(i) $928,794 payable by cheque to the Vendor at the Funding Time
inclusive of interest at a rate of 6.75% per annum
calculated from the Effective Time up to and including the
Funding Date;
(ii) the delivery to the Vendor of a demand promissory note
from the Purchaser in the amount of $275,154. Such demand
promissory note shall be paid in full immediately
following the Funding Time by payment in cash by the
Purchaser in an amount equal to the Vendor's Portion of
the TPI Receivable or by an assignment of the Vendor's
Portion of the TPI Receivable to the Vendor or any
combination thereof, together with an assignment of the
Remenda Insurance;
(iii) a payment of the Vendor's Portion of the amount calculated
pursuant to Schedule 3.1(a)(iii) to the Vendor on March 15,
2000;
(iv) $250,000 to the Vendor on April 28, 2000; and
(v) a payment on July 31, 2001 of the amounts, if any, equal to
the Vendor's Portion, of the amount calculated pursuant to
Schedule 3.1(a)(v) hereof less $1,000,000, which payment to
the Vendor shall not exceed the sum of $250,000.
3.2 Assignment of Shareholders' Loans
(a) In consideration of payment to the Vendor in the amount of $250,448
at the Funding Time, the Vendor shall execute and deliver an
assignment in the form of the assignment set out on Schedule 3.2(a)
hereof assigning to the Purchaser all of Vendor's right, title and
interest in and to the 517244 Shareholder Loan.
(b) In consideration of payment to the Vendor in the amount of $420,305
at the Funding Time, the Vendor shall execute and deliver an
assignment in the form of the assignment set out on Schedule 3.2(b)
hereof assigning to the Purchaser all of Vendor's right, title and
interest in and to the Sundog Shareholder Loan.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Vendors' Representations and Warranties
The Vendor, the Company and 517244, represent and warrant to the
Purchaser that:
(a) Corporate Standing The Company is a corporation duly incorporated
and subsisting under the laws of Alberta as a private company as
that term is defined in the Securities Act (Alberta) with the
corporate power to own its assets and to carry on its business and
has made all necessary filings under all applicable corporate,
securities and taxation laws or any other laws to which the Company
is subject.
(b) Corporate Records The corporate records and minute book of the
Company are complete and true and correct in all material respects
and the minute book contains copies of minutes of all meetings of
the directors, committees of directors and shareholders of the
Company and of all written resolutions of such directors, committees
and shareholders.
(c) Authorization; Validity The Company has the full legal right,
corporate power and authority to enter into this Agreement and the
transactions contemplated hereby and to perform its obligations
pursuant to the terms of this Agreement. Each of the Vendor and
517244 has the full legal right and authority to enter into this
Agreement and the transactions contemplated hereby and to perform
its respective obligations pursuant to the terms of this
Agreement. The execution and delivery of this Agreement by the
Vendor, the Company and 517244 and the performance by the Vendor,
the Company and 517244 of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors of
the Company and 517244 and this Agreement has been duly and
validly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of the Vendor,
the Company and 517244, enforceable in accordance with its terms
subject to limitations with respect to enforcement imposed by law
in connection with bankruptcy or other laws generally affecting
creditors' rights, and to the extent that equitable remedies, such
as specific performance and injunction, are in the discretion of
the court from which they are sought.
(d) Execution and Delivery The execution, delivery and performance of
this Agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of the terms hereof will not:
(i) conflict with, or result in a breach or violation of, any
of the constating documents or by-laws of the Company;
(ii) conflict with, or result in a default (or would constitute
a default but for any requirement of notice or lapse of
time or both) under any document, agreement or other
instrument to which the Vendor, the Company or 517244 is a
party or by which the Vendor, the Company or 517244 is
bound, or result in the creation or imposition of any Lien
on any of the Company's properties pursuant to (A) any law
or regulation to which the Vendor, the Company or 517244
or any of their respective property is subject, or (B) any
judgment, order or decree to which the Vendor, the Company
or any Shareholder is bound or any of their respective
property is subject;
(iii) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization
of the Company; or
(iv) violate any law, order, judgment, rule, regulation, decree
or ordinance to which the Vendor, the Company or any
Shareholder is subject or by which the Vendor, the Company
or any Shareholder is bound provided however, that no
representation and warranty is being provided with respect
to compliance by the Purchaser with the Investment Canada
Act.
(e) Authorized Capital The authorized capital of the Company consists of
an unlimited number of Class A Common Voting Shares, Class B
Non-Voting Preferred Redeemable Shares, Class C Non-Voting Preferred
Redeemable Convertible Shares, and Class D Non-voting Preferred
Redeemable Convertible Shares, of which 252 Class A Common Voting
Shares are issued and outstanding as of the date hereof, of which
the following are validly issued and outstanding:
Shares Beneficial & Registered Owner
------ -----------------------------
160 Class A Common Voting 000000 Xxxxxxx Inc.
63 Class A Common Voting 517244 Alberta Limited
29 Class A Common Voting Xxxx X. Xxxxxxx
All of the issued and outstanding shares in the capital of the
Company have been duly authorized and validly issued and are fully
paid and non-assessable. The Shares are owned of record and
beneficially by Xxxxxxx, 408446 and 517244 in the amounts set forth
above, free and clear of all Liens. All of the issued and
outstanding shares in the capital of the Company were offered,
issued, sold and delivered by the Company in compliance with all
applicable laws concerning the issuance of securities. Further, none
of such shares was issued in violation of any preemptive rights.
There are no voting agreements or voting trusts with respect to any
of the shares.
(f) Entitlements No option, warrant, call, subscription right,
conversion right or other contract or commitment of any kind
exists, of any character, written or oral, which may obligate the
Company to issue or sell any shares in the capital of the
Company. The Company has no obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire any of its shares or any
interests therein or to pay any dividend or make any distribution
in respect thereof.
(g) Shareholders' Loans The total amount of the Sundog Shareholder Loan
is $420,305 and the total amount of the 517244 Shareholder Loan is
$250,448.
(h) Subsidiaries and Debt Interests
(i) The Company has no Subsidiaries or Affiliates;
(ii) Except for the Preferred Shares, the Company does not
presently own, of record or beneficially, or control,
directly or indirectly, any shares, securities convertible
into shares or any other equity interest in any
corporation, limited liability company, association or
other business entity, nor is the Company, directly or
indirectly, a participant in any joint venture,
partnership or other non-corporate entity; and
(iii) Except as set forth on Schedule 4.1(h)(iii), there are no
promissory notes that have been issued to, or are held by,
the Company.
(i) Complete Copies of Materials The Company has delivered to Purchaser
at the Sundog Premises true and complete copies of each agreement,
contract, commitment or other document (or summaries thereof) that
is referred to in the Schedules or that has been requested by
Purchaser.
(j) Absence of Claims Against Company Except for the Shareholders'
Loans, the 1999 Bonus, benefits and wages due to Xxx Xxxxxxx in his
capacity as an employee in the ordinary course of business, and the
performance of this Agreement by the Company, neither 517244 nor the
Vendor has any claims against the Company.
(k) Financial Conditions
(i) The Company's revenue for the fiscal year ended July 31,
1998 was not less than $25,000,000;
(ii) The earnings of the Company before interest and taxes and
bonuses, adjusted to reflect the add-backs set forth on
Schedule 4.1(k)(ii) for the fiscal year ended July 31, 1998
are not less than $2,600,000;
(iii) The sum of the Company's total outstanding interest
bearing indebtedness to banks, and all other financial
institutions and creditors (in each case including the
current portions of such indebtedness, but excluding any
amounts referred to in Section 7.3(d) hereof and Section
7.3(d) of the Remenda Agreement, and any amounts payable
to the Vendor, 408446, Remenda and 517244, and their
Affiliates, any income taxes payable from the Balance
Sheet Date on earnings, operating leases, trade payables
and other accounts payable incurred in the ordinary course
of the Company's business consistent with past practice)
as of the Funding Date will not be more than $3,550,000;
and
(iv) Except as set forth on Schedule 4.1(k)(iv) no related party
debts other than as set forth herein or contemplated hereby
have been incurred or paid since July 31, 1998.
(l) Financial Statements Schedule 4.1(l) includes true,
complete and correct copies of the Company's audited balance sheet
("Balance Sheet") as of the Balance Sheet Date, and income
statement (the "Income Statement") as at and for the year ended
July 31, 1998 and the Company's internally generated, unaudited
balance sheet and income statement as of and for the seven months
ended February 28, 1999 (collectively, the "Company Financial
Statements").
(i) The Company Financial Statements are materially in
accordance with the books and accounts of the Company as at
the Balance Sheet Date;
(ii) The Company Financial Statements have been prepared in
accordance with GAAP consistently applied;
(iii) The Balance Sheet presents fairly the financial condition of
the Company as of the date indicated thereon and the Income
Statement presents fairly the results of its operations for
the period indicated thereon;
(iv) Since the dates of the Company Financial Statements, there
have been no material changes in the Company's accounting
policies;
(v) The financial position of the Company as at the Effective
Date will be at least as good as the financial position of
the Company as at the Balance Sheet Date; and
(vi) Subject to Schedule 4.1(cc)(iii), the Company Financial
Statements fairly present all of the assets and liabilities
of the Company as at the Balance Sheet Date and the
Effective Date including, without limitation, all contingent
liabilities of the Company as at the Balance Sheet Date.
(m) Liabilities and Obligations
(i) Except as disclosed on Schedule 4.1(u)(v), the Company is
not liable for or subject to any liabilities except for:
(A) those liabilities reflected on the Balance Sheet and
not previously paid or discharged;
(B) those liabilities arising in the ordinary course of
its business consistent with past practice under any
contract, commitment or agreement specifically
disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term
or amount involved or otherwise;
(C) the lease of the Sundog Premises; and
(D) those liabilities incurred since the Balance Sheet
Date in the ordinary course of business consistent
with past practice, which liabilities are not,
individually or in the aggregate, material.
(ii) The Company has delivered to Purchaser, in the case of those
liabilities which are not fixed or are contested, a
reasonable estimate of the maximum amount which may be
payable;
(iii) Schedule 4.1(m)(iii) sets forth a summary description of
all plans or projects involving the opening of new
operations, expansion of any existing operations or the
acquisition of any real property or existing business, to
which management of the Company has made any material
expenditure in the two-year period prior to the Effective
Date, which if pursued by the Company would require
additional material expenditures of capital; and
(iv) For purposes of this Section 4.1(m), the term
"liabilities" shall include, without limitation, any
direct or indirect liability, indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, either accrued,
absolute, contingent, mature, unmature or otherwise and
whether fixed or unfixed, xxxxxx or inchoate, liquidated
or unliquidated, secured or unsecured. Schedule
4.1(s)(ii) insofar as it relates to the leases contains a
complete list of all interest-bearing indebtedness of the
Company not disclosed on the Company Financial Statements.
(n) Books and Records The Company has made and kept books and records
and accounts, which, in reasonable detail, accurately and fairly
reflect the activities of the Company. The Company has not engaged
in any transaction, maintained any bank account, or used any
corporate funds except for transactions, bank accounts, and funds
which have been and are reflected in its normally maintained books
and records.
(o) Bank Accounts; Powers of Attorney Schedule 4.1(o) sets forth a
complete and accurate list as of the Funding Date, of:
(i) the name of each financial institution at which the
Company has any account or safe deposit box;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account;
(iv) the name of each person authorized to draw thereon or have
access thereto; and
(v) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the
Company and a description of the terms of such power.
(p) Accounts and Notes Receivable At the Funding Time, the
Company will deliver to Buyer a complete and accurate list, as of
a date not more than two (2) business days prior to the Funding
Date, of the accounts and notes receivable of the Company
(including without limitation receivables from and advances to
employees and the Shareholders) which includes an aging of all
accounts and notes receivables showing amounts due in thirty (30)
day aging increments the Accounts Receivable. All Accounts
Receivable represent valid obligations arising from sales actually
made or services actually performed in the ordinary course of
business. The Accounts Receivable are current and collectible net
of any respective reserves shown on the Company's books and
records (which reserves are adequate and calculated consistent
with past practice). Subject to such reserves, each of the
Accounts Receivable will be collected in full, without any
set-off, within one hundred and twenty (120) days after the day on
which it first became due and payable other than those set forth
in Schedule 4.1(p). There is no contest, claim, or right of
set-off, other than rebates and returns in the ordinary course of
business, under any contract with any obligor of an Account
Receivable relating to the amount or validity of such Account
Receivable.
(q) Permits The Company owns or holds all material permits and other
governmental authorizations, including without limitation permits,
licenses necessary for the continued operation of its business as it
is currently being conducted (the "Permits"). The Permits are valid,
and the Company has not received any notice that any governmental
authority intends to modify, cancel, terminate or fail to renew any
Permit. No present or former officer director, shareholder, or
employee of the Company or any affiliate thereof, or any other
person, firm, corporation or other entity, owns or has any
proprietary, financial or other interest (direct or indirect) in any
Permits. The Company has conducted and is conducting its business in
material compliance with the requirements, standards, criteria and
conditions set forth in the Permits and other applicable orders,
approvals, rules and regulations and is not in violation of any of
the foregoing. The transactions contemplated by this Agreement will
not result in a default under, or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company, by
any Permit.
(r) Real Property
(i) The Company does not own or have any right, title or
interest in any real property except for the Leases.
(ii) Except as set forth in Schedule 4.1(r) and 4.1(y)(ii):
(A) All of the Leases are valid and in full force and
effect. The Company has delivered to the Purchaser
true and complete copies of all of the Leases, all
amendments, renewals, extensions, modifications or
supplements thereto, and all material correspondence
pursuant to which any party to any of the Leases
declared a default thereunder or provided notice of
the exercise of any option granted to such party
under such Lease. The Leases and the Company's
interests thereunder are free of all Liens. The
Company has paid all amounts payable to the
landlords under the Leases;
(B) None of the Leases requires the consent or approval of
any party thereto in connection with the consummation
of the transactions contemplated hereby;
(C) All accounts for work and services performed or
materials placed or furnished by or on behalf of the
Vendor or the Company upon or in respect of
construction in each of the Leased Premises has been
fully paid by closing and no person will be entitled
to claim a lien under the Builders' Lien Act (Alberta)
for work performed by or on behalf of the Vendor or
the Company;
(D) the Vendor or the Company have not received any notice
of any proceedings by any Governmental Authority
having jurisdiction advising of any deficiency or
non-compliance with any building restriction, zoning
by-law, fire code, or any other regulation relating to
any of the Leased Premises, nor is the Vendor or the
Company aware of any such deficiency or
non-compliance;
(E) to the best of the Vendor's or the Company's
knowledge, all obligations, conditions and
requirements under all development permits required to
be obtained by the Company have been met and satisfied
and development completion permits required to be
obtained by the Company evidencing the same have been
obtained from The City of Calgary;
(F) neither the Vendor nor the Company have received any
notice of a proposal to expropriate any part of the
Leased Premises;
(G) each of the N.E. Lease and the Parking Lot Lease have
been adopted and assumed by and are binding upon the
current registered owners of the lands on which the
N.E. Warehouse Property and the Parking Lot are
located;
(H) to the best of the Vendor's or the Company's
knowledge, there are no structural defects, material
non-structural defects or material deficiencies in any
of the buildings on the Leased Premises, and the
Leased Premises are presently in compliance with all
statutory provisions;
(I) to the best of the Vendor's or the Company's
knowledge, there are no outstanding work orders or
deficiency notices against the Vendor or the Company
in respect of the Leased Premises, or other orders
relating to any of the Leased Premises from or
required by any police or fire department,
sanitation or health authorities or from any other
federal, provincial or municipal authority and any
matters under discussion with any such departments
or authorities relating to work or other orders;
(J) notice has not been received by the Vendor or the
Company from any authority having jurisdiction
advising of any default or non-compliance with any
lawful requirement or standard of workmanship in the
construction of the improvements on the Leased
Premises placed thereon by the Vendor or the
Company, or in respect of the plumbing, heating,
ventilating, air conditioning, electrical or other
mechanical systems therein;
(K) the Vendor or the Company have not received from any
of their insurers which carries on their behalf
insurance on the Leased Premises any written notice of
any defect or inadequacy in connection with Leased
Premises or its maintenance or operation that would
affect the insurability of the Leased Premises that
has not been cited;
(L) the Vendor or the Company have not intentionally
withheld any material information relating to adverse
facts or adverse material in connection with the
Leased Premises or the Leases;
(M) except for the use of premises by
Xxxxxxxx-Xxxxxxxxx, neither the Vendor nor the
Company have granted leases, offers to lease,
options with respect to leases, licenses, agreements
to lease, renewals of leases, assignments and
subleases thereof or other tenancy agreements or
other agreements granting any right of occupation,
possession or use with respect to the Leased
Premises or buildings located thereon;
(N) no written notice has been received by the Vendor or
the Company which remains outstanding from any
governmental or quasi-governmental authority
relating to any defect in the construction of the
buildings or any other improvements on the Leased
Premises, or relating to any work order, deficiency
or non-compliance with any building restrictions,
building codes, zoning by-laws, fire codes,
environmental laws, or other regulations, laws,
statutes, ordinances or rules, in each case in
respect of the Leased Premises and the buildings and
improvements thereon; and
(O) each of the Leased Premises are fully serviced by all
required utilities including electricity, natural gas,
water and sewer.
(s) Personal Property
(i) Schedule 4.1(s)(i) sets forth a complete and accurate list
of all material personal property included on the Balance
Sheet and all other personal property owned or leased by
the Company and all trade fixtures and leasehold
improvements owned by both as of the Balance Sheet Date
and acquired since the Balance Sheet Date, including in
each case a list of all leases for material equipment, and
an indication as to which assets are currently owned, or
were formerly owned, by any Shareholder or business or
personal affiliates of any Shareholder or of the Company.
True, complete and correct copies of the leases for
material equipment will be delivered to Purchaser at the
Sundog Premises;
(ii) The Company currently owns or leases all personal property
and other assets necessary to conduct the business and
operations of the Company as they are currently being
conducted, free and clear of all Liens except for such Liens
as are set forth on Schedule 4.1(s)(ii); and
(iii) All of the material, machinery and equipment of the
Company, including those listed on Schedule 4.1(s)(i), are
in good working order and condition, ordinary wear and
tear excepted. All personal property leases set forth on
Schedule 4.1(s)(i) are in full force and effect and
constitute valid and binding agreements of the Company,
and the Company is not in breach of any of their terms.
All fixed assets used by the Company that are material to
the operation of its business are either owned by the
Company or leased under an agreement listed on Schedule
4.1(s)(i) or 4.1(s)(ii).
(t) Intellectual Property
(i) The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights
to use, the registered and unregistered Marks listed on
Schedule 4.1(t)(i). Such schedule lists all of the Marks
registered in Canada or in any foreign country, and all of
the unregistered Marks, that the Company now owns or uses
in connection with its business. Except with respect to
those Marks shown as licensed on Schedule 4.1(t)(i), the
Company owns all of the registered and unregistered
trademarks, service marks, and trade names that it uses.
The Marks listed on Schedule 4.1(t)(i) will not cease to
be valid rights of the Company by reason of the execution,
delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby;
(ii) The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights
to use, all rights in the Patents listed on Schedule
4.1(t)(ii) and in the Copyrights listed on Schedule
4.1(t)(ii). Such Patents and Copyrights constitute all of
the Patents and Copyrights that the Company now owns or is
licensed to use. The Company owns or is licensed to
practice under all patents and copyright registrations
that the Company now owns or uses in connection with its
business;
(iii) The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights
to use, all rights in the trade secrets, franchises, or
similar rights (collectively, "Other Rights") listed on
Schedule 4.1(t)(iii). Those Other Rights constitute all
of the Other Rights that the Company now owns or is
licensed to use. The Company owns or is licensed to
practice under all trade secrets, franchises or similar
rights that it owns, uses or practices under;
(iv) The Marks, Patents, Copyrights, and Other Rights listed on
Schedules 4.1(t)(i), 4.1(t)(ii), 4.1(t)(ii), and
4.1(t)(iii) are referred to collectively herein as the
"Intellectual Property." The Intellectual Property owned
by the Company is referred to herein collectively as the
"Company Intellectual Property." All other Intellectual
Property is referred to herein collectively as the "Third
Party Intellectual Property." Except as indicated on
Schedule 4.1(t)(iv), the Company has no obligations to
compensate any person for the use of any Intellectual
Property nor has the Company granted to any person any
license, option or other rights to use in any manner any
Intellectual Property, whether requiring the payment of
royalties or not; and
(v) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of
any Third Party Intellectual Property license, sublicense
or agreement described in Schedule 4.1(t)(i), 4.1(t)(ii),
4.1(t)(iii) or 4.1(t)(iv). No claims with respect to the
Company Intellectual Property or Third Party Intellectual
Property are currently pending or, to the knowledge of the
Company, are threatened by any person, nor, to the
Vendor's or Company's knowledge, do any grounds for any
claims exist: (A) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by the
Company infringes on any copyright, patent, trademark,
service xxxx or trade secret; (B) against the use by the
Company of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer
software programs and applications used in the Company's
business as currently conducted by the Company; (C)
challenging the ownership, validity or effectiveness of
any of the Company Intellectual Property or other trade
secret material to the Company; or (D) challenging the
Company's license or legally enforceable right to use of
the Third Party Intellectual Property. To the Vendor's or
Company's knowledge, there is no unauthorized use,
infringement or misappropriation of any of the Company
Intellectual Property by any third party. Neither the
Vendor or the Company (i) has been sued or charged in
writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade
secrets, any patents, trademarks, service marks, or
copyrights and which has not been finally terminated or
been informed or notified by any third party that the
Company may be engaged in such infringement or (ii) has
knowledge of any infringement liability with respect to,
or infringement by, the Company of any trade secret,
patent, trademark, service xxxx, or copyright of another.
(u) Significant Customers; Material Contracts and Commitments
(i) Schedule 4.1(u)(i) sets forth a complete and accurate list
of all Significant Customers and Significant Suppliers.
For purposes of this Agreement, "Significant Customers"
are the twenty (20) customers that have effected the most
purchases, in dollar terms, from the Company during each
of the past four (4) fiscal quarters, and "Significant
Suppliers" are the twenty (20) suppliers who supplied the
largest amount by dollar volume of products or services to
the Company during the twelve (12) months ending on the
Balance Sheet Date;
(ii) Schedule 4.1(u)(ii) contains a complete and accurate list
of all contracts, commitments, leases, instruments,
agreements, licenses or permits, written or oral, to which
the Company is a party or by which it or its properties
are bound (including without limitation contracts with
Significant Customers, joint venture or partnership
agreements, contracts with any labor organizations,
employment agreements, consulting agreements, loan
agreements, indemnity or guaranty agreements, bonds,
mortgages, options to purchase land, liens, pledges or
other security agreements) to which the Company and any
affiliate of the Company or any officer, director or
Shareholder of the Company are parties ("Related Party
Agreements"); that may give rise to obligations or
liabilities exceeding, during the current term thereof,
$110,000 or that may generate revenues or income
exceeding, during the current term thereof, $110,000
(collectively with the Related Party Agreements, the
"Material Contracts" for the purposes of this Section 4.1
(u)). The Company has delivered to the Purchaser at the
Sundog Premises true, complete and correct copies of the
Material Contracts;
(iii) Except to the extent set forth on Schedule 4.1(u)(iii),
(A) none of the Company's Significant Customers has
canceled or substantially reduced or, to the knowledge of
the Vendor or the Company, is currently attempting or
threatening to cancel or substantially reduce, any
purchases from the Company, (B) none of the Company's
Significant Suppliers has canceled or substantially
reduced or, to the knowledge of the Vendor or the Company,
is currently attempting to cancel or substantially reduce,
the supply of products or services to the Company, and
(C) the Company has complied with all of its commitments
and obligations and is not in default under any of the
Material Contracts, and no notice of default has been
received with respect to any thereof and (D) there are no
Material Contracts that were not negotiated at arms
length. The Company has not received any material
customer complaints concerning its products and/or
services, nor has it had any of its products returned by a
purchaser thereof except for normal warranty returns
consistent with past history and those returns that would
not result in a reversal of any material revenue;
(iv) Each Material Contract is valid and binding on the Company
and is in full force and effect and is not subject to any
default thereunder by any party obligated to the Company
pursuant thereto. The Company has obtained all necessary
consents, waivers and approvals of parties to any Material
Contracts that are required in connection with any of the
transactions contemplated hereby, or are required by any
Governmental Authority or other third party or are
advisable in order that any such Material Contract remain
in effect without modification after the transactions
contemplated by this Agreement and without giving rise to
any right to termination, cancellation or acceleration or
loss of any right or benefit except as disclosed in
Schedule 4.1(u)(iv);
(v) The approximate outstanding balances on all loans or credit
agreements either (A) between the Company and any person in
which any of the Shareholders owns a material interest, or
(B) guaranteed by the Company for the benefit of any person
in which any of the Shareholders owns a material interest,
are set forth in Schedule 4.1(u)(v).; and
(vi) The pledge, hypothecation or mortgage of all or
substantially all of the Company's assets (including,
without limitation, a pledge of the Company's contract
rights under any Material Contract) will not, except as
set forth on Schedule 4.1(u)(vi), (A) result in the breach
or violation of, (B) constitute a default under,
(C) create a right of termination under, or (D) result in
the creation or imposition of (or the obligation to create
or impose) any lien upon any of the assets of the Company
(other than a lien created pursuant to the pledge,
hypothecation or mortgage described at the start of this
Article 4.1(u)(vi)) pursuant to any of the terms and
provisions of, any Material Contract to which the Company
is a party or by which the property of the Company is
bound.
(v) Government Contracts The Company is not a party to any
government contracts relative to the provisions of its
services.
(w) Inventory The inventory of the Company consists
of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, all of which is
merchantable and fit for the purposes for which it was
procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective, as adjusted for the passage
of time through the Funding Date in accordance with the past
custom and practice of the Company.
(x) Insurance Schedules 4.1(x), 4.1(aa) and 1.1(u)
set forth a complete and accurate list, as of the Balance
Sheet Date, of all insurance policies carried by the Company
and all insurance claims or workmen's compensation claims
received for the past two (2) policy years. The Company has
delivered to Purchaser at the Sundog Premises true, complete
and correct copies of all current insurance policies, all of
which are in full force and effect. All premiums payable
under all such policies set forth in Schedule 4.1(x) have
been paid and the Company is otherwise in full compliance
with the terms of such policies. Such policies of insurance
are of the type and in amounts customarily carried by
persons conducting businesses similar to that of the
Company. To the knowledge of the Company, there have been no
threatened terminations of, or material premium increases
with respect to, any of such policies.
(y) Environmental Matters
(i) For the purposes of this section:
(A) "Environmental Authorization" means all
licenses, permits, grants or other
authorizations issued under or pursuant to any
Environmental Laws pertaining to or relating in
any way to the Company, or any of its assets,
obligations or undertakings;
(B) "Environmental Investigation" includes, but is
not limited to, any oral or written notice
received by the Company from any Governmental
Authority relating to any actual or alleged
Release by the Company of any Hazardous
Substance;
(C) Environmental Laws" means all provisions
relating to the environment that are now in
effect under the common law or any applicable
federal, provincial, municipal or local laws,
statutes, by laws, regulations, rules, orders
(including court orders), judgments, decrees,
ordinances, directives and the terms and
conditions of the Environmental Authorizations;
(D) "Hazardous Substance" means a substance or
mixture of substances that exhibits
characteristics of flammability, toxicity,
corrosivity or reactivity, including, without
limitation, any contaminants, pollutants, noise,
dangerous substances, liquid waste, industrial
waste, hauled liquid waste, toxic substances,
hazardous waste, hazardous materials, hazardous
chemicals and hazardous substances as defined
in, regulated by or controlled pursuant to any
Environmental Law now in effect;
(E) "Environmental Claims" means any and all
administrative, regulatory or judicial actions,
suits, demands, claims, liens, notices of
non-compliance or violation, investigations,
inspections, inquiries or proceedings relating
in any way to any Environmental Laws or any
permit or approval issued under any
Environmental Laws including, without
limitation:
(a) any claim by a Governmental Authority for
enforcement, clean-up, removal, response,
remedial or other actions or damages
pursuant to any Environmental Laws; and
(b) any claim by a Person seeking damages,
contribution, indemnification, cost
recovery, compensation or injunctive or
other relief resulting from or relating to
Regulated Substances, including any
Release thereof, or arising from actual,
alleged or threatened injury to human
health or safety (arising from
environmental matters) or to the
environment;
(F) the term "Governmental Authority" means any
federal, provincial, state, regional, municipal
or local government or any department, agency,
board, tribunal or authority thereof or other
political subdivision thereof and any individual
or group exercising executive, legislative,
judicial, regulatory or administrative functions
of, or pertaining to, government or the operation
thereof;
(G) the term "Release" means any release, spill,
emission, leak, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or
migration of Hazardous Substances into the
environment including, without limitation, the
movement of Hazardous Substances through ambient
air, soil, surface water, ground water, wetlands,
land or sub-surface strata; and
(H) the term "Person" means an individual,
corporation, partnership, trust or other legal
entity and includes any Governmental Authority.
(ii) Except as set forth on Schedule 4.1(y)(ii): (A) there
are no outstanding orders, notices (whether written or
oral) or similar requirements relating to the Company
issued by any Governmental Authority with respect to
any Environmental Laws, (B) there are no matters under
discussion with any Person relating to such orders,
notices or similar requirements and (C) the Company is
not the subject of, nor to the Company's knowledge,
being threatened to be the subject of, any
Environmental Investigation or Environmental Claim
brought under any federal, provincial or local
Environmental Law or any third party claim relating to
environmental conditions on or off the properties
owned, leased operated or otherwise occupied by the
Company.
(iii) Except as set forth on Schedule 4.1(y)(ii), the
business conducted by the Company has been and now is
operated in full compliance with all Environmental
Laws, and to the knowledge of the Company, there are
no facts or circumstances which are likely to give
rise to any non-compliance with any Environmental Law
or any Environmental Claim.
(iv) Except as set forth on Schedule 4.1(y)(ii), (A) no
Environmental Authorizations are required to carry on
the business of the Company and the Company has not
received any notice (whether oral or written) from any
Governmental Authority that any Environmental
Authorizations are required to carry on the business
of the Company; (B) the Company and the Vendor have
not placed any underground storage tanks and Hazardous
Substances and to the best of the Vendor's and
Company's knowledge there are no underground storage
tanks and no Hazardous Substances are present in, on
or under the lands underlying the Sundog Premises
(Schedule 4.1(y)(ii) identifies all underground and
aboveground storage tanks, and the capacity, age and
contents of such tanks, located on real property owned
or leased by the Company), (C) the Company has not
transported, stored, used, manufactured, disposed of,
Released, or exposed its employees or others to any
Hazardous Substance in violation of any Environmental
Law in effect on or before the Funding Date, nor has
the Company manufactured, disposed of, transported,
stored, used Released, or sold, any product containing
a Hazardous Substance in violation of any
Environmental Law;
(v) Except as set forth on Schedule 4.1(y)(ii), the
Company has not ever been prosecuted or convicted of
an offense for non-compliance with any Environmental
Law, nor has it or, to the best of the Company's
knowledge have any of its directors, officers,
employees or agents been fined or otherwise subjected
to any administrative proceeding or the subject of any
Environmental Investigation, alleged or confirmed as a
breach of any Environmental Law, in relation to either
of the business of the Company or the conduct thereof
by or on behalf of the Company;
(vi) Except as set forth on Schedule 4.1(y)(ii), (A) the
Company has not received any notice of any
Environmental Investigation or Environmental Claim
from any Person, including any notice under or
pursuant to any Environmental Law, nor to the
Company's knowledge are there any facts or
circumstances which could give rise to any such
notice, that the Company is a potentially responsible
or liable party for any environmental contamination;
and (B) the Company has not received any notice of any
conditions on or off the properties owned, leased,
operated or otherwise occupied by the Company which
could give rise to any liabilities, known or unknown,
under any Environmental Law or as the result of any
Environmental Claim; and
(vii) Except as set forth on Schedule 4.1(y)(ii), (A) the
Company has not disposed of or arranged (by contract,
agreement or otherwise) for the disposal of any
Hazardous Substance that was generated, stored or used
by the Company at any offsite location that has been
or is listed or proposed for inclusion on any list
promulgated by any Governmental Authority for the
purpose of identifying sites which pose a danger to
health and safety, and (B) there have been no
environmental studies, assessments, reports or
analyses made or prepared in the last five (5) years
relating to the facilities of the Company.
(z) Labor and Employment Matters Except as set forth in Schedule 4.1
(z), with respect to employees of and service providers to the
Company:
(i) the Company is and has been in compliance in all material
respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, including without limitation any such laws
respecting employment discrimination, workers' compensation,
family and medical leave, and occupational health and safety
requirements, and has not and is not engaged in any unfair
labor practice;
(ii) there is not now, nor within the past three (3) years has
there been, any unfair labor practice complaint against the
Company pending or, to the Vendor's or the Company's
knowledge, threatened, before the Alberta Labor Relations
Board or any other government entity;
(iii) there is not now, nor within the past three (3) years has
there been, any Labour strike, slowdown or stoppage actually
pending or, to the Vendor's or the Company's knowledge,
threatened, against or directly affecting the Company;
(iv) to the Vendor's or the Company's knowledge, no labor
representation organization effort exists nor has there been
any such activity within the past three (3) years;
(v) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and, to
the Vendor's or the Company's knowledge, no claims therefor
exist or have been threatened;
(vi) the employees of the Company are not and have never been
represented by any labor union, and no collective bargaining
agreement is binding and in force against the Company or
currently being negotiated by the Company;
(vii) to the Vendor's or the Company's knowledge, no trade union,
council of trade unions, employee bargaining agency or
affiliated bargaining agent:
(A) holds bargaining rights with respect to any of the
Company's employees by way of certification, interim
certification, voluntary recognition, designation or
successor rights, or
(B) has applied to be certified as the bargaining agent of
any of the Company's employees;
(viii) to the Vendor's or the Company's knowledge, no executive or
key employee or any group of employees has plans to
terminate his, her or their employment with the Company, the
Company has not terminated, laid-off or dismissed (whether
actually or constructively) any employees of the Company
during the four (4) weeks prior to the Funding Date;
(ix) the Company does not have any written employment agreement
with any person whomsoever except such agreements as are
listed in Schedule 4.1(z)(viii), which Schedule sets forth
a complete and accurate list, as of March 15, 1999, of all
employees of the Company, their respective positions,
dates of hire with the Company (or any predecessors in
interest thereof), current salaries, benefits and other
remunerations and dates of last salary increases, and
indicates which employees are parties to a written or oral
agreement of employment (including confidentiality and
non-competition agreements);
(x) there have been no claims or allegations brought against
the Company or any officer, director, Shareholder or
employee of the Company or any other Person with whom an
employee may have dealings through his or her employment
by the Company, with respect to employment, employment
practices or terms or conditions of employment, including,
without limiting the generality of the foregoing, claims
alleging sexual harassment or discrimination;
(xi) all liabilities due and payable on or before the Funding
Date with respect to present or former employees of the
Company have been paid or shall be paid in full on or
before the Funding Date, including premiums contributions,
remittance and assessments for unemployment insurance,
Canada Pension Plan, income tax, workers compensation and
any other related legislation, accrued wages, Taxes,
salaries, commissions and Benefit Plan payments;
(xii) all vacation pay, bonuses, commission and other emoluments
relating to the employees of the Company are accurately
reflected in all respects and have been accrued in the
financial records of the Company; and
(xiii) the Company has not entered into any agreement with any of
its employees with respect to termination of their
employment, and the Company has no obligation to reinstate
any employees or former employees.
(aa) Employee Benefit Plans
(i) Except as disclosed in Schedule 4.1(aa), the Company is not
bound by or a party to:
(A) any benefit plan including, without limiting the
generality of the foregoing, any pension plan,
retirement savings plan, retirement compensation
arrangement, salary deferral arrangement, health
care plan or deferred profit sharing plan, or any
benefit arrangement, obligation, custom, or
practice, whether or not legally enforceable, to
provide benefits, other than salary, as compensation
for services rendered, to present or former
directors, employees, agents, or independent
contractors including, without limiting the
generality of the foregoing, employment agreements,
severance agreements, executive compensation
arrangements, incentive programs or arrangements,
sick leave, vacation pay, severance pay policies,
plant closing benefits, salary continuation for
disability, consulting, or other compensation
arrangements, workers' compensation, retirement,
deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life
insurance, tuition reimbursement or scholarship
programs, any plans providing benefits or payments
in the event of a change of control, change in
ownership, or sale of a substantial portion
(including all or substantially all) of the assets
of any business or portion thereof, in each case
with respect to any present or former employees,
directors, or agents maintained by or on behalf of
the Company or any of its Subsidiaries for any of
their employees (each, a "Benefit Plan");
(B) any liability for any unfunded obligation for any
benefit or compensation for employees including,
without limiting the generality of the foregoing, any
profit sharing plans; or
(C) any liability for any contingent obligation which will
become an obligation upon the Closing including,
without limiting the generality of the foregoing, any
retirement allowance or retirement compensation
arrangement.
(ii) Subject to Schedule 4.1 (aa), all Benefit Plans listed in
Schedule 4.1(aa) have been duly registered where required
by, and are in good standing under, all applicable
legislation including, without limiting the generality of
the foregoing, the Income Tax Act and the Employment Pension
Plans Act (Alberta), as amended, and all required employer
contributions under each Benefit Plan have been made and the
applicable funds have been funded in accordance with the
terms of such Benefit Plan and no past service funding
liabilities exist thereunder;
(iii) With respect to each Benefit Plan, true, correct, and complete
copies of all the following documents, to the extent
applicable, have been delivered to Purchaser or its designee
at the Sundog Premises:
(A) all documents constituting the Benefit Plans, including
but not limited to, trust agreements, insurance
policies, service agreements, and formal and informal
amendments thereto;
(B) the most recent summary plan description;
(C) the most recent written descriptions for all non-written
agreements relating to any such plan or arrangement;
(D) all annual reports submitted within the two (2) years
preceding the Funding Date.
(E) all notices of non-compliance that were given within the
two (2) years preceding the Funding Date by any
Governmental Authority with respect to any Benefit Plan;
and
(F) employee manuals or handbooks containing personnel or
employee relations policies.
(iv) Subject to Schedule 4.1 (aa), there are no pending claims or
lawsuits by, against, or relating to any Benefit Plan that
would, if successful, result in liability of the Company, and
no claims or lawsuits have been asserted, instituted or, to
the knowledge of the Vendor or the Company, threatened by,
against, or relating to any Benefit Plan, against the assets
of any trust or other funding arrangement under any Benefit
Plan, by or against the Company with respect to any Benefit
Plan, or by or against the plan administrator or any fiduciary
of any Benefit Plan, and to the Vendors or the Company's
knowledge there are no facts that could form the basis for any
such claim or lawsuit; and
(v) No Benefit Plan contains any provision or is subject to any
law that would prohibit the transactions contemplated by this
Agreement or that would give rise to any vesting of benefits,
severance, termination, or other payments or liabilities as a
result of the transactions contemplated by this Agreement.
(bb) Taxes Except as set forth in Schedule 4.1(bb):
(i) The Company has filed or caused to be filed on a timely
basis with the appropriate federal, provincial or
municipal Governmental Authority all Tax Returns required
to be filed on or before the Funding Date; all such Tax
Returns, as filed, are true, complete and correct in all
respects and fully disclose the income tax, expenses,
deductions and credits to the extent permitted by law;
none of such Tax Returns has been amended; all Taxes due
and payable or remittable with respect to the periods
reflected on such Tax Returns, all assessments and
reassessments and all tax installments and other
remittances required to be made on or prior to the Funding
Date have been or will be fully paid prior to the Funding
Date; there are no pending assessments or reassessments in
respect of a preceding taxation year or other taxable
period or any audits or investigations in progress,
pending or threatened (either in writing or verbally,
formally or informally), by any Governmental Authority
against the Company or any of its assets with respect to
any Taxes; there are no agreements, waivers or other
arrangements providing for an extension of time with
respect to the filing, assessment or reassessment of any
Taxes payable by the Company; there are no agreements with
any federal, provincial or municipal taxing authority that
may affect the subsequent Tax liabilities of the Company;
the reserves and provisions for Taxes on the books of the
Company are adequate for all Taxes which have been or may
in the future be assessed or reassessed against the
Company with respect to the appropriate periods then ended
and all periods prior thereto;
(ii) The Company (A) has withheld for each payment made to each
of its present and former employees, officers and
directors and to any non-resident of Canada the amount of
any Taxes and other deductions required to be withheld
therefrom, (B) has paid the same to the proper Government
Authority within the time periods required under any
applicable legislation, and (C) has complied with all
information reporting and backup withholding requirements,
including maintenance of required records with respect
thereto, in connection with amounts paid to any employee,
independent contractor, creditor, or other third party;
(iii) The income tax liabilities of the Company have been assessed
for all taxation years up to and including the taxation year
ended July 31, 1998; true and complete copies of the federal
and provincial Tax Returns for the Company for each of the
fiscal years ended July 31, 1998, 1997, 1996 and 1995 and
copies of all assessments and reassessments relating to such
taxation years have been delivered to Purchaser or its
representatives;
(iv) The income tax liabilities of Sundog Digital Printing
Limited have been assessed for the taxation years ended July
31, 1996 and July 31, 1995; true and complete copies of the
federal and provincial Tax Returns for Sundog Digital
Printing Limited for each of the fiscal years ended July 31,
1996 and 1995 and copies of all assessments and
reassessments relating to such taxation years have been
delivered to the Purchaser or its representatives;
(v) No amount in respect of any outlay or expense that is
deductible for the purposes of computing the income of the
Company for the purposes of the Income Tax Act has been
owing by the Company for longer than two (2) years to any
person or entity with whom the Company was not dealing at
arm's length (for the purposes of the Income Tax Act) at the
time that outlay or expense was incurred;
(vi) The Company has not, either directly or indirectly,
transferred property to or acquired property from any person
or entity with whom it was not dealing at arm's length (for
the purposes of the Income Tax Act) for consideration other
than consideration equal to the fair market value of the
property at the time of the disposition or acquisition
thereof;
(vii) The Company has not claimed a deduction with respect to an
outlay or expense which Revenue Canada may disallow in the
circumstances;
(viii) All amounts of consideration paid or agreed to be paid by
the Company with respect to the acquisition from, the use
or reproduction of property of, or services rendered by, a
non-resident of Canada not dealing at arm's length with
the Company for the purposes of and within the meaning of
the Income Tax Act have been no greater than would be
considered reasonable in the circumstances where such
non-resident would be dealing at arm's length with such
entity;
(ix) All amounts of consideration paid or agreed to be paid to
the Company with respect to the acquisition by, the use or
reproduction of property by, loan to, or services rendered
to, a non-resident of Canada with whom the Company was not
dealing at arm's length for the purposes of and within the
meaning of the Income Tax Act have been equal to at least
an amount which would be considered reasonable in
circumstances where such non-resident would be dealing at
arm's length with such entity;
(x) There are no circumstances which exist and would result in,
or which have existed and resulted in, any of sections 80 to
and including section 80.04 of the Income Tax Act applying
to the Company;
(xi) The Company has not been a party to an election made under
section 83 nor has the Company been a party to an election
under section 85 of the Income Tax Act;
(xii) The Company is a registrant for the purposes of the ETA; the
Company is not a financial institution within the meaning of
the ETA;
(xiii) The Company has not made any elections under the ETA;
(xiv) All applicable retail sales tax was paid by the Company on
the initial acquisition of its tangible personal property;
(xv) During the three years prior to the Funding Date, except as
set forth in Schedule 4.1(bb), the Company (A) has not ever
done business in, or currently does not do business in, the
United States of America, and (B) has not ever filed, or has
no obligation to file, any Tax Return in the United States
of America;
(xvi) The amount of the Company's liability for unpaid Taxes as
of the Balance Sheet Date did not exceed the amount of the
current liability accruals for Taxes (excluding reserves
for deferred Taxes) shown on the Balance Sheet, and the
amount of the Company's liability for unpaid Taxes for all
periods or portions thereof ending or deemed to have ended
on or before the Effective Date will not exceed the amount
of the current liability accruals for Taxes (excluding
reserves for deferred Taxes) as such accruals are
reflected on the books and records of the Company made as
of the Effective Date;
(xvii) The Company has filed all reports and has created and/or
retained all records required with respect to its
ownership by and transactions with related parties. Each
related person required to maintain records with respect
to transactions between the Company and related persons
has maintained such records. All documents that are
required to be created and/or preserved by related persons
with respect to transactions with the Company were created
and are maintained as required by law;
(xviii) The Company currently utilizes the accrual method of
accounting for income tax purposes and such method of
accounting has not changed in the past five (5) years;
(xix) No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or are
expected to be asserted with respect to Taxes of the
Company and the Company has not received notice (either in
writing or verbally, formally or informally) and does not
expect to receive notice that it has not filed a Tax
Return or paid Taxes required to be filed or paid by it;
the Company is not a party to any action or proceeding for
assessment or collection of Taxes, and no such event has
been asserted or threatened (either in writing or
verbally, formally or informally) against the Company or
any of its assets;
(xx) There are (and as of immediately following the Funding Date
there will be) no Liens on the assets of the Company
relating to or attributable to Taxes;
(xxi) To the Company's knowledge, there is no basis for the
assertion of any claim relating or attributable to Taxes
which, if adversely determined, would result in any Lien on
the assets of the Company or otherwise have an adverse
effect on the Company or its business;
(xxii) None of the Company's assets are leased from or to a Tax
exempt entity under the Income Tax Act (or comparable laws
of any jurisdiction);
(xxiii) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this
Agreement, covering any employee or former employee of the
Company that, individually or collectively, could give rise
to the payment of any amount (or portion thereof) that would
not be deductible pursuant to Sections 9, 18, 20 or 68 of
the Income Tax Act (or comparable laws of any jurisdiction);
(xxiv) The Company is not nor has it ever been, a party to a Tax
indemnity agreement, and the Company has not assumed the Tax
liability of any other Person under contract;
(xxv) The Company's Tax basis in their assets for purposes of
determining their future amortization, depreciation and
other income tax deductions is accurately reflected on the
Company's books and records;
(xxvi) The Company has no net operating losses or other Tax
attributes presently subject to limitation under Section 111
of the Income Tax Act (or comparable laws of any
jurisdiction); and
(xxvii) The Company has filed or caused to be filed, within the time
and manner provided by the Income Tax Act, any necessary tax
elections, pursuant thereto that relate to the amount of
taxable income reported in any tax returns filed for
taxation years ending on or before the Effective Date.
(cc) Conformity with Law; Litigation
(i) The Company has not violated any law or regulation or any
order of any court or federal, provincial, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over it;
(ii) Except as set out on Schedule 4.1(cc)(ii) no Shareholder
has, at any time: (i) committed any criminal act (except
for minor traffic violations); (ii) engaged in acts of
fraud, dishonesty, gross negligence or moral turpitude;
(iii) filed for personal bankruptcy; or (iv) been an
officer, director, manager, trustee or controlling
shareholder of a company that made an assignment in
bankruptcy; and
(iii) Except as set forth on Schedule 4.1(cc)(iii), there are no
claims, actions, suits or proceedings, pending or, to the
knowledge of the Vendor or the Company, threatened or
commenced against or affecting the Vendor or the Company
at law or in equity, or before or by any federal,
provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality
having jurisdiction over it and no notice of any claim,
action, suit or proceeding, whether pending or threatened,
has been received. There are no judgments, orders,
injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by
arbitration) against the Vendor or the Company or against
any of its properties or business.
(dd) Intentionally left blank.
(ee) Absence of Changes Since the Balance Sheet Date, the Company has
conducted its business in the ordinary course and, except as
contemplated herein or as set forth on Schedule 4.1(ee) or disclosed
herein, there has not been:
(i) any change, by itself or together with other changes, that
has materially adversely affected, or is likely to
materially adversely affect, the business, operations,
affairs, prospects, properties, assets, profits or condition
(financial or otherwise) of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of
the Company;
(iii) any change in the authorized capital of the Company or in
its outstanding securities or any change in its ownership
interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the shares, or any direct or indirect
redemption, purchase or other acquisition of any of the
shares of the Company;
(v) any increase in the compensation, bonus, sales commissions
or fee arrangements payable or to become payable by the
Company to any of its officers, directors, Shareholders,
employees, consultants or agents, except for ordinary and
customary bonuses and salary increases for employees in
accordance with past practice, nor has the Company entered
into or amended any Employee Benefit Plan, employment,
severance or other agreement relating to compensation or
fringe benefits;
(vi) any work interruptions, labor grievances or claims filed, or
any similar event or condition of any character, materially
adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to
any person, including without limitation the shareholders
and their Affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company, including without
limitation any indebtedness or obligation of the
Shareholders and their Affiliates, provided that the Company
may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past
practice;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the
assets, property or rights of the Company or requiring
consent of any party to the transfer and assignment of any
such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or
assets outside of the ordinary course of business of the
Company;
(xi) any waiver of any material rights or claims of the Company;
(xii) any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which
the Company is a party;
(xiii) any transaction by the Company outside the ordinary course
of business;
(xiv) any capital commitment by the Company, either individually
or in the aggregate, exceeding $110,000;
(xv) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by
the Company or the revaluation by the Company of any of its
assets;
(xvi) any creation or assumption by the Company of any mortgage,
pledge, security interest or lien or other encumbrance on
any asset (other than liens arising under existing lease
financing arrangements which are not material and liens for
Taxes not yet due and payable);
(xvii) any entry into, amendment of, relinquishment, termination or
non- renewal by the Company of any contract, lease
transaction, commitment or other right or obligation
requiring aggregate payments by the Company in excess of
$110,000;
(xviii) any loan by the Company to any Person, incurring by the
Company of any indebtedness, guaranteeing by the Company of
any indebtedness, issuance or sale of any debt securities of
the Company or guaranteeing of any debt securities of
others; or
(xix) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the
preceding clauses (i) through (xix) (other than negotiations
with Purchaser and its representatives regarding the
transactions contemplated by this Agreement).
(ff) Disclosure All written agreements, lists, schedules,
instruments, exhibits, documents, certificates, reports,
statements and other writings furnished to Purchaser pursuant
hereto or in connection with this Agreement or the transactions
contemplated hereby, are and will be complete and accurate in all
material respects. No representation or warranty by the Vendor,
the Company or 517244 contained in this Agreement, in the
Schedules attached hereto or in any certificate furnished or to be
furnished by the Vendor, the Company or 517244 to Purchaser in
connection herewith or pursuant hereto contains or will contain
any untrue statement of a material fact or omits or will omit to
state any material fact necessary in order to make any statement
contained herein or therein not misleading. There is no fact
known to the Vendor, the Company or 517244 that has specific
application to the Vendor, the Company and 517244 (other than
general economic or industry conditions) and that materially
adversely affects or, as far as the Vendor, 517244 and the Company
can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations
of the Company that has not been set forth in this Agreement or
any Schedule hereto.
(gg) Predecessor Status; Schedule 4.1(gg) sets forth a listing of
all legal names, trade names, fictitious names or other names
(including, without limitation, any names of divisions or
operations) of the Company and all of its predecessor companies
during the five-year period immediately preceding the Closing,
including without limitation the names of any entities from whom
the Company has acquired material assets. During the five (5)
year period immediately preceding the Closing, the Company has
operated only under the names set forth on Schedule 4.1(gg) in the
jurisdiction or jurisdictions set forth on Schedule 4.1(gg) and
has not been a subsidiary or division of another corporation or a
part of an acquisition which was later rescinded.
(hh) Location of Chief Executive Offices The Company's chief executive
offices are located at 0000 - 0 Xxxxxx X.X., Xxxxxxx, Xxxxxxx.
(ii) Location of Equipment and Inventory All inventory and equipment
held on the date hereof by the Company is located at either the
Sundog Premises or at 0000 - 00xx Xxxxxx X.X., Xxxxxxx or at the
premises of Coast Paper in Calgary. For purposes of this section,
(a) the term "inventory" shall mean any inventory of whatever
nature owned by the Company as of the date hereof, and, in any
event, shall include, but shall not be limited to, all
merchandise, inventory and goods wherever located, together with
all goods, supplies, incidentals, packaging materials and any
other items used or usable in manufacturing, processing, packaging
or shipping the same; in all stages of production -- from raw
materials through work-in-process to finished goods; and (b) the
term "equipment" shall mean any equipment of any nature owned by
the Company as of the date hereof, and, in any event, shall
include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures and vehicles owned by the Company as of the
date hereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or
affixed thereto.
(jj) Year 2000 Compliance The Company is currently undergoing a
Year 2000 compliance review but has not yet completed same. As such,
the Company may not be Year 2000 Compliant and Ready. To the best of
the knowledge of the Vendor, the Company and 408443 no customer,
supplier of the Company or party with whom the Company has business
dealings has notified the Company that they are not or may not be
Year 2000 Compliant and Ready. Schedule 4.1(jj) appends various
reports on Year 2000 Compliance and a Company internal memorandum in
regard to Year 2000 Compliance.
4.2 Remenda's Representations and Warranties
The Vendor represents and warrants to the Purchaser that:
(a) 517244 is a corporation duly amalgamated, organized and subsisting
under the laws of Alberta as a private company as that term is
defined in the Securities Act (Alberta) with the corporate power to
own its assets and to carry on its business and has made all
necessary filings under all applicable corporate, securities and
taxation laws or any other laws to which 517244 is subject;
(b) the authorized capital of 517244 consists of 25,000 Class A Common
Shares, 25,000 Class B Common Shares and unlimited number of C
Preferred Shares which as of the Funding Date there is issued and
outstanding the following as fully-paid and non-assessable:
Shares Beneficial and Registered Owner
------ -------------------------------
100 Class "A" Shares Vendor
(c) The Vendor is the beneficial and registered owner of the shares
referred to in Section 3.2(b) above which, at the Funding Date, will
be free and clear of all Liens and any other rights of others;
(d) The Vendor has good and sufficient power, authority, and right to
enter into and deliver this Agreement and as at the Funding Date to
transfer the legal and beneficial title and ownership of the 517244
Shares to the Purchaser free and clear of all Liens and any other
rights of others;
(e) there is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon:
(i) The Vendor to sell, transfer, assign, pledge, charge,
mortgage or in any other way dispose of or encumber any of
the 517244 Shares other than pursuant to the provisions of
this Agreement, or
(ii) to allot or issue any of the unissued shares of 517244 or to
create any additional class of shares.
(f) neither the entering into nor the delivery of this Agreement nor the
completion of the transactions contemplated hereby by the Vendor or
by 517244 will result in the violation of:
(i) any of the provisions of the constating documents or
by-laws of 517244,
(ii) any agreement or other instrument to which 517244 is a party
or by which 517244, is bound, or
(iii) any applicable law, rule or regulation.
(g) at the Funding Time, the sole asset of 517244 will be 100 Class "A"
Shares in the capital of the Company registered in its name and
517244 will be the owner of such assets with a good and marketable
title, free and clear of all Liens and any other rights of others;
(h) as at the Funding Date, there will be no outstanding liabilities
against 517244 other than the 517244 Shareholders Loan;
(i) 517244 is not a party to any contract or contractual commitment
other than those agreements entered into in accordance with the
terms of this Agreement;
(j) 517244 is not a party to or bound by any guarantee, indemnification,
surety or similar obligation other than guarantees granted on behalf
of the Company;
(k) 517244 is not a party to any lease or agreement in the nature of a
lease for real property, whether as lessor or lessee;
(l) as of the Funding Date, and except for the shares it holds in the
Company, 517244 will not have any Subsidiaries or agreements,
options or commitments to acquire any shares or securities of any
corporation or to acquire or lease any business operations, real
property or assets;
(m) there are no actions, suits or proceedings (whether or not
purportedly on behalf of 517244) pending or threatened against or
adversely affecting, or which could adversely affect, 517244 or
any of its assets before or by any federal, provincial, municipal
or other governmental court, department, commission, board,
bureau, agency or instrumentality, domestic or foreign, whether or
not insured, and which might involve the possibility of any
judgment or liability against 517244;
(n) 517244 is conducting its business in compliance with all
applicable laws, rules, regulations, notices, approvals and orders
of Canada and of the Province of Alberta and all municipalities
thereof in which its business is carried on, is not in material
breach of any such laws, rules, regulations, notices, approvals or
orders and is duly licensed, registered or qualified, and duly
possesses all material permits, in the Province of Alberta and all
municipalities thereof in which 517244 carries on its business to
enable its business to be carried on as now conducted and its
assets to be owned, leased and operated, and all such licences,
registrations, qualifications and permits are valid and subsisting
and in good standing and none of the same contains or is subject
to any term, provision, condition or limitation which has or may
have a material adverse effect on the operation of its business or
which may materially adversely change or terminate such licence,
registration, qualification or permit by virtue of the completion
of the transactions contemplated hereby; and
(o) 517244 does not have any liability, obligation or commitment for
the payment of income taxes, corporation capital taxes or any
other taxes or duties of whatever nature or kind or interest or
penalties with respect thereto, except such as are disclosed in
the 517244 financial statements or such taxes or duties not yet
due as have arisen since the date of last 517244 financial
statements in the usual and ordinary course of business and for
which adequate provision in the accounts of 517244 has been made.
517244 is not in arrears with respect to any required
withholdings, remittances or instalment payments of any tax or
duty of any kind and has not filed any waiver for a taxation year
under the Income Tax Act or any other legislation imposing tax on
it. 517244 has, at the prescribed times, filed all tax returns,
information returns and schedules thereto required to be filed by
it in all applicable jurisdictions. All such tax returns properly
reflect, and do not in any respect understate, the taxable income
or the liability for taxes of 517244 in a relevant taxation year
or calendar year. Without limiting the generality of the
foregoing, 517244 is in compliance with all registration, timely
reporting, and remittance obligations in respect of all provincial
and federal sales tax legislation and the goods and services tax.
There are no actions, suits, or other proceedings or
investigations or claims in progress, pending or threatened
against 517244 in respect of any taxes, governmental charges, or
assessments and, in particular, there are no currently outstanding
reassessments or written enquiries that have been issued or raised
by any governmental authority relating to any such taxes,
governmental charges and assessments. To the knowledge of the
Vendor and 517244, there is no basis for any adverse reassessment
by any taxing authority for any year remaining open for
reassessment.
ARTICLE 5
PURCHASER'S REPRESENTATIONS AND WARRANTIES
5.1 Purchaser's Representations
The Purchaser represents and warrants to the Vendor that:
(a) Corporate Standing The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the Province
of Ontario, and is duly authorized and qualified to do business
under all applicable laws, regulations, ordinances and orders of
public authorities to carry on its business in the places and in the
manner as now conducted.
(b) Authorization; Validity of Obligations The representative of the
Purchaser executing this Agreement has all requisite corporate power
and authority to enter into and bind the Purchaser to the terms of
this Agreement. The Purchaser has the full legal right, power and
corporate authority to enter into this Agreement and the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Purchaser and the performance by the Purchaser of
the transactions contemplated herein has been duly and validly
authorized by the Board of Directors of the Purchaser and this
Agreement has been duly and validly authorized by all necessary
corporate action. This Agreement is a legal, valid and binding
obligation of the Purchaser enforceable in accordance with its
terms; and
(c) No Conflicts The execution, delivery and performance of this
Agreement, the consummation of the transactions herein contemplated
hereby and the fulfillment of the terms hereof will not:
(i) conflict with, or result in a breach or violation of the
constating documents or by-laws of the Purchaser;
(ii) conflict with, or result in a default (or would constitute
a default but for a requirement of notice or lapse of time
or both) under any document, agreement or other instrument
to which the Purchaser is a party, or result in the
creation or imposition of any Lien on any of the
Purchaser's properties pursuant to (A) any law or
regulation to which the Purchaser or any of its property
is subject, or (B) any judgment, order or decree to which
the Purchaser is bound or any of its property is subject;
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other
authorization of the Purchaser;
(iv) violate any law, order, judgment, rule, regulation, decree
or ordinance to which the Purchaser is subject, or by which
the Purchaser is bound including, without limitation, the
Investment Canada Act.
ARTICLE 6
COVENANTS
6.1 Taxes
The following provisions shall govern the allocation of
responsibility as between the Company and 517244, on the one hand, and the
Vendor, on the other, for certain tax matters following the Effective Date:
(a) The Vendor shall prepare or cause to be prepared and file or cause
to be filed, within the time and in the manner provided by law,
all Tax Returns of the Company and 517244 for all fiscal periods
ending on or deemed to have ended on or before the Effective Date
that are due after the Effective Date. The Vendor shall pay to
the Company and 517244 on or before the date of such Tax Returns
the amount of all Taxes shown as due on such Tax Returns to the
extent that such Taxes are not reflected in the current liability
accruals for Taxes (excluding reserves for deferred Taxes) shown
on the books and records of the Company and 517244 as of the
Effective Date. Such Returns shall be prepared and filed in
accordance with applicable law and in a manner consistent with
past practices and shall be subject to review and approval by
Purchaser. To the extent reasonably requested by the Vendor or
required by law, Purchaser shall participate in the filing of any
Tax Returns filed pursuant to this paragraph;
(b) The Purchaser, the Company, and 517244 on one hand, and the Vendor
on the other hand, shall (A) cooperate fully, as reasonably
requested, in connection with the preparation and filing of Tax
Returns pursuant to this Section 6.1 and any audit, litigation or
other proceeding with respect to Taxes; (B) make available to the
other, as reasonably requested, all information, records or
documents with respect to Tax matters pertinent to the Company and
517244 for all periods ending prior to or including the Effective
Date; and (C) preserve information, records or documents relating to
Tax matters pertinent to the Company and 517244 that is in their
possession or under their control until the expiration of any
applicable statue of limitations or extensions thereof;
(c) The Vendor shall timely pay all transfer, documentary, sales, use,
stamp, registration and other Taxes and fees applicable to the
Vendor arising from or relating to the transactions contemplated by
this Agreement, and the Vendor shall, file all necessary Tax Returns
and other documentation with respect to all such transfers,
documentary, sales, use stamp, registration, and other Taxes and
fees. If required by applicable law the Purchaser and the Company
will join in the execution of any such Tax Returns and other
documentation;
(d) The Purchaser does not assume and shall not be liable for any Taxes
under the Income Tax Act or any other Taxes whatsoever which may be
or become payable by the Vendor and 517244 including, without
limiting the generality of the foregoing, any Taxes resulting from
or arising as a consequence of this Agreement;
(e) The Vendor shall prepare or cause to be prepared and file or cause
to be filed, within the time and manner provided by the Income Tax
Act, the elections pursuant to Section 16.1 thereof, that relate to
the August 26, 1998 financing transaction entered into with the Bank
of Nova Scotia; and
(f) The Company shall be responsible for the expense of filing its Tax
Return resulting from the transactions contemplated by this
Agreement.
6.2 Accounts Receivable
In the event that all Accounts Receivable as at the Funding Date are
not collected in full (subject to and net of reserves specified in Section
4.1(p)) within one hundred and twenty (120) days after the Closing then, at the
request of the Company or Purchaser, the Vendor shall pay the Company an amount
equal to the Vendor's Portion of the Accounts Receivable not so collected, and
upon receipt of such payment the Company shall assign to the Vendor, all rights
with respect to the uncollected Accounts Receivable giving rise to the payment
and shall also thereafter promptly remit to Vendor any excess collections
received by it with respect to such assigned Accounts Receivable. Subsequent to
the Funding Time the Purchaser shall cause the Company to use all commercially
reasonable efforts to collect the Accounts Receivable.
6.3 Related Party Agreements
The Vendor, the Company and/or 517244, as the case may be, shall
terminate any Related Party Agreements, which Purchaser requests the Vending the
Company or 517244 to terminate, whether before or after the Funding Time, with
the exception of the leases of the Sundog Premises,.
6.4 Cooperation
(a) The Company, Vendor, 517244 and Purchaser shall each deliver or
cause to be delivered to the other on the Funding Date, and at
such other times and places as shall be reasonably agreed to, such
instruments as the other may commercially reasonably request for
the purpose of carrying out this Agreement. In connection
therewith, if required, the president or chief financial officer
of the Company and 517244 shall execute any documentation
reasonably required by Purchaser's independent public accountants
(in connection with such accountant's audit of the Company and
517244) or the NASDAQ National Market;
(b) The Vendor, the Company and 517244 shall cooperate and use their
commercially reasonable efforts to have the current officers,
directors and employees of the Company and 517244 cooperate with
the Purchaser on and after the Funding Date in furnishing
information, evidence, testimony and other assistance in
connection with any filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Funding Date;
(c) Each party hereto shall cooperate in obtaining all consents and
approvals required under this Agreement to effect the transactions
contemplated hereby; and
(d) The Company, the Vendor, 517244 and the Purchaser shall file all
notices and other information and documents required under the
Investment Canada Act as promptly as practicable after the date
hereof.
6.5 Access to Information; Confidentiality; Public Disclosure
(a) Between the date of this Agreement and the Funding Date, the
Vendor will afford to the officers and authorized representatives
of the Purchaser access to (A) all of the sites, properties, books
and records of the Company and 517244 and (B) such additional
financial and operating data and other information as to the
business and properties of the Company and 517244 as the Purchaser
may from time to time reasonably request, including without
limitation, access upon reasonable request to the Company's
employees, customers, vendors, suppliers and creditors for due
diligence inquiry;
(b) The Purchaser recognizes and acknowledges that it had in the past,
currently has, and in the future may possibly have, access to
certain confidential information of the Company, such as lists of
customers, operational policies, and pricing and cost policies
that are valuable, special and unique assets of the Company's
business. The Purchaser agrees that, unless there is a Closing,
it will not disclose confidential information with respect to the
Company to any person, for any purpose or reason whatsoever,
except to authorized representatives of the Company and to counsel
and other advisers, provided that such advisers (other than
counsel) agree to the confidentiality provisions of this Section
6.5(b), unless:
(A) such information becomes known to the public generally
through no fault of the Purchaser;
(B) disclosure is required by law or the order of any
governmental authority under color of law; or
(C) the disclosing party reasonably believes that such
disclosure is required in connection with the defense
of a lawsuit against the disclosing party;
provided, that prior to disclosing any information pursuant to
clause (A), (B) or (C) above, the Purchaser shall give prior written
notice thereof to the Company and provide the Company with the
opportunity to contest such disclosure and shall cooperate with
efforts to prevent such disclosure; and
(c) Prior to the Funding Date, neither the Vendor, the Company nor
517244 shall make any disclosure (whether or not in response to an
inquiry) of the subject matter of this Agreement unless such
disclosure is previously approved by the Purchaser in writing. The
Purchaser agrees to keep the Vendor, the Company and 517244 apprised
in advance of any disclosure of the subject matter of this Agreement
by the Purchaser prior to the Funding Date.
6.6 Conduct of Business Pending Closing
Between the Effective Date and the Funding Date, the Company and
517244 will (except as requested or agreed by Purchaser or except as
contemplated by the terms hereof):
(a) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management,
operation or accounting;
(b) maintain its properties and facilities, including those held under
the Leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and preserve its
business organization intact, retain its present officers and key
employees and maintain its relationships with suppliers, vendors,
customers, creditors and others having business relations with it;
(f) maintain compliance with all permits, laws, rules and regulations,
consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities;
(g) maintain present debt and lease instruments and not enter into new
or amended debt or lease instruments; and
(h) maintain present salaries and commission levels for all officers,
directors, employees, agents, representatives and independent
contractors, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice or as
contemplated herein.
6.7 Prohibited Activities
Between the Effective Date and the Funding Date, the Company and
517244 will not, without the prior written consent of Purchaser, not to be
unreasonably withheld unless the same is contemplated by the terms hereof:
(a) make any change in their respective articles of incorporation or
bylaws, or authorize or propose the same;
(b) issue, deliver or sell, authorize or propose the issuance, delivery
or sale of any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind, or
authorize or propose any change in its equity capitalization, or
issue or authorize the issuance of any debt securities;
(c) declare or pay any dividend, or make any distribution (whether in
cash, stock or property) in respect of its stock whether now or
hereafter outstanding, or split, combine or reclassify any of its
shares or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its shares,
or purchase, redeem or otherwise acquire or retire for value any
shares;
(d) enter into any contract or commitment or incur or agree to incur any
liability or make any capital expenditures, or guarantee any
indebtedness, except in the ordinary course of business and
consistent with past practice in an amount in excess of $110,000,
including contracts to provide services to customers;
(e) increase the compensation payable or to become payable to any
officer, director, shareholder, employee, agent, representative or
independent contractor, except for ordinary and customary bonus and
salary increases, make any bonus or management fee payment to any
such person; make any loans or advances; adopt or amend any plan or
benefit arrangement; or grant any severance or termination pay;
(f) create or assume any mortgage, pledge or other lien or encumbrance
upon any assets or properties whether now owned or hereafter
acquired;
(g) sell, assign, lease, pledge or otherwise transfer or dispose of any
property or equipment except in the ordinary course of business
consistent with past practice;
(h) acquire or negotiate for the acquisition of (by merger,
consolidation, purchase of a substantial portion of assets or
otherwise) any business or the start-up of any new business, or
otherwise acquire or agree to acquire any assets that are material,
individually or in the aggregate, to the Company;
(i) amalgamate or consolidate or agree to amalgamate or consolidate with
or into any other corporation;
(j) waive any material rights or claims of the Company, provided that
the Company may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past
practice;
(k) commit a breach of or amend or terminate any material agreement,
permit, license or other right;
(l) enter into any other transaction:
(i) that is not negotiated at arm's length with a third party
not affiliated with the Company or any officer, director or
Shareholder; or
(ii) outside the ordinary course of business consistent with
past practice; or
(iii) prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) revalue any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business consistent
with past practice;
(o) make any tax election other than in the ordinary course of
business and consistent with past practice, change any tax
election, adopt any tax accounting method other than in the
ordinary course of business and consistent with past practice,
change any tax accounting method, file any Tax Return (other than
any estimated tax returns, payroll tax returns or sales tax
returns) or any amendment to a Tax Return, enter into any closing
agreement, settle any tax claim or assessment, or consent to any
tax claim or assessment, without the prior written consent of
Purchaser; or
(p) take, or agree (in writing or otherwise) to take, any of the actions
described in Sections 6.7(a) through (o) above, or any action which
would make any of the representations and warranties of the Vendor,
Company and 517244 contained in this Agreement untrue or result in
any of the conditions set forth in Article 7 not being satisfied.
6.8 Exclusivity
None of the Vendor, the Company, 517244 or any agent, officer,
director or any representative of the Vendor, the Company or 517244 or the
Vendor will, during the period commencing on the date of this Agreement and
prior to the earlier to occur of the Funding Time or the termination of this
Agreement in accordance with its terms, directly or indirectly:
(a) solicit, encourage or initiate the submission of proposals or offers
from any Person for;
(b) engage in any discussions pertaining to; or
(c) furnish any information to any person other than Purchaser relating
to
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the Company or a merger, consolidation or business
combination of the Company.
In addition to the foregoing, if any one of the Vendor, the Company
or 517244 receives any unsolicited offer or proposal, or has actual knowledge of
any unsolicited offer or proposal, relating to any of the above, the Vendor, the
Company or 517244 shall immediately notify Purchaser thereof, including the
identity of the party making such offer or proposal and the specific terms of
such offer or proposal.
6.9 Notification of Certain Matters
Each party hereto shall give prompt notice to the other parties
hereto of:
(a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation
or warranty of it contained herein to be untrue or inaccurate in any
material respect at or prior to the Funding Time; and
(b) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by
such party hereunder.
The delivery of any notice pursuant to this Section 6.9 shall not,
without the express written consent of the other parties be deemed to (x) modify
the representations or warranties hereunder of the party delivering such notice,
(y) modify the conditions set forth in Articles 7 and 8, or (z) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
ARTICLE 7
CONDITIONS
7.1 Conditions For the Benefit of the Purchaser
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction or waiver, on or
before the Funding Date, of the following conditions and deliveries:
(a) All of the representations and warranties of the Vendor, the
Company and 517244 contained in this Agreement shall be true,
correct and complete on and as of the Funding Date with the same
effect as though such representations and warranties had been made
on and as of such date; all of the terms, covenants, agreements
and conditions of this Agreement to be complied with, performed or
satisfied by the Vendor, the Company and 517244 on or before the
Funding Date shall have been duly complied with, performed or
satisfied; and a certificate to the foregoing effects dated the
Funding Date and signed on behalf of the Vendor, the Company and
517244 and shall have been delivered to Purchaser;
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision
challenging Purchaser's proposed acquisition of the Shares, or
limiting or restricting Purchaser's conduct or operation of the
business of the Company (or its own business) following the
transactions contemplated by this Agreement shall be in effect,
nor shall any proceeding brought by an administrative agency or
commission or other Governmental Authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending;
(c) There shall be no action, suit, claim or proceeding of any nature
pending or threatened against Purchaser or the Vendor, the Company
or 517244 their respective properties or any of their officers or
directors, that could materially and adversely affect the
business, assets, liabilities, financial condition, results of
operations or prospects of the Company. A certificate in respect
of the Vendor, the Company and 517244 to the foregoing effect
dated the Funding Date and signed on behalf of the Vendor, the
Company and 517244 shall have been delivered to Purchaser;
(d) There shall have been no material adverse changes in the business,
operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits or condition
(financial or otherwise) of the Company, taken as a whole, since
the Balance Sheet Date except those that affect the industry
generally; and Purchaser shall have received a certificate signed
by the Vendor, the Company and 517244 dated the Funding Date to
such effect;
(e) The Purchaser shall have received (i) a copy of the articles of
incorporation of the Company and 517244 certified by an appropriate
authority in the jurisdiction of its incorporation and (ii) a copy
of the bylaws of the Company and 517244 certified by a duly
authorized officer of the Company, and such documents shall be in
form and substance reasonably acceptable to the Purchaser;
(f) Purchaser shall have received from the Company completed interim
financial statements for the period ending on February 28, 1999 in a
form reasonably satisfactory to Purchaser;
(g) The Purchaser shall have received a certificate (the "Closing
Financial Certificate"), dated as of the Funding Date, signed on
behalf of the Company and by the Vendor, setting forth:
(i) the revenue of the Company for the fiscal year ended July
31, 1998 and the period ended February 28, 1999;
(ii) the earnings of the Company before interest and taxes and
bonuses, adjusted to reflect the add-back of certain
non-recurring costs, for the fiscal year ended July 31, 1998
and the period ended February 28, 1999;
(iii) The sum of the Company's total outstanding interest
bearing indebtedness to banks, and all other financial
institutions and creditors (in each case including the
current portions of such indebtedness, but excluding any
amounts payable pursuant to Section 3.1(b) hereof and
Section 3.1(b) of the Xxxxxxx Agreement, and any amounts
payable to the Vendor, Xxxxxxx and 408446, and their
Affiliates, any income taxes payable from the Balance
Sheet Date on earnings, operating leases, trade payables
and other accounts payable incurred in the ordinary course
of the Company's business consistent with past practice)
as of the Funding Date.
(h) Vendor shall have entered into an employment agreement with the
Purchaser in the form set forth in Schedule 1.1(t) hereof prior to
the Funding Time;
(i) the Company shall have entered into a lease with the registered
owner(s) of the Sundog Premises on the terms set forth in Schedule
7.1(i) hereof prior to or contemporaneous with the Funding Time and
each of such leases shall be registered by way of caveat against the
certificates of title to the Sundog Premises and in the event that
any mortgage, encumbrance or financial charge exists, then the
holder of each such mortgage, encumbrance or financial charge shall
have executed and delivered to the Company a non-disturbance
agreement in form and content acceptable to the Purchaser;
(j) Remenda shall have signed the Remenda Agreement; and
(k) The Vendor, the Company and 517244 shall have made all deliveries
as are called for by this Agreement. The Purchaser shall be fully
satisfied in its sole discretion with the results of its review of
all of the Schedules, whether delivered before or after the
execution hereof, and such deliveries, and its review of, and
other due diligence investigations with respect to, the business,
operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits and condition
(financial or otherwise) of the Company.
7.2 Conditions for the Benefit of the Vendor, the Company and 517244
The obligation of the Vendor, the Company and 517244 to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
or waiver, at or before the Funding Time, of the following conditions and
deliveries:
(a) All of the representations and warranties of Purchaser contained in
this Agreement shall be true, correct and complete on and as of the
Funding Time with the same effect as though such representations and
warranties had been made as of such date; all of the terms,
covenants, agreements and conditions of this Agreement to be
complied with, performed or satisfied by Purchaser on or before the
Funding Date shall have been duly complied with, performed or
satisfied; and a certificate to the foregoing effects dated the
Funding Date and signed by any officer of the Purchaser shall have
been delivered to the Vendor, the Company and 517244;
(b) No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
other legal or regulatory restraint or provision challenging
Purchaser's proposed acquisition of the Shares, or limiting or
restricting Purchaser's conduct or operation of the business of the
Company (or its own business) following the transactions
contemplated by this Agreement shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; and a certificate
to the foregoing effects dated the Funding Date and signed by any
officer of the Purchaser shall have been delivered to the Vendor,
the Company and 517244;
(c) All necessary material consents of, and filings with, any
governmental authority or agency or third party relating to the
consummation by the Purchaser of the transactions contemplated
herein, shall have been obtained and made;
(d) The Company or Purchaser shall have entered into an employment
agreement with Vendor in the form set forth in Schedule 1.1(t)
hereof prior to or contemporaneously with the Funding Time; and
(e) Xxxxxxx shall have entered into the Xxxxxxx Agreement.
7.3 Conditions for Benefit of Purchaser, Vendor, Company and 517244
The obligation of the Purchaser, the Vendor, the Company and 517244
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver, at or before the Funding Time, of the following
conditions and deliveries to be completed immediately prior to the Funding Time:
(a) the Company shall remit the Xxxxxxx Pension Obligation to such
entity as shall be designated by Xxxxxx Xxxxxxx. Concurrently
therewith, Xxxxxx Xxxxxxx shall unconditionally release the Company
for all claims in relation to the Xxxxxxx Pension Obligation and
enter into an amendment of the Xxxxxxx Employment Contract
acknowledging deferral of payment of the Xxxxxxx Severance
Obligation to June 30, 1999 and providing for an assignment to
Xxxxxx Xxxxxxx of the life insurance on his life held by the
Company;
(b) the Company shall declare, as evidenced by a written resolution of
the board of directors of the Company that a bonus net of
withholdings has been credited to the Sundog Shareholder Loan
account in the net amount of $136,238 (the "1999 Bonus"). The
Company shall make all remittances, including any remittances
required under the Income Tax Act, to be made in connection with the
payment of the 1999 Bonus; and
(c) Remenda shall release the Company from that certain employment
agreement dated December 22, 1989 between Remenda and the Company.
ARTICLE 8
INDEMNIFICATION
8.1 General Indemnification by the Vendor
The Vendor as to the Vendor's Portion, covenants and agrees to
indemnify, defend, protect and hold harmless the Purchaser and the Company and
their respective officers, directors, employees, shareholders, assigns,
successors and Affiliates (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties") from, against and in respect of:
(a) all liabilities, losses, claims, damages, punitive damages, causes
of action, lawsuits, administrative proceedings (including
informal proceedings), investigations, audits, demands,
assessments, adjustments, judgments, settlement payments,
deficiencies, penalties, fines, interest (including interest from
the date of such damages) and costs and expenses (including
without limitation reasonable legal fees and disbursements of
every kind, nature and description) (collectively, "Damages")
suffered, sustained, incurred or paid by the Indemnified Parties
in connection with, resulting from or arising out of:
(i) any breach of any representation or warranty of the Vendor,
517244 or the Company set forth in this Agreement or any
Schedule or certificate, delivered by or on behalf of any of
the Vendor, 517244 or the Company in connection herewith;
(ii) any nonfulfillment of any covenant or agreement by the
Vendor or, prior to the Funding Date, the Company or 517244,
under this Agreement. or
(iii) the business, operations or assets of the Company or 517244
prior to the Funding Time or the actions or omissions of the
Company's or 517244's directors, officers, shareholders,
employees or agents prior to the Funding Time, other than
Damages arising from matters expressly disclosed in the
Company Financial Statements, this Agreement or the
Schedules to this Agreement
(iv) any additional assessment, Tax or penalties payable as a
result of the assignment of the Remenda Insurance and any
other assignment of any employee insurance in accordance
with this Agreement; and
(b) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 8.1.
8.2 Limitation and Expiration
Notwithstanding the above:
(a) there shall be no liability for indemnification under Section 8.1
unless, and solely to the extent that, the aggregate amount of
Damages exceeds $110,000 (the "Indemnification Threshold");
provided, however, that the Indemnification Threshold shall not
apply to (i) Damages arising out of any breaches of the covenants
of the Vendor, 517244 or the Company set forth in this Agreement
or representations and warranties made in Sections 4.1(e)
(Authorized Capital), 4.1(f) (Entitlements), 4.1(u) (Significant
Customers; Material Contracts and Commitments), 4.1(aa) (Employee
Benefit Plans), 4.1(bb) (Taxes), or 4.1(cc) (Conformity with Law;
Litigation);
(b) the aggregate amount of the Vendor's liability under this Article 8
shall not exceed the Purchase Price, provided however, that the
Vendor's liability for Damages arising out of any breaches of the
representations made in Sections 4.1(y), 4.1(aa) or 4.1(bb) or
Damages described in Section 8.1 (a)(ii) or (iv) shall not be
subject to such limitation and shall not count toward the limitation
described in the first clause of this Section 8.2(b);
(c) the indemnification obligations under this Article 8, or under any
certificate or writing furnished in connection herewith, shall
terminate at the date that is the later of clause (i) or (ii) of
this Section 8.2(c):
(i) (A) except as to representations, warranties, and
covenants specified in clause (i)(B) of this Section
8.2(c), the third anniversary of the Funding Date;
(B) with respect to representations and warranties
contained in Sections 4.1(y), 4.1(aa), 4.1(bb) and
the indemnification set forth in Section
8.1(a)(ii)(iii) or (iv), on (A) the date that is six
(6) months after the expiration of the longest
applicable limitation period contained in the
applicable federal or provincial statute (including
extensions thereof), or (B) if there is no
applicable federal or provincial statute, (x) five
(5) years after the Funding Date if the Claim (as
defined below) is related to the cost of
investigating, containing, removing or remediating a
release of Hazardous Substances (as defined above)
into the environment, or (y) five (5) years after
the Funding Date for any other Claim covered by
clause (i)(B) of this Section 8.2(c); or
(ii) The final resolution of claims or demands pending as of the
dates described in clause (i) of this Section 8.2(c) (such
claims referred to as "Pending Claims").
(d) For greater certainty the Vendor shall, in accordance with the
provisions of this Article 8, indemnify the Purchaser and the
Company in respect of those matters set out in that schedule
delivered at the Funding Time by the Purchaser to the Vendor which
letter is attached hereto as Schedule 8.2(d). The Vendor
acknowledges that Schedule 8.2(d) shall in no way constitute any
amendment, waiver, modification or abridgement of any of the
Purchasers rights under this Article 8.
8.3 Indemnification Procedures
All claims or demands for indemnification under this Article 8
("Claims") shall be asserted and resolved as follows:
(a) In the event that any Indemnified Party has a Claim against any
party obligated to provide indemnification pursuant to Section 8.1
hereof (the "Indemnifying Party") which does not involve a Claim
being asserted against or sought to be collected by a third party,
the Indemnified Party shall within thirty (30) days of having
actual knowledge of such Claim (failing which the Indemnified
Party shall be deemed to waive its right to indemnification in
respect of such Claim) notify the Vendor of such Claim, specifying
the nature of such Claim and the amount or the estimated amount
thereof to the extent then feasible (the "Claim Notice"). If the
Vendor does not notify the Indemnified Party within thirty (30)
days after the date of delivery of the Claim Notice that the
Indemnifying Party disputes such Claim, with a detailed statement
of the basis of such position, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder. In case an objection is made in writing in accordance
with this Section 8.3(a), the Indemnified Party shall respond in a
written statement to the objection within thirty (30) days and,
for sixty (60) days thereafter, attempt in good faith to agree
upon the rights of the respective parties with respect to each of
such Claims (and, if the parties should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both
parties).
(b) (i) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is
asserted against an Indemnified Party by a third party (a
"Third Party Claim"), the Indemnified Party shall deliver
a Claim Notice to the Vendor within thirty (30) days of
having actual knowledge of such Third Party Claim (failing
which the Indemnified Party shall be deemed to waive its
right to Indemnification in respect of such Claim). The
Vendor shall have thirty (30) days from the date of
delivery of the Claim Notice to notify the Indemnified
Party (A) whether the Indemnifying Party disputes
liability to the Indemnified Party hereunder with respect
to the Third Party Claim, and, if so, the basis for such a
dispute, and (B) if such party does not dispute liability,
whether or not the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend
against the Third Party Claim, provided that the
Indemnified Party is hereby authorized (but not obligated)
to file any motion, answer or other pleading and to take
any other action which the Indemnified Party shall deem
necessary or appropriate to protect the Indemnified
Party's interests.
(ii) In the event that the Vendor timely notifies the
Indemnified Party that the Indemnifying Party does not
dispute the Indemnifying Party's obligation to indemnify
with respect to the Third Party Claim, the Indemnifying
Party shall defend the Indemnified Party against such
Third Party Claim by appropriate proceedings, provided
that, unless the Indemnified Party otherwise agrees in
writing, the Indemnifying Party may not settle any Third
Party Claim (in whole or in part) if such settlement does
not include a complete and unconditional release of the
Indemnified Party. If the Indemnified Party desires to
participate in, but not control, any such defense or
settlement the Indemnified Party may do so at its sole
cost and expense. If the Indemnifying Party elects not to
defend the Indemnified Party against a Third Party Claim,
whether by failure of such party to give the Indemnified
Party timely notice as provided herein or otherwise, then
the Indemnified Party, without waiving any rights against
such party, may settle or defend against such Third Party
Claim in the Indemnified Party's sole discretion and the
Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or
judgment and, on an ongoing basis, all indemnifiable costs
and expenses of the Indemnified Party with respect
thereto, including interest from the date such costs and
expenses were incurred.
(iii) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in
writing to the Vendor any Third Party Claim seeks material
prospective relief which could have an adverse effect on
any Indemnified Party or the Company or any subsidiary,
the Indemnified Party shall have the right to control or
assume (as the case may be) the defense of any such Third
Party Claim and the amount of any judgment or settlement
and the reasonable costs and expenses of defense shall be
included as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnified Party
elects to exercise such right, the Indemnifying Party
shall have the right to participate in, but not control,
the defense of such Third Party Claim at the sole cost and
expense of the Indemnifying Party.
(c) Nothing herein shall be deemed to prevent the Indemnified Party from
making a Claim, and an Indemnified Party may make a Claim hereunder,
for potential or contingent Damages provided the Claim Notice sets
forth the specific basis for any such potential or contingent claim
or demand to the extent then feasible and the Indemnified Party has
reasonable grounds to believe that such Claim may be made.
(d) Subject to the provisions of Section 8.2, the Indemnified Party's
failure to give notice as required by this Section 8.3 of any
actual, threatened or possible claim or demand which may give rise
to a right of indemnification hereunder shall not relieve the
Indemnified Party unless the failure to give such notice materially
and adversely prejudiced the Indemnifying Party.
(e) The parties will make appropriate adjustments for any Tax benefits,
Tax detriments or insurance proceeds in determining the amount of
any indemnification obligation under this Article 8, provided that
no Indemnified Party shall be obligated to continue pursuing any
payment pursuant to the terms of any insurance policy.
8.4 General Indemnification by the Purchaser
The Purchaser covenants and agrees to indemnify, defend, protect and
hold harmless the Vendor from, against and in respect of:
(a) all Damages suffered, sustained, incurred or paid by the Vendor in
connection with, resulting from or arising out of, directly or
indirectly:
(i) any breach of any representation or warranty of the
Purchaser set forth in this Agreement;
(ii) any nonfulfillment of any covenant or agreement by the
Purchaser, or after the Funding Date, the Company, under
this Agreement, excluding any such non-fulfillment caused by
the Vendor;
(iii) the business, operations or assets of the Company subsequent
to the Funding Date or the actions or omissions of the
Company's directors, officers, shareholders, employees or
agents subsequent to the Funding Date, excluding Damages
caused by or actions or omissions of the Vendor; or
(iv) guarantees or indemnities or the sureties provided by Vendor
or his Affiliates for the benefit of the Company as set
forth in Schedule 8.4(a)(iv).
(b) the indemnification obligation under this Section 8.4 shall
terminate on the third anniversary of the Funding Date.
8.5 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants made by the Vendor,
the Company, 517244 and the Purchaser in or pursuant to this Agreement or in any
document delivered pursuant hereto shall be deemed to have been made on the date
of this Agreement (except as otherwise provided herein) and, if a Closing
occurs, as of the Funding Date. The representations of the Vendor, the Company
and 517244 will survive the Closing and will remain in effect until, and will
expire upon, the termination of the indemnification obligations as provided in
Section 8.2. The representations and warranties of the Purchaser will survive
Closing and will remain in effect until, and will expire upon the third
anniversary of the Funding Date.
8.6 Remedies Cumulative
The remedies set forth in this Article 8 are cumulative and shall
not be construed to restrict or otherwise affect any other remedies that may be
available to the Indemnified Parties under any other agreement or pursuant to
statutory or common law.
8.7 Right to Set Off
Subject to complying with the procedures set forth in of Section
11.10, the Purchaser shall have the right, but not the obligation, to set off,
in whole or in part, against the portion of the Purchase Price payable pursuant
to Sections 3.1(a)(iii), 3.1(a)(iv) or 3.1(a)(v) hereof, amounts finally
determined under Section 8.3 to be owed to the Purchaser by the Vendor, 517244
or the Company or any Indemnifying Party under this Article 8.
8.8 Claims
The Vendor's Liability to an Indemnified Party pursuant to Section
8.1 shall be limited to the Vendor's Portion. Similarly, the Parties acknowledge
that in relation to any other action or claim whatsoever under and pursuant to
this Agreement whether in relation to a breach of the representation or
warranties, the covenants or otherwise, the Vendor's Liability shall be limited
to the Vendor's Portion and the Purchaser shall deliver notice to the Vendor of
such other claim within thirty days of having actual knowledge of such claim
failing which the Purchaser shall be deemed to have waived such claim.
ARTICLE 9
NON - COMPETITION
9.1 Prohibited Activities
The Vendor acknowledges that he has developed relationships on
behalf of and acquired proprietary and confidential information about the
Company, including, but not limited to, its customers, vendors, prices, sales
strategies and other information, some of which may be regarded and treated by
the Company and the Purchaser as trade secrets. In order to protect the
Company's and/or the Purchaser's critical interest in these relationships and
information, the Vendor covenants that he will not, for a period of four (4)
years following the Funding Date, for any reason whatsoever, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
persons, partnership, corporation, or business of whatever nature:
(a) engage, as an officer, director, shareholder, owner, partner,
member, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or adviser, or as a
sales representative, in any business selling any products or
services in direct competition with the Company, within 50 miles
of any locations where the Company both has an office and conducts
business ("Territory"). As used in this subsection, "competition"
shall mean engaging, directly or indirectly, for himself or any
other person or entity, in (i) any facet of the business of the
Company in which the Vendor was engaged in prior to the Funding
Date or (ii) any facet of the business of the Company about which
the Vendor acquired proprietary or confidential information during
the course of his ownership of the Shares;
(b) hire or join with in a competitive business capacity, any employee
of the Company within the Territory;
(c) solicit or accept business which competes with the business of the
Company from any person who is, on the Funding Date, or that has
been, within one (1) year prior to the Funding Date, a customer of
the Company; or
(d) acquire or enter into any agreement to acquire any prospective
acquisition candidate that was, to the knowledge of the Vendor,
either called upon by the Company as a prospective acquisition
candidate or was the subject of an acquisition analysis by the
Company within 3 years prior to the Funding Date. The Vendor, to
the extent lacking the knowledge described in the preceding
sentence, shall immediately cease all contact with such
prospective acquisition candidate upon being informed that the
Company had called upon such candidate or made an acquisition
analysis thereof.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit the Vendor from acquiring as an investment not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over- the-counter.
9.2 Confidentiality
The Vendor acknowledges that he has acquired confidential
information and trade secrets concerning the operation of the Company, the use
or disclosure of which could cause the Company or its affiliates or subsidiaries
substantial loss and damages that could not be readily calculated and for which
no remedy at law would be adequate. Accordingly, the Vendor covenants and agrees
with the Company and Purchaser that he will not at any time, except in
performance of Vendor's obligations to the Company or with the prior written
consent of the Company pursuant to authority granted by a resolution of the
Board of Directors of the Company, directly or indirectly, disclose any secret
or confidential information that he or she may learn or has learned by reason of
his ownership of the Company or his employment by the Company, or any of its
Subsidiaries and Affiliates, or use any such information in a manner detrimental
to the interests of the Company or Purchaser, unless (i) such information
becomes known to the public generally through no fault of any Shareholder, (ii)
disclosure is required by law or the order of any Governmental Authority under
color of law, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, provided, that prior to disclosing any information pursuant to
clause (i), (ii) or (iii) above, the Vendor shall give prior written notice
thereof to Purchaser and provide Purchaser with the opportunity to contest such
disclosure and shall cooperate with efforts to prevent such disclosure. The term
"confidential information" includes, without limitation, information not
previously disclosed to the public or to the trade by the Company's or
Purchaser's management with respect to the Company's or Purchaser's, or any of
their Affiliates' or Subsidiaries', products, facilities, and methods, trade
secrets and other intellectual property, software, source code, systems,
procedures, manuals, confidential reports, product price lists, customer lists,
financial information (including the revenues, costs, or profits associated with
any of the Company's products), business plans, prospects, or opportunities but
shall exclude any information already in the public domain.
9.3 Damages
Because of the difficulty of measuring economic losses to Purchaser
as a result of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to Purchaser for which it would have
no other adequate remedy, the Vendor agrees that the foregoing covenant may be
enforced by Purchaser in the event of breach by the Vendor, by injunctions and
restraining orders.
9.4 Reasonable Restraint
The parties agree that the foregoing covenants in this Article 9
impose a reasonable restraint on the Vendor in light of the activities and
business of the Purchaser on the date of the execution of this Agreement,
assuming the completion of the transactions contemplated hereby.
9.5 Severability; Reformation
The covenants in this Article 9 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
9.6 Independent Covenant
All of the covenants in this Article 9 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Vendor against the Purchaser,
whether predicated on this Agreement or otherwise, shall not constitute a
defence to the enforcement by the Purchaser of such covenants. The parties
expressly acknowledge that the terms and conditions of this Article 9 are
independent of the terms and conditions of any other agreements including, but
not limited to, any employment agreements entered into in connection with this
Agreement. It is specifically agreed that the period of four (4) years stated at
the beginning of this Article 9 during which the agreements and covenants of the
Vendor made in this Article 9 shall be effective, shall be completed by
excluding from such computation any time during which the Vendor is found by a
court of competent jurisdiction to have been in violation of any provisions of
this Article 9. The covenants contained in this Article 9 shall not be affected
by any breach of any other provision hereof by any party hereto and shall have
no effect if the transactions contemplated by this Agreement are not
consummated.
9.7 Materiality
The Company and the Vendor hereby agree that the covenants set forth
in this Article 9 are a material and substantial part of the transactions
contemplated by this Agreement, supported by adequate consideration.
ARTICLE 10
CLOSING
10.1 Closing
(a) The Closing shall take place through the delivery of executed
originals or facsimile counterparts of all documents required
hereunder on such date that all conditions to Closing shall have
been satisfied or waived, or at such other time and date as the
Purchaser and the Vendor may agree, which date is referred to as the
"Funding Date."
(b) The completion of the transactions contemplated herein shall be
carried out pursuant to such reasonable trust conditions as are
agreed upon between the solicitors representing the Vendor, the
Company and 517244 and the Solicitors representing the Purchaser
which shall provide that all closing documents and funds shall be
delivered to the Solicitors representing the Purchaser and held in
escrow and not released until all parties have delivered all
required closing documents and funds and caveats respecting the
Leases have been registered at the Land Titles Office against the
respective certificates of title to the lands referenced in the
Leases, subject only to the caveats and instruments that were
registered against titles as at the Effective Date.
10.2 Deliveries at Funding Time
At the Funding Time:
(a) the Purchaser shall deliver or cause to be delivered to the Vendor
the following:
(i) funds in the amount of $1,599,547 for the Purchased Interests;
(ii) demand promissory note in the amount of $275,154;
(iii) releases of the personal guarantees of Vendor and the
corporate guarantees of 517244 and its Affiliates;
(iv) releases of the Vendor by the Company and 517244;
(v) a legal opinion in form reasonably satisfactory to Vendor's
solicitors in relation to the enforceability of this Agreement
and the other agreements delivered pursuant to the terms
hereof;
(vi) an undertaking to pay to the Xxxxxxx Xxxxxxxxx Obligation and
the Xxxxxxx Pension Obligation.
(b) the Vendor shall deliver or cause to be delivered to the Purchaser
the following:
(i) a certificate of each of the Vendor, 517244 and the Company
confirming that the representations set forth herein by them
to are true and correct at the Funding Date;
(ii) a certified copy of the resolution of the board of directors
of the Company and 517244 approving the agreement and the
transfer of the 517244 Shares from the Vendor to the
Purchaser;
(iii) certificates representing the Shares duly endorsed in blank
for transfer;
(iv) The share certificate book, minute book, corporate seal and
all other corporate records and business records of 517244;
(v) resignations of the existing directors and officers of
517244;
(vi) a legal opinion in form reasonably satisfactory to Purchaser's
solicitors in relation to the enforceability of this Agreement
and the other agreements delivered pursuant to the terms
hereof;
(c) At the Funding Time, the Vendor, 517244, the Company and the
Purchaser, as the case may be, shall execute and deliver or cause to
be delivered the following:
(i) an assignment of the Shareholders Loans; and
(ii) the Remenda Employment contract.
10.3 Purchaser Post Closing Obligations
Following the Funding Time the Purchaser shall:
(a) appoint new directors for 517244 and the Company and cause a duly
completed Notice of Change of Directors to be filed with Alberta
Corporate Registry and in any other jurisdictions where 517244 or
the Company is registered and such notification is required to be
filed;
(b) designate a new registered office for 517244 and the Company and
cause a duly completed Notice of Change of Address to be filed with
Alberta Corporate Registry;
(c) cause 517244 and the Company to deliver to the former directors of
517244 and the Company, as the case may be, duly executed releases
in a form reasonably acceptable to the solicitors for the Vendor;
(d) assign the Remenda Insurance from the Company to the Vendor or his
nominee; and
(e) assign the TPI Receivable from the Purchaser in favor of the Vendor.
10.4 Xxxxxxx Contract
In due course, following the Funding Time, the Purchaser shall
ensure the payment to Xxxxxx Xxxxxxx of the Xxxxxxx Xxxxxxxxx Obligation by the
Company.
ARTICLE 11
GENERAL
11.1 Termination
This Agreement may be terminated at any time prior to the Funding
Date solely:
(a) by mutual consent of the board of directors of Purchaser and the
board of directors of the Company; or
(b) by the Vendor, the Company and 517244 as a group, on the one hand,
or by Purchaser, on the other hand, if the Closing shall not have
occurred on or before April 15, 1999, provided that the right to
terminate this Agreement under this Section 11.1(b) shall not be
available to either party (with the Vendor, the Company and 517244
deemed to be a single party for this purpose) whose material
misrepresentation, breach of warranty or failure to fulfill any
obligation under this Agreement has been the cause of, or resulted
in, the failure of the closing to occur on or before such date; or
(c) by the Vendor, the Company and 517244 as a group, on the one hand,
or by Purchaser, on the other hand, if there is or has been a
material breach, failure to fulfill or default on the part of the
other party (with the Vendor, the Company and 517244 deemed to be
a single party for this purpose) of any of the representations and
warranties contained herein or in the due and timely performance
and satisfaction of any of the covenants, agreements or conditions
contained herein, and the curing of such default shall not have
been made or shall not reasonably be expected to occur before the
Funding Date; or
(d) by the Vendor, the Company and 517244 as a group, on the one hand,
or by Purchaser, on the other hand, if there shall be a final
non-appealable order of a federal or provincial court in effect
preventing consummation of the transactions contemplated by this
Agreement; or there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed
applicable to the transactions contemplated by this Agreement by
any governmental entity which would make the consummation of the
transactions contemplated by this Agreement illegal.
11.2 Effect of Termination
In the event of the termination of this Agreement pursuant to
Section 11.1, this Agreement shall forthwith become ineffective, and there shall
be no liability or obligation on the part of any party hereto or its officers,
directors or shareholders. Notwithstanding the foregoing sentence, (i) the
provisions of Articles 11 and 8, shall remain in full force and effect and
survive any termination of this Agreement; (ii) each party shall remain liable
for any breach of this Agreement prior to its termination; and (iii) in the
event of termination of this Agreement pursuant to Section 11.1(c) above, then
notwithstanding the provisions of Section 11.7 below, the breaching party (with
the Vendor, 517244 and the Company deemed to be a single party for purposes of
this Article 11), shall be liable to the other party to the extent of the
expenses incurred by such other party in connection with this Agreement and the
transactions contemplated hereby, as well as any damages in accordance with
applicable law.
11.3 Successors and Assigns
This Agreement and the rights of the parties hereunder may not be
assigned (except by operation of law) and shall be binding upon and shall inure
to the benefit of the parties hereto, the successors of the Purchaser, and the
heirs and legal representatives of the Vendor. Notwithstanding anything in the
foregoing to the contrary, the Purchaser may assign any of its rights or
obligations under this Agreement to any direct or indirect Subsidiary or
Affiliate of the Purchaser in its sole and absolute discretion and without the
consent of the Vendor or the Company or 517244; provided, however that in the
event of such assignment the Purchaser shall continue to be liable to the Vendor
for the payment of the Purchase Price.
11.4 Entire Agreement; Amendment; Waiver
This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. Each of the
Schedules to this Agreement is incorporated herein by this reference and
expressly made a part hereof. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement. This Agreement shall not be
amended or modified except by a written instrument duly executed by each of the
parties hereto. Any extension or waiver by any party of any provision hereto
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
11.5 Counterparts
This Agreement may be executed in any number of counterparts and any
party hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original, and all of which counterparts taken
together shall constitute but one and the same instrument.
11.6 Brokers and Agents
Purchaser and the Vendor, the Company and 517244 (as a group) each
represents and warrants to the other that it has not employed any broker or
agent for which the other would be liable in connection with the transactions
contemplated by this Agreement and agrees to indemnify the other against all
losses, damages or expenses relating to or arising out of claims for fees or
commission of any broker or agent employed or alleged to have been employed by
such party.
11.7 Expenses
The Purchaser has and will pay the fees, expenses and disbursements
of the Purchaser and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. The Vendor
(and not the Company or 517244) have and will pay the fees, expenses and
disbursements of the Vendor, the Company and 517244 and their agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement.
11.8 Specific Performance; Remedies
Each party hereto acknowledges that the other parties will be
irreparably harmed and that there will be no adequate remedy at law for any
violation by any of them of any of the covenants or agreements contained in this
Agreement, including without limitation, the confidentiality obligations set
forth in Section 9.2 and the non-competition provisions set forth in Section
9.1. It is accordingly agreed that, in addition to any other remedies which may
be available upon the breach of any such covenants or agreements, each party
hereto shall have the right to obtain injunctive relief to restrain a breach or
threatened breach of, or otherwise to obtain specific performance of, the other
parties, covenants and agreements contained in this Agreement.
11.9 Notices
Any notice, request, claim, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given if delivered personally or sent by telefax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
If to the Purchaser or the Company to:
Workflow Management Inc.
000 Xxxxx Xxxx Xxx
Xxxx Xxxxx, Xx.
XXX 00000
Attn: Xxxxxxx X. Xxxxx
Vice President and General Counsel
(Telefax: (000) 000-0000)
with a required copy to:
XxXxxxxx Xxxxxxxx
#0000, 000 - 0 Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxx X. Xxxxx
(Telefax: (000) 000-0000)
and to:
Xxxxxxx & Xxxxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: T. Xxxxxxx Xxxxxx, Xx., Esq.
(Telefax: (000)000-0000)
If to the Vendor to:
(Telefax: (000) 000-0000)
and to:
the Vendor
00000 Xxxxxxx Xxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
and to:
Field Xxxxxxxx Perraton
Suite 1900, 000 - 0 Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx X. Xxxxxxxx, Q.C.
(Telefax: (000) 000-0000)
or to such other address as the person to whom notice is to be given
may have specified in a notice duly given to the sender as provided herein. Such
notice, request, claim, demand, waiver, consent, approval or other communication
shall be deemed to have been given as of the date so delivered, telefaxed,
mailed or dispatched and, if given by any other means, shall be deemed given
only when actually received by the addressees.
11.10 Governing Law
(a) Subject to the provisions of Section 11.10(b) below, this Agreement
shall be governed by and construed, interpreted and enforced in
accordance with the laws of Alberta and the federal laws of Canada
applicable therein. Any disputes arising out of, in connection with
or with respect to this Agreement, the subject matter hereof, the
performance or non-performance of any obligation hereunder, or any
of the transactions contemplated hereby shall be adjudicated in a
court of competent civil jurisdiction sitting in the City of
Calgary, Alberta and appeal courts therefrom and nowhere else. Each
of the parties hereto hereby irrevocably submits to the jurisdiction
of such court for the purposes of any suit, civil action or other
proceeding arising out of, in connection with or with respect to
this Agreement, the subject matter hereof, the performance or
non-performance of any obligation hereunder, or any of the
transactions contemplated hereby (collectively, "Suit"). Each of the
parties hereto hereby waives and agrees not to assert by way of
motion, as a defense or otherwise in any such Suit, any claim that
it is not subject to the jurisdiction of the above courts, that such
Suit is brought in an inconvenient forum, or that the venue of such
Suit is improper.
(b) Prior to instituting any formal legal actions in connection with
disputes arising under this Agreement, the Vendor, the Company,
517244 and the Purchaser (collectively, the "Parties") shall first
attempt to resolve their disputes informally as follows:
(i) upon written request of a Party, each Party shall appoint a
designated representative whose task it will be to meet for
the purpose of endeavoring to resolve such dispute, such
meetings to be held in Calgary, Alberta;
(ii) the designated representatives shall meet as often as the
Parties reasonably deem necessary in order to gather and
furnish to the other all information with respect to the
matter in issue which the Parties believe to be appropriate
and germane in connection with its resolution and the
representatives shall discuss the problem and negotiate in
good faith in an effort to resolve the dispute without the
necessity of any formal proceeding;
(iii) during the course of negotiations, all reasonable requests
made by one Party to another for nonprivileged information,
reasonably related to this Agreement, shall be honoured in
order that each of the Parties may be fully advised of the
other's position;
(iv) the specific format for discussion shall be left to the
discretion of the Parties, but may include the preparation
of agreed upon statements of fact or written statements of
position;
(v) formal proceedings for the resolution of a dispute may not
be commenced until the earlier of (A) the designated
representatives concluding in good faith that amicable
resolution through continued negotiation of the matter does
not appear likely or (B) 30 days after the initial request
to negotiate the dispute;
(vi) the foregoing provisions of this Section 11.10(b) shall not
be construed to prevent a Party from instituting, and a
Party is authorized to institute, formal proceedings earlier
to avoid the expiration of any applicable limitations period
or to preserve a superior position to creditors. In
addition, (i) nothing in this Section 11.10(b) shall be
construed to limit the rights of the Purchaser to seek
injunctive relief in the event that the Vendor violates any
of the provisions of Article 9 and (ii) any Party may
institute formal legal proceedings if it makes a good faith
determination that a breach of the terms of this Agreement
by another Party is such that the damages to such Party
resulting from the breach will be so immediate, so large or
severe, and so incapable of adequate redress after the fact
that a temporary restraining order or other injunctive
relief is the only adequate remedy.
11.11 Severability
If any provision of this Agreement or the application thereof to any
person or circumstances is held invalid or unenforceable in any jurisdiction,
the remainder hereof, and the application of such provision to such person or
circumstances in any other jurisdiction, shall not be affected thereby, and to
this end the provisions of this Agreement shall be severable. The preceding
sentence is in addition to and not in place of the severability provisions in
Section 9.5.
11.12 Absence of Third Party Beneficiary Rights
No provision of this Agreement is intended, nor will any provision
be interpreted, to provide or to create any third party beneficiary rights or
any other rights of any kind in any client, customer, affiliate, shareholder,
employee or partner of any party hereto or any other person or entity.
11.13 Mutual Drafting
This Agreement is the mutual product of the parties hereto, and each
provision hereof has been subject to the mutual consultation, negotiation and
agreement of each of the parties, and shall not be construed for or against any
party hereto.
11.14 Further Representations
Each party to this Agreement acknowledges and represents that it has
been represented by its own legal counsel in connection with the transactions
contemplated by this Agreement, with the opportunity to seek advice as to its
legal rights from such counsel. Each party further represents that it is being
independently advised as to the tax consequences of the transactions
contemplated by this Agreement and is not relying on any representation or
statements made by the other party as to such tax consequences.
11.15 Further Assurances
From time to time subsequent to the Funding Date, the parties shall
execute and deliver or cause the execution and delivery of such additional
documents as may be reasonably required to carry out the intent of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
DATA BUSINESS FORMS LIMITED
By: /s/ Data Business Forms Limited
--------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
SIGNED, SEALED, AND DELIVERED in
the presence of:
/s/ Xxx Xxxxxxx
--------------------------------- -----------------------------------
Witness Xxx Xxxxxxx
SUNDOG PRINTING LIMITED
By:/s/ Sundog Printing Limited
-----------------------------------
Name:
Title:
000000 XXXXXXX LIMITED
By: /s/ 517244 Alberta Limited
-----------------------------------
Name:
Title:
