SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, dated as of December __, 1999, by and
among 3016117 NOVA SCOTIA ULC a Nova Scotia unlimited liability company
("Seller"), XXXXXX MATERIAL HANDLING, INC., a Delaware corporation ("Parent"),
and MagneTek Mondel Holding ULC, a Nova Scotia unlimited liability company
("Buyer").
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, all of the issued and outstanding shares in the capital of Mondel
ULC, a Nova Scotia unlimited liability company (the "Company"), all in
accordance with the terms and conditions herein set forth;
AND WHEREAS, Parent is a party to this Agreement for the purposes of
making certain representations, warranties, covenants and indemnities with
Seller for the benefit of Buyer;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
1.1 Defined Terms.
"Adjusted Closing Balance Sheet" has the meaning set forth in Section 2.3.5
hereof.
"Affiliate" (and, with a correlative meaning, "Affiliated") means, with
respect to any Person, any other Person that directly, or through one or more
intermediaries, controls or is controlled by or is under common control with
such first Person, and, if such a Person is an individual, any member of the
immediate family (including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests or by contract). For greater certainty, the parties
acknowledge that (i) Parent shall be deemed to be the ultimate controlling
Person of the Company and the Seller and (ii) MagneTek, Inc. shall be deemed to
be the ultimate controlling Person of Buyer, for the purposes of this Agreement
and the definition of Affiliate.
"Agreement" means this Share Purchase Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Applicable Law" means with respect to any Person, property,
transaction, event or other matter, any law, rule, statute, regulation, order,
judgment, decree, treaty or other requirement having the force of law
(collectively, "Law") relating to or applicable to such Person, property,
transaction, event or other matter. Applicable Law also includes, where
appropriate, any interpretation of Law (or any part thereof) by any Person
having jurisdiction over it, or charged with its administration or
interpretation.
"April Balance Sheet" means the balance sheet of the Company as of
April 30, 1999, prepared to reflect the elimination of intercompany accounts and
the Excluded Liabilities, a true and complete copy of which is attached as
Exhibit A hereto.
"Base Purchase Price" has the meaning set forth in Section 2.2.1 hereof.
"Benefit Plan" means any Employee Plan or Employee Benefit Plan.
"Business" means the business and operations of the Company.
"Business Days" means any day other than a Saturday or Sunday or a
statutory or bank holiday in Ontario or Nova Scotia.
"Business Employees" has the meaning set forth in Section 3.7(a) hereto.
"Buyer" has the meaning set forth in the recitals hereto.
"Buyer Indemnitees" has the meaning set forth in Section 7.2 hereof.
"Cash" means cash and cash equivalents.
"Certificate" has the meaning set forth in Section 7.2 hereof.
"Claimed Amount" has the meaning set forth in Section 7.4.2 hereof.
"Claim Notice" has the meaning set forth in Section 7.4.2 hereof.
"Class A Preferred Shares" means the shares in the capital of the
Company described as Class A Preferred Shares in the Company's
constating documents.
"Closing" means the consummation of the purchase, assignment and sale
of the Shares as contemplated hereby.
"Closing Balance Sheet" has the meaning set forth in Section 2.3.2 hereof.
"Closing Date" means the date of this Agreement.
"Closing Equity" means the difference between the value of the
Company's total assets and its total liabilities (excluding the Excluded
Liabilities), as shown on the Estimated Closing Balance Sheet or the Final
Closing Balance Sheet or the Adjusted Closing Balance Sheet, as applicable.
"Closing Place" means the offices of Blake, Xxxxxxx & Xxxxxxx, Xxxxx
0000, Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx, X0X 0X0, or such other place as
Seller, Parent and Buyer may agree.
"Common Shares" means shares in the capital of the Company described as
common shares in the Company's constating documents.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as in effect from time to time.
"Contracts" has the meaning set forth in Section 3.5 hereof.
"Controlling Party" has the meaning set forth in Section 7.4.1(b) hereof.
"Damages" has the meaning set forth in Section 7.2 hereof.
"Disclosure Schedule" means the disclosure schedule delivered by
Seller and Parent to Buyer on the date hereof.
"Dollars" or "$" means the lawful currency of the United States of
America, unless otherwise indicated.
"Effective Time" means the end of business in the Province of Ontario
on the Closing Date.
"Employee Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA, that is sponsored or contributed to by the Company in the
United States of America or any ERISA Affiliate thereof covering employees or
former employees of the Company.
"Employee Pension Benefit Plan" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA,
other than a Multiemployer Plan covering employees or former employees of the
Company in the United States of America.
"Employee Plan" means any benefit arrangement or agreement covering
employees, former employees, officers, former officers, directors and former
directors of the Company and the beneficiaries of any of them that is not an
Employee Benefit Plan, including (i) each employment, consulting or change of
control agreement; (ii) each arrangement providing for retirement, health
(including retiree health), disability or fringe benefits, insurance coverage
(including any self-insured arrangements), (iii) each bonus, incentive, deferred
bonus, incentive or performance pay arrangement, (iv) each arrangement providing
any termination allowance, severance or similar benefits, (v) each equity
compensation plan; (vi) each deferred compensation plan and (vii) each
compensation policy and practice maintained by the Company, but excluding any
arrangement established pursuant to statute and maintained by a Governmental
Authority.
"Encumbrances" means mortgages, security interests, pledges, claims,
liens, easements, rights of way, restrictions, encroachments, leases,
occupancies, tenancies, options; pre-emptive purchase rights and any other
adverse interests or rights of others.
"Environmental Laws" mean any applicable statute, enactment, ordinance,
rule, regulation, decision, common law, judgment, decree, permit or license,
whether local, state, provincial, territorial or national, in force or effect as
of the Closing:
(a) relating to emissions, discharges, spills, releases or threatened
releases of Hazardous Substances into air, water, or land;
(b) relating to the use, treatment, storage, disposal, handling,
manufacturing or shipment of Hazardous Substances;
(c) relating to noise, odor, wetlands, pollution, contamination or any
injury or threat of injury to persons or property;
(d) relating to the regulation of storage tanks; or
(e) otherwise relating to protection, investigation or restoration of
human health and safety, the environment, or natural resources.
"Environmental Liabilities" means all Liabilities, whether currently
existing or arising hereafter, but in either such case relating to or arising
from conditions existing prior to the Effective Time, which arise under or
relate to any Environmental Laws.
"Environmental Surveys"has the meaning set forth in Section 3.12 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any other Person or entity under common control
with the Company within the meaning of Section 414(b), (c), (m) or (o) of the
Code and the regulations thereunder.
"Estimated Closing Balance Sheet" has the meaning set forth in Section
2.3.1 hereof.
"Estimated Purchase Price" has the meaning set forth in Section 2.2.2
hereof.
"Excluded Liabilities" means (i) all Liabilities for Taxes that are the
responsibility of Seller pursuant to Section 6.1(d); (ii) all Liabilities of the
Company that are not attributable or related to the Business; (iii) any
liability for any claim relating to the existence or alleged existence of
asbestos in or in connection with any products sold at any time by the Company;
(iv) any Liability for any payment to be made under any severance, change of
control, termination, stay and pay or similar agreement or plan between the
Company and any Business Employee and (v) any Liability arising from or relating
to the Company's having conducted business under any unregistered trade name or
under any name other than its legal corporate name.
"Final Closing Balance Sheet" has the meaning set forth in Section
2.3.2 hereof.
"Financial Statements" mean: (a) the financial statements listed on
Section 3.8 of the Disclosure Schedule, including the April Balance Sheet; and
(b) the interim unaudited financial statements of the Company for the months
commencing November 1, 1998 through the month ended immediately prior to the
Closing (to the extent such statements for the month ended immediately prior to
the Closing are reasonably available), true and complete copies of all of which
(except those for periods not yet available) have previously been made available
to the Buyer.
"GAAP" means generally accepted accounting principles in effect in the
United States of America at the time of determination as consistently applied,
except as expressly contemplated herein.
"Governmental Authority" means any court or federal, state, provincial,
municipal or other governmental authority, department, commission, board, agency
or instrumentality.
"Group Health Plan" means any group health plan, as defined in Section
5000(b)(1) of the Code.
"Hazardous Substance" means (i) any substance listed, classified or
regulated pursuant to any Environmental Law, including any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, di-ocytl phthalates ("DOPs"), radioactive materials
or radon, or (ii) any solid, liquid, gas, odor, heat, sound, vibration,
radiation or combination of them that may impair the natural environment, injure
or damage property or plant or animal life or harm or impair the health of any
individual.
"HSRA" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder, as in effect from time to time.
"Improvements" has the meaning set forth in Section 3.3.3(b)(iv) hereof.
"Indemnified Person" has the meaning set forth in Section 8.4.1(a) hereof.
"Indemnifying Person" has the meaning set forth in Section 7.4.1(a) hereof.
"Information Technology" means computer software, computer firmware,
computer hardware (whether general or specific purpose), and other similar or
related items of automated, computerized, and/or software system(s).
"Intellectual Property Transfer Agreement" means the Intellectual Property
Transfer Agreement, to be entered into by and between MHE Technologies, Inc. and
the Company at the Closing.
"Intellectual Property Rights" has the meaning set forth in Section
3.6(a) hereof.
"Intercompany Accounts" means all intercompany accounts except for
intercompany trade receivables accrued by the Company in the ordinary course of
business.
"IRS" means the Internal Revenue Service.
"Knowledge of Buyer" means the knowledge, after due inquiry, of Xxxxx
Xxxxxxx, Xxxx X. Xxxxxxx, Xx. and Xxxxxx X. Miley.
"Knowledge of Seller and Parent" means the knowledge, after due
inquiry, of Xxxx Xxxxx, Xxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, and the actual knowledge
of Xxxxx Xxxxx and Xxxx Xxxxxxxx.
"Letter of Credit" has the meaning set forth in Section 6.4 hereof.
"Liabilities" means all obligations, indebtedness, commitments, and
other items, whether direct or indirect, absolute, accrued, contingent or
otherwise.
"License Agreement" means the License Agreement to be entered into by and
between the Company and MHE Technologies, Inc. at the Closing.
"Licenses" mean the licenses, authorizations, permits, approvals and
other authorizations issued by any Governmental Authority owned or held by the
Company or by Seller or Parent in connection with the ownership and operation of
the Business, together with any renewals, extensions or modifications thereof
and additions thereto between the date hereof and the Closing.
"Management Employees" has the meaning set forth in Section 3.7(a) hereof.
"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, liabilities, reserves or any other aspect of the Company or the
Business, taken as a whole, that could reasonably be expected to result in a
material adverse effect on, or a material adverse change in, the Company or the
Business, or a material adverse effect on Buyer's ownership of the Shares after
the Closing Date.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
3(37) and 4001(a)(3) of ERISA.
"Multiple Employer Plan" means any Employee Benefit Plan sponsored by
more than one employer, within the meaning of Sections 4063 or 4064 of ERISA or
Section 413(c) of the Code.
"Neutral Auditors" has the meaning set forth in Section 2.3.5 hereof.
"Noncompetition Agreement" means the Noncompetition Agreement to be
entered into by and between Parent and the Company concurrently with this
Agreement.
"Permitted Encumbrances" mean: (i) Encumbrances for Taxes not yet due
and payable or that the taxpayer is contesting in good faith through appropriate
proceedings; (ii) as to the use of the real estate assets used by the Company,
any easements or reservations of, or rights of others for, rights of way,
highway and railroad crossings, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning restrictions which do not materially
interfere with the operation of the Business; (iii) in the case of non-real
estate assets, any security interest disclosed in Section 3.3.1 of the
Disclosure Schedule; (iv) liens created by statute securing the claims of
materialmen, landlords and like Persons incurred in the ordinary course of
business for sums not yet delinquent; (v) purchase money liens and liens
securing rental payments under capital lease arrangements and disclosed in
Section 3.3.1 of the Disclosure Schedule; (vi) liens securing borrowed money to
be released at or prior to the Closing and disclosed in Section 3.3.1 of the
Disclosure Schedule; and (vii) other liens set forth in Section 3.3.1 of the
Disclosure Schedule.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, joint venture, joint-stock company, trust, association,
unincorporated entity of any kind, trust, governmental or regulatory body or
other entity.
"Products" has the meaning set forth in Section 3.15 hereof.
"Purchase Price" has the meaning set forth in Section 2.2.1 hereof.
"Reference Rate" means the borrowing rate in effect from time to time
under the Restated Credit Agreement, dated as of June 20, 1997, between
MagneTek, Inc., as Borrower, NationsBank of Texas, N.A., as Agent, certain other
banks as Co-Agents, and certain Lenders thereunder.
"Representatives" has the meaning set forth in Section 6.1.1 hereof.
"Resolution Period" has the meaning set forth in Section 2.3.4 hereof.
"Response" has the meaning set forth in Section 7.4.2(b) hereof.
"Seller" has the meaning set forth in the Preamble hereof.
"Seller Indemnitees" has the meaning set forth in Section 8.3 hereof.
"Seller Returns" has the meaning set forth in Section 6.1(b) hereof.
"Shares" means all the issued and outstanding Common Shares and Class A
Preferred Shares of the Company.
"Subsidiary" means, as to any Person, any corporation or other entity,
whether now existing or hereafter organised or acquired, of which a majority of
the securities or other ownership interests having ordinary voting power for the
election of directors or other Persons performing similar functions are at the
time owned by such Person and/or one or more Subsidiaries of such Person.
"Supply Agreement" means the Supply Agreement, dated the date hereof,
to be entered into by and between Parent and the Company.
"Tax" or "Taxes" means (A) taxes, charges, fees, levies, imposts and
other assessments, including, but not limited to, all income, sales, use, goods
and services, value added, capital, capital gains, alternative, net worth,
transfer, profits, withholding, payroll, employer health, excise, franchise,
real property and personal property taxes, and any other taxes, customs duties,
fees, assessments or similar charges in the nature of a tax including Canadian
Pension Plan and provincial pension plan contributions, employment insurance
payments and workers' compensation premiums, together with all installments with
respect thereto, and any interest, fines, additions and penalties imposed by any
Governmental Authority in connection with amounts described in this clause (A)
and (B) any liability for payment of amounts described in clause (A) whether as
a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law.
"Tax Letter of Credit" has the meaning set forth in Section 6.4 hereof.
"Tax Indemnification Release Provision" has the meaning set forth in
Section 7.2 hereof.
"Tax Return" means any return, declaration, report, or information
return or statement relating to Taxes, including any schedule or attachment
thereto and any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 7.4.1(a) hereof.
"Unresolved Changes" has the meaning set forth in Section 2.3.5 hereof.
"Year 2000 Compliant" means, with respect to the Company's products and
Information Technology, that they are designed to be used prior to, during, and
after the calendar Year 2000 A.D., and that during each such time period they
will accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including the years 1999 and 2000, and
leap year calculations and will not malfunction, cease to function, or provide
invalid or incorrect results as a result of date/time data, to the extent that
other products and Information Technology, used in combination with the products
and Information Technology being acquired, properly exchanges date/time data
with them.
1.2 Accounting Terms. All terms of an accounting nature not specifically defined
herein shall have the respective meanings given to them under GAAP.
1.3 Exhibits and Schedules. The following Exhibits and Schedules attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions thereof and the provisions of the
Agreement, the provisions in this Agreement shall prevail:
Exhibits
Exhibit A - April Balance Sheet
Exhibit B - Form of Letter of Credit
Exhibit C Form of Tax Letter of Credit
Schedules
Schedule 1 - Disclosure Schedule
Schedule 2 Allocation of Purchase Price for U.S. Taxes
1.4 Other Definition Provisions. The masculine form of words includes the
feminine and the neuter and vice versa, and, unless the context otherwise
requires, the singular form of words includes the plural and vice versa. The
words "herein," "hereof," "hereunder" and other words of similar import when
used in this Agreement refer to this Agreement as a whole, and not to any
particular section or subsection.
ARTICLE 2
PURCHASE OF SHARES; PURCHASE PRICE
2. Purchase of the Shares, Purchase Price and Method of Payment.
2.1 Purchase of the Shares. In accordance with the terms and upon satisfaction
of the conditions contained in this Agreement, at the Closing, Seller shall
sell, assign, transfer, convey and deliver to Buyer, free and clear of all
Encumbrances, and Buyer shall purchase from Seller, the Shares.
2.2 Consideration.
2.2.1 Purchase Price. The aggregate base purchase price for the Shares shall be
Three Million Dollars ($3,000,000) (the "Base Purchase Price"), which shall be
subject to adjustment as described in Section 2.2.2 and Section 2.3 below (as
adjusted, the "Purchase Price").
2.2.2 Payment of Purchase Price at Closing. At the Closing, the Base Purchase
Price shall be adjusted: (a) upward by the amount, if any, by which the Closing
Equity as calculated in accordance with the Estimated Closing Balance Sheet (as
defined below) exceeds $2,551,772.00 or (b) downward by the amount, if any, by
which the Closing Equity as calculated in accordance with the Estimated Closing
Balance Sheet is less than $2,551,772.00 (as adjusted, the "Estimated Purchase
Price"). At the Closing, Buyer shall pay to Seller on account of the Purchase
Price an amount equal to the Estimated Purchase Price by wire transfer, in
immediately available funds, pursuant to wire transfer instructions delivered to
Buyer by Seller at least three (3) Business Days prior to the Closing, or by
certified check, at Seller's sole option.
2.3 Purchase Price Adjustment.
2.3.1 Estimated Closing Balance Sheet. No later than three (3) Business Days or
earlier than ten (10) Business Days prior to the Closing Date, Seller shall, in
consultation with Buyer, prepare an estimated balance sheet of the Company as of
the Effective Time (the "Estimated Closing Balance Sheet") and a calculation of
estimated Closing Equity as of the Effective Time based on the assets and
liabilities of the Company as reflected on the Estimated Closing Balance Sheet.
2.3.2 Final Closing Balance Sheet. As soon as practicable, but in no event later
than sixty (60) days following the Closing, Seller shall, in consultation with
Buyer, prepare a balance sheet of the Company as of the Effective Time (the
"Final Closing Balance Sheet" and collectively with the Estimated Closing
Balance Sheet, the "Closing Balance Sheet") and a calculation of Closing Equity
as of the Effective Time, as calculated in accordance with the Final Closing
Balance Sheet. The Final Closing Balance Sheet and calculation of Closing Equity
shall be prepared so that they present fairly the Closing Equity as of the
Effective Time using practices and procedures consistent with the preparation of
the Financial Statements and in accordance with GAAP; provided, that all
Intercompany Accounts, Excluded Liabilities and any refunds in respect of Taxes
for the period prior to the Closing, will be excluded therefrom (it being the
understanding that Intercompany Accounts have been eliminated in accordance with
Section 3.20 hereof). In addition, the Final Closing Balance Sheet will only
include intercompany trade receivables that are excluded from the definition of
Intercompany Accounts if and to the extent such receivables have been collected
prior to the date the Final Closing Balance Sheet is required to be prepared.
2.3.3 Access. During the preparation of the Closing Balance Sheet and the
calculation of Closing Equity in connection therewith, and throughout the period
of any review or dispute within the contemplation of this Section 2.3: (a)
Seller shall, until the Closing, and Buyer shall, after the Closing, cause the
Company to provide Buyer or Seller, as applicable, and their respective
authorized representatives with access to all relevant books, records,
workpapers and employees of the Company as may reasonably be requested by such
party; and (b) Seller and Buyer shall cooperate fully with each other and their
respective authorized representatives in connection with such preparation and
review, including the provision to one another on a timely basis of all
information reasonably requested in connection with such preparation and review.
2.3.4 Delivery and Review. Seller shall deliver a copy of the Final Closing
Balance Sheet to Buyer promptly after it has been prepared and in no event later
than sixty (60) days after the Closing. After receipt of the Final Closing
Balance Sheet, Buyer shall have thirty (30) days to review the Final Closing
Balance Sheet, together with the workpapers used in the preparation thereof.
Unless Buyer delivers written notice to Seller on or prior to the thirtieth day
after the receipt of the Final Closing Balance Sheet stating that it has
objections to the Final Closing Balance Sheet or the calculation of Closing
Equity made in accordance therewith (and setting forth the disputed items),
Buyer shall be deemed to have accepted and agreed to the Final Closing Balance
Sheet and the calculation of Closing Equity made pursuant thereto. If Buyer so
notifies Seller of its objections to the Final Closing Balance Sheet, the
parties shall, within thirty (30) days (or such longer period as the parties may
agree) following such notice (the "Resolution Period"), attempt to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive.
2.3.5 Resolution. Any amounts remaining in dispute at the conclusion of the
Resolution Period (the "Unresolved Changes") shall be submitted to a nationally
recognized United States accounting firm that has not advised Buyer or Seller in
the past five (5) years (such firm being referred to as the "Neutral Auditors")
within ten (10) days after the expiration of the Resolution Period. Each party
agrees to execute, if requested by the Neutral Auditors, a reasonable engagement
letter with the Neutral Auditors. All fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors shall be borne pro rata by Buyer
and Seller in proportion to the allocation of the dollar amount of the
Unresolved Changes made by the Neutral Auditors such that the prevailing party
or parties pays a lesser proportion of the fees and expenses. The Neutral
Auditors shall act as an arbitrator to determine, based on the provisions of
this Section 2.3, only the Unresolved Changes. The Neutral Auditors'
determination of the Unresolved Changes shall be made within forty-five (45)
days of the submission of the Unresolved Changes thereto, shall be set forth in
a written statement delivered to Buyer, on the one hand, and Seller, on the
other hand, and shall be final, binding and conclusive. The term "Adjusted
Closing Balance Sheet", as used in this Agreement, shall mean the definitive
Closing Balance Sheet agreed to (or deemed agreed to) by Buyer, on the one hand,
and Seller, on the other hand, under Section 2.3 or, if Unresolved Changes are
submitted to the Neutral Auditors, such definitive Closing Balance Sheet, as
adjusted to reflect the determination of the Neutral Auditors under this Section
2.3.5.
2.3.6 Post-Closing Adjustments. If and to the extent the Closing Equity as
calculated in accordance with the Adjusted Closing Balance Sheet exceeds the
Closing Equity as calculated in accordance with the Estimated Closing Balance
Sheet, then Buyer shall pay an amount equal to such excess (together with
interest on such amount, from the Closing Date to the date of payment, at the
Reference Rate in effect on such date, without compounding) to Seller as an
adjustment to the Purchase Price. If and to the extent that the Closing Equity
as calculated in accordance with the Adjusted Closing Balance Sheet is less than
the Closing Equity as calculated in accordance with the Estimated Closing
Balance Sheet, then Seller shall pay an amount equal to such shortfall (together
with interest on such amount, from the Closing Date to the date of payment, at
the Reference Rate in effect on such date, without compounding) to Buyer as an
adjustment to the Purchase Price. If the amount of post-Closing adjustments are
agreed to (or deemed agreed to) by Buyer, on the one hand, and Seller, on the
other hand, before or during the Resolution Period, then payment of any
adjustment shall be made within five (5) Business Days after the date of such
agreement (or deemed agreement). If there are Unresolved Changes at the end of
the Resolution Period, then (a) the minimum amount which the parties agree is
owed pursuant to this Section 2.3.6 shall be paid within five (5) Business Days
after the end of the Resolution Period and any additional amounts owing with
respect to the Unresolved Changes shall be paid within five (5) Business Days
after the resolution thereof by the Neutral Auditors or (b) in all other cases,
any and all payments shall be made within five (5) Business Days after the
resolution of the Unresolved Changes by the Neutral Auditors. Any payment made
to any party pursuant to this Section 2.3.6 shall be (i) net of any obligations
identified, as of such date, as owed by such party under Article X of this
Agreement and (ii) paid by wire transfer of immediately available funds to a
bank account specified by the party to which such payment is owed.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE BUSINESS
3. Representations and Warranties Relating to the Company and the Business. Each
of Seller and Parent hereby represents and warrants to Buyer that, as of the
date hereof:
3.1 Organization and Standing; Capitalization.
3.1.1 Organization and Standing. The Company:
(a) is an unlimited liability company duly organized and validly existing under
the laws of Nova Scotia;
(b) has full corporate power and authority and all governmental Licenses,
authorizations, consents and approvals required to own, lease and use its
properties and to conduct the Business as now being conducted and to perform the
obligations required to be performed by it hereunder and to consummate the
transactions contemplated hereby; and
(c) is duly qualified to do business in every jurisdiction in which the nature
of its business requires such qualification.
3.1.2 Capitalization; Corporate Structure.
(a) The authorized capital of the Company consists of 100,000,000 Common Shares
and 2,600,000 Class A Preferred Shares, of which 8,600 Common Shares and
2,600,000 Class A Preferred Shares are issued and outstanding. The Shares have
been duly authorized and issued and are validly outstanding, fully paid and
nonassessable and were not issued in violation of any preemptive or other rights
or in violation of any Applicable Laws, the Memorandum or Articles of
Association or other constating documents of the Company.
(b) The Shares are held as indicated on Section 3.1.2(b) of the Disclosure
Schedule. Seller is the sole owner of record and beneficial owner of, all of the
Shares and Seller will, as of the Closing, have the full and unrestricted right,
power and authority to sell and transfer the Shares to Buyer. At the Closing,
Seller shall deliver to Buyer duly endorsed certificates evidencing Seller's
ownership of the Shares. Upon delivery of such Shares to Buyer and payment by
Buyer to Seller of the consideration therefor, Buyer will acquire good and
marketable title to and complete ownership of the Shares free and clear of all
Encumbrances.
(c) There are not currently, and as of the Closing there will not be, any
outstanding (i) subscriptions, options, warrants, rights of first refusal or
other rights to purchase from the Company or Seller any shares of capital stock
of the Company or (ii) any securities convertible into or exchangeable for
shares of capital stock of the Company. There is no contract, right or option
outstanding requiring the Company to redeem or repurchase any of its shares of
capital stock and there are no preemptive rights with respect to any shares of
capital stock of the Company.
(d) The Company has no Subsidiaries.
(e) The corporate records and minute books of the Company contain complete and
accurate minutes of all meetings of and corporate actions or written resolutions
of the directors, committees of directors and shareholders of the Company. All
such meetings were duly called and held, all such corporate actions were duly
taken, and all such resolutions duly passed or validly signed. The share
certificates, register of transfers, registers of shareholders and directors,
and other similar records of the Company are complete, accurate and current.
(f) Section 3.1.2(f) of the Disclosure Schedule lists all business, fictitious,
trade or other names under which the Company is currently conducting, or has
historically conducted, business.
3.2 No Contravention. The performance of the Company under this Agreement and
its execution and delivery of, and performance under, any other documents to be
executed in connection herewith do not and will not, after the giving of notice
or the lapse of time: (a) conflict with or violate any provisions of the
Memorandum or Articles of Association or other constating documents of the
Company; (b) subject to obtaining the consents listed on Section 3.2 of the
Disclosure Schedule and taking the actions referenced in Section 4.3.2, result
in the breach of any of the terms of, constitute a default under, conflict with
or result in the termination or alteration of, any Contract or agreement to
which the Company is a party or by which the Company or any of its properties is
bound; or (c) subject to obtaining the consents and taking the actions listed on
Section 3.2 of the Disclosure Schedule and complying with the HSRA, the
Investment Canada Act (Canada) and the Competition Act (Canada), as applicable,
to the Knowledge of Seller and Parent, contravene or conflict with or constitute
a violation of any License or Applicable Law binding upon or applicable to the
Company, the Business or the Shares.
3.3 Tangible Assets.
3.3.1 Title. The Company has good and valid title to, or a good and valid
leasehold interest in, all of the tangible assets and properties it owns or
uses. Except for Permitted Encumbrances or as disclosed on Section 3.3.1 of the
Disclosure Schedule, the Company holds title to each such asset free and clear
of all Encumbrances. To the Knowledge of Seller and Parent, the landlord named
on each real property lease (collectively, the "Leases") to which the Company is
a party has good and valid fee simple title in the real property subject to such
Lease, subject to no exceptions that affect or may reasonably be expected to
affect the use or operation of such real property by the Company.
3.3.2 Asset Rights. At the Closing, all of the rights, properties and assets
necessary for using, owning, operating and conducting the Business shall be
either: (a) owned by the Company; or (b) licensed or leased to the Company under
one of the Contracts or one of the agreements to be entered into pursuant to
this Agreement.
3.3.3 Condition of Assets.
(a) All of the Company's tangible assets and properties are in good operating
condition and repair, ordinary wear and tear excepted, and are adequate for the
uses to which they are currently put and no properties or assets necessary for
the conduct of the Business as currently conducted by the Company are in need of
replacement, maintenance or repair except for routine replacement, maintenance
and repair.
With respect to the real property owned or leased by the Company (the "Real
Property"):
(i) all Real Property is in compliance with all Applicable Laws (including
without limitation laws relating to parking, zoning and land use) and public and
private covenants and restrictions;
(ii) there are no zoning, building code, occupancy restriction or other land-use
regulation proceedings or any proposed change in any Applicable Laws which could
detrimentally affect the use or operation of any parcel of Real Property, nor
has Seller or the Company received any notice of any special assessment
proceedings affecting any parcel of Real Property, or applied for any change to
the zoning or land use status of any parcel of Real Property;
(iii) all water, sewer, gas, electric, telephone and drainage facilities and all
other utilities required by law or for the normal use and operation of each
parcel of Real Property as currently used or operated by the Business are (X)
installed to the property lines of such parcel and (Y) adequate to service such
parcel of Real Property as improved and to permit full compliance with all
Applicable Laws; and
(iv) to the Knowledge of Seller and Parent, except as disclosed on Section 3.3.3
of the Disclosure Schedule, there are no latent defects or adverse physical
conditions affecting any parcel of Real Property or any of the facilities,
buildings, structures, erections, improvements, fixtures, fixed assets and
personal property of a permanent nature affixed, annexed or attached to, located
on or forming part of such Real Property (collectively, the "Improvements").
Except as disclosed on Section 3.3.3 of the Disclosure Schedule, no repairs are
required to be made, or based upon current condition of the Improvements, will
be required to be made to the Improvements in order to permit the Company to
conduct its business as currently conducted or in order to comply with any
Contract.
3.4 Licenses. The Company has the Licenses listed on Section 3.4 of the
Disclosure Schedule, which constitute all of the Licenses and other governmental
authorizations required to conduct the Business as currently conducted by the
Company or as the Business is contemplated to be conducted as of the date of
this Agreement.
3.5 Contracts.
(a) All contracts, leases, instruments and employment and other agreements to
which the Company is a party (other than all purchase orders made in the
ordinary course of business and any agreement for which the Company's aggregate
obligation after the Closing does not exceed $25,000 or which is cancelable by
the Company: (x) on sixty (60) days or less notice; (y) without Liability to the
Company or the Buyer) (the "Contracts") are listed on Section 3.5 of the
Disclosure Schedule. With respect to each Lease, Section 3.5 of the Disclosure
Schedule sets forth the location of the real property leased pursuant to such
Lease, the monthly rental payments due under such Lease, the expiration date of
the Lease, and a brief description of the activities conducted by the Company on
such real property. True and complete copies of each Contract have heretofore
been provided to Buyer.
(b) Neither the Company nor, to the Knowledge of Seller and Parent, any other
party thereto, is in default under any Contract and no event, occurrence or
condition exists, which, with the giving of notice or the lapse of time, may
reasonably be expected to result in a default thereunder.
(c) The Company has not granted any release or waiver under any of the
Contracts.
(d) The Contracts are each in full force and effect and valid and binding and
enforceable against the Company and, to the Knowledge of Seller and Parent, each
other party thereto, in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws relating to or affecting creditors' rights generally.
(e) Subject to obtaining the consents set forth on Section 3.2 of the Disclosure
Schedule, the transfer of the Shares contemplated by this Agreement will not
result in any default, penalty or modification to any of the Contracts,
including, without limitation, the leases to which the Company is a party.
3.6 Intellectual Property Rights.
(a) Section 3.6(a) of the Disclosure Schedule sets forth a complete and correct
list of each patent, patent application and invention, trademark, trade name,
trademark or trade name registration or application, copyright or copyright
registration or application for copyright registration, servicemark, brand xxxx
or brand name or any pending application related thereto, or any material trade
secret, proprietary know-how, programs or processes or any similar rights, and
each license or licensing agreement for any of the foregoing used or owned by
the Company, or which will be used or owned by the Company after giving effect
to the transfer pursuant to the Intellectual Property Transfer Agreement, or
relating to the Company or the Business (collectively the "Intellectual Property
Rights").
(b) There is no pending nor, to the Knowledge of Seller and Parent, threatened
claim against the Company or, in the case of Intellectual Property Rights to be
transferred to the Company pursuant to the Intellectual Property Transfer
Agreement, against MHE Technologies, in either case that may involve a claim of
misappropriation, infringement, or other violation of any patent, trademark,
copyright, trade secret or other intellectual property right of any Person, or
that may challenge or question the validity of any of the Intellectual Property
Rights, nor is the Company or MHE Technologies aware of any facts that may
reasonably be expected to give rise to any such claim. No Intellectual Property
Right is subject to any outstanding order, judgment, decree, stipulation or
agreement that, after giving effect to the Intellectual Property Transfer
Agreement, would restrict the use thereof by the Company or the licensing
thereof by the Company to any Person. MHE Technologies has the right to assign
the Intellectual Property Rights to the Company as contemplated by the
Intellectual Property Transfer Agreement, including the right to xxx for and
recover from past and future violations in connection with or related to such
Intellectual Property Rights. To the Knowledge of Seller and Parent, after
giving effect to the transfer pursuant to the Intellectual Property Transfer
Agreement, the current use of the Intellectual Property Rights by the Company
does not conflict with, infringe upon or violate any patent, patent license,
patent application, trademark, tradename, trademark or tradename registration,
copyright, copyright registration, service xxxx, brand xxxx or brand name or any
pending application relating thereto, or any trade secret, know-how, programs or
processes, or any similar rights, of any Person.
(c) After giving effect to the transfer pursuant to the Intellectual Property
Transfer Agreement, the Company owns or has the right to use without payment the
entire right, title and interest, free and clear of all Encumbrances other than
Permitted Encumbrances, in, to and under, all Intellectual Property Rights
listed on Section 3.6(a) of the Disclosure Schedule. No other inventions,
processes, computer programs, know-how, formulae, trade secrets, patents, chip
designs, mask works, trademarks, trade names, brand names, copyrights, licenses
or applications for any of the foregoing are necessary for the unimpaired
continued operation of the Business in the manner that the Business has
heretofore been conducted or is proposed to be conducted as of the date of this
Agreement. Section 3.6(c) of the Disclosure Schedule lists all licenses of any
Intellectual Property Rights to or by the Company, after giving effect to the
transfer pursuant to the Intellectual Property Transfer Agreement. All
agreements relating to the Intellectual Property Rights are in full force and
effect after giving effect to the transfer pursuant to the Intellectual Property
Transfer Agreement.
3.7 Employees; Plans.
(a) Attached hereto as Section 3.7(a) of the Disclosure Schedule is a list of
all salaried employees of the Company with an annual base salary in excess of
$70,000, indicating the positions that such employees currently hold (the
"Management Employees", and together with all other employees of the Company,
the "Business Employees"). Section 3.7(a) of the Disclosure Schedule also lists
each employment agreement, consulting agreement, severance pay, continuation
pay, termination pay and similar agreement between the Company and any Business
Employee. Except as set forth on Section 3.7(a) of the Disclosure Schedule, no
Business Employee is on disability or extended leave.
(b) The Company does not sponsor, maintain, contribute to, or have any
obligation to contribute to, any Employee Plan, except as set forth in Section
3.7(b) of the Disclosure Schedule. Seller has made true and correct copies of
all governing instruments and related agreements pertaining to each Employee
Plan available to Buyer, including, in the case of any Employee Plan not set
forth in writing, a written description thereof. Each Employee Plan has been
maintained in accordance with all Applicable Laws and with the provisions of
such Employee Plan in all material respects.
(c) Schedule 3.7(c) of the Disclosure Schedule lists each Employee Benefit Plan
and Employee Pension Benefit Plan copies of which have been provided to Buyer or
its affiliates, that the Company contributes to or maintains. Each such Employee
Benefit Plan, each such Employee Pension Benefit Plan and each related trust,
insurance contract, or fund complies in form and in operation with the
applicable requirements of ERISA, the Code, and any other Applicable Law. With
respect to each Benefit Plan which is an Employee Pension Benefit Plan, (i) all
contributions which are due have been paid to each such Benefit Plan, (ii) no
event has occurred and no condition has existed that has adversely affected, or
is likely to adversely affect the application and/or receipt of a favourable
determination by the IRS in respect of such Benefit Plan, and (iii) as of the
last day of the most recent prior plan year, the market value of assets under
each such Benefit Plan (other than any Multiemployer Plan) equaled or exceeded
the present value of Liabilities thereunder (determined in accordance with the
then current funding assumptions).
(d) With respect to each Benefit Plan that the Company maintains, (x) no such
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated or been the
subject of a Reportable Event (as defined in ERISA), as to which notices would
be required to be filed with the Pension Benefit Guaranty Corporation ("PBGC"),
and no proceeding by the PBGC to terminate any such Benefit Plan has been
instituted, (y) no action, suit, proceeding, hearing or investigation with
respect to the qualification or registration of such Benefit Plan or the
administration or the investment of the assets of any such Benefit Plan (other
than routine claim for benefits) is pending or, to the Knowledge of Seller and
Parent, threatened, and (z) neither the Company nor any of its ERISA Affiliates
has incurred any liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA, including but not limited to, any withdrawal
liability to any Multiemployer Plan with respect to any such Benefit Plan that
is subject to ERISA or the Code.
(e) No transaction prohibited by Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any Benefit Plan that is subject to ERISA or
the Code which transaction has or can reasonably be expected to cause the
Company or any of its ERISA Affiliates to incur any Liability under ERISA, the
Code or otherwise, excluding transactions effected pursuant to and in compliance
with a statutory or administrative exemption. Except as disclosed on Section
3.7(c) of the Disclosure Schedule, neither the Company nor any of its ERISA
Affiliates has any current or projected liability in respect of post-employment
or post-retirement health or medical or life insurance benefits for retired,
former or current employees of the Company, except as required under Applicable
Law. Other than as described in Section 3.7(c) of the Disclosure Schedule, no
employee or former employee of the Company or any of its ERISA Affiliates will
become entitled to any bonus, retirement, severance or similar benefit or
enhanced benefit (including acceleration of vesting or exercise of an incentive
award) as a result of the transactions contemplated hereby. With respect to any
Benefit Plan, to the Knowledge of Seller and Parent no event or circumstance
exists which would, either singularly or in the aggregate, have a Material
Adverse Effect.
(f) The Company has not made, or acquiesced in the making of, any amendments to
any of the Employee Plans which are not disclosed in the documents made
available to Buyer. All obligations of the Company (including fiduciary,
funding, investment and administration obligations) required to be performed in
connection with the Employee Plans or the funding agreements therefor have been
performed in a timely fashion in accordance with the terms of the Employee Plans
and Applicable Laws. Where required, the Employee Plans are duly registered
under the Income Tax Act (Canada) and applicable pension standards legislation.
There are no taxes owing in respect of the Employee Plans. There have been no
improper withdrawals, or applications of, the assets held in respect of the
Employee Plans by the Company. No promises of benefit improvements under the
Employee Plans have been made except as may be required under Applicable Laws,
and to the Knowledge of the Seller and Parent, there are no outstanding disputes
concerning the assets held in respect of any of the Employee Plans.
(g) All contributions or premiums required to be paid by the Company in respect
of the Employee Plans have been paid in a timely fashion in accordance with the
terms of the Employee Plans and the Applicable Laws. All employee contributions
to the Employee Plans required to be made by way of authorized payroll deduction
have been properly withheld by the Company and fully paid out in a timely
fashion in accordance with the terms of the Employee Plans and the Applicable
Laws. There are no taxes owing in respect of the Employee Plans.
(h) All reports and other disclosures relating to the Employee Plans required by
this Agreement, or by any Applicable Laws, to be filed or distributed on or
before the execution of this Agreement have been filed or distributed. All such
reports and disclosures required by this Agreement, or by any applicable laws or
regulations, to be filed or distributed on or before the Closing Date shall be
so filed or distributed.
(i) The Employee Plans are fully funded both on an ongoing basis and on a
solvency basis using actuarial methods and assumptions contained in the most
recent actuarial report required to be prepared and filed with the applicable
pension regulatory authority. All employee data respecting any Employee Plan is
correct. None of the Employee Plans is the subject of any investigation,
proceeding, action or claim and to the Knowledge of the Seller and Parent, there
exists no state of facts which after notice or lapse of time or both could
reasonably be expected (i) to give rise to any such investigation, proceeding,
action or claim, or (ii) to affect the registration of the Employee Plans.
(j) The Company is not a party to or bound by any collective agreement and is
not currently conducting negotiations with any labour union or employee
association. To the Knowledge of Seller and Parent, prior to the date of this
Agreement, there has been no attempt to organize, certify or establish any
labour union or employee association in relation to any employees of the
Company. There are no existing or, to the Knowledge of Seller and Parent,
threatened labour strikes or disputes, grievances, controversies or other labour
troubles affecting the Company or the Business.
(k) The Company has complied with all Applicable Laws relating to employment,
including those relating to wages, hours, collective bargaining, occupational
health and safety, workers' hazardous materials, employment standards, pay
equity and workers' compensation. There are no outstanding charges or, to the
Knowledge of the Seller and Parent complaints against the Company relating to
unfair labour practices or discrimination or under any legislation relating to
employees. The Company has paid in full all amounts owing under the Workers'
Compensation Act (Ontario) or comparable provincial legislation. There are no
charges or orders outstanding against the Company under the Occupational Health
and Safety Act (Ontario).
3.8 Financial Statements.
(a) True and complete copies of the Financial Statements listed on Section 3.8
of the Disclosure Schedule, including the April Balance Sheet and monthly and
year to date unaudited financial statements through the month ended immediately
prior to the Closing Date (to the extent such statements for the month ended
immediately prior to the Closing Date are reasonably available), have heretofore
been made available to Buyer.
(b) Except as disclosed on Section 3.8 of the Disclosure Schedule, each of the
Financial Statements listed on Section 3.8 of the Disclosure Schedule:
(i) has been prepared based on the books and records of the Company in
accordance with GAAP and the Company's normal accounting practices, consistent
with past practice and with each other, and presents fairly the financial
position and results of operations of the Company, as of the dates set forth and
for the periods indicated therein, in conformity with GAAP consistently applied
throughout the periods covered thereby (subject, in the case of interim
statements, to the lack of footnotes, and customary year-end audit adjustments,
provided any such adjustments are not, individually or in the aggregate,
material);
(ii) contains and reflects all necessary adjustments, accruals, provisions and
allowances for a fair presentation of the Company's financial condition and the
results of its operations for the periods covered by such financial statement;
(iii) to the extent applicable, contains and reflects adequate provisions for
all reasonably anticipated liabilities for all Taxes (other than Excluded
Liabilities) with respect to the periods then ended and all prior periods;
(iv) with respect to contracts and commitments for the sale of goods or the
provision of services by the Company, contains and reflects adequate reserves
for all reasonably anticipated losses and costs and expenses in excess of
expected receipts; and
(v) has been certified by a responsible financial officer of the Company.
(c) Except as set forth in Section 3.8(c) of the Disclosure Schedule, there are
no Liabilities of the Company other than: (i) Liabilities disclosed on the April
Balance Sheet, (ii) Liabilities specifically disclosed and identified as such on
the Disclosure Schedule, and (iii) Liabilities incurred since the date of the
April Balance Sheet in the ordinary course of business.
3.9 Absence of Certain Changes. Except as set forth on in Section 3.9 of the
Disclosure Schedule, since the date of the April Balance Sheet, the Business has
been conducted in the ordinary course and consistent with past practice and
there has not been:
(a) any event, occurrence, state of circumstances or facts or change in the
Company or in the Business that has had or that may be reasonably expected to
have, either alone or together, a Material Adverse Effect;
(b) (i) any change in any Liabilities of the Company reflected in the April
Balance Sheet or that should be reflected as a Liability on the Company's
balance sheet that has had, or will have, a Material Adverse Effect; or (ii) any
incurrence, assumption or guarantee of any indebtedness for borrowed money by
the Company in connection with the Business or otherwise;
(c) any (i) payments by the Company in satisfaction of any Liabilities of the
Company related to the Business, other than in the ordinary course of business,
or the guarantee by the Company of any indebtedness of any other Person; or (ii)
creation, assumption or sufferance of the existence of (whether by action or
omission) any Encumbrance on any assets reflected on the April Balance Sheet,
other than Permitted Encumbrances;
(d) any change by the Company in its accounting principles, methods or practices
or in the manner it keeps its books and records or any change by the Company of
its current practices with regards to sales, receivables, payables or accrued
expenses;
(e) any (i) single capital expenditure or commitment in excess of $25,000 or
(ii) group of related capital expenditures or commitments in an aggregate amount
in excess of $50,000;
(f) any loan to or guarantee or assumption of any loan or obligation on behalf
of any director, officer, stockholder or employee of the Company, except travel
advances occurring in the ordinary course of business; or
(g) any payment, discharge or satisfaction of any Liabilities of the Company,
other than payments, discharges or satisfactions in the ordinary course of
business.
3.10 Litigation; Compliance.
(a) Except as set forth on Section 3.10(a) of the Disclosure Schedule, there are
no lawsuits, civil, criminal or administrative actions, suits, demands,
hearings, arbitrations, governmental investigations or claims pending or, to the
Knowledge of Seller and Parent, threatened, by or against the Company, nor, to
the Knowledge of Seller and Parent, is there any reasonable basis for any such
claim or proceeding.
(b) Except as set forth on Section 3.10(b) of the Disclosure Schedule, the
Company has not violated or infringed, and is not in violation or infringement
of, any material Applicable Law. The Company has historically been and currently
is in compliance with the requirements of all Applicable Laws, including all
Applicable Laws relating to the importing or exporting of products from their
country of origin.
(c) No outstanding unsatisfied writ, rule, injunction, judgment, award, order or
decree has been rendered against or affecting the Company or the Business.
3.11 Taxes.
(a) Except as set forth in Section 3.11 of the Disclosure Schedule, all Tax
Returns required to be filed by or on behalf of the Company have been properly
and accurately prepared and timely filed. All Taxes shown to be due and payable
on such Tax Returns, and all other Taxes of or with respect to the Company which
are due and payable, have been timely paid.
(b) Except as set forth in Section 3.11 of the Disclosure Schedule, the Company
has withheld from each payment made to any of its present or former employees,
officers and directors, direct or indirect shareholders and all other persons
all amounts required by law to be withheld, and has remitted such withheld
amounts within the prescribed periods to the appropriate governmental body. The
Company has remitted all Canada Pension Plan contributions, provincial pension
plan contributions, employment insurance premiums, employer health taxes and
other Taxes payable by it in respect of its employees to the proper governmental
body within the time required under the applicable legislation.
(c) Except as set forth in Section 3.11 of the Disclosure Schedule, the Company
is not a party to or bound by a Tax sharing, Tax indemnity, Tax allocation or
similar agreement and is not bound by any closing agreement, offer in compromise
or similar agreement with respect to Taxes.
(d) Except as set forth in Section 3.11 of the Disclosure Schedule, there are no
present or pending disputes, audits or other adjustments with respect to Taxes
relating to the Company and, to the Knowledge of Seller and Parent, there is no
basis upon which a Tax authority could impose a liability for Taxes for which
the Company could be held liable in excess of those shown on the Tax Returns
previously filed and Taxes incurred in the ordinary course of business since the
date of such Tax Returns and included as a liability on the Final Closing
Balance Sheet to be prepared by Seller pursuant to Section 2.3.2. None of the
transactions contemplated by this Agreement are anticipated to give rise to any
liability for Taxes of the Company. Neither the Company nor its affiliates has
received notice that the Company is or may be subject to Tax in a jurisdiction
in which it has not filed or does not currently file Tax Returns. No action has
been taken inconsistent with past practice that would have the effect of
deferring any Tax liability with respect to the Company from any taxable period
(or portion thereof) ending on or before or including the Closing Date to any
subsequent taxable period. The Company does not have and has not had a permanent
establishment in any country other than Canada and the United States. Except as
set forth in Section 3.11 of the Disclosure Schedule, the Company has at all
times complied with the contemporaneous documentation requirements under section
247(4) of the Income Tax Act (Canada).
(e) Except as set forth in Section 3.11 of the Disclosure Schedule, at all times
during its existence, for United States federal and applicable United States
state and local income tax purposes, the Company has been "disregarded as an
entity separate from its owner" within the meaning of United States Treasury
Regulation ss. 301.7701-3(b)(2)(i)(C), and has not made an election to be
treated otherwise for any income tax purposes.
3.12 Environmental Matters. Except as disclosed in the environmental surveys
(the "Environmental Surveys") a description of which is set out in Section 3.12
of the Disclosure Schedule: (a) the Company is, and at all times since February
16, 1995 has been, in compliance with all applicable Environmental Laws; (b)
there are no asbestos-containing materials, polychlorinated biphenyls, DOPs,
urea formaldehyde foam insulation, incinerators, underground or aboveground
storage tanks, septic systems or tanks or cesspools located on real property
owned or leased by the Company; (c) the properties currently owned or leased by
the Company (including soils, groundwater, surface water, building or other
structures) are not contaminated with any Hazardous Substances; (d) the
properties formerly owned or leased by the Company were not contaminated with
Hazardous Substances during the period of the Company's ownership or lease; (e)
the Company is not subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (f) the Company has not been
associated with any release or threat of release of any Hazardous Substance; (g)
the Company has not received any notice, demand, letter, claim, or request for
information alleging that the Company may be in violation of or liable under any
Environmental Law; (h) the Company is not subject to any orders, decrees,
injunctions or other arrangements with any Governmental Authority and is not
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law; (i) the Company has not been identified
as a potentially responsible party under any Environmental Laws for cleanup
liability with respect to the emission, discharge or release of any Hazardous
Substance and (j) to the Knowledge of Seller and Parent, there are no
circumstances or conditions involving the Company that could reasonably be
expected to result in any claims or Liabilities pursuant to any Environmental
Law. This Section 3.12 sets forth the sole and exclusive representations and
warranties of Seller with respect to environmental, health and safety matters.
3.13 Insurance. Section 3.13 of the Disclosure Schedule contains a complete list
of all policies of insurance currently in force covering the Business or the
Company.
3.14 Brokers. No investment bank, broker, finder, agent or other advisor will be
entitled to any fee, commission or reimbursement of expenses from the Company or
Buyer or any of Buyer's Affiliates upon consummation of or otherwise in
connection with the transactions contemplated by this Agreement.
3.15 Product Warranty and Product Liability. Section 3.15 of the Disclosure
Schedule contains a true, correct and complete copy of the standard warranty or
warranties provided in connection with the sale of the Products (as defined
below). Except as set forth or described on Section 3.15 of the Disclosure
Schedule, there is no outstanding warranty for any Product that differs in any
material respect from such standard warranties and there is no Company practice
or custom not set forth in writing that expands such standard warranties. Except
as set forth on Section 3.15 of the Disclosure Schedule, none of Seller, Parent
or the Company has received notice, since January 1, 1998, from any customer to
the effect that such customer has experienced product quality problems of such
significance that it has reason to believe a concession of over $50,000 would be
required in order to resolve such customer's concerns. Each of the Products is,
and at all times up to and including the sale of such Product has been, (i) in
compliance with all Applicable Laws, and (ii) in conformity with all promises or
affirmations of fact made on the packaging or instructions for such Product or
in connection with its sale. Except as set forth on Section 3.15 of the
Disclosure Schedule, on the date of this Agreement, to the extent required by
Applicable Law or by a customer, all of the Company's Products have been rated
and approved by Underwriters Laboratories or the analogous foreign body, as the
case may be. The Company is in compliance in all material respects with all
requirements relating to such ratings and approvals, and none of Seller, Parent
or the Company has received any notice that such ratings or approvals may be
revoked or withdrawn. None of the Company's products, either as currently or
historically manufactured or sold, contains asbestos. Section 3.15 of the
Disclosure Schedule sets forth a description of all warranty claims processed
since January 1, 1998 and all customer concessions, in each case that have been
recorded in amounts exceeding, in any one such claim or concession, $50,000. The
defined term "Products" as used in this Agreement means any and all products
designed, manufactured, distributed or sold by the Company or that are subject
to ongoing warranty by the Company. The word products as otherwise used includes
all products historically manufactured or sold by the Company.
3.16 Affiliate Transactions. Except as described on Section 3.16 of the
Disclosure Schedule, other than sales of Products by the Company in the ordinary
course of business and consistent with past practice, there have been no
transactions between the Company, on the one hand, and Seller or Parent or any
of their or the Company's Affiliates, on the other (collectively, "Related
Parties"), since January 1, 1997. As of the Closing Date, other than obligations
to the Company arising from sales of Products by the Company in the ordinary
course of business, there are no obligations between the Company and any Related
Party.
3.17 Customers. Section 3.17 of the Disclosure Schedule sets forth a list of the
ten (10) largest customers of, and the ten (10) largest suppliers providing
goods and services to, the Business, for the 12-month period ended October 31,
1999, together with the approximate dollar amounts of goods or services provided
to or by such Persons during each such period and a summary description of the
goods or services provided. Neither the Company nor Seller has received written
notice from any such vendor or customer of such vendor's or customer's intent to
reduce or discontinue its business with the Company.
3.18 Backlog. As of December 7, 1999, the Company's sales order backlog was U.S.
$822,887.55, as set forth on Section 3.18 of the Disclosure Schedule. Neither
the Company nor Seller has received written notice from any customer listed on
Section 3.18 of the Disclosure Schedule of such customer's intent to terminate
any sales order listed on Section 3.18 of the Disclosure Schedule.
3.19 Year 2000. All of the Company's Products and, to the extent used in the
manufacture of such Products, all of its Information Technology (including,
without limitation, all non-customized off-the-shelf software used in the
manufacture of such Products) is Year 2000 Compliant. To the Knowledge of Seller
and Parent, all of the Company's Information Technology (including, without
limitation, non-customized off-the-shelf software) that is used in the operation
of the Business but is not Information Technology used in the manufacture of the
Company's Products (which is addressed in the preceding sentence), is Year 2000
Compliant.
3.20 Satisfaction of Intercompany Accounts. Parent has paid or caused to be paid
all Intercompany Accounts due and owing by Parent or its Affiliates to the
Company, and the Company has paid all Intercompany Accounts due and owing to
Parent and its Affiliates. All applicable withholding Taxes with respect to such
payments have been withheld and remitted to the proper taxing authorities on a
timely basis.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLERS
4. Representations and Warranties of Seller and Parent. Each of Seller and
Parent represents and warrants to Buyer that, as of the date hereof:
4.1 Organization and Standing. Nova Scotia is an unlimited liability company
duly organized and validly existing under the laws of Nova Scotia and Parent is
a corporation duly organized and validly existing under the laws of the State of
Delaware; each of Seller and Parent has full corporate power and authority and
all governmental licenses, authorizations, consents and approvals required to
own, lease and use its properties and to conduct its business and operations as
now being conducted and to perform the obligations required to be performed by
it hereunder and to consummate the transactions contemplated hereby.
4.2 Authorization and Binding Obligations. The execution, delivery and
performance by Seller and Parent of this Agreement and the other documents to be
executed and delivered by each of them in connection herewith have been duly and
validly authorized and, upon execution thereof, will be duly executed and
delivered by Seller or Parent, as the case may be, and constitute or will
constitute (assuming, in each case, the due execution by the other parties
thereto) the legal, valid and binding agreement of each of Seller and Parent,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance or other
similar laws relating to or affecting creditors' rights generally and the
exercise of judicial discretion in accordance with general equitable principles.
4.3 No Contravention; Consents.
4.3.1 No Contravention. The execution, delivery and performance of this
Agreement and the other documents to be executed in connection herewith by each
of Seller and Parent do not and will not, after the giving of notice, or the
lapse of time: (i) conflict with or violate any provisions of the Memorandum or
Articles of Association, or the Certificate of Incorporation or Bylaws, as
appropriate, or other formative documents of Seller or Parent, as the case may
be; (ii) subject to obtaining the consents listed in Section 3.2 of the
Disclosure Schedule, result in the breach of any of the terms of, constitute a
default under, conflict with or result in the termination or alteration of any
contract or any license or permit to which either Seller or Parent is a party or
by which either Seller or Parent or any of its properties is bound; or (iii) to
the Knowledge of Seller and Parent, contravene or conflict with or constitute a
violation of any Applicable Law.
4.3.2 Consent. Other than compliance with the HSRA, the Investment Canada Act
(Canada) and the Competition Act (Canada), and except for the consents and
actions listed on Section 3.2 of the Disclosure Schedule, no consent, waiver,
authorization or approval from, or filing of any notice or report with, any
Governmental Authority or other Person is necessary in connection with the
execution, delivery or performance by Seller or Parent of this Agreement or any
of the documents or transactions contemplated hereby.
4.4 Tax Status. Seller is not a non-resident of Canada for purposes of Section
116 of the Income Tax Act (Canada). No Tax will be required to be withheld from
any payments to be made to Seller pursuant to this Agreement.
4.5 Brokers. Any fee, commission or reimbursement of expenses of any investment
bank, broker, finder, agent or other advisor, including but not limited to Bank
of New York, in respect of Seller, Parent or the Company, shall be payable by
Seller or Parent, as the case may be, upon consummation of or otherwise in
connection with the transactions contemplated by this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5. Representations and Warranties of Buyer. Buyer hereby represents and warrants
to Seller and Parent that:
5.1 Organization and Standing. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer has
full corporate power and authority and all governmental licenses,
authorizations, consents and approvals required to own, lease and use its
properties and to conduct its business and operations as now being conducted and
to perform the obligations required to be performed by it hereunder and to
consummate the transactions contemplated hereby. Buyer, on or prior to the
Closing Date, will be qualified to do business in all jurisdictions in which the
nature of the business conducted, or immediately thereafter to be conducted, by
it, makes such qualification necessary or where failure to do so would have a
material adverse effect on its business, financial condition or operations.
5.2 Authorization and Binding Obligations. The execution, delivery and
performance by Buyer of this Agreement and the other documents to be executed
and delivered by Buyer in connection herewith have been duly and validly
authorized and, upon execution thereof, will be duly executed and delivered by
Buyer, and constitute or will constitute (assuming, in each case, the due
execution by each of the other parties thereto), the legal, valid and binding
agreement of Buyer enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance or other similar laws affecting or relating to or affecting
creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
5.3 No Contravention; Consents.
5.3.1 No Contravention. The execution, delivery and performance of this
Agreement and other documents to be executed in connection herewith by Buyer do
not and will not, after the giving of notice or the lapse of time: (a) conflict
with or violate any provisions of the Certificate of Incorporation, bylaws or
other formative documents of Buyer; (b) subject to obtaining the consents and
taking the actions referenced in Section 5.3.2, result in the breach of any of
the terms of, constitute a default under, conflict with or result in the
termination or alteration of, any contract or license to which Buyer is a party
or by which Buyer or any of its properties is bound; or (c) to the Knowledge of
Buyer, violate any Applicable Law.
5.3.2 Consents. Other than compliance with the HSRA, the Investment Canada Act
(Canada) and the Competition Act (Canada), no consent, waiver, authorization or
approval from, or filing of any notice or report with, any Governmental
Authority or other Person is necessary in connection with the execution,
delivery or performance by Buyer of this Agreement or any of the documents or
transactions contemplated hereby.
5.4 Brokers. Any fee, commission or reimbursement of expenses of any investment
bank, broker, finder, agent or other advisor in respect of Buyer shall be
payable by Buyer upon consummation of or otherwise in connection with the
transactions contemplated by this Agreement.
5.5 Litigation; Compliance.
(a) There are no lawsuits, civil, criminal or administrative actions, suits,
demands or claims pending, or to the Knowledge of Buyer, threatened against or
affecting Buyer or any of its Affiliates before or by any Governmental Authority
that would affect Buyer's ability to consummate the transactions contemplated
hereby;
(b) Neither Buyer nor any of its Affiliates is in default under, or in violation
of, any Applicable Law that would affect Buyer's ability to consummate the
transactions contemplated hereby; and
(c) no writ, rule, injunction, award, order or decree has been rendered against
or affecting Buyer or any of its Affiliates or any of its assets or properties
that would affect Buyer's ability to consummate the transactions contemplated
hereby.
5.6 Financial Capacity. Buyer has all funds on hand to satisfy and perform all
of Buyer's obligations under this Agreement and the documents to be executed and
exchanged at Closing.
5.7 Sophistication; Due Diligence. Buyer hereby certifies and represents that
(i) it is experienced, sophisticated and knowledgeable in the making of
investments, (ii) has had access to the Company and the Business, and (iii) is
not relying on any representation relating to the Company other than the
representations and warranties contained in this Agreement or in any certificate
or legal opinion delivered pursuant hereto.
5.8 Purchase for Investment. Buyer is acquiring the Shares for its own account,
for investment purposes only, and not with a view to, or for, resale,
distribution or granting a participation therein, in whole or in part.
ARTICLE 6
COVENANTS OF THE PARTIES
6. Covenants of the Parties.
6.1 Tax Matters.
(a) Tax Treatment. Buyer, Seller and Parent agree that they shall, and shall
cause their Affiliates to, treat the sale of the Shares pursuant to this
Agreement as a sale of the assets of the Company for all United States federal,
state and local income tax purposes. The parties agree to file all United States
Tax Returns in a manner consistent with such treatment.
(b) Preparation of Tax Returns.
(i) Seller and Parent covenant to prepare at their own expense and deliver to
Buyer any and all Tax Returns relating to a Tax reporting period ending on or
prior to the Closing Date ("Seller Returns"). In addition to and not by way of
limitation on the foregoing, Seller Returns shall include all Pennsylvania
income, franchise and sales and use Tax Returns for all periods that ended prior
to the Closing Date and for which such Seller Returns have not been filed
(including but not limited to all Pennsylvania sales and use Tax Returns for all
open periods). With respect to any Seller Returns that are not due as of the
Closing Date, Seller and Parent shall deliver such Seller Returns to Buyer not
later than the earlier of (A) fifteen (15) days prior to the date on which such
return is required to be filed and (B) one hundred and twenty (120) days after
the Closing Date. With respect to any Seller Return that is due but has not been
filed as of the Closing Date, such Seller Returns shall be submitted to Buyer in
draft form within ninety (90) days after the Closing Date (provided that such
time period shall be extended for so long as Seller is negotiating in good faith
with the relevant taxing authority and provides copies of all communications to
or from such taxing authority to Buyer), together with Seller's calculation of
all applicable penalties, additions to Tax, interest and other amounts owed with
respect to such Seller returns, for Buyer's review and approval (not to be
unreasonably withheld).
(ii) Upon Buyer's review and approval of any Seller Returns and (if applicable)
Seller's calculations of other amounts owing, such Seller Return shall be
submitted to Buyer in final form, accompanied by a cheque from Seller or Parent
made payable to the applicable taxing jurisdiction in an amount equal to all
Taxes and other amounts payable as provided in such Seller Return and, if
applicable, such agreed calculations of other amounts owing (the amount of such
cheque shall be based on an assumption that such Seller Return will be filed and
the related Taxes paid ten (10) days from the date Buyer receives such Seller
Return and cheque). Provided such final Seller Return and cheque are in the form
and amounts agreed to by Buyer, Buyer shall cause such Seller Return to be
executed by the appropriate corporate officer and shall file such Seller Return
and remit the payment received from Seller. Delivery of such final Seller Return
by Seller or Parent to Buyer shall constitute a representation and warranty by
Seller that such Seller Return is complete and accurate.
(iii) In the event Seller does not deliver a Seller Return within the time
prescribed herein, Buyer may, but shall not be required to, cause such Seller
Return to be prepared and filed and cause to be paid the related Taxes and other
amounts owing with respect thereto, upon which Seller and Parent shall
immediately reimburse Buyer for all such Taxes and other amounts, as well as
costs, charges (including reasonable professional fees), and other amounts
incurred in connection with the operation of this Section 6.1(b).
(iv) Buyer's approval, execution, preparation, filing, payment or other action
with respect to any Seller Return shall not in any way reduce Seller's
obligations under this Agreement, and in accordance with Sections 6.1(d) and
7.2(c) Seller and Parent shall indemnify, defend and hold Buyer and its
Affiliates (including the Company) harmless from and against all Damages with
respect to any such Seller Return, whether prepared by or at the request of
Seller, Parent, Buyer or their Affiliates.
(c) Cooperation. The parties hereto agree to furnish or cause to be furnished to
one another, upon request, as promptly as practicable, such information and
assistance relating to the Company and the Business as is reasonably necessary
for the filing of all Tax Returns, and making of any election related to Taxes,
the preparation for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax Return. The parties
hereto shall cooperate with each other in the conduct of any audit or other
proceeding, including the filing of any amended Tax Returns, related to Taxes
involving the Business and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of this
Section 6.1(c). Seller and Parent also shall provide such information to Buyer
and the Company as reasonably requested by Buyer and the Company for the purpose
of enabling the Company to comply with the contemporaneous documentation
requirements under section 247(4) of the Income Tax Act (Canada).
(d) Responsibility for Payment. Subject to Liabilities for Taxes for the period
prior to Closing which have been reflected in the calculation of the Purchase
Price, Seller shall pay as and when due, and Seller and Parent shall jointly and
severally indemnify, defend and hold the Buyer and its Affiliates (including,
following the Closing, the Company) harmless from and against, any and all
Liabilities for Taxes and related Damages (as defined in Section 7.2) of or
relating to the Company or Seller, and reasonable professional fees and other
reasonable out-of-pocket costs associated with such Taxes (i) accrued with
respect to all taxation periods ending on or before the Closing Date, (ii)
accrued with respect to or attributable to the Business during all periods up to
and including the Closing Date (including but not limited to Taxes relating to
any transactions between the Company and any other Person occurring at or prior
to Closing) whether or not such periods are taxation periods, or (iii) are
incurred and become payable as a result of the transfer of the Shares to the
Buyer contemplated by this Agreement (including but not limited to any transfer,
documentary, sales, use or other Taxes with respect to the transfer of the
Shares to Buyer, and any recording or filing fees with respect thereto). The
amounts described in the preceding sentence are Excluded Liabilities and are
subject to indemnification under Sections 7.2(c) and 7.2(d). The obligation of
Seller and Parent to indemnify Buyer and its Affiliates under this Section
6.1(d) shall not be reduced by reason of any disclosure or representation made,
or information provided, to Buyer or its Affiliates and representatives,
including but not limited to disclosure information provided in the Disclosure
Schedule.
(e) Allocation of Purchase Price. For United State federal, state and local
income tax purposes, the Purchase Price shall be allocated in accordance with
Schedule 2. Each of the parties hereto agrees to report the transactions
contemplated hereby for United States federal, state and local income Tax
purposes in accordance with such allocation of the Purchase Price.
6.2 Regulatory Filings.
6.2.1 Cooperation. The parties shall cooperate in the timely and expeditious
preparation and prosecution of any filings with any federal, state, provincial
or local authorities that may be required in connection with the transactions
contemplated by this Agreement.
6.2.2 Certain Filings. Within thirty (30) days after the execution and delivery
of this Agreement, Buyer and Seller shall file, or cause to be filed, with the
appropriate Canadian authorities any and all reports or notifications which are
required to be filed under the Investment Canada Act (Canada) and the
Competition Act (Canada). Seller, Parent and Buyer shall furnish to each other
such information as may be necessary and such assistance as the other may
reasonably request in connection with the preparation and filing of all notices
and filings referenced in this Section 6.2.2
6.3 Employee Matters. The parties agree that, until January 1, 2000, when the
Business Employees in the United States are integrated into Buyer's benefit
plans and payroll system, Parent shall continue to provide benefits and pay
payroll for such Business Employees. Buyer agrees that, within thirty (30) days
of receiving a summary of the expenses incurred by Parent in connection with
providing such benefits and payroll from the Effective Time until December 31,
1999, it shall reimburse Parent fully for all such expenses.
6.4 Collateral Agreements. Concurrently with the execution and delivery of this
Agreement, (a) Buyer and Parent, or any of their respective Subsidiaries as the
same shall designate, shall each execute and deliver the following agreements:
(i) the Supply Agreement, (ii) the Intellectual Property Transfer Agreement,
(iii) the Noncompetition Agreement and (iv) the License Agreement and (b) Parent
shall deliver (i) an irrevocable letter of credit in the amount of $350,000 from
Canadian Imperial Bank of Commerce for the benefit of Buyer and the Company, in
the form attached as Exhibit B hereto (the "Letter of Credit"), and (ii) an
irrevocable letter of credit in the amount of $650,000 from Canadian Imperial
Bank of Commerce for the benefit of Buyer, in the form attached as Exhibit C
hereto (the "Tax Letter of Credit").
6.5 Refunds in Respect of Audits/Taxes. If Seller or its Affiliates receives a
refund of Taxes (including interest) in respect of the Company for the period
prior to the Closing, such refund shall be paid immediately to the Company. If
Buyer or the Company receives such refund (whether from Seller or otherwise),
Buyer shall cause to be remitted to Seller an amount equal to the amount of such
refund, net of any Taxes incurred or to be incurred by Buyer or its Affiliates
(including the Company) by virtue of such refund.
ARTICLE 7
INDEMNIFICATION
7. Indemnification.
7.1 Survival. The representations and warranties of the parties set forth in
this Agreement (or in any document delivered in connection herewith) shall
survive the Closing Date and, except as set forth in the remainder of this
Section 7.1, terminate on the close of business on the date which is eighteen
(18) months after the Closing Date. The representations and warranties contained
in Section 3.11 shall survive the Closing Date until the expiration of the
normal reassessment period under Applicable Laws (as the same may be extended
from time to time after consultation with Seller and Parent), except that
representations and warranties of Seller in connection with any Tax matter
relating to the Company which are based on misrepresentation or fraud shall
continue in full force indefinitely. The representations and warranties
contained in Section 3.12 shall survive the Closing Date and terminate on the
close of business on the fifth anniversary of the Closing Date. The
representations and warranties contained in Sections 3.1 and 4.1 shall not
expire and shall remain in full force and effect without any time limitation.
The covenants and agreements of the parties contained in this Agreement (and in
any document delivered in connection herewith) shall remain operative and in
full force and effect without any time limitation, except as any such covenant
or agreement shall be limited in duration by the express terms thereof. If a
notice is given with respect to a bona fide claim in accordance with this
Article VIII before expiration of such periods, then (notwithstanding the
subsequent expiration of such time period) the representation, warranty,
covenant or agreement applicable to such claim shall survive until, but only for
purposes of, the resolution of such claim.
7.2 Indemnification by Seller and Parent. Subject to the limitations contained
in Section 7.5 and Section 7.6, Seller and Parent shall jointly and severally
indemnify, defend and hold harmless, Buyer and its officers, directors,
employees, agents and Affiliates (the "Buyer Indemnitees"), from and against,
and pay or reimburse the Buyer Indemnitees for, any and all obligations and
other Liabilities, monetary damages, fines, fees, penalties, losses (excluding
diminution in value of any asset) and reasonable expenses (including without
limitation reasonable amounts paid in settlement, court costs and reasonable
fees and expenses of attorneys), excluding consequential damages (except to the
extent included in monetary damages paid or payable by the Buyer Indemnitees to
third parties) (collectively, "Damages") incurred by the Buyer Indemnitees,
relating to or arising from:
(a) any breach by either Seller or Parent at any time of any of its
covenants or agreements contained in this Agreement;
(b) any inaccuracy or misrepresentation in or breach of any representation or
warranty of Seller or Parent contained in this Agreement;
(c) any Excluded Liability; and
(d) without limiting the generality of Section 7.2(c) above, and for purposes of
delineating the scope of the Tax Letter of Credit, Excluded Liabilities include
all Liabilities of the Company in respect of Taxes for the period up to the
Closing, including but not limited to the matters described in Section 3.11 of
the Disclosure Schedule.
The indemnification obligations of Seller and Parent under this Section 7.2
shall be secured by the Letter of Credit. In addition, the indemnification
obligations of Seller and Parent under Section 7.2(d) shall be secured by the
Tax Letter of Credit. For greater certainty, the parties acknowledge that the
Letter of Credit shall not be replaced by Parent at the end of its term if
Parent is in compliance with those financial covenants set forth in the Credit
Agreement between Parent and others and Canadian Imperial Bank of Commerce as
administrative agent and collateral agent for the banks identified therein dated
March 30, 1998 as amended August 28, 1998 and August 2, 1999 as in effect on the
date hereof (the "Credit Agreement"), which covenants are the subject of the
detailed compliance certificate that is required to be delivered by Parent's
Chief Executive Officer under the Credit Agreement as of the date hereof (the
"Certificate"). Compliance with the foregoing financial covenants will be
evidenced by the Certificate actually delivered to the agent under the Credit
Agreement, if both the financial covenants and form of required Certificate are
unchanged from the date hereof, and otherwise will be evidenced by a pro forma
Certificate prepared as though such covenants and required Certificate remained
in effect. Parent will provide Buyer with copies of the Certificate regularly
prepared as and when it is provided to the agent under the Credit Agreement.
The parties acknowledge that the Tax Letter of Credit is not required to be
replaced at the end of its term if the Tax Indemnification Release Provision is
satisfied. For the purposes of this Agreement, the "Tax Indemnification Release
Provision" is satisfied if, as of the quarter preceding the expiration of the
term of the Tax Letter of Credit, Buyer is reasonably satisfied that all
liabilities of the Company in respect of Taxes for the period prior to Closing
including but not limited to those matters described in Schedule 3.11(d) of the
Disclosure Schedule have been resolved and that all Taxes of the Company for the
period prior to the Closing have been paid by or on behalf of Parent. The
parties further acknowledge that Parent may replace the Letter of Credit or the
Tax Letter of Credit with substantially similar letters of credit from a
recognized financial institution upon the expiration of the Credit Agreement,
which agreement is scheduled to expire on or about the last business day of
March, 2003.
7.3 Buyer's Indemnification. Subject to the limitations contained in Section 7.5
and Section 7.7, Buyer shall indemnify, defend and hold harmless, each of Seller
and Parent and their respective Affiliates (the "Seller Indemnitees"), from and
against, and pay or reimburse the Seller Indemnitees for, all Damages incurred
by the Seller Indemnitees, relating to or arising from:
(a) Buyer's breach of any of its covenants or agreements contained in this
Agreement;
(b) any inaccuracy or misrepresentation in or breach of any representation or
warranty of Buyer contained in this Agreement; and
(c) except for the Excluded Liabilities, any Liabilities of the Company arising
from and after the Closing Date.
7.4 Method of Asserting Claims.
7.4.1 Third Party Claims.
(a) A Person seeking indemnification under this Article VIII (an "Indemnified
Person") shall give written notification to the Person from whom indemnification
is sought (the "Indemnifying Person") of the commencement of any suit or
proceeding relating to a third party claim or any other assertion of Liabilities
by a third party (a "Third Party Claim") which the Indemnified Person has a
reasonable basis to believe may give rise to any Damages for which
indemnification pursuant to this Article VIII may be sought. Such notification
shall be given within ten (10) Business Days after the Indemnified Person
receives notice of such Third Party Claim, and shall describe the nature of, and
(to the extent known by the Indemnified Person) the facts constituting the basis
for, such Third Party Claim and the amount of the claimed Damages; provided,
however, that no delay on the part of the Indemnified Person in notifying the
Indemnifying Person shall relieve the Indemnifying Person of any Liability or
obligation hereunder except to the extent of any Damages caused by or arising
out of such delay. Such notice shall be accompanied by copies of all material
relevant documentation with respect to such Third Party Claim, including, but
not limited to, any summons, complaint or other pleading which may have been
served, any written demand or any other documentation.
(b) Within thirty (30) days after delivery of such notification, the
Indemnifying Person may, upon written notice thereof to the Indemnified Person,
assume control of the defense of such suit or proceeding with counsel reasonably
satisfactory to the Indemnified Person. If the Indemnifying Person does not so
assume control of such defense, the Indemnified Person shall control such
defense. The party not controlling such defense (the "Non-Controlling Party")
may participate therein at its own expense. The party controlling such defense
(the "Controlling Party") shall keep the Non-Controlling Party advised of the
status of such suit or proceeding and the defense thereof and shall consider in
good faith recommendations made by the Non-Controlling Party with respect
thereto. The Non-Controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such suit or proceeding (including
copies of any summons, complaint or other pleading that may have been served on
such party and any written claim, demand, invoice, billing or other document
evidencing or asserting the same) and shall otherwise cooperate with and assist
the Controlling Party in the defense of such suit or proceeding. The
Indemnifying Person shall not agree to any settlement of, or the entry of any
judgment arising from, any such suit or proceeding without the prior written
consent of the Indemnified Person, which shall not be unreasonably withheld or
delayed. The Indemnified Person shall not agree to any settlement of, or the
entry of any judgment arising from, any such suit or proceeding without the
prior written consent of the Indemnifying Person, which shall not be
unreasonably withheld or delayed.
(c) With respect to the indemnity obligation of Seller and Parent under Section
7.2(d), the parties acknowledge that Buyer shall, or shall cause the Company, to
notify Seller and Parent of any developments with respect to the Company's Taxes
for the period prior to Closing, including not limited to any developments with
respect to the matters set forth in Section 3.11 of the Disclosure Schedule. The
parties further acknowledge that Parent and Seller have the right to communicate
with Governmental Authorities with respect to such Tax matters from and after
the Closing Date prior to formal demands by any Governmental Authority in
respect of Taxes of or related the Company for the period prior to the Closing.
(d) Notwithstanding the foregoing provisions of this Section 7.4.1, in the event
a Third-Party Claim is made against an Indemnified Person as to which such
Indemnified Person is entitled to seek indemnification hereunder and (i) such
Indemnified Person reasonably concludes that the Indemnifying Person lacks the
financial and personnel resources to vigorously defend such Indemnified Person,
or that the Indemnifying Person is not diligently defending such Indemnified
Person, or (ii) if there is a reasonable probability that a Third Party Claim
may materially and adversely affect an Indemnified Person other than as a result
of money damages or money payments, then in each such case the Indemnified
Person may elect to retain the defense of such Third-Party Claim and will be
entitled to be reimbursed by the Indemnifying Person for the Indemnified
Person's reasonable expenses incurred in such defense, such expenditures to be
reimbursed promptly after submission of invoices therefor.
7.4.2 Indemnification Claims by the Parties. In order to seek indemnification
under this Article VII, an Indemnified Person shall give written notification (a
"Claim Notice") to the Indemnifying Person which contains (i) a description and
the amount, if known (the "Claimed Amount"), including the basis therefor, of
any Damages incurred by the Indemnified Person, (ii) a statement that the
Indemnified Person is entitled to indemnification under this Article VII for
such Damages and a reasonable explanation of the basis therefor, and (iii) a
demand for payment in the amount of such Damages, if known, subject to the
limitations contained in this Article VII.
7.5 Limitations; Sole Recourse..
7.5.1 Sole Recourse. The parties hereto expressly acknowledge that the sole
recourse of the parties for any breach of this Agreement subsequent to the
Closing, or the inaccuracy of any representation or warranty in this Agreement
by the other party, is that set forth in Section 6.1 and this Article VII.
7.6 Limitation on Obligations of Seller and Parent. The obligations of Seller
and Parent under Section 7.2 shall be subject to the following limitations:
(a) the aggregate Liability of Seller and Parent to indemnify the Buyer
Indemnitees pursuant to Section 7.2(b) of this Agreement shall not exceed
$2,500,000;
(b) Each of Seller and Parent shall have no obligation to indemnify the Buyer
Indemnitees pursuant to Section 7.2(b) of this Agreement unless and until the
aggregate amount of Damages incurred by the Buyer Indemnitees exceeds $100,000,
after which xxxx Xxxxxx and Parent shall collectively be liable to indemnify the
Buyer Indemnitees fully for all Damages incurred by the Buyer Indemnitees in
excess of $100,000;
(c) The obligations of Seller and Parent to indemnify the Buyer Indemnitees
pursuant to Sections 7.2(a), 7.2(c) and 7.2(d) of this Agreement shall not be
subject to any cap or other limitation; and
(d) the fact that any Excluded Liability is the subject matter of a
representation or warranty that has terminated, or for which indemnification is
limited as set forth in this Section 7.6, shall not limit or affect in any
respect of the indemnification obligations of Seller and Parent with respect to
such Excluded Liability.
7.7 Limitation on Buyer's Obligations. Buyer's obligations under Section 7.3
shall be subject to the following limitations:
(a) the aggregate Liability of Buyer to indemnify the Seller Indemnitees
pursuant to Section 7.3(b) of this Agreement shall not exceed $2,500,000;
(b) Buyer shall have no obligation to indemnify the Seller Indemnitees pursuant
to Section 7.3(b) of this Agreement unless and until the aggregate amount of
Damages incurred by the Seller Indemnitees exceeds $100,000, after which time
Buyer shall be liable to indemnify the Seller Indemnitees fully for all Damages
incurred by the Seller Indemnitees in excess of $100,000.
ARTICLE 8
MISCELLANEOUS
8. Miscellaneous.
8.1 Retention of Records. After the Closing Date, copies of all books,
management, contracts and records of Seller and its Affiliates relating to the
Company prior to the Closing Date shall, for a period of six years following the
Closing Date, be made available promptly, at the written request of Seller and
at Seller's expense, to Seller and its authorized representatives, accountants
and attorneys for any reasonable business purpose.
8.2 Assignment. No party hereto may assign or transfer its rights or obligations
arising under this Agreement, without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld; provided,
however, that Seller shall be permitted to assign its right to receive cash
under this Agreement to one or more of its Affiliates, and provided further that
Buyer shall be permitted to assign its rights hereunder in connection with any
sale of the Business or a division of Buyer that operates the Business
subsequent to the date hereof. This Agreement shall be binding upon and shall
inure to the benefit of the respective successors and assigns of the parties.
8.3 Notice. All notices and other communications provided for herein shall be by
facsimile transmission, or in writing and telecopied, or delivered by a
nationally recognized overnight delivery service, to the intended recipient at
the telephone number, telecopier number, or "Address for Notices" specified:
If to Buyer to: MagneTek, Inc.
00 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Miley, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Parent or Seller: Xxxxxx Material Handling, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxxxx Material Handling, Inc.
000 Xxxx Xxxxxx Xxxx Xxx
Xxx Xxxxx, Xxxxxxxxx 00000-0000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and a copy to: Blake, Xxxxxxx & Xxxxxxx
Xxxxxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Managing Partner
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or, as to any party, at such other telecopier number, or address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all notices and other communications hereunder shall
be deemed to have been duly given when transmitted by telecopier or, if
delivered by overnight delivery service, one Business Day after mailing.
8.4 Entire Agreement.
8.4.1 Other Agreements. This Agreement, together with the Exhibits and the
Disclosure Schedule hereto and all other agreements entered into pursuant to
this Agreement, contain the entire understanding between the parties hereto
concerning the subject matter hereof, and supersedes and terminate any and all
prior representations, warranties, undertakings, covenants and agreements
between the parties.
8.4.2 Modification. This Agreement may not be changed, modified, altered or
terminated except by an agreement in writing executed by Buyer and Seller.
8.5 Third Parties. Except as expressly set forth herein (including, without
limitation, the provisions of Article VIII), nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any Person or entity
other than the parties hereto and their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
8.6 Captions. Captions and descriptive headings are for convenience of reference
only and shall not control or affect the meaning or construction of any
provisions of this Agreement.
8.7 Waiver. No waiver of a breach of, or default under, any provision of this
Agreement shall be deemed a waiver of such provision or of any subsequent breach
or default of the same or similar nature or of any other provision or condition
of this Agreement.
8.8 Rights Cumulative. Except as set forth herein, all rights, powers and
remedies herein given to Buyer, Seller and Parent are cumulative and not
alternative, and are in addition to all statutes or rules of law.
8.9 Governing Law; Submission to Jurisdiction. This Agreement, and the rights
and obligations of Buyer, Seller and Parent hereunder, shall be governed by and
construed in accordance with the internal laws of the Province of Ontario
applicable to contracts made and to be performed therein. Each of the parties
hereto submits to the jurisdiction of any state or federal court sitting in the
Province of Ontario, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined in such court. Each of Buyer, Seller and Parent
agree to appoint and maintain an agent for service of process in the Province of
Ontario and each of the parties hereto hereby waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety, or other security that might be required of any other party with
respect thereto.
8.10 Attorney for Service. Seller and Parent irrevocably appoint Blake, Xxxxxxx
and Xxxxxxx, Box 00 Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X 0X0, and Buyer
irrevocably appoints XxXxxxxx Binch, Royal Bank Plaza, Suite 3800, South Tower,
Toronto, Ontario M5J 2J7, as their respective authorized attorney and agent to
accept and acknowledge, for and on behalf of the respective attorning party,
service or any and all process in the Province of Ontario, Canada in any suit,
agrees that service of process upon such attorney and agent by delivering a copy
thereof, addressed to the respective attorney, in care of such attorney and
agent, at the above address, shall be conclusively deemed to have come to the
notice of the respective attorning party at the time of such delivery and shall
constitute in every respect valid and effective personal service upon the
respective attorning party at the time of such delivery, and that failure by
such attorney and agent to give notice of such service to the respective
attorning party shall not affect the validity or effect of such service or any
judgment or order based thereon or arising therefrom. Each of the attorning
parties irrevocably authorizes and directs such attorney and agent to accept
service on its behalf and agrees to appear in such suit, action or proceeding.
Each of the attorning parties further agrees to take all action as may be
necessary to confirm and continue in full force and effect the appointment of
such attorney and agent for so long as a party to the Agreement continues to
have obligations outstanding in respect of the Agreement.
8.11 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance, is held invalid, such invalidity shall not affect
any other provision which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable.
8.12 Costs, Expenses, Etc. Except as expressly provided elsewhere herein, each
of Seller, Parent, the Company and Buyer shall bear all costs and expenses
incurred by it and its respective Affiliates in connection with this Agreement
and in the preparation for and consummation of the transactions provided for
herein.
8.13 Specific Performance. Seller and Buyer hereby agree that Buyer shall be
entitled, in addition to any other remedies or damages available to Buyer in the
event of any breach of this Agreement by Seller or Parent, to specific
performance of the obligations of Seller or Parent, as the case may be, under
this Agreement.
8.14 Counterparts. This Agreement may be executed in any number of counterpart
copies, each of which shall be deemed an original, but which together shall
constitute a single instrument. This Agreement may be executed by facsimile
signatures.
8.15 Further Assurances. Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to execute and deliver all such other
documents, certificates and agreements and to take, or cause to be taken, all
actions, and to do, or cause to be done, anything else that may reasonably be
deemed necessary to perfect and give effect to the transactions contemplated by
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
XXXXXX MATERIAL HANDLING, INC.
By:
Name:
Title:
3016117 NOVA SCOTIA ULC
By:
Name:
Title:
By:
Name:
Title:
MAGNETEK MONDEL HOLDING, ULC
By:
Name:
Title:
By:
Name:
Title:
Exhibit A
April Balance SheeT
EXHIBIT B
FORM OF LETTER OF CREDIT
EXHIBIT C
FORM OF TAX LETTER OF CREDIT
SCHEDULE 1
Disclosure schedule
SCHEDULE 2
ALLOCATION OF PURCHASE PRICE FOR U.S. TAX
SHARE PURCHASE AGREEMENT
BY AND AMONG
3016117 NOVA SCOTIA ULC
AND
MAGNETEK MONDEL HOLDING ULC
AND
XXXXXX MATERIAL HANDLING, INC.,
Regarding the sale of all the
shares in the capital of
Mondel ULC
dated as of
December _____, 1999
TABLE OF CONTENTS
Page
-i-
ARTICLE 1 DEFINITIONS....................................................................................1
1. Definitions....................................................................................1
1.1 Defined Terms..................................................................................1
1.2 Accounting Terms...............................................................................8
1.3 Exhibits and Schedules.........................................................................8
1.4 Other Definition Provisions....................................................................9
ARTICLE 2 PURCHASE OF SHARES; PURCHASE PRICE.............................................................9
2. Purchase of the Shares, Purchase Price and Method of Payment...................................9
2.1 Purchase of the Shares.........................................................................9
2.2 Consideration..................................................................................9
2.2.1 Purchase Price........................................................................9
2.2.2 Payment of Purchase Price at Closing..................................................9
2.3 Purchase Price Adjustment......................................................................9
2.3.1 Estimated Closing Balance Sheet.......................................................9
2.3.2 Final Closing Balance Sheet..........................................................10
2.3.3 Access...............................................................................10
2.3.4 Delivery and Review..................................................................10
2.3.5 Resolution...........................................................................10
2.3.6 Post-Closing Adjustments.............................................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE BUSINESS.......................12
3. Representations and Warranties Relating to the Company and the Business.......................12
3.1 Organization and Standing; Capitalization.....................................................12
3.1.1 Organization and Standing............................................................12
3.1.2 Capitalization; Corporate Structure..................................................12
3.2 No Contravention..............................................................................13
3.3 Tangible Assets...............................................................................13
3.3.1 Title................................................................................13
3.3.2 Asset Rights.........................................................................13
3.3.3 Condition of Assets..................................................................13
3.4 Licenses......................................................................................14
3.5 Contracts.....................................................................................14
3.6 Intellectual Property Rights..................................................................15
3.7 Employees; Plans..............................................................................16
3.8 Financial Statements..........................................................................19
3.9 Absence of Certain Changes....................................................................19
3.10 Litigation; Compliance........................................................................20
3.11 Taxes.........................................................................................20
3.12 Environmental Matters.........................................................................21
3.13 Insurance.....................................................................................22
3.14 Brokers.......................................................................................22
3.15 Product Warranty and Product Liability........................................................22
3.16 Affiliate Transactions........................................................................23
3.17 Customers.....................................................................................23
3.18 Backlog.......................................................................................23
3.19 Year 2000.....................................................................................23
3.20 Satisfaction of Intercompany Accounts.........................................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................24
4. Representations and Warranties of Seller and Parent...........................................24
4.1 Organization and Standing.....................................................................24
4.2 Authorization and Binding Obligations.........................................................24
4.3 No Contravention; Consents....................................................................24
4.3.1 No Contravention.....................................................................24
4.3.2 Consent..............................................................................24
4.4 Tax Status....................................................................................25
4.5 Brokers.......................................................................................25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................25
5. Representations and Warranties of Buyer.......................................................25
5.1 Organization and Standing.....................................................................25
5.2 Authorization and Binding Obligations.........................................................25
5.3 No Contravention; Consents....................................................................25
5.3.1 No Contravention.....................................................................25
5.3.2 Consents.............................................................................26
5.4 Brokers.......................................................................................26
5.5 Litigation; Compliance........................................................................26
5.6 Financial Capacity............................................................................26
5.7 Sophistication; Due Diligence.................................................................26
5.8 Purchase for Investment.......................................................................26
ARTICLE 6 COVENANTS OF THE PARTIES......................................................................27
6. Covenants of the Parties......................................................................27
6.1 Tax Matters...................................................................................27
6.2 Regulatory Filings............................................................................29
6.2.1 Cooperation..........................................................................29
6.2.2 Certain Filings......................................................................29
6.3 Employee Matters..............................................................................29
6.4 Collateral Agreements.........................................................................29
6.5 Refunds in Respect of Audits/Taxes............................................................29
ARTICLE 7 INDEMNIFICATION...............................................................................30
7. Indemnification...............................................................................30
7.1 Survival......................................................................................30
7.2 Indemnification by Seller and Parent..........................................................30
7.3 Buyer's Indemnification.......................................................................31
7.4 Method of Asserting Claims....................................................................32
7.4.1 Third Party Claims...................................................................32
7.4.2 Indemnification Claims by the Parties................................................33
7.5 Limitations; Sole Recourse....................................................................33
7.5.1 Sole Recourse........................................................................33
7.6 Limitation on Obligations of Seller and Parent................................................33
7.7 Limitation on Buyer's Obligations.............................................................34
ARTICLE 8 MISCELLANEOUS.................................................................................34
8. Miscellaneous.................................................................................34
8.1 Retention of Records..........................................................................34
8.2 Assignment....................................................................................34
8.3 Notice........................................................................................34
8.4 Entire Agreement..............................................................................36
8.4.1 Other Agreements.....................................................................36
8.4.2 Modification.........................................................................36
8.5 Third Parties.................................................................................36
8.6 Captions......................................................................................36
8.7 Waiver........................................................................................36
8.8 Rights Cumulative.............................................................................36
8.9 Governing Law; Submission to Jurisdiction.....................................................36
8.10 Attorney for Service..........................................................................36
8.11 Severability..................................................................................37
8.12 Costs, Expenses, Etc..........................................................................37
8.13 Specific Performance..........................................................................37
8.14 Counterparts..................................................................................37
8.15 Further Assurances............................................................................38
