STOCK ACQUISITION AGREEMENT
This Stock Acquisition Agreement ("Agreement") is made on the
_____ day of June 1999 by and among (i) Eurisys Mesures SA, a French corporation
("EM"), (ii) Aptec Instruments Ltd., an Ontario corporation which prior to
Closing (as defined below) shall be continued as a corporation formed under the
laws of the Province of New Brunswick, Canada ("Aptec"); (iii) Aptec Acquisition
Corp., a Pennsylvania corporation which is wholly-owned by Aptec ("Newco"); (iv)
the shareholders of Aptec identified in Exhibit A hereto (each a "Xxxxx Holder"
and collectively the "Xxxxx Holders"); (v) Nuclear Research Corporation, a
Pennsylvania corporation ("NRC"); (vi) Xx. Xxxxxx Xxxxx, an individual resident
in Aurora, Ontario ("Xx. Xxxxx") and (vii) and certain shareholders of NRC
identified in Exhibit B hereto (each a "Xxxxxxx Holder" and collectively the
"Xxxxxxx Holders"). The Xxxxx Holders and the Xxxxxxx Holders are sometimes
collectively referred to as the "Sellers". Aptec, Newco and the Xxxxx Holders
are sometimes collectively referred to as the "Xxxxx Parties".
WHEREAS, the capital stock of Aptec currently consists of 23,780 common shares
("Aptec Common Stock"), all of which are currently owned by the Xxxxx Holders
and, immediately prior to the Closing and the Merger shall consist of 30,780
shares of Aptec Common Stock;
WHEREAS, pursuant to an Agreement and Plan of Merger of even date herewith (the
"Merger Agreement"), Aptec and NRC have agreed to a transaction whereby NRC will
be merged (the "Merger") into Newco, a wholly-owned subsidiary of Aptec and the
Xxxxxxx Holders will receive in the Merger, $214,799 in cash and 12,720 newly
issued shares of the Aptec Common Stock; and
WHEREAS, EM wishes to acquire Aptec Common Stock representing 51% of all Aptec
Common Stock issued and outstanding after the Merger and the transactions
contemplated in this Agreement, through the acquisition of (i) 4,000 shares of
newly issued Aptec Common Stock purchased from Aptec; (ii) 14,365 shares of
Aptec Common Stock purchased from the Xxxxx Holders; and (iii) 5,860 shares of
Aptec Common Stock purchased from the Xxxxxxx Holders.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE ACQUISITION TRANSACTIONS
Section 1.01 Loan to Xxxxx Holders. Immediately prior to or at
the Closing, EM will make a loan to Xx. Xxxxxx Xxxxx ("Xx. Xxxxx") in the amount
of $3,500,000 (the "Loan"). Xx. Xxxxx will execute and deliver to EM a
promissory note (the "Offset Note") in the form of Exhibit C hereto. Xx. Xxxxx
will contribute all proceeds of the Loan to the capital of Aptec in
consideration for the issuance to Xx. Xxxxx of 7,000 shares of Aptec Common
Stock and Aptec will contribute such amount to the capital of Newco in
consideration for the issuance of all the
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capital stock of Newco. The $3,500,000 contributed to Newco will be used to
satisfy its obligations in the Merger, comprising the payment of the Cash
Consideration to the Public Shareholders (as such terms are defined in the
Merger Agreement) aggregating $3,285,201 and the payment of $214,799 in cash to
the Xxxxxxx Holders at the Closing such amount to be adjusted to reflect the
purchase price adjustments set forth in Schedule A.
Section 1.02 Purchase from the Xxxxx Holders. At the Closing
and following the Merger, EM will purchase from the Xxxxx Holders, and the Xxxxx
Holders will sell to EM, an aggregate of 14,365 shares of Aptec Common Stock,
for an aggregate purchase price of $7,182,500 (the "Xxxxx Purchase Price"). The
Xxxxx Purchase Price, and the allocation of the Xxxxx Purchase Price as set out
in Subsections (i), (ii) and (iii) directly below shall be adjusted to reflect
the purchase price adjustments set forth in Schedule A.
The Xxxxx Purchase Price will be paid by EM as follows:
(i) First, by offsetting the Offset Note against the Xxxxx
Purchase Price, resulting in a net Purchase Price for the Xxxxx Holders of
$3,682,500;
(ii) Second, by making a cash payment to the Xxxxx Holders at
the Closing of $3,314,250, (the "Closing Xxxxx Payment"); and
(iii) Third, by a cash payment of $368,250 which will be
deposited into an account (the "Zieba Escrow Account") with Citibank N.A., New
York, N.Y. as escrow agent ("Escrow Agent") and will be disbursed in accordance
with the provisions of Section 5.10 hereof.
The number of shares of Aptec Common Stock, the Xxxxx Purchase
Price, the Closing Xxxxx Payment and the Xxxxx Escrow Account with respect to
each Xxxxx Holder is set forth on Exhibit A.
Section 1.03 Purchase from the Xxxxxxx Holders. At the Closing
and following the Merger, EM will purchase from the Xxxxxxx Holders, and the
Xxxxxxx Holders will sell to EM, an aggregate of 5,860 shares of Aptec Common
Stock, for an aggregate purchase price of $2,930,0000 (the "Xxxxxxx Purchase
Price"). The Xxxxxxx Purchase Price, and the allocation of the Xxxxxxx Purchase
Price as set out in Subsections (i) and (ii) directly below shall be adjusted to
reflect the purchase price adjustments set forth in Schedule A.
The Xxxxxxx Purchase Price will be paid by EM as follows:
(i) First, by a cash payment to the Xxxxxxx Holders at the
Closing of $2,615,500, (the "Closing Xxxxxxx Payment"); and
(ii) Second, by a cash payment of $314,500 which will be
deposited into an account (the "Xxxxxxx Escrow Account") with the Escrow Agent
and disbursed in accordance with the provisions of Section 5.10 hereof.
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The number of shares of Aptec Common Stock, the Xxxxxxx
Purchase Price, the Closing Xxxxxxx Payment and the Xxxxxxx Escrow Account with
respect to each Xxxxxxx Holder is set forth on Exhibit B.
Section 1.04 Purchase of Shares from Aptec. At the Closing, EM
will subscribe to and purchase from Aptec, and Aptec will sell and issue to EM,
4,000 shares of newly issued Aptec Common Stock, in consideration for a payment
of $2,000,000 in cash such amount to be adjusted to reflect the purchase price
adjustments set forth in Schedule A.
Section 1.05 Closing. The closing of the Transactions (the
"Closing") will take place at 10:00 a.m. (New York City time) on a date (the
"Closing Date") to be specified by the parties and on the same day as the
Effective Date (as defined in the Merger Agreement) of the Merger, which shall
be no later than the second Business Day after satisfaction of the conditions
set forth in Article VII, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless the parties agree in writing to
another time, date or place. All payments to be made by EM at the Closing shall
be made by wire transfers of immediately available funds to bank accounts in the
United States designated by the beneficiaries thereof not later than three (3)
Business Days prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE XXXXX HOLDERS
The Xxxxx Holders, jointly and severally, represent and
warrant to EM as set forth below. For the avoidance of doubt, all reference
herein to Aptec or Aptec Subsidiaries shall be expressly deemed to exclude any
assets, rights, obligations, liabilities and business of NRC or any NRC
Subsidiaries existing prior to the Merger, which upon the Merger shall be
possessed by Newco.
Section 2.01 Corporate Existence and Power. Aptec is a
corporation duly incorporated, validly existing and subsisting under the
Business Corporations Act (Ontario) and has all corporate power required to
carry on its business as now conducted. On or before the Closing, Aptec will
have been continued, subject to Regulatory approval, under the laws of the
province of New Brunswick and will be duly incorporated, validly existing and
subsisting under the Business Corporations Act [New Brunswick]. Aptec is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except where
the failure to so qualify or be in good standing would not have a Material
Adverse Effect. Aptec has delivered to EM copies of Aptec's certificate and
articles of incorporation as amended, and by-laws currently in effect. Aptec's
New Brunswick Articles of Continuance and by-laws in effect at the Closing Date
shall be those attached as Schedule 2.01.
Section 2.02 Corporate Authorization; Ownership.
(a) The execution, delivery and performance by the Xxxxx
Parties of this Agreement and the consummation by the Xxxxx Parties of the
transactions contemplated hereby
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are within Aptec's corporate powers and have been duly authorized by all
necessary corporate action on the part of the Xxxxx Parties. This Agreement has
been duly and validly executed and delivered by the Xxxxx Parties and, assuming
the due and valid authorization, execution and delivery of this Agreement by EM,
constitutes a valid and binding agreement of the Xxxxx Parties, enforceable in
accordance with its terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally and by equitable principles of general
applicability. The Board of Directors and the shareholders of Aptec and Newco
have approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby. No corporate or other proceedings on the part
of the Xxxxx Parties are necessary to authorize or approve this Agreement, the
Merger Agreement or to consummate the transactions contemplated hereby and
thereby.
(b) The shares of Aptec Common Stock held, or to be acquired
pursuant to the transactions contemplated in the Merger Agreement and herein, by
the Xxxxx Holders are owned or will be owned by them of record and beneficially,
free and clear of any Liens. At the Closing, EM will acquire valid and
marketable title to the shares of Aptec Common Stock sold by the Xxxxx Holders
under Section 1.02, free and clear of any Liens.
Section 2.03 Governmental Authorization. The execution,
delivery and performance by Aptec of this Agreement and the consummation by the
Xxxxx Parties of the Merger and the Transactions require no consent, waiver,
approval, authorization or permit by or from, or action by or in respect of, or
filing with, any Governmental Entity.
Section 2.04 Non-contravention. The execution, delivery and
performance by the Xxxxx Parties of this Agreement and the consummation by the
Xxxxx Parties of the transactions contemplated hereby do not and will not: (i)
contravene or conflict with the certificate of incorporation or by-laws of the
corporate Xxxxx Parties; (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Xxxxx Parties; (iii) result in a
breach or violation of or constitute a default (or an event that with the giving
of notice or the lapse of time or both would constitute a default) under or give
rise to a right of termination, amendment, cancellation or acceleration of any
material right or obligation of the Xxxxx Parties or to a loss of any benefit to
which the Xxxxx Parties are entitled or require any consent, approval or
authorization under any provision of any agreement, contract or other instrument
binding upon the Xxxxx Parties or any of their respective assets; or (iv) result
in the creation or imposition of any Lien on any asset of the Xxxxx Parties.
Section 2.05 Capitalization.
(a) The authorized capital stock of Aptec consists of an
unlimited number of common shares, of which (i) 23,780 shares of Aptec Common
Stock are currently issued and outstanding; (ii) 30,780 shares of Aptec Common
Stock will be issued and outstanding after the contribution of the Loan and
issuance of shares of Aptec Common Stock as contemplated in Section 1.01; (iii)
43,500 shares of Aptec Common Stock will be issued and outstanding after the
completion of the Merger; and (iv) 47,500 shares of Aptec Common Stock will be
issued and outstanding immediately after the acquisition by EM of shares of
Aptec Common Stock as contemplated herein.
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(b) All outstanding shares of Aptec Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable. Each
Xxxxx Holder now owns and will on the Closing Date immediately following and
after giving effect to the Merger, own of record and beneficially the number of
shares of Aptec Common Stock opposite such Holder's name in Exhibit A, free and
clear of all Liens. At the Closing, EM will acquire valid and marketable
beneficial and legal title to such shares, free and clear of any Liens. Except
as set forth in this Section 2.05, there are outstanding (i) no shares in the
capital or other voting securities of Aptec, (ii) no securities of Aptec
convertible into or exchangeable for shares in the capital or voting securities
of Aptec, (iii) no options or other rights to acquire from Aptec or any Xxxxx
Holder, and no obligation of Aptec or any Xxxxx Holder to issue, any shares in
the capital, voting securities or securities convertible into or exchangeable
for shares in the capital or voting securities of Aptec and (iv) no other
securities or agreements of Aptec issued and outstanding giving a right to the
holder to participate in a percentage of the sales, profits or cash flow of
Aptec or any Aptec Subsidiary. There are no outstanding obligations of Aptec or
any Aptec Subsidiary to repurchase, redeem or otherwise acquire any Aptec
Securities.
(c) There are no outstanding contractual obligations of Aptec
or any Aptec Subsidiary to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any other person other than to
wholly-owned Aptec Subsidiaries, in the ordinary course of business consistent
with past practice except to the extent contemplated in the Merger Agreement or
herein.
Section 2.06 Subsidiaries.
(a) Each Aptec Subsidiary is, [or in the case of Newco will
be], a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, has, [or in
the case of Newco, will have] all corporate, partnership or similar powers
required to carry on its business as now conducted and is, [or in the case of
Newco will be] duly qualified to do business as a foreign corporation or other
legal entity and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except any jurisdiction where the failure to so quality
or be in good standing would not have a Material Adverse Effect. All Aptec
Subsidiaries and their respective jurisdictions of organization are identified
in Schedule 2.06.
(b) All of the outstanding shares of capital stock of, or
other ownership interests in, each Aptec Subsidiary are owned by Aptec, directly
or indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests, except as otherwise
contemplated in the Merger Agreement or herein,). Except as otherwise
contemplated in the Merger Agreement or herein, there are no outstanding (i)
securities of Aptec convertible into or exchangeable for shares of capital stock
or other voting securities or ownership interests
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in any Aptec Subsidiary or (ii) options or other rights to acquire from Aptec or
any Aptec Subsidiary, and no other obligation of Aptec or any Aptec Subsidiary
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Aptec Subsidiary. The securities
described in clauses (i) and (ii) above are referred to collectively as the
"Aptec Subsidiary Securities". There are no outstanding obligations of Aptec or
any Aptec Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Aptec Subsidiary Securities or pay any dividend or make any other distribution
in respect thereof to a Person other than Aptec or a wholly-owned Aptec
Subsidiary.
Section 2.07 Financial Statements; Book Value.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of Aptec identified on
Schedule 2.07 (including, without limitation, the audited consolidated balance
sheet at August 31, 1998 (the "Balance Sheet")) (collectively, the "Financial
Statements") fairly present, in conformity with Canadian GAAP applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of Aptec and its consolidated Aptec Subsidiaries
as of the dates thereof and its consolidated statements of operations, retained
earnings and changes in financial position for the periods then ended (subject
to normal year-end adjustments in the case of any unaudited interim financial
statements). The Financial Statements have been prepared from the books and
records of Aptec and the Aptec Subsidiaries maintained in the ordinary course
and reflect and provide adequate reserves in respect of all known liabilities of
Aptec and the Aptec Subsidiaries, including all known contingent liabilities, as
of their respective dates.
(b) At August 31, 1998, the consolidated Book Value of Aptec
and its Subsidiaries was, and on the Closing Date will be, not less than
C$1,648,048.
(c) Aptec and each of the Aptec Subsidiaries (i) keeps books,
records and accounts that, in reasonable detail, accurately and fairly reflect
(A) the transactions and dispositions of assets of such entity and (B) the value
of inventory calculated in accordance with Canadian GAAP. None of Aptec or any
of the Aptec Subsidiaries, and no employee, agent or shareholder of any such
entity, directly or indirectly has made any payment of funds of any such entity
or received or retained any funds in violation of any applicable law, rule or
regulation.
Section 2.08 Absence of Certain Changes or Events. Except for
the transactions contemplated in the Merger Agreement or herein, since August
31, 1998, there has not been: (i) any change in the business, operations or
financial condition of Aptec or any of the Aptec Subsidiaries that has had or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Aptec, or any repurchase, redemption or other acquisition by Aptec or any of the
Aptec Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Aptec or any of the Aptec
Subsidiaries; (iii) any incurrence, assumption or guarantee by Aptec or any of
the Aptec Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course
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and in amounts and on terms consistent with past practices; or (iv) as of the
date hereof, any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Aptec or any of the
Aptec Subsidiaries that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 2.09 Real Property.
(a) Set forth on Schedule 2.09 is (i) a complete list of all
real property (the "Owned Property") that Aptec or any of the Aptec Subsidiaries
has legal or equitable title and (ii) a description of each lease of real
property under which Aptec or any of the Aptec Subsidiaries is a lessee, lessor,
sublessee or sublessor (the "Leased Property"). The Owned Property and the
Leased Property sometimes collectively are referred to as the "Real Property".
True and complete copies of all leases to which Aptec or any Subsidiary is a
party respecting any real property and all other instruments granting such
leasehold interests, rights, options or other interests (the "Property Leases"),
and of all deeds, title insurance policies, title opinions, surveys, mortgages,
agreements and other documents granting to Aptec or any of the Aptec
Subsidiaries title to or an interest in or otherwise affecting or relating to
any Real Property (the "Title Documents"), have been made provided to EM.
(b) With respect to the Property Leases, no breach or event of
default on the part of any party to any of the Property Leases and no event
that, with the giving of notice or lapse of time or both, would constitute such
breach or event of default, have occurred and are continuing unremedied. All the
Property Leases are in full force and effect and are valid and enforceable
against the parties thereto in accordance with their terms. All rental and other
payments due under each of the Property Leases have been duly paid in accordance
with the terms of such Property Lease. The transactions contemplated in this
Agreement do not require the consent of any party to, constitute an event of
default under, or trigger any options to, terminate or otherwise change the
existing terms of any Property Lease.
(c) To Aptec's knowledge, the buildings and improvements
leased by Aptec or any Aptec Subsidiary, and the operation or maintenance
thereof as operated and maintained, do not (i) contravene any zoning or building
law or ordinance or other administrative regulation (including but not limited
to those relating to zoning, land division, building, fire, health and safety)
or (ii) violate any restrictive covenant or any provision of federal, state,
local or foreign law.
(d) To Aptec's knowledge, there is no pending or, threatened
condemnation or expropriation proceeding with respect to, or that could affect,
any Real Property.
Section 2.10 Personal Property. Except as described in
Schedule 2.10, Aptec and the Aptec Subsidiaries have good and marketable title
to all personal property reflected on the Balance Sheet and all personal
property acquired by Aptec or any of the Aptec Subsidiaries since the date of
the Balance Sheet (except such personal property as has been disposed of in the
ordinary course of business), free and clear of any Liens.
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Section 2.11 Inventories. The inventories set forth in the
Balance Sheet have been valued in accordance with Canadian GAAP applied
consistently throughout the period covered. Physical adjustments to inventories
since August 31, 1998 have been correctly recorded in the ordinary course of
business. All obsolete items and items below-standard quality have been written
off or written down to net realizable value in the Balance Sheet. All
inventories not written off on the Balance Sheet have been priced at the lower
of cost or market. Such inventories are usable in the ordinary course of
business of Aptec at a value which is no less than the value at which such
inventories are carried by Aptec. The inventory is adequate for the conduct of
the business of Aptec and inventory levels are not in excess of normal operating
requirements of Aptec.
Section 2.12 Accounts Receivable. All accounts receivable of
Aptec that are reflected on the Financial Statements or the accounting records
of Aptec and the Aptec Subsidiaries as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. The Accounts Receivable are or will be as of the Closing Date
collectible within 180 days of the date due net of the respective reserves shown
on the Balance Sheet or on the accounting records of Aptec as of the Closing
Date (which reserves are adequate and calculated consistent with past practice
and, in the case of the reserve as of the Closing Date, will not represent a
greater percentage of the Accounts Receivable as of the Closing Date than the
reserve reflected in the Balance Sheet represented of the Accounts Receivable
reflected therein and will not represent a material adverse change in the
composition of such Accounts Receivable in terms of aging). There is no contest,
claim, or right of setoff other than returns in the ordinary course of business,
under any contract with any obligor of any Accounts Receivable relating to the
amount or validity of such Accounts Receivable. Schedule 2.12 contains a
complete and accurate list of all Accounts Receivable as of the date of this
Agreement, which list sets forth the aging of such Accounts Receivable.
Section 2.13 Personnel.
(a) Set forth on Schedule 2.13 is a true and complete list of:
(i) the name of each person employed by Aptec or any Aptec
Subsidiary (other than hourly employees) whose total compensation for
services rendered, including without limitation bonuses and deferred
compensation, for the fiscal year ended August 31, 1998 was in excess
of the rate of C$70,000 per year, the title or job classification of
each such person, the current compensation of each such person and the
place in which such person is employed;
(ii) the name of each person, if any, holding tax or other
powers of attorney from Aptec or any Aptec Subsidiary and a summary of
the terms thereof;
(iii) the name and title or job description of each
director and officer, and each other key employee, of Aptec and each of
the Aptec Subsidiaries; and
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(iv) the name and title or job description of each
employee in respect of whom Aptec is the beneficiary of a life
insurance policy, and the details of such policy.
(b) Except as set forth on Schedule 2.13, since August 31,
1998, there has been no material change in the rate of total compensation for
services rendered, including without limitation bonuses and deferred
compensation, for any of the employees listed on Schedule 2.13, other than Xx.
Xxxxxx Xxxxx, and the bonuses and deferred compensation established for the
fiscal year ending August 31, 1998 were consistent with the past practices of
Aptec for similar employees in similar situations.
Section 2.14 Labor Matters.
(a) Except as set forth on Schedule 2.14, neither Aptec nor
any Aptec Subsidiary is a party to any contract or collective bargaining
agreement with any labor organization. Other than as set forth on Schedule 2.14,
no organization or representation question, is pending respecting the employees
of Aptec or the Aptec Subsidiaries, and no such question has been raised within
the preceding three years.
(b) All reasonably anticipated obligations of Aptec or the
Aptec Subsidiaries, whether arising by operation of law, contract, past custom
or otherwise, for unemployment compensation benefits, pension benefits,
salaries, wages, bonuses, sick leave, vacation, workers' compensation and other
forms of compensation payable to the officers, directors and other employees and
independent contractors of Aptec or the Aptec Subsidiaries have been paid or
adequate accruals therefore have been made in the Balance Sheet.
(c) There is no claim, grievance, arbitration, negotiation,
suit, action or charge of or by any employee of Aptec or any Aptec Subsidiary
against or involving Aptec or any Aptec Subsidiary, and no complaint is pending
against Aptec or any Aptec Subsidiary before any labor relations board, labor
standards board, occupational safety and health authority, human rights tribunal
or any federal, state, provincial or local agency, court, board or tribunal,
nor, to Aptec's knowledge, is there any basis therefor. Aptec and the Aptec
Subsidiaries have complied, in respect of their employees, in all material
respects with all applicable statutes, regulations, rules, decrees, orders and
restrictions of the United States of America, all states and other subdivisions
thereof, Canada, all provinces and territories thereof, all foreign
jurisdictions and all agencies and instrumentalities of the foregoing.
(d) Aptec has made available to EM copies of all claims,
complaints, reports or other documents in Aptec's files concerning Aptec or any
Aptec Subsidiary or their employees made by or against Aptec or any Aptec
Subsidiary during the past five years pursuant to workers' compensation laws,
labor standards laws, human rights laws, occupational safety and health laws,
Title VII of the Civil Rights Act of 1964, the Occupational Safety and Health
Act of 1970, the National Labor Relations Act of 1935 or any other federal or
state provincial or local laws, regulations, by-laws, orders, rules or decrees,
relating to employment of labor.
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Section 2.15 Environmental Matters.
(a) (i) None of Aptec, the Aptec Subsidiaries nor any previous
owner, tenant, occupant, operator or user of any Real Property or Former Real
Property or any other person has engaged in or permitted any operation or
activity at or upon, or any use or occupancy of, any Real Property or Former
Real Property for the purpose of or in any way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
reclaiming, recycling, dumping or disposal of any Hazardous Materials (as
defined below) on, under, in or about any Real Property or Former Real Property
or any property adjoining any such property, or transported any Hazardous
Materials to, from or across any Real Property or Former Real Property. No
Hazardous Materials currently are produced, incorporated in any construction on,
deposited, stored or otherwise located on, under, in or about any Real Property,
other than as disclosed in the waste generator permit attached in Schedule 2.27.
(ii) No Hazardous Materials have migrated from any Real
Property or Former Real Property upon or beneath other properties, and no
Hazardous Materials have migrated or threatened to migrate from other properties
upon, about or beneath any Real Property.
(iii) No underground improvement, including without
limitation treatment or storage tank or water, gas or oil well, is or ever has
been located on any Real Property or Former Real Property. All underground
treatment and storage tanks, if any, have been exhumed and disposed of, and all
portions of the Real Property and Former Real Property and all groundwater
contaminated by any Hazardous Materials contained therein, have been remediated
in full compliance with all Environmental Requirements and to a degree that any
remaining concentrations of Hazardous Materials are below maximum contaminate
levels or other regulatory limits set forth in applicable or relevant
Environmental Requirements.
(iv) All Real Property and Former Real Property and all
current and past activities thereon, including without limitation the use,
maintenance and operation of all Real Property and Former Real Property and all
activities and conduct of business related thereto, currently comply and at all
times in the past have complied in all material respects with all Environmental
Requirements.
(v) None of Aptec or any Aptec Subsidiaries has received
any notice or other communication concerning or has any knowledge of (A) any
violation or alleged violation of Environmental Requirements, whether or not
corrected or (B) any alleged liability for Environmental Damages (as defined
below) in connection with any Real Property, Former Real Property, or material
transported to, from or across any Real Property or Former Real Property. No
writ, injunction, decree, order or judgment relating to the foregoing is
outstanding. There is no lawsuit, claim, proceeding, citation, directive,
summons or investigation pending or threatened against Aptec or any of the Aptec
Subsidiaries relating to any alleged violation of or liability under any
applicable Environmental Requirements or the presence of any Hazardous Materials
thereon.
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(b) For the purposes of this Agreement:
(i) "Environmental Damages" means all claims, judgments,
damages, losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs and expenses of defense of a claim (whether or not
such claim is ultimately defeated), good faith settlements of judgment, and
costs and expenses of reporting, investigating, removing and/or remediating
Hazardous Materials, of whatever kind or nature, contingent or otherwise,
matured or unmatured, including without limitation reasonable attorney's fees
and disbursements and consultants' fees, any of which arise out of or relate to
the existence of Hazardous Materials at, upon, about or beneath the Real
Property or Former Real Property, or migrating or threatening to migrate to or
from, or released or discharged on or from, the Real Property or Former Real
Property or transported to, from, or across any Real Property or Former Real
Property.
(ii) "Environmental Requirements" means all applicable
statutes, regulations, rules, ordinances, codes, actions, licenses, permits,
orders, decrees, approvals, plans, authorizations, concessions, franchises and
similar items of all federal, state, provincial and local governmental branches
agencies, departments, commissions, boards, bureaus or instrumentalities
domestic and foreign, having jurisdiction and all applicable judicial and
administrative and regulatory decrees, judgments and orders and all covenants
running with the land that relate to the protection of health or the
environment, including without limitation those that relate to the existence,
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, recycling, reclaiming or disposal of Hazardous Materials.
(iii) "Former Real Property" means any real property in
which Aptec or any of the Aptec Subsidiaries heretofore held but no longer holds
a fee, leasehold or other legal, beneficial or equitable interest.
(iv) "Hazardous Materials" means any substance: (A) the
presence of which requires reporting, investigation, removal or remediation
under any Environmental Requirement; (B) that is defined as a "hazardous waste",
"hazardous substance" or "pollutant" or "contaminant" under any Environmental
Requirement; (C) that is toxic, explosive, corrosive, flammable, ignitable,
infectious, radioactive, reactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated under any Environmental Requirement; (D) the presence
of which on any Real Property or Former Real Property poses or posed a hazard to
the health or safety of persons on or about any Real Property or Former Real
Property; (E) the presence of which on adjacent properties constitutes a
trespass by Aptec or an Aptec Subsidiary; (F) that contains gasoline, diesel
fuel or other petroleum hydrocarbons; or (G) that contains PCBs, asbestos or
urea formaldehyde foam insulation.
(c) Aptec and the Aptec Subsidiaries have complied in all
material respects with all Environmental Requirements.
(d) Aptec has furnished EM with true and complete copies of
all claims, complaints, reports, assessments, audits, investigations and other
documents in the possession of or obtainable by Aptec made by, on behalf of or
against Aptec or any Subsidiary during the past five (5) years pertaining to
Environmental Requirements or Hazardous Materials.
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(e) Notwithstanding anything to the contrary in this Section
2.15, all representations made in this Section 2.15 with respect to the actions
or omissions of any current or prior owner or occupant of any Real Property or
Former Real Property, other than Aptec or any Aptec Subsidiary, are made to the
knowledge of Aptec.
Section 2.16 Benefit Plans.
(a) Set forth on Schedule 2.16 is a complete list of each
current employment contract and consulting agreement entered into by Aptec or
any Aptec Subsidiary, or by which Aptec or any Aptec Subsidiary is bound, and
each pension, retirement, deferred compensation, bonus, incentive compensation,
restricted stock, stock option, stock appreciation, employee stock purchase,
savings, insurance, medical, hospitalization, disability, death, severance,
change of control or termination pay agreement or plan and any other employee
benefit plan, agreement, arrangement or commitment, whether formal or informal,
not required to be listed on Schedule 2.17, maintained, entered into or
contributed to, or which is required to be maintained, entered into or
contributed to, by Aptec or any Aptec Subsidiary for the benefit of any current
or former director, officer or employee of Aptec or any Aptec Subsidiary (each
the "Benefit Plan" and collectively the "Benefit Plans"). Aptec has no Benefit
Plans which are or are required to be funded by any contributions, premiums or
source-deducted employee contributions. Aptec has delivered to EM true and
correct copies of each Benefit Plan listed on Schedule 2.16.
(b) Each Benefit Plan is legally valid and binding and in full
force and effect, and benefits under the Benefit Plans are as represented in
such plan documents. The following information is set forth on Schedule 2.16
with respect to each Benefit Plan: (i) the cost to Aptec or any Aptec Subsidiary
associated with such Benefit Plan for each of the past three fiscal years and
the plan year in which the Closing Date occurs; (ii) the amount of any liability
of Aptec or any Aptec Subsidiary for payments or contributions past due with
respect to such Benefit Plan as of the last day of its most recent plan year and
as of the end of any subsequent month ending prior to the Closing Date, and the
date any such amounts were paid; (iii) any contribution to such Benefit Plan in
a form other than cash; and (iv) whether such Benefit Plan has been terminated.
Except as set forth on Schedule 2.16, neither Aptec nor any Aptec Subsidiary has
any obligation or liability with respect to any Benefit Plan, including without
limitation under any collective bargaining agreement to which Aptec or any Aptec
Subsidiary is a party or by which it is bound. Aptec and the Aptec Subsidiaries
have made adequate provisions for reserves to meet contributions that have not
been made because they are not yet due under the terms of any Benefit Plan or
related agreement.
(c) Except as expressly set forth in Schedule 2.16, all
Benefit Plans and any amendments thereto are duly registered or filed where
required or permitted by law (including registration or filing with the relevant
tax authorities where such registration or filing is required to qualify for
tax-exemption or other beneficial tax status or to receive a ruling with respect
to qualifying for such tax-exemption or other beneficial tax status) and are in
good standing under, and in compliance with, all laws.
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(d) Except as set forth expressly on Schedule 2.16 or as
expressly contemplated in any employment agreement disclosed on Schedule 2.16,
Aptec and the Aptec Subsidiaries have reserved all rights necessary to amend or
terminate each of the Benefit Plans without the consent of any other person,
except with respect to claims under any such Benefit Plan that are incurred but
unpaid as of the date of any such amendment or termination.
(e) There are no outstanding defaults or violations by Aptec
and the Aptec Subsidiaries (or, to the knowledge of Aptec, any allegations
thereof) of any obligation required to be performed by any of them in connection
with any Benefit Plan. No order has been made or notice given pursuant to any
laws requiring (or proposing to require) Aptec or any Aptec Subsidiary or the
administrator or any funding agent to take (or refrain from taking) any action
in respect of any Benefit Plan.
(f) No returns, filings, reports and disclosures relating to
Benefit Plans are required by such Benefit Plans or by any governmental bodies
or any all laws.
(g) Except as set forth expressly in Schedule 2.16, Aptec and
the Aptec Subsidiaries have delivered to the EM the following documents:
(i) true, complete and up-to-date copies of all
documents embodying and summarizing the Benefit Plans including, without
limitation, with respect to each Benefit Plan, all amendments thereto, any trust
agreement, insurance contract or other funding arrangement and any summaries of
such Benefit Plans provided to employees;
(ii) the two (2) most recent actuarial valuations
prepared for each Benefit Plan for which valuations are required and any
subsequent interim or revised actuarial opinions or certificates for each such
Benefit Plan;
(iii) for those Benefit Plans which are funded plans,
the most recent accounting of such Benefits Plans' assets and liabilities; and
(iv) for those Benefit Plans which must be registered
with any governmental body (including, without limitation, revenue authorities),
evidence of the relevant registration.
Except as set forth expressly in Schedule 2.16, knowledge of any fact, condition
or circumstance since the date of the above listed documents which would
materially affect the information contained therein, in particular and without
limiting the generality of the foregoing, no contracts, promises or commitments
(whether legally binding or not) have been made by Aptec or any Subsidiary to
create or establish any additional Benefit Plan or amend any Benefit Plan or to
provide increased benefits thereunder to any employee, except as required by
applicable legislation.
(h) No event has occurred and there has been no act or failure
to act on the part of Aptec, any Aptec Subsidiary, any agent or any
administrator that has or could subject Aptec or any Aptec Subsidiary to any
liability or obligation to pay benefits not provided for
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under the terms of the Benefit Plans (including as required to be amended by any
applicable legislation in effect as of the Closing Date) or to the imposition of
any tax, penalty or other disability, whether by way of indemnity or otherwise,
that could have a Material Adverse Effect.
(i) Except as specifically set forth in Schedule 2.16, the
consummation of the transactions contemplated by this Agreement shall not
(either alone or upon the occurrence of any additional or subsequent event)
constitute an event under the terms of any Benefit Plan that shall or may result
in any payment (whether of severance or otherwise) or acceleration, vesting or
increase in benefits with respect to any employee or any acceleration or
increase in the funding requirements in respect of any Benefit Plan.
(j) Aptec and its Subsidiaries has maintained books and
records in respect of each Benefit Plan in accordance with all applicable laws
and such books and records are complete and accurate in all material respects
and include all data and information in respect of the Benefit Plans and the
assets held by Aptec and its Subsidiaries in connection therewith that EM may
reasonably be expected for the administration of such Benefit Plans and include
all books and records which are customarily maintained in respect of such
benefit plans.
(k) No Benefit Plan provides for post-employment health, life
insurance or other welfare benefit coverage.
Section 2.17 ERISA Plans.
(a) There is no employee pension benefit plan (the "Pension
Plans") as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974 ("ERISA") or employee welfare benefit plan (the "Welfare Plans" and,
together with the Pension Plans, collectively referred to as the "ERISA Plans")
as defined in Section 3(1) of ERISA, which is subject to ERISA, established,
maintained or contributed to by Aptec or any ERISA Affiliate or to which Aptec
or any ERISA Affiliate had an obligation to contribute during the five years
preceding the date hereof. As used herein, the term "ERISA Affiliate" means a
corporation which is a member of a controlled group of corporations with Aptec
or any Aptec Subsidiary within the meaning of Section 414(b) of the Internal
Revenue Code of 1986 (the "Code"), a trade or business (including a sole
proprietorship, partnership, trust, estate or corporation) which is under common
control with Aptec or any Aptec Subsidiary within the meaning of Section 414(c)
of the Code, or a member of an affiliated service group with Aptec or any Aptec
Subsidiary within the meaning of Section 414(m) or Section 414(o) of the Code.
(b) No contract, agreement, plan or other arrangement, whether
or not an ERISA Plan (other than this Agreement), exists pursuant to which the
execution of this Agreement would trigger an obligation by Aptec or any Aptec
Subsidiary to pay any amount or provide any property to any employee, officer or
director of Aptec or any of the Aptec Subsidiaries.
Section 2.18 Compliance with Law. Aptec and the Aptec
Subsidiaries, their officers, directors, agents and employees have complied with
all applicable statutes, regulations, orders and restrictions of the United
States of America, all states and other subdivisions thereof,
14
of Canada, all provinces and subdivisions thereof, all applicable foreign
jurisdictions, all agencies and instrumentalities of the foregoing and all
national and international self-regulatory bodies and authorities in respect of
the conduct of Aptec's and the Aptec Subsidiaries' business and ownership of
their properties, except where such failure to comply would not have a Material
Adverse Effect.
Section 2.19 Litigation. Except set forth in Schedule 2.19,
there is no action, suit, claim, proceeding, inquiry or investigation pending
or, to the knowledge of Aptec, threatened, against or affecting Aptec or any
Aptec Subsidiary, or the assets, properties, business or business prospects of
Aptec or any Aptec Subsidiary, or relating to or involving the transactions
contemplated by this Agreement at law or in equity, or before or by any
arbitrator or any federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
Aptec knows of no basis for any of the foregoing. Except as set forth on
Schedule 2.19, none of Aptec or any Aptec Subsidiary has received any opinion or
memorandum or legal advice or notice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage that may have
a Material Adverse Effect. Neither Aptec nor any Aptec Subsidiary is in default
with respect to any order, writ, injunction or decree known to or served upon
Aptec or such Aptec Subsidiary. There is no pending action or suit brought by
Aptec or any Aptec Subsidiary against others.
Section 2.20 Material Contracts.
(a) Except for this Agreement, the Merger Agreement and the
collateral agreements contemplated in this Agreement and the Merger Agreement to
be entered into among the parties hereto and except as set forth on Schedule
2.20, neither Aptec nor any Aptec Subsidiary is a party to any written or oral:
(i) contract involving an income or expense in excess of
C$75,000 (on an annualized basis) or contract not made in the ordinary
course of business;
(ii) consulting agreement or contract for the employment
of any officer, employee or other person on a full-time, part-time or
consulting basis;
(iii) agreement, mortgage, indenture, loan or credit
agreement, security agreement, guaranty or indemnity or other agreement
or instrument relating to the borrowing or lending of money or
extension of credit or providing for the mortgaging or pledging of, or
otherwise placing a lien or security interest on, any assets or
properties of Aptec or any Aptec Subsidiary;
(iv) option, warrant or other contract for the purchase of
any debt or equity security of any corporation, or for the issuance of
any debt or equity security, or the conversion of any obligation,
instrument or security into debt or equity securities, of Aptec or any
Aptec Subsidiary;
(v) settlement agreement of any administrative or judicial
proceedings within the past five years; or
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(vi) intellectual property (including trademark) licensing
agreements.
(b) Neither Aptec nor any of the Aptec Subsidiaries is in
breach of or in default under any of the contracts, obligations or commitments
set forth on Schedule 2.20 (collectively, the "Contracts"), and no event has
occurred that, with the giving of notice or lapse of time or both, would
constitute such a breach or default. Except as set forth on Schedule 2.20, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) violate, or conflict with, or
result in a breach of any provision of or constitute a default (or an event
which, with the giving of notice the passage of time or otherwise, would
constitute a default) under, or entitle any party (with the giving of notice,
the passage of time or otherwise) to terminate, accelerate or call a default
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Aptec or any Aptec
Subsidiaries under, any of the terms or conditions of any Contract or (ii)
require the consent of any party (other than Aptec or Aptec Subsidiaries) to any
Contract. Aptec has furnished Aptec with a true and complete copy of all written
contracts, obligations or commitments set forth on Schedule 2.20, and with
accurate descriptions of all oral contracts, obligations or commitments set
forth on Schedule 2.20.
Section 2.21 Conduct of Business. Except pursuant to the
transactions contemplated in the Merger Agreement or herein, since August 31,
1998, Aptec has preserved the business organization of Aptec and the Aptec
Subsidiaries intact, kept available to Aptec and the Aptec Subsidiaries the
services of all current officers and employees, and preserved the goodwill of
the suppliers, customers, employees and others having business relations with
Aptec and the Aptec Subsidiaries. Except pursuant to the transactions
contemplated in the Merger Agreement or herein, and except as set forth on
Schedule 2.21, since August 31, 1998, Aptec and the Aptec Subsidiaries have
conducted their business in the ordinary course, have maintained their assets
and properties in at least as good order and condition as existed on August 31,
1998 (other than wear as may be accounted for by reasonable use) and as is
necessary to continue to conduct their business and have not and will not
through to the Closing Date:
(a) incurred any obligation or liability (absolute, accrued,
contingent or other), except in the ordinary course of business;
(b) discharged or satisfied any lien or encumbrance, or paid
or satisfied any obligation or liability (absolute, accrued, contingent
or other), other than liabilities reflected on the Balance Sheet or
incurred since August 31, 1998 in the ordinary course of business
consistent with past practice; or in connection with the Purchase for
Cancellation Agreement with Xxxxxx Xxxxx in an amount of up to US$
43,859.
(c) written down or written off any Accounts Receivable,
except for the accrual of reserves as permitted under Section 2.12.
(d) increased or established any reserve for taxes or other
liabilities on its books or otherwise provided therefor, except for
current taxes due in the ordinary cause of business;
16
(e) mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the assets or properties of Aptec or any of
the Aptec Subsidiaries;
(f) sold, assigned or transferred any asset, property or
business or canceled any debt or claim or waived any right, except
sales of inventory, immaterial amounts of other assets in the ordinary
course of business and the aircraft referred to in paragraph (k) below;
(g) except as set forth in Schedule 2.21(g), granted any
increase in the compensation (including bonuses and deferred
compensation) payable to any executive officer, director, key employee
of Aptec or any Aptec Subsidiary other than Xx. Xxxxxx Xxxxx or granted
any increase in compensation to any other employee of Aptec or any
Aptec Subsidiary in excess of five percent (5%); or paid or accrued for
the benefit of Xx. Xxxxxx Xxxxx any salary, bonus or other compensation
or benefit which would have the effect of reducing the Book Value of
Aptec at August 31, 1999 to less than C$1,648,048.
(h) made or authorized any capital expenditure for additions
to plant and equipment of Aptec and the Aptec Subsidiaries in excess of
C$20,000 in the aggregate except as may have been necessary for
ordinary repair, maintenance and replacement;
(i) made or forgiven any loan to any shareholder or any
relative or affiliate of any shareholder, or declared, set aside or
paid to any shareholder any dividend or other distribution in respect
of its capital stock, or redeemed or purchased any of its capital
stock, or agreed to take any such action;
(j) transferred any asset or paid any commission, salary or
bonus to any shareholder or any relative or affiliate of any
shareholder other than the payment of wages or salaries to shareholder
employees in the ordinary course of business and as disclosed on
Schedule 2.13, or paid any rent, commission or fee to any shareholder
or any relative or affiliate of any shareholder other than pursuant to
leases disclosed on Schedule 2.09 in the amounts shown thereon;
(k) entered into or agreed to enter into any transaction with
or for the benefit of any shareholder or any relative or affiliate of
any shareholder, other than the transactions contemplated by this
Agreement or the Merger Agreement and the sale of the Cessna 340 to Xx.
Xxxxx or his designee at a cash price payable on or before the Closing
Date equal to its depreciated book value at the time of sale; or
(l) issued, sold or transferred, or agreed to issue, sell or
transfer, any stock, bond, debenture or other security of Aptec or the
Aptec Subsidiaries.
17
Section 2.22 Tax Matters.
(a) Aptec and the Aptec Subsidiaries in a timely manner have
filed all returns and other reports required of them under all Canadian federal,
provincial, local and foreign tax laws to which they are subject and have paid
all taxes shown due on such returns. All such returns and reports are true,
correct and complete in all material respects and accurately set forth all items
to the extent required to be reflected or included in such returns by applicable
federal, state, local or foreign tax laws, regulations or rules. Aptec and the
Aptec Subsidiaries have paid in full or set up an adequate reserve in respect of
all taxes for the periods covered by such returns, as well as all other material
taxes, penalties, interest, fines, deficiencies, assessments and governmental
charges that have become due or payable, including without limitation all taxes
that Aptec or any of the Subsidiaries is obligated to withhold from amounts paid
or payable to or benefits conferred upon employees, creditors and third parties.
Neither Aptec nor any Aptec Subsidiary has any tax liability for which an
adequate tax reserve has not been established on the Balance Sheet, whether or
not disputed, including any interest and penalty in connection therewith, for
all periods ending on or prior to the date of the Balance Sheet. With respect to
any periods for which tax returns have not yet been required to be filed or for
which taxes are not yet due and payable, Aptec and the Aptec Subsidiaries have
only incurred liability for taxes in the ordinary course of their business and
in the manner and at a level consistent with prior years.
(b) Set forth on Schedule 2.22 is a complete list of income
and other tax returns filed by Aptec or any of the Aptec Subsidiaries pursuant
to the laws or regulations of any federal, state, local or foreign tax authority
that have been examined or audited by the IRS or other appropriate authority
during the preceding ten years (or five years, with respect to all returns other
than income tax returns). Also set forth on Schedule 2.22 is a complete list of
all adjustments resulting from each such examination or audit. No tax
examination or audit is in progress. No changes proposed by a taxing authority
in an audit during such ten (or five) year period (other than changes disclosed
in Schedule 2.22) can reasonably be expected to affect the amount of tax
liability for Aptec or any Aptec Subsidiary in the future. All deficiencies
proposed as a result of such examinations or audits have been paid or finally
settled and no issue has been raised in any such examination or audit that, by
application of similar principles, reasonably can be expected to result in the
assertion of a deficiency for any other year not so examined or audited. The
results of any settlement and the necessary adjustments resulting therefrom
properly are reflected in the Balance Sheet. The period during which any
assessment against Aptec or any of the Aptec Subsidiaries may be made by the IRS
or other appropriate authority has expired without waiver or extension for the
years set forth on Schedule 2.22 for each such authority. There are no grounds
for any further tax liability with respect to the years that have not been
examined or audited. There is no outstanding agreement or waiver made by or on
behalf of Aptec or any of the Aptec Subsidiaries for the extension of time for
any applicable statute of limitations, and neither Aptec nor any of the Aptec
Subsidiaries has requested any extension of time in which to file any tax
return.
(c) Except for taxes for the payment of which an adequate
reserve has been established on the Balance Sheet and for property taxes that
are not delinquent, there is no tax lien, whether imposed by any federal, state,
local or foreign taxing authority, outstanding against any of the assets or
properties of Aptec or any of the Aptec Subsidiaries.
(d) No Aptec Subsidiary has executed any closing agreement
pursuant to Section 7121 of the Code or any predecessor provision thereof, or
any similar provision of state or local law.
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(e) Aptec has not filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Aptec or any Subsidiary.
(f) None of the assets owned by any Aptec Subsidiary is
property that is required to be treated as owned by any other person pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(g) Aptec is not a party to a tax sharing agreement or similar
arrangement.
(h) Neither Aptec nor any Aptec Subsidiary has agreed, and
neither is required to make any adjustments pursuant to Section 481(a) of the
Code or any similar provision of state or local law by reason of a change in
accounting method initiated by it or any other relevant party, and neither has
any knowledge that the IRS has proposed any such adjustment or change in
accounting method, and there is no application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or assets of Aptec or any Aptec Subsidiary.
(i) Aptec has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under any circumstances
could obligate it to make payments, in each case that would not be deductible
under Section 280G of the Code.
(j) As used in this Agreement, the term "tax return" includes
any material report, statement, form, return or other document or information
required to be supplied to a taxing authority in connection with taxes. As used
in this Agreement, the term "taxes" means any federal, state, local and foreign
income or gross receipts tax, alternative or add-on minimum tax, sales and use
tax, customs duty and any other tax, charge, fee, levy or other assessment
including without limitation property, transfer, occupation, service, license,
payroll, franchise, excise, withholding, ad valorem, severance, stamp, premium,
windfall profit, employment, rent or other tax, governmental fee or like
assessment or charge of any kind whatsoever, together with any interest, fine or
penalty thereon, addition to tax, additional amount, deficiency, assessment or
governmental charge imposed by any federal, state, local or foreign taxing
authority.
(k) There are no contingent tax liabilities or any other
grounds that could prompt an assessment or reassessment of Aptec or the Aptec
Subsidiaries, including, but without limitation, aggressive treatment of income,
expenses, deductions, credits or other amounts in the filing of earlier or
current tax returns, nor has Aptec or the Aptec Subsidiaries received any
indication from any taxation authorities than an assessment or reassessment of
taxes is proposed.
(l) Aptec and the Aptec Subsidiaries have collected from each
receipt from any of their past and present customers (or other persons paying an
amount to Aptec or the Aptec Subsidiaries) the amount of all taxes (including
good and services tax and provincial sales tax) required to be collected and
have remitted such taxes when due, in the form required under the appropriate
legislation or made adequate provision for the payment of such amount to the
proper receiving authorities.
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(m) Aptec and the Aptec Subsidiaries have not at any time
benefited from a forgiveness of debt or entered into any transaction or
arrangement (including conversions of debt into shares of its share capital)
which could have resulted in the application of Section 80 and following of the
Income Tax Act, Canada (the "ITA") or the corresponding provisions of any
applicable provincial legislation.
(n) All refunds of taxes or credits claimed with respect to
research and development expenses (R&D) (Credits or Refunds) were claimed by
Aptec and the Aptec Subsidiaries in accordance with the ITA and the relevant
provincial legislation and Aptec and the Aptec Subsidiaries have satisfied at
all times the relevant criteria and conditions entitling them to such R&D
Credits or Refunds.
(o) Since the date of their incorporation, Aptec and Aptec's
Canadian subsidiaries have been "Canadian controlled private corporations"
within the meaning of the ITA.
(p) As of the Closing Date, there will not be any contract,
agreement, plan or arrangement including but not limited to the provisions of
this section, covering any employee or former employee of Aptec or the Aptec
Subsidiaries that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by Aptec or the Aptec Subsidiaries as
an expense under any applicable tax law.
(q) The Xxxxx Holders are not non-resident persons within the
meaning of the ITA and any applicable provincial legislation.
(r) The Reorganization (as defined below) will not result in
the imposition of any tax on EM, Aptec or the Aptec Subsidiaries. The term
"Reorganization" shall mean the transaction described on Schedule 2.22 hereto.
Section 2.23 Absence of Undisclosed Liabilities. Neither Aptec
nor any Aptec Subsidiary has any indebtedness or liability, whether accrued,
fixed or contingent, other than (a) liabilities reflected in the Balance Sheet,
and (b) liabilities incurred in the ordinary course of business of Aptec and the
Aptec Subsidiaries (consistent with past practice in terms of both frequency and
amount) subsequent to the date of the Balance Sheet.
Section 2.24 Insurance. Set forth on Schedule 2.24 is a
complete list and description of all policies of insurance, together with the
premiums currently payable thereon, covering (i) damage to goods being
manufactured, shipped, held or otherwise processed by Aptec or any of the Aptec
Subsidiaries, (ii) providing for fire, property, casualty, business
interruption, personal or product liability, workers' compensation and other
forms of insurance coverage for Aptec or (iii) providing for fire, property,
casualty and other forms of insurance coverage for the Real Property. All such
policies or substantially comparable insurance will be outstanding and in full
force and effect at the Closing Date, and the consummation of the transactions
contemplated
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hereby will not cause a cancellation or reduction in the coverage of such
policies. There was no material inaccuracy in any application for any such
insurance coverage. Except as set forth on Schedule 2.24, there is no claim,
action, suit or proceeding arising out of or based upon any of such policies of
insurance, and no basis for any such claim, action, suit or proceeding exists.
There is no notice of any pending or threatened termination or premium increase
with respect to any of such policies, and Aptec and the Aptec Subsidiaries are
in compliance with all conditions contained therein.
Section 2.25 Corporate Name.
"Aptec" and "Aptec Instruments" constitute all of the business
styles and trade names presently used by Aptec and the Aptec Subsidiaries. Set
forth on Schedule 2.25 is a list of all jurisdictions, and the locations in such
jurisdictions, in which the corporate name "Aptec" and "Aptec Instruments", or
any variations thereof are used by Aptec or the Aptec Subsidiaries. Aptec has
the full legal right to use such names in Ontario and from and after the Closing
in New Brunswick. There is no actual or, to the knowledge of Aptec, threatened
claim by any third party with respect to the use of such names or of any actual
or proposed use of the name "Aptec" and "Aptec Instruments" or any variations
thereof by any third party in conflict with the use thereof by Aptec and the
Aptec Subsidiaries. The use by Aptec and the Aptec Subsidiaries of the name
"Aptec" and "Aptec Instruments" or any variations thereof does not infringe upon
the rights of any third party and neither Aptec nor any Subsidiary has granted
any third party any right to use such name or any variations thereof.
Section 2.26 Transactions with Related Parties.
(a) Except pursuant to the transactions contemplated in the
Merger Agreement or herein, and except as set forth on Schedule 2.26, there are
no outstanding notes payable to, accounts receivable from or advances by Aptec
or any of the Aptec Subsidiaries to, and neither Aptec nor any of the Aptec
Subsidiaries is otherwise a creditor of, any shareholder or former shareholder
of Aptec or any relative or affiliate of any shareholder or former shareholder
of Aptec. Except pursuant to the transactions contemplated in the Merger
Agreement or herein, since the date of the Balance Sheet, neither Aptec nor any
of the Aptec Subsidiaries has incurred any obligation or liability to, or become
a creditor of any shareholder or former shareholder of Aptec or any relative or
affiliate of any shareholder or former shareholder of Aptec.
(b) Except as set forth on Schedule 2.26, since the date of
the Balance Sheet, Aptec has neither declared any dividends nor paid any
dividends to any shareholder or former shareholder of Aptec or any relative of
any shareholder or former shareholder of Aptec.
(c) Neither Aptec nor any of the Aptec Subsidiaries has
purchased or leased real property from any shareholder or former shareholder of
Aptec or any relative of such person, including any other instruments granting
such leasehold interests, or involving rights, options or other interests.
Section 2.27 Permits. Aptec and the Aptec Subsidiaries have
all franchises, licenses, permits, certificates and other authorizations from
federal, state, provincial, local or
21
foreign governments or governmental agencies, departments or bodies that are
necessary for the conduct of their business and which, if not obtained, would,
individually or in the aggregate, have a Material Adverse Effect (each a
"Permit"). Schedule 2.27 contains a list of all Permits. Aptec has no knowledge
of any fact, error or omission relevant to any Permit that would permit the
revocation or withdrawal, or the threatened revocation or withdrawal, thereof.
Aptec and the Subsidiaries will continue to have the use and benefit thereof and
the rights granted thereby after the Merger has occurred.
Section 2.28 Bank Accounts. Schedule 2.28 attached hereto
contains an accurate and complete list of:
(a) the names and addresses of each bank in which Aptec or any
Aptec Subsidiary has an account;
(b) the account numbers of such accounts; and
(c) the authorized signatories and amounts for such accounts.
Section 2.29 Product Liability. There are no pending product
liability, warranty, backcharge, additional work, field repair or other claims
by any third party (whether based on contract or tort and whether relating to
personal injury, including death, property damage or economic loss) arising from
(A) services rendered by Aptec or any Aptec Subsidiary, (B) the manufacture,
sale, distribution, erection or installation of products by Aptec or any Aptec
Subsidiary or (C) the operation of Aptec's or any Aptec Subsidiary's business.
Section 2.30 Customers. Set forth on Schedule 2.30 is a
complete list of the ten (10) largest (in terms of dollar volume) customers of
Aptec and the Aptec Subsidiaries for each of the fiscal years ended August 31,
1997 and 1998, indicating the amount paid to Aptec by each customer for each
such fiscal year and the names of the employees of Aptec who are primarily
responsible for servicing each such customer as of the date hereof. Except as
set forth on Schedule 2.30, none of such customers has terminated or indicated
an intention or plan to terminate all or a material part of the services
performed for or orders historically placed by such customers. Except as set
forth on Schedule 2.30, Aptec has satisfactory relationships with its major
customers, and suppliers and contractors, and Aptec has no reason to believe
there will be any adverse change in any of such relationships, whether by reason
of the Merger or for any other reason. None of the employees primarily
responsible for servicing customers listed thereon has indicated an intention or
plan to terminate his or her employment with Aptec.
Section 2.31 Intellectual Property Matters.
(a) As used herein, the term "Intellectual Property Assets"
includes:
(i) all fictional business names, trading names,
registered and unregistered trademarks, service marks, and applications
(collectively, "Marks");
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(ii) all patents, patent applications, and inventions
and discoveries that may be patentable owned by Aptec (collectively,
"Patents");
(iii) all registered copyrights in both published
works and unpublished works, and all rights in mask works
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, customer histories, product formulations,
product information and specifications, software, technical
information, data, process technology, plans, drawings, and blue prints
(collectively, "Trade Secrets"), owned, used, or licensed by Aptec as
licensee or licensor.
(b) (i) Schedule 2.31(b) attached hereto contains a
complete and accurate list and summary description, including any royalties paid
or received by Aptec, of all contracts relating to the Intellectual Property
Assets to which Aptec is a party or by which Aptec is bound, except for any
license implied by the sale of a product and perpetual, paid-up licenses for
commonly available software programs with a value of less than $500 under which
Aptec is the licensee. There are no outstanding and, to Aptec's knowledge, no
threatened disputes or disagreements with respect to any such agreement.
(ii) The Intellectual Property Assets owned or used
by Aptec are all those necessary for the operation of Aptec's business as
currently conducted. Aptec is the owner of all right, title, and interest in and
to each of the Intellectual Property Assets, free and clear of all Liens and to
Aptec's knowledge other adverse claims, and to Aptec's knowledge has the right
to use without payment to a third party all of the Intellectual Property Assets.
No employee of Aptec has any rights to or interests in the Intellectual Property
Assets.
(iii) Except as set forth in Schedule 2.31(b)
attached hereto, all Aptec research employees who are currently employed or were
employed in the past two years have executed written contracts with Aptec that
assign to Aptec all rights to any inventions, improvements, discoveries, or
information relating to the business of Aptec. To Aptec's knowledge, no employee
has entered into any contract that restricts or limits in any way the scope or
type of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than Aptec.
(c) Patents.
(i) Aptec and the Aptec Subsidiaries own no Patents.
(ii) None of the products manufactured and sold, nor
any process or know-how used by Aptec, infringes or is alleged to infringe any
patent or other proprietary right of any other Person, other than as disclosed
in Schedule 2.19.
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(d) Trademarks.
(i) Schedule 2.31(d) attached hereto contains a
complete and accurate list and summary description of all Marks.
(ii) All Marks that have been registered with the
United States Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date.
(iii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to Aptec's knowledge, no such
action is threatened with respect to any of the Marks.
(iv) To Aptec's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) To Aptec's knowledge, no Xxxx is infringed or has
been challenged or threatened in any way and none of the Marks used by Aptec
infringes or is alleged to infringe any trade name, trademark, or service xxxx
of any third party.
(vi) All products and materials containing a Xxxx
xxxx the proper federal registration notice where permitted by law.
(e) Copyrights.
(i) Aptec and the Aptec Subsidiaries own no
Copyrights.
(ii) No Copyright is infringed or, to Aptec's
knowledge, has been challenged or threatened in any way. None of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iii) All works encompassed by the Copyrights have
been marked with the proper copyright notice.
(f) Trade Secrets.
(i) With respect to each Trade Secret, the
documentation if any defining relating to such Trade Secret is current,
accurate, and sufficient in detail and content to identify and explain it and to
allow its full and proper use without reliance on the knowledge or memory of any
individual.
(ii) Aptec has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of the Trade Secrets.
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(iii) Aptec has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. Except as set forth on
Schedule 2.31(f), the Trade Secrets are not part of the public knowledge or
literature, and, to Aptec's knowledge, have not been used, divulged, or
appropriated either for the benefit of any person or to the detriment of Aptec.
No Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
Section 2.32 Government Contracts. Schedule 2.32 sets forth
the nature and dollar amount of each contract obtained by Aptec and the Aptec
Subsidiaries since January 1, 1994 from any governmental body, agency or
department by reason of Aptec's and the Aptec Subsidiaries' status as a "small
business", with respect to which Aptec's status as a Canadian-controlled private
corporation is relevant or any other preferential, priority or set-aside
treatment granted under any federal, state or local law.
Section 2.33 Brokers. None of Aptec or any of the Aptec
Subsidiaries, or any of their respective officers, directors or employees, has
employed any investment banker, broker, finder or other intermediary or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE XXXXXXX HOLDERS
The Xxxxxxx Holders, jointly and severally, make to EM the
representations and warranties as follows:
Section 3.01 Representations and Warranties in the Merger
Agreement. The representations and warranties set forth in Sections 2.01 through
and including Section 2.34 of the Merger Agreement are as of the date hereof,
and will on the Closing Date be, true and correct and are hereby made by the
Xxxxxxx Holders for the benefit of EM as though fully set forth herein. Any such
representations and warranties in the Merger Agreement which are qualified by
reference to knowledge shall continue to be so qualified for purposes of the
representations and warranties made by the Xxxxxxx Holders herein.
Section 3.02 Power and Authority. The execution, delivery and
performance by the Xxxxxxx Holders of this Agreement and the consummation by the
Xxxxxxx Holders of the transactions contemplated hereby are within the Xxxxxxx
Holders' power and authority. This Agreement has been duly and validly executed
and delivered by each Xxxxxxx Holder and, assuming the due and valid
authorization, execution and delivery of this Agreement by EM and all other
parties hereto other than the Xxxxxxx Holders, constitutes a valid and binding
agreement of the Xxxxxxx Holders, enforceable in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
and by equitable principles of general applicability.
25
Section 3.03 Ownership of Shares. (a) The shares of Aptec
Common Stock when issued to the Xxxxxxx Holders in the Merger will be owned by
them of record and beneficially, free and clear of any Liens. At the Closing, EM
will acquire valid and marketable title to the shares of Aptec Common Stock sold
by the Xxxxxxx Holders under Section 1.03, free and clear of any Liens.
(b) The shares of NRC Common Stock and the warrants to
purchase shares of NRC Common Stock held by the Xxxxxxx Holders were acquired by
the Xxxxxxx Holders for fair value.
Section 3.04 Allocation to Public Shareholders. The Allocation
(as such term is defined in the Fairness Opinion) of the value to the Public
Shareholders in the Merger is fair to such Public Shareholders from a financial
point of view, and from and after the Closing Date none of Aptec, Newco or EM
shall by virtue of the Merger or otherwise, have any obligations or liabilities
to the Public Shareholders, except as set forth in the Merger Agreement.
Section 3.05 Risks Associated with Aptec Common Stock. The
Xxxxxxx Holders understand and acknowledge that:
(i) They have carefully evaluated the Transactions with the
assistance and advice of their financial advisor and legal counsels;
(ii) There exist substantial risks associated with their
receipt of Aptec Common Stock in the Merger, including the possible loss or
decline in the value of such securities;
(iii) In deciding to accept their shares of Aptec Common Stock
in the Merger they have not relied upon any representations or warranties
whatsoever of Aptec or EM or their respective officers, directors, shareholders
and affiliates; and
(iv) Any projections, evaluations or other documents furnished
by or on behalf of Aptec or EM do not constitute a representation or warranty as
to the anticipated future financial performance of Aptec and the Xxxxxxx Holders
are not relying on any such projections, evaluations or other documents in
making their decision to vote in favor of the Merger and receive shares of Aptec
Common Stock.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EM
EM represents and warrants to the Xxxxx Holders and the
Xxxxxxx Holders as follows:
Section 4.01 Corporate Existence and Power. EM is a
corporation duly incorporated, validly existing and in good standing under the
laws of France and has all corporate power required to carry on its business as
now conducted. EM is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary.
Section 4.02 Corporate Authorization. The execution, delivery
and performance by EM of this Agreement and the consummation by EM of the
transactions contemplated hereby are within the corporate powers of EM and have
been duly authorized by all necessary corporate action on the part of EM. This
Agreement has been duly and validly executed and delivered by EM and, assuming
the due and valid authorization, execution and delivery of this Agreement by the
Xxxxx Holders, Aptec, the Xxxxxxx Holders and NRC, constitutes a valid and
binding agreement of EM, enforceable in accordance with its terms except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally and by
equitable principles of general applicability. The Board of Directors of EM has
approved this Agreement and the transactions contemplated hereby. No other
corporate proceedings or shareholder approvals on the part of EM are necessary
to authorize or approve this Agreement or to consummate the transactions
contemplated hereby.
Section 4.03 Governmental Authorization. The execution,
delivery and performance by EM of this Agreement and the consummation by EM of
the Transactions contemplated hereby require no consent, waiver, approval,
authorization or permit by or from, or action by or in respect of, or filing
with, any Governmental Entity, other than Canadian federal and provincial
regulatory filings.
Section 4.04 Non-contravention. The execution, delivery and
performance by EM of this Agreement and the consummation by EM of the
transactions contemplated hereby do not and will not: (i) contravene or conflict
with the certificate of incorporation or by-laws of EM; (ii) contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to EM; (iii)
result in a breach or violation of or constitute a default (or an event that
with the giving of notice or the lapse of time or both would constitute a
default) under or give rise to a right of termination, amendment, cancellation
or acceleration of any right or obligation of EM or to a loss of any material
benefit to which EM is entitled.
Section 4.05 Financial Ability. At the Closing, EM will have
the financial ability, or will have available to it the financial resources from
its parent organization, to consummate the transactions contemplated in Article
I to this Agreement and to make the Loans and to purchase the shares of Aptec
Common Stock from Aptec, the Xxxxx Holders and the Xxxxxxx Holders as provided
in this Agreement.
Section 4.06 No other Agreements. Neither EM nor any of its
Affiliates has any agreement, option or right to acquire shares of Aptec Common
Stock, except for this Stock Acquisition Agreement and the Exhibits hereto.
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ARTICLE V
INDEMNIFICATION AND REMEDIES
Section 5.01 Survival. All representations, warranties,
covenants, and obligations in this Agreement, the Schedules, and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing for the periods provided in this Article V. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted by EM with respect to, or any knowledge acquired (or
capable of being acquired by EM) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The closing by EM of the Transactions
notwithstanding the inaccuracy of any representation or warranty, or on the lack
of performance of or compliance with any covenant or obligation, will not affect
EM's right to indemnification or payment of Damages (as hereafter defined),
based on such representations, warranties, covenants, and obligations.
Section 5.02 Indemnification and Payment of Damages by the
Xxxxx Holders. Subject to the provisions contained in this Article V, the Xxxxx
Holders, jointly and severally, will indemnify and hold harmless EM for, and
will pay EM the amount of any loss, liability, claim, damage or expense
(including reasonable costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by the
Xxxxx Holders in this Agreement, the Schedules, or any
certificate or document delivered by the Xxxxx Holders or
Aptec pursuant to this Agreement as if such representation
or warranty were made on and as of the Closing Date;
(b) any breach by the Xxxxx Holders or Aptec or Newco of any
covenant or obligation of the Xxxxx Holders or Aptec or
Newco in this Agreement;
(c) any Taxes for any period ending on or before the Closing
Date, or the portion of any period including but not
ending on the Closing Date, other than current Taxes for
such periods and except to the extent amounts have been
accrued on Aptec's financial statements in respect of such
Taxes;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement
or understanding alleged to have been made by any such
Person with the Xxxxx Holders or Aptec (or any Person
acting on their behalf) in connection with the Merger or
any of the transactions contemplated in this Agreement;
and
(e) any claim with respect to the matter disclosed in Schedule
2.19
28
Section 5.03 Indemnification and Payment of Damages by the
Xxxxxxx Holders. Subject to the provisions contained in this Article V, the
Xxxxxxx Holders, jointly and severally, will indemnify and hold harmless EM for,
and will pay to EM the amount of any Damages, arising, directly or indirectly,
from or in connection with:
(a) any breach of any representation or warranty made by the
Xxxxxxx Holders in this Agreement, the Schedules, or any
certificate or document delivered by the Xxxxxxx Holders
or NRC pursuant to this Agreement as if such
representation or warranty were made on and as of the
Closing Date;
(b) any breach by the Xxxxxxx Holders or NRC of any covenant
or obligation of the Xxxxxxx Holders or NRC in this
Agreement;
(c) any Taxes in respect of NRC and the NRC Subsidiaries for
any period ending on or before the Closing Date, or the
portion of any period including but not ending on the
Closing Date, other than current Taxes for such period and
except to the extent amounts have been accrued on
Financial Statements in respect of such Taxes;
(d) any claim by a Public Shareholder that the Allocation is
not fair to such holder;
(e) any Environmental Damages in respect of NRC and the NRC
Subsidiaries, notwithstanding that the matter giving rise
thereto is disclosed on Schedule 2.16 of the Merger
Agreement; and
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement
or understanding alleged to have been made by any such
Person with the Xxxxxxx Holders or NRC (or any Person
acting on their behalf) in connection with the Merger or
any of the transactions contemplated in this Agreement.
Section 5.04 Indemnification and Payment of Damages by EM. EM
will indemnify and hold harmless Sellers, and will pay to Sellers the amount of
any Damages arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by EM in this Agreement or in any
certificate delivered by EM pursuant to this Agreement, (b) any breach by EM of
any covenant or obligation of EM in this Agreement, or (c) any claim by any
Person for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by such Person
with EM (or any Person acting on its behalf) in connection with any of the
transactions contemplated in this Agreement.
Section 5.05 Time Limitations. Sellers will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, unless on or before the expiration of the applicable claim
periods set forth in this Section 5.05, EM notifies Sellers of a
29
claim specifying the factual basis thereof in reasonable detail to the extent
then known by EM. The time periods within which EM may assert a claim for
Damages shall be as follows:
(a) as against the Xxxxx Holders:
(i) with respect to claims for matters covered by
Sections 2.02, 2.05 and 2.22 of this Agreement (collectively, "Statute
Claims"), until the expiration of the applicable statute of
limitations, including any tolling thereof;
(ii) with respect to claims for matters covered by
Sections 2.07, 2.11 and 2.12 of this Agreement, until March 31, 2001;
(iii) with respect to claims for matters covered by
Section 2.15 of this Agreement, until the third (3rd) anniversary of
the Closing Date; and
(iv) with respect to claims for matters covered by
all other Sections of Article II of this Agreement not enumerated in
clauses (i), (ii) or (iii) above, until the expiration of the second
(2nd) anniversary of the Closing Date.
(b) as against the Xxxxxxx Holders:
(i) with respect to claims for matters covered by
Sections 2.05 and 2.23 of the Merger Agreement and claims for matters
covered by Sections 3.02, 3.03, 3.04 and 3.05 of this Agreement
(collectively, "Statute Claims"), until the expiration of the
applicable statute of limitations, including any tolling thereof.
(ii) with respect to claims for matters covered by
Sections 2.08 and 2.13 of the Merger Agreement, until March 31, 2001.
(iii) with respect to claims for matters covered by
Section 2.16 of the Merger Agreement, until the third (3rd) anniversary
of the Closing Date; and
(iv) with respect to claims for matters covered by
all other Sections of Article II of the Merger Agreement not enumerated
in clauses (i), (ii) or (iii) above, until the expiration of the second
(2nd) anniversary of the Closing Date.
Section 5.06 Threshold Amounts.
(a) The Xxxxx Holders will have no liability (for
indemnification or otherwise) with respect to claims
under this Article V until the total of all Damages
with respect to all such matters reaches or exceeds
$75,000 in the aggregate and then only for the excess
above such amount; provided, however, that the Xxxxx
Holders will be liable for all Statute Claims from
the first dollar incurred.
(b) The Xxxxxxx Holders will have no liability (for
indemnification or otherwise) with respect to claims
under this Article V until the total of all
30
Damages with respect to all such matters reaches or
exceeds $75,000 in the aggregate and then only for
the excess above such amount; provided, however, that
the Xxxxxxx Holders will be liable for all Statute
Claims from the first dollar incurred.
Section 5.07 Limitations on Indemnification.
(a) Notwithstanding anything to the contrary in this
Article V, EM's rights to indemnification in respect
of all claims other than Statute Claims shall be
limited to the sum of $1,500,000 as against the Xxxxx
Holders and the sum of $1,500,000 as against the
Xxxxxxx Holders.
(b) EM's rights of recourse under this Article V with
respect to all claims except Statute Claims shall be
exercised in the following order:
(i) first, against the Xxxxx Escrow Account or the
Xxxxxxx Escrow Account, as the case may be up to the
amount of principal and interest then held by the
Escrow Agent;
(ii) second, against the Xxxxx Holders or the Xxxxxxx
Holders, as the case may be, to the extent of any
claims of EM in excess of clause (i) above and up to
an additional amount of $425,000 for the Xxxxxxx
Holders and $425,000 for the Xxxxx Holders, who shall
be liable personally to pay such amounts in cash to
EM; and
(iii) third, to the extent of any claims of EM in
excess of the foregoing clauses (i) and (ii) and up
to the aggregate amounts set forth in Section
5.07(a), against the Xxxxxxx Holders or the Xxxxx
Holders, as the case may be, who shall be liable
personally to EM for such amounts and shall settle
them in cash, at face value, unless they irrevocably
elect, by written notice to EM within thirty (30)
days of their receipt of a notice of claim to settle
such amounts by tendering to EM shares of Aptec
Common Stock free and clear of any Liens, each of
which, for purposes solely of this Section 5.07(b)
shall be deemed to represent the equivalent of $500
in cash.
Section 5.08 Procedure for Indemnification.
(a) Promptly after receipt by an indemnified party
(an "Indemnified Party") under this Article V of
notice of a claim or the commencement of any
proceeding against it (a "Third Party Claim"), such
Indemnified Party will, if a claim is to be made
against an indemnifying party (an "Indemnifying
Party") under this Article V, give written notice
within 15 Business Days to the Indemnifying Party of
the commencement of such claim or proceeding,
describing in reasonable detail such claim or
proceeding, but the failure to notify the
Indemnifying Party will not relieve the Indemnifying
Party of any liability that it may have to any
Indemnified
31
Party, except to the extent that the Indemnifying
Party demonstrates that the defense of such action is
prejudiced by the Indemnifying Party's failure to
give such notice.
(b) Upon receipt by the Indemnifying Party of written
notice of the commencement of any proceeding against
the Indemnified Party, the Indemnifying Party will,
unless the claim is a Statute Claim, be entitled to
participate in such proceeding and, to the extent
that it wishes (unless (i) the Indemnifying Party is
also a party to such proceeding and the Indemnified
Party determines in good faith that joint
representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable
assurance to the Indemnified Party of its financial
capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to
assume the defense of such proceeding with counsel
reasonably satisfactory to the Indemnified Party and,
after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the
defense of such proceeding, the Indemnifying Party
will not, as long as it diligently conducts such
defense, be liable to the Indemnified Party under
this Article V for any fees of other counsel or any
other expenses with respect to the defense of such
proceeding, in each case subsequently incurred by the
Indemnified Party in connection with the defense of
such proceeding, other than reasonable costs of
investigation. If the Indemnifying Party assumes the
defense of a proceeding, (i) it will be conclusively
established for purposes of this Agreement that the
claims made in that proceeding are within the scope
of and subject to indemnification; (ii) no compromise
or settlement of such claims may be effected by the
Indemnifying Party without the Indemnified Party's
consent, which consent shall not be unreasonably
withheld, provided that the Indemnified Party's
consent shall not be required if (A) there is no
finding or admission of any violation of Legal
Requirements or any violation of the rights of any
Person and no effect on any other claims that may be
made against the Indemnified Party, and (B) the sole
relief provided is monetary damages that are paid in
full by the Indemnifying Party; and (iii) the
Indemnified Party will have no liability with respect
to any compromise or settlement of such claims
effected without its consent, which consent shall not
be unreasonably withheld. If notice is given to an
Indemnifying Party of the commencement of any
proceeding and the Indemnifying Party does not,
within twenty days after the Indemnified Party's
notice is given, give notice to the Indemnified Party
of its election to assume the defense of such
proceeding, the Indemnifying Party will be bound by
any determination made in such proceeding or any
compromise or settlement effected by the Indemnified
Party.
(c) Notwithstanding the foregoing, if an Indemnified
Party determines in good faith that there is a
reasonable probability that a proceeding may
adversely
32
affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified
Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or
settle such proceeding, but the Indemnifying Party
will not be bound by any determination of a
proceeding so defended or any compromise or
settlement effected without its consent (which may
not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is
brought against any Indemnified Party for purposes of
any claim that an Indemnified Party may have under
this Agreement with respect to such Proceeding or the
matters alleged therein and agree that process may be
served on Sellers with respect to such a claim
anywhere in the world.
(e) A claim for indemnification for any matter not
involving a third-party claim or a Proceeding shall
be asserted by written notice by the Indemnified
Party to the Indemnifying Party. Claims against the
Xxxxx Escrow Account or the Xxxxxxx Escrow Account
will be made in accordance with the procedures set
forth in the Escrow Agreements.
Section 5.09 Computation of Damages.
(a) For purposes of this Article V, the amount of Damages in
each instance where indemnification is sought shall be deemed to be an amount
(x) net of any insurance proceeds and any indemnity, contribution or other
similar payment actually received from any third party with respect thereto, and
(y) net of any tax benefit actually realized by Aptec or Newco, as the case may
be (i.e. the amount of Damages shall be computed on an after-tax-basis to the
extent that the costs to which such Damages relate actually give rise to a tax
deduction). For purposes of this Section, a tax benefit will arise when actually
realized by Aptec or Newco in the year in which the accrual of such costs is
made and the amount of such tax benefit shall be determined by reference to
Newco's (if the claim pertains to indemnification to EM by the Xxxxxxx Holders)
or Aptec's (if the claim pertains to indemnification to EM by the Xxxxx Holders)
effective rate of taxation in such year, without giving effect to the inclusion
of Newco or Aptec in any consolidated tax return of EM or its Affiliates.
(b) Notwithstanding anything to the contrary in this Article
V, in respect of any claims by EM arising from costs, losses or expenses
incurred by Aptec or its Subsidiaries or NRC or its Subsidiaries, EM's sole
remedy shall be to receive indemnification for Damages under this Article V
equal to fifty-one percent (51%) of such costs, losses or expenses after
application of Section 5.09(a).
33
Section 5.10(A) Special Indemnity from the Xxxxxxx Holders.
The Xxxxxxx Holders shall promptly upon demand pay to Aptec or Newco the
following:
(a) The amount of all Accounts Receivable (other than
retainers not yet due) of NRC or any NRC Subsidiary which remain uncollected
after one year from the Closing Date which in the aggregate exceeds $100,000;
(b) The amount of any claims in respect of the matters
disclosed in Schedule 2.24 of the Merger Agreement; and
(c) The amount of any claims in respect of the matter
disclosed in item 3 of Schedule 2.20 of the Merger Agreement.
The foregoing indemnity shall be excluded from the scope of Sections 5.05, 5.06,
5.07 and 5.09 and shall survive for a period of three years from the Closing,
and shall be in lieu of and not in addition to any right of indemnification of
EM in respect to similar indemnification matters contained in Article V.
34
Section 5.11 Indemnification for Certain Tax Consequences.
(a) If EM takes any action, or causes Aptec or any Subsidiary
of Aptec to take any action, that breaches or violates any of the
representations, warranties and covenants contained in Section 6.02 of the
Merger Agreement or Section 6.06 hereof and which results in a Statement Filer,
as defined below, (or any other person) being required to recognize gain on the
exchange, in accordance with the Merger Agreement, of his or her NRC Common
Stock or warrants for Aptec Common Stock (the "NRC Exchange") prior to the end
of the five taxable year period referred to in Treas. Reg. ss. 1.367(a)-8(b)(3)
(the "End Date"), then EM shall be liable to reimburse the Statement Filer (or
other person) for the amount of interest and penalties which he or she is
required to pay to the United States Government as a consequence of such gain
recognition [plus an amount equal to the Hypothetical Interest (as defined
below) on the amount of income tax paid to the United States Government by the
Statement Filer(s) as a consequence of such gain recognition]; provided,
however, that no amounts shall be due pursuant to this Section 5.11 to the
extent that amounts are paid by Aptec pursuant to Section 6.03 of the Merger
Agreement. Each such reimbursement amount shall be grossed up to take into
account the amount of additional tax payable by the Statement Filer as a
consequence of receipt of any reimbursement as provided above plus the amount of
any gross-up received pursuant to this sentence. Any claim for indemnification
under this Section 5.11 must be made within thirty (30) days after the
expiration of the statute of limitations on the assessment of the tax for the
relevant year.
(b) A "Statement Filer" is a person who files a Gain
Recognition Agreement under Treas. Reg. ss. 1.367(a)-8 with respect to any NRC
Exchange.
(c) Any amount due pursuant to Section 5.11(a) with respect to
the payment of interest and penalties paid to the United States Government by
the Statement Filer(s) shall be paid to the Statement Filer(s) within ten (10)
Business Days after the delivery to EM of a calculation in reasonable detail of
the interest and penalties paid and proof of payment of the interest and
penalties. Any amounts due pursuant to Section 5.11(a) with respect to the tax
on any gross-up shall be paid to the Statement Filer(s) within ten (10) Business
Days after the delivery to EM of a calculation in reasonable detail of the
amount of income tax due as the result of the receipt of any such gross-up and
proof of payment of the tax.
(d) "Hypothetical Interest" with respect to tax paid by any
Statement Filer shall mean an amount of interest calculated at the rate of Prime
(as defined below) plus three percentage points compounded monthly for the
period beginning with the date on which an amount of tax is paid by the
Statement Filer(s) to United States Government and ending on the End Date.
Hypothetical Interest due hereunder to the Statement Filer(s) shall be paid in
arrears on the first day of each quarter annual period following the Tax Payment
Date.
(e) "Prime" for purposes of this Agreement shall mean the
Prime Rate as published in the Wall Street Journal on the Closing Date.
35
(f) No limitation set forth in this Agreement except in this
Section 5.11 or any other agreement with respect to time or amount of
indemnification due any party hereunder shall apply to amounts due under this
Section 5.11.
Section 5.12 Interest on claims. Any claims for
indemnification under this Article V which are not paid when due will bear
interest at the rate of seven percent (7%) per annum from thirty (30) days after
the date such claims are first made until such claims are paid.
Section 5.13 Disputes. Any disputes with respect to claims for
indemnification under this Article V shall be subject to the jurisdiction of the
courts as provided in Section 9.06. The party prevailing on a claim to enforce
its right to indemnification hereunder shall be entitled to collect its costs of
the action, including attorneys' fees and court costs.
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.01 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties will use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done and to assist and cooperate with the other parties in doing, as promptly as
practicable, all things necessary or advisable under applicable laws and
regulations to ensure that the conditions set forth in Article VII are satisfied
and to consummate and make effective the transactions contemplated by this
Agreement. If at any time after the Closing Date any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional instruments, the proper officers and
directors of each party will take all such action.
Section 6.02 Consents. Each of the parties will use its
reasonable best efforts to obtain as promptly as practicable all consents,
waivers, approvals, authorizations or permits of any Governmental Entity or any
other Person required in connection with the consummation of the transactions
contemplated by this Agreement.
Section 6.03 Public Announcements. None of Aptec, NRC or the
Sellers will issue any press release or make any other public announcement
concerning this Agreement, the Merger or the transactions contemplated hereby
without the prior consent of EM, except that any party may make such public
disclosure that it believes in good faith and upon the reasoned advice of
counsel to be required by law (in which event such party will notify EM prior to
making such disclosure).
Section 6.04 Notification of Certain Matters. The Sellers
promptly will notify EM of: (i) the occurrence or non-occurrence of any fact or
event that would be reasonably likely to cause any (x) representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date or (y) material
covenant, condition or agreement contained in this Agreement not to be complied
36
with or satisfied in all material respects; and (ii) any failure of NRC, Aptec
or the Sellers to comply with or satisfy in any material respect any covenant,
condition or agreement contained in this Agreement.
Section 6.05 Access to Information. From the date hereof until
the Closing Date, Aptec, NRC and the Sellers will, and will cause each of their
respective Subsidiaries to: (i) give EM and its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of such party and
its Subsidiaries as EM reasonably may request, and furnish EM with such
financial and operating data and other information as EM reasonably may request;
and (ii) instruct such parties' employees, counsel and financial advisors to
cooperate with EM in its investigation of the business of such party and its
Subsidiaries.
Section 6.06 Covenants Regarding Section 367.
(a) Before January 1, 2005, EM will cause Aptec not to dispose
of any of the shares of Newco stock owned following the Merger, except in (i)
dispositions that do not constitute exchanges for United States federal income
tax purposes and (ii) dispositions in which gain is not required to be
recognized for United States federal income tax purposes;
(b) Before January 1, 2005, EM will cause Newco not to dispose
of substantially all, within the meaning of Section 368(a)(1)(C) of the Code, of
the assets of NRC, received in the Merger except for dispositions described in
Treas. Reg. ss. 1.367(a)-8(e)(3)(B); and
(c) In the event Aptec disposes of the stock of Newco or Newco
disposes of substantially all of the assets of NRC received in the Merger, in
either case in a transaction not violating this Section 6.06, EM will cause
Aptec to cooperate with the Xxxxxxx Holders in complying with the requirements
of Section 367 of the Code and the regulations promulgated thereunder, and shall
provide the Xxxxxxx Holders with any information that is within the control of
Aptec or Newco and that is reasonably requested to enable them to comply with
such statute and regulations.
ARTICLE VII
CONDITIONS TO THE TRANSACTIONS
Section 7.01 Conditions to the Obligations of Each Party. The
respective obligations of the parties to consummate the Transactions are subject
to the satisfaction, at or prior to the Closing Date, of each of the following
conditions:
(a) The shareholders of NRC shall have approved and adopted
the Merger Agreement and the Merger pursuant to the requirements of NRC's
articles of incorporation and by-laws and applicable law, all conditions to the
Merger shall have been fulfilled and the Merger shall have been consummated at
the Effective Date.
37
(b) The consummation of the Merger and the Transactions shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity entered after the parties have used their reasonable best efforts to
prevent such entry. There shall not have been any statute, rule or regulation
enacted, promulgated or deemed applicable to the Merger or the Transactions by
any Governmental Entity that prevents the consummation of the Merger or the
Transactions.
(c) The governmental and other consents required to be
obtained in connection with the Merger and the Transactions, as set forth in
Schedule 7.01, shall have been obtained or waived.
(d) The Escrow Agreements in the form of Exhibit D1 and D2
hereto shall have been executed and delivered by all parties thereto.
(e) The Shareholders Agreement in the form of Exhibit E hereto
shall have been executed and delivered by all parties thereto.
Section 7.02 Conditions Precedent to the Obligations of EM.
The obligations of EM to consummate the Transactions are subject to the
satisfaction, at or prior to the Closing Date, of each of the following further
conditions:
(a) Each of the representations and warranties of the Sellers
contained in this Agreement shall have been true and correct in all respects
when made and on and as of the Closing Date as if made on and as of such date,
and the Sellers shall have performed and complied in all material respects with
all agreements and covenants required to be performed and complied with by each
of them under this Agreement on or prior to the Closing Date. EM shall have
received certificates to such effect from the Xxxxx Holders and the Xxxxxxx
Holders, in the form of Exhibits F and G, respectively.
(b) Xx. Xxxx Xxxxxxx shall have duly executed and delivered
the Non-Competition Employment and Consulting Agreement in the form of Exhibit H
hereto.
(c) Xx. Xxxxxx Xxxxx shall have executed and delivered the
Non- Competition and Employment Agreement in the form of Exhibit I hereto.
(d) EM shall have received instruments of transfer and share
certificates representing the shares of Aptec Common Stock acquired pursuant to
Article I, in form reasonably acceptable to EM's counsel.
(e) EM shall have received a favorable opinion of Wolf, Block,
Xxxxxx and Xxxxx-Xxxxx LLP, dated the Closing Date, with respect to matters set
forth in Exhibit J and a favorable opinion of Torkin Xxxxx Xxxxx & Xxxxx, dated
the Closing Date, with respect to the matters set forth in Exhibit K.
(f) The loan to Xxxx Xxxxxxx from NRC shall have been repaid
in full.
38
Section 7.03 Conditions Precedent to the Obligations of the
Xxxxx Holders. The obligations of the Xxxxx Holders to consummate the
Transactions is subject to the satisfaction, at or prior to the Closing Date, of
each of the following further conditions:
(a) Each of the representations and warranties of EM contained
in this Agreement shall have been true and correct in all respects when made and
on and as of the Closing Date as if made on and as of such date EM shall have
performed and complied in all material respects with all agreements and
covenants required to be performed and complied with by it under this Agreement
on or prior to the Closing Date and the Xxxxx Holders shall have received a
certificate to such effect.
(b) Xx. Xxxxxx Xxxxx shall have received the Non Competition
and Employment Agreement in the form of Exhibit I duly executed by Aptec.
Section 7.04 Conditions Precedent to the Obligations of the
Xxxxxxx Holders. The obligations of the Xxxxxxx Holders to consummate the
Transactions is subject to the satisfaction, at or prior to the Closing Date, of
each of the following further conditions:
(a) Each of the representations and warranties of EM contained
in this Agreement shall have been true and correct in all respects when made and
on and as of the Closing Date as if made on and as of such date EM shall have
performed and complied in all material respects with all agreements and
covenants required to be performed and complied with by it under this Agreement
on or prior to the Closing Date and the Xxxxxxx Holders shall have received a
certificate to such effect.
(b) Xx. Xxxx Xxxxxxx shall have received the Non-Competition
Employment and Consulting Agreement in the form of Exhibit H duly executed by
Aptec.
(c) Xxxx Xxxxxxx and Xxxxxxx Xxxxxxx shall have received
releases from their obligations as guarantors of the loan obligations of NRC and
its Subsidiaries to First Union National Bank in form and substance reasonably
acceptable to their counsel.
(d) NRC shall have assigned and transferred to Xx. Xxxx
Xxxxxxx or his designee all of NRC's right, title and interest in that certain
insurance policy on the life of Xxxxxxx Xxxxxxx described on Schedule 2.14 of
the Merger Agreement, in consideration for the payment by Xxxx Xxxxxxx at
Closing to NRC of $142,404.49 (through May 1999) plus all premiums paid through
the Closing Date.
39
ARTICLE VIII
TERMINATION; OTHER PROVISIONS
Section 8.01 Termination. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Closing Date:
(a) by mutual written agreement of the Sellers and EM;
(b) by any of the Sellers or EM, upon termination of the
Merger Agreement or in the event the Transactions have not been
consummated on or before November 24, 1999; provided that the right to
terminate this Agreement pursuant to this Section 8.01(b) will not be
available to any party whose breach of any provision of the Merger
Agreement or of this Agreement results in the failure of the Merger or
of the Transactions to be consummated by such time;
(c) by any of the Sellers or EM, if there shall be any law or
regulation that makes consummation of the Transactions illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining the parties from consummating the Transactions is entered and
such judgment, injunction, order or decree shall become final and
non-appealable.
The party desiring to terminate this Agreement pursuant to
this Section 8.01 shall give notice of such termination to the other party.
Section 8.02 Effect of Termination. If this Agreement is
terminated pursuant to Section 8.01, this Agreement will become void and of no
effect with no liability on the part of any party hereto or its respective
directors, officers or shareholders, except that the agreements contained in
Section 8.03 will survive the termination hereof. Nothing herein shall relieve
any party from liability for any breach of this Agreement.
Section 8.03 Assessment and Remediation of Environmental
Matters.
(a) Promptly after the execution of this Agreement, EM will
retain the services of a firm (the "Consulting Firm") to conduct an
environmental assessment and investigation of NRC's facility located in
Warrington, PA (the "Property") in accordance with protocols and methods
approved by EM. The purpose of the assessment and investigation shall be to
ascertain the nature and extent of any environmental conditions on the Property,
including, inter alia, those that may be associated with the presence of
underground storage tanks on the Property.
(b) The Consulting Firm will perform such tests, soil borings,
samplings, analyzes and other procedures as EM and the Consulting Firm see fit
to determine whether or not there exists any contamination of the buildings,
vegetation soil or groundwater on the Property.
40
(c) All fees, expenses and costs of any kind of the Consulting
Firm and agents, contractors, laboratories and others retained by or for EM in
connection with the environmental assessment and investigation ("Assessment
Costs") of the Property and sampling, testing and analyzing will be promptly
paid by NRC, whether or not the transactions contemplated by this Agreement are
consummated.
(d) In the event that the results of the tests and procedures
described in paragraph b above indicate, in the opinion of the Consulting Firm,
that cleanup, removal, containment or other remediation or corrective action
(collectively, "Remediation") is necessitated by any Environmental Requirement,
the Consulting Firm shall establish an estimate of the probable cost of such
Remediation (the "Remediation Estimate"). The Remediation Estimate will be
provided to all parties.
(e) NRC shall bear the first $75,000 of Assessment Costs and
Remediation Estimate (together, the "Total Costs") and up to an additional
amount of $425,000 of such Total Costs shall be deducted at the Closing from the
amounts payable to the Public Shareholders and the Xxxxxxx Holders under the
Merger Agreement and this Agreement on a basis consistent with the Allocation of
the value of the transactions contemplated in the Merger Agreement and this
Agreement.
(f) In the event that the Total Costs exceed $500,000 (any
such excess, the "Excess Remediation Costs"), EM or the Xxxxxxx Holders may
elect to terminate this Agreement by written notice to Aptec and NRC within five
(5) Business Days of the EM's receipt of the Remediation Estimate; provided
that, no such termination shall become effective if, within two (2) Business
Days of their receipt of EM's termination notice, the Xxxxxxx Holders and NRC
give written notice to EM and Aptec that they consent to a reduction of the
consideration to be paid at Closing to the Xxxxxxx Holders and the Public
Shareholders in the Merger and this Agreement on a basis consistent with the
Allocation of the value of the transactions contemplated in the Merger Agreement
and this Agreement by the amount of the Excess Remediation Costs. In the event
that the Xxxxxxx Holders exercise their right of termination as aforesaid, they
shall pay to EM $125,000 upon such termination.
(g) NRC and the Xxxxxxx Holders shall authorize the Consulting
Firm, its agents, contractors and their respective employees unrestricted access
to the Property to conduct their investigation, testing, borings and other
procedures and shall cooperate with and promptly provide to EM and the
Consulting Firm, and cause NRC's employees to provide, all information and data
in their custody or control deemed necessary or relevant by EM or the Consulting
Firm.
(h) Aptec agrees to substantially comply with the
recommendations of the Consulting Firm and to proceed with the Remediation up to
the amounts provided in paragraphs (e) or (f) above.
Section 8.04 Fees and Expenses. Each party shall bear its own
fees, costs and expenses (including accounting, auditing, and attorneys' fees)
incurred by such party in connection with the Merger, this Agreement and the
Transactions; provided, however, that the Xxxxxxx Holders will pay or reimburse
NRC or Aptec at the Closing for all such fees, costs and expenses incurred or
payable by NRC for services rendered from and after April, 1999 which are in
excess of $350,000 in the aggregate.
41
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or by
facsimile to the respective parties as follows:
If to Aptec or the Xxxxx Holders, to:
Aptec Instruments Ltd.
Xxxx 00X Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxx
with a copy to:
Torkin, Manes, Xxxxx & Arbus
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq.
If to NRC or the Xxxxxxx Holders, to:
Nuclear Research Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxx
with a copy if on or before July 4, 1999 to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
42
and if after July 4, 1999 with a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
and a copy to:
Adelman, Lavine, Gold and Xxxxx
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
If to EM:
Eurisys Mesures SA
ZA de L'Observatoire
4 Avenue Des Fresnes
Montigny Le Bretonneux
Xx. Xxxxxxx Xxxxxxxx Xxxxx 00000
Xxxxxx
Facsimile: 011-33-1-39-48-57-91
Attention: Xx. Xxxxxxxxx Xxxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or such other address or facsimile number as such party may specify for the
purpose by written notice to the other parties hereto. Each such notice, request
or other communication will be effective: (i) if delivered in person, when such
delivery is made at the address specified in this Section 9.01; (ii) if
delivered by overnight courier, the next Business Day after such delivery is
sent to the address specified in this Section 9.01; or (iii) if delivered by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section 9.01 and the appropriate confirmation is received.
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Section 9.02 Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
Section 9.03 Extension; Waiver. At any time prior to the
Closing Date, the parties may: (i) extend the time for the performance of any of
the obligations or other acts of any other party; (ii) waive any inaccuracies in
the representations and warranties contained herein by any other party or in any
document, certificate or writing delivered pursuant hereto by any other party;
or (iii) waive compliance with any of the agreements of any other party or with
any conditions to its own obligations. Any agreement on the part of any party to
any such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 9.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties, except that EM
may assign this Agreement to any Affiliate of EM provided that such assignment
shall not relieve EM of its obligations hereunder, and after the Closing EM may
assign its rights hereunder without restriction provided, however, that no such
assignment will relieve EM of its obligations under this Agreement and the
Exhibits hereto.
Section 9.05 Governing Law. This Agreement will be construed
in accordance with and governed by the law of the State of New York applicable
to agreements entered into and to be performed wholly within such State.
Section 9.06 Jurisdiction. Each of the parties: (i) consents
to submit itself to the personal jurisdiction of any federal or state court
located in the State of New York in the event any dispute arises out of this
Agreement; (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court; and (iii)
agrees that it will not bring any action relating to this Agreement in any court
other than a federal or state court sitting in the State of New York.
Section 9.07 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement will become effective when each party shall have
received counterparts hereof signed by all of the other parties.
Section 9.08 Entire Agreement. This Agreement, the Exhibits
and Schedules hereto and the other agreements referred to herein or executed
contemporaneously herewith constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
or therein has been made or relied upon by any party.
44
Section 9.09 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.10 Severability. In the event that any one or more
of the provisions contained in this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
Section 9.11 EM as sole beneficiary of representations and
warranties. The representations and warranties made by the Xxxxx Holders and the
Xxxxxxx Holders in this Agreement are made solely for the benefit of EM, its
successors and assigns. Nothing in this Agreement shall be deemed to create any
rights or remedies to the benefit of the Xxxxx Holders or the Xxxxxxx Holders
against each other or against Aptec or NRC which shall survive the Closing. In
consideration for the payment of the Closing Xxxxxxx Payment, the Xxxxxxx
Holders hereby affirmatively waive and relinquish any rights to make any claims
whatsoever against Aptec or Newco before and after the Closing, except for their
rights under agreements relating to the Transactions.
Section 9.12 Additional Definitions.
(a) When used in this Agreement, the following terms have the
following meanings:
"Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person.
"Book Value" means total assets less total liabilities
calculated in accordance with GAAP.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banks in the State of New York are authorized or
obligated to be closed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Dollars" or "$" means United States dollars.
"C$" means Canadian dollars.
"GAAP" means generally accepted accounting principles in
effect in the United States of America or Canada, as the case may be, as of the
date of the applicable determination.
"Governmental Entity" means any government or subdivision
thereof, or any administrative, governmental or regulatory authority, agency,
commission, tribunal or body, domestic, foreign or supranational.
45
"knowledge of Aptec" means any fact or matter which is known
by any officer or director of Aptec, or should have been known by such person
after due inquiry.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect" means any change or event that
individually or when taken together with all other changes and events, is or is
reasonably likely to be materially adverse to the business, assets, liabilities,
operations or condition (financial or otherwise) or prospects of Aptec and its
Subsidiaries, taken as a whole, other than any such effect arising out of or
resulting from the transactions contemplated by this Agreement or general
economic, financial, or market conditions. A Material Adverse Effect shall be
conclusively deemed to exist if there occurs any event which causes or may
reasonably be expected to cause or result in estimable monetary loss which,
individually or when aggregated with all other events, exceeds $50,000.
"Aptec Subsidiary" means any Subsidiary of Aptec, excluding in
all cases NRC and Subsidiaries of NRC.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
are directly or indirectly owned or controlled by such Person.
"Transactions" means the transactions contemplated in Article
I of this Agreement.
46
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be duly executed by its respective authorized officer as of the day
and year first above written.
EURISYS MESURES SA APTEC INSTRUMENTS LTD.
By: /s/ Xxxxxxxxx Xxxxx By: /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------
Name: Xxxxxxxxx Xxxxx Name: Xxxxxx Xxxxx
Title: Chairman & CEO Title: President
APTEC ACQUISITION CORP. NUCLEAR RESEARCH CORPORATION
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------- ---------------------------
Name: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxxx
Title: President Title: President
XXXXXXX HOLDERS XXXXX HOLDERS
Xxxx X. Xxxxxxx Xxxxxx Xxxxx
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx Xxxxxxxx Xxxxx
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxxx Xxxxx
----------------------------- ---------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxxx Xxxxx
The Xxxxx Family Trust
By: /s/ Xxxx Xxxxxxx
---------------------------
Name: Xxxx Xxxxxxx
Title: Trustee
By /s/ Xxxxxx Xxxxx
---------------------------
Xxxxxx Xxxxx, Trustee
1356359 Ontario Inc.
By: /s/ Xxxxxx Xxxxx
---------------------------
Name: Xxxxxx Xxxxx
Title: President
47
