Exhibit 2.1
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of July 31, 2000.
BETWEEN:
XXXX XXXXXXXXX ("Xxxxxxxxx")
and XXXXXXX XXXXXXXXX
("MacArthur")
(collectively, the "Vendors")
- and -
ARS NETWORKS, INCORPORATED
a corporation incorporated under the laws of the State of New Hampshire
(the "Purchaser")
- and -
T & T DIESEL POWER LIMITED
a corporation incorporated under the laws of the Province of Ontario,
(the "Corporation")
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties covenant and
agree as follows:
ARTICLE I.
INTERPRETATION
1.1. DEFINED TERMS
For the purpose of this Agreement, unless the context otherwise
requires, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:
"Act" means the BUSINESS CORPORATIONS ACT (Ontario) as in effect on the
date hereof;
"Affiliate" has the meaning attributed to that term in the Act;
"Arbitrator" has the meaning set out in section 2.4;
"ARS Shares" means 200,000 common shares in the capital of the
Purchaser;
"Associate" has the meaning attributed to that term in the Act;
"Annual Financial Statements" means the unaudited consolidated financial
statements of the Corporation as at and for the financial years ended July 31,
1998 and 1999, including the notes thereto and the notice to reader thereon, a
copy of which is annexed hereto as Schedule 1;
"Business" means the business currently and heretofore carried on by the
Corporation consisting of manufacturing and assembling of diesel generators and
ancillary equipment (including, without limitation, trailers and enclosures)
and, as ancillary thereto, product support;
"Business Day" means any day (other than a Saturday or a Sunday) on
which the main branch of CIBC Bank in Guelph, Ontario, is open for business;
"Claim" has the meaning set out in section 9.3;
"Closing" means the completion of the Transaction on the Closing Date;
"Closing Balance Sheet" has the meaning set out in section 2.3;
"Closing Certificates" has the meaning set out in subsection 5.1(a);
"Closing Date" means July 31, 2000 or such other date as may be mutually
agreed upon by the Vendors and the Purchaser;
"Closing Financial Statements" has the meaning set out in section 2.3;
"Closing Income Statement" has the meaning set out in section 2.3;
"Contract" means any agreement, indenture, contract, lease, deed of
trust, licence, option, instrument or other commitment, whether written or oral;
"Direct Claim" has the meaning set out in section 9.3;
"Employee Plans" has the meaning set out in section 3.34;
"Encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature, adverse
claim, exception, reservation, easement, right of occupation, any matter capable
of registration against title, option, right of pre-emption, privilege or any
Contract to create any of the foregoing;
"Environmental Laws" has the meaning set out in subsection 3.33(a);
"Environmental Permits" has the meaning set out in subsection 3.33(b);
"Escrow Agent" means the law firm of Pallett Valo;
"ETA" means the Excise Tax Act (Canada), as amended from time to time;
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"Financial Statements" means the Annual Financial Statements and the
Interim Financial Statements;
"GST" means any and all taxes payable under Part IX of the ETA or under
any provincial legislation similar to Part IX of the ETA;
"Hazardous Substances" has the meaning set out in subsection 3.33(a);
"Indemnified Party" has the meaning set out in section 9.3;
"Indemnifying Party" has the meaning set out in section 9.3;
"Intellectual Property" has the meaning set out in section 3.16;
"Interim Financial Statements" means the unaudited consolidated
financial statements of the Corporation as at and for the month periods ended,
April 30, 2000, copies of which financial statements are annexed hereto as
Schedule 2;
"Laws" means all laws, statutes, ordinances, regulations, by-laws,
rules, judgments, decrees or orders of governmental authorities, whether
federal, provincial, state or municipal;
"Leased Property" has the meaning set out in section 3.1 1;
"Leases" has the meaning set out in section 3. 13;
"Licences" has the meaning set out in section 3.20;
"Losses", in respect of any matter, means all claims, demands,
proceedings, losses, damages, liabilities, deficiencies, costs and expenses
(including, without limitation, all legal and other professional fees and
disbursements, interests, penalties and amounts paid in settlement) arising
directly or indirectly as a consequence of such matter;
"Permitted Encumbrances" means:
(a) liens for taxes, assessments and governmental charges due and
being contested in good faith and diligently by appropriate proceedings (and for
the payment of which adequate provision has been made);
(b) servitudes, easements, restrictions, rights-of-way and other
similar rights in real property or any interest therein, provided the same are
not of such nature as to materially adversely affect the use of the property
subject thereto by the Corporation;
(c) liens for taxes either not due and payable or due but for
which notice of assessment has not been given;
(d) undetermined or inchoate liens, charges and privileges
incidental to current construction or current operations and statutory liens,
charges, adverse claims, security interests or encumbrances of any nature
whatsoever claimed or held by any governmental authority that have not at the
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time been filed or registered against the title to the asset or served upon the
Corporation pursuant to law or that relate to obligations not due or delinquent;
(e) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms or any lease and liens or rights reserved in
any lease for rent or for compliance with the terms of such lease;
(f) security given in the ordinary course of the Business to any
public utility, municipality or government or to any statutory or public
authority in connection with the operations of the Business, other than security
for borrowed money;
(g) the reservations in any original grants from the Crown of any
real property or interest therein and statutory exceptions to title that do not
materially detract from the value of the real property concerned or materially
impair its use in the operation of the Business; and
(h) those encumbrances described in Schedule 4;
"Purchase Price" has the meaning set out in section 2.2;
"Purchased Shares" has the meaning set out in section 2.1;
"Real Property" has the meaning set out in section 3. 11;
"Shares" means all of the issued shares in the capital of the
Corporation;
"Tax Act" means the Income Tax Act (Canada), as amended from time to
time;
"Third Party" has the meaning set out in section 9.5;
"Third Party Claim" has the meaning set out in section 9.3;
"Time of Closing" means 10:00 a.m. Guelph Time on the Closing Date; and
"Transaction" means the transaction of purchase and sale of the
Purchased Shares contemplated by this Agreement.
1.2. CURRENCY
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are expressed in Canadian funds.
1.3. SECTIONS AND HEADINGS
The division of this Agreement into sections and the insertion of
headings are for convenience of reference only and shall not affect the
interpretation of this Agreement. Unless otherwise indicated, any reference in
this Agreement to a section or a Schedule refers to the specified section of or
Schedule to this Agreement.
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1.4. NUMBER, GENDER AND PERSONS
In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include all
genders and words importing persons shall include individuals, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities.
1.5. ACCOUNTING PRINCIPLES
Any reference in this Agreement to generally accepted accounting
principles refers to generally accepted accounting principles as approved from
time to time by the Canadian Institute of Chartered Accountants or any successor
institute.
1.6. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral,
including, without limitation, that certain letter of intent dated May 1, 2000,
between the Purchaser and the Vendors (save and except for the provisions under
the heading "Confidentiality" in the said letter of intent). There are no
conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.7. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
1.8. APPLICABLE LAW
This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of the Province of Ontario and the federal laws of
Canada applicable therein, and each party hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
1.9. SEVERABILITY
If any provision of this Agreement or any part of any provision of this
Agreement, is held to be invalid, illegal or unenforceable by a court of
competent jurisdiction, such provision or part shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
balance of any provision of this Agreement absent such part and such invalid,
illegal or unenforceable provision or part shall be deemed to be severed from
this Agreement and this Agreement shall be construed and enforced as if such
invalid, illegal or unenforceable provision or part had never been inserted in
this Agreement.
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1.10. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and, where the context so permits, their respective
successors and permitted assigns. Subject to section 10.7, no party may assign
any of its rights or obligations hereunder without the prior written consent of
the other parties.
1.11. AMENDMENT AND WAIVERS
No amendment or waiver of any provision of this Agreement shall be
binding on any party unless consented to in writing by such party. No waiver of
any provision of this Agreement shall constitute a waiver of any other
provision, nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided.
1.12. SCHEDULES
The following Schedules are attached to and form part of this Agreement:
Schedule 1 Annual Financial Statements
Schedule 2 Interim Financial Statements
Schedule 3 Location of Assets
Schedule 4 Permitted Encumbrances
Schedule 5 Owned and Leased Real Property
Schedule 6 Intellectual Property
Schedule 7 Insurance Policies
Schedule 8 Material Contracts
Schedule 9 Licences and Permits
Schedule 10 Regulatory Consents
Schedule 11 Third Party Consents
Schedule 12 Legal and Regulatory Proceedings
Schedule 13 Accounts and Attorneys
Schedule 14 Directors and Officers
Schedule 15 Related Party Transactions
Schedule 16 Environmental Matters
Schedule 17 Employee Matters
Schedule 18 Major Customers
Schedule 19 Product Warranties
Schedule 20 Employment Agreement (Xxxxxxxxx)
Schedule 20A Employment Agreement (MacArthur)
Schedule 21 Form of Opinion of Vendor's Lawyers
Schedule 22 Form of Release - From Vendors to Corporation
Schedule 23 Form of Opinion of Purchaser's, US Lawyers
Schedule 24 Form of Opinion of Purchaser's, Ontario Lawyers
Schedule 25 Escrow Agreement
Schedule 26 Promissory Note
Schedule 27 Litigation Involving the Purchaser
Schedule 28 Form of Release - From Corporation to Vendors
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For greater certainty (a) all information which is disclosed on one
Schedule shall be deemed to be disclosed on all Schedules; and (b) the
disclosure of information on the Schedules shall not be deemed to have
established a standard of materiality.
ARTICLE II.
PURCHASE AND SALE OF PURCHASED SHARES
2.1. PURCHASE AND SALE OF PURCHASED SHARES
Subject to the terms and conditions hereof, the Vendors covenant and
agree to sell, assign and transfer to the Purchaser and the Purchaser covenants
and agrees to purchase from the Vendors all of the issued and outstanding shares
owned by the Vendors in the Corporation (the "Purchased Shares"), namely:
NAME NUMBER AND CLASS OF SHARES
---- --------------------------
Xxxxxxxxx 100 Class A common
MacArthur 100 Class B common
The Purchased Shares shall be delivered to the Escrow Agent on Closing
subject to and in accordance with the terms of the Escrow Agreement in the form
attached as Schedule 25.
2.2. PURCHASE PRICE
The purchase price for the Purchased Shares shall be the sum of
$621,796.00 (the "Purchase Price"). The Purchase Price shall be satisfied by the
Purchaser on the Closing Date as follows:
(a) by payment of the sum of $75,000.00 to MacArthur and
$75,000.00 to Xxxxxxxxx, by way of certified cheque or bankers draft;
(b) by issuing the ARS Shares to the Vendors, 100,000 to be
issued in the name of MacArthur and 100,000 in the name of Xxxxxxxxx. The
Vendors acknowledge and agree that while a notional value of $300,000.00 has
been attributed to the ARS Shares, the Purchaser makes no representation or
warranty to the Vendors as to the value of ARS Shares (but, for greater
certainty, this acknowledgement and agreement shall not diminish or impair the
Vendors' rights under section 7 of the Escrow Agreement); and
(c) by delivery to the Vendors of a Promissory Note (the
"Promissory Note") substantially in the form set out in Schedule 26 securing the
principal sum of $171,796.00 (the "Principal Amount").
2.3. CLOSING FINANCIAL STATEMENTS
As soon as is practicable, and in any event not later than 60 calendar
days following the Closing Date, the Vendors shall deliver to the Purchaser a
consolidated balance sheet for the Corporation as of the close of business on
the Closing Date (the "Closing Balance Sheet") and a consolidated income
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statement for the Corporation for the period from April 30, 2000 to the Closing
Date (the "Closing Income Statement") each of which shall be reported on by
Xxxxxx Wierre, Chartered Accountant. The Closing Balance Sheet and the Closing
Income Statement (collectively, the "Closing Financial Statements") shall be
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the Financial Statements and shall present fairly the
consolidated financial position of the Corporation as at the Closing Date and
the consolidated sales, earnings and results of operations for the period
between April 30, 2000 and the Closing Date. If the Purchaser wishes the Closing
Financial Statements to be audited, they shall be responsible for all costs
associated with having the Closing Financial Statements audited.
2.4. DISPUTES CONCERNING CLOSING FINANCIAL STATEMENTS
The parties, or their respective auditors, may dispute any aspect of the
Closing Financial Statements by notice in writing given to the other within two
weeks following the delivery of the Closing Financial Statements to the parties.
Unless such dispute is not resolved promptly by agreement, the Vendors and the
Purchaser may request each of the Corporation's accountant and the Purchaser's
accountant to select jointly one of Price Waterhouse Coopers or KPMG to
arbitrate the dispute. If the Corporation's accountant and the Purchaser's
accountant are unable to agree as to the firm that will arbitrate the dispute,
one of the two firms proposed above shall be chosen by lot by counsel for the
Purchaser. The firm chosen shall designate a partner (the "Arbitrator") to
determine the matter in dispute as a single arbitrator in accordance with the
ARBITRATIONS ACT, 1991 (Ontario). The cost of the arbitration shall be in the
discretion of the Arbitrator. The decision of the Arbitrator with respect to any
matter in dispute (including as to all procedural matters and any decision as to
costs) shall be final and binding on the Vendors and the Purchaser and shall not
be subject to appeal by either party. Upon agreement with respect to all matters
in dispute, or upon a decision of the Arbitrator with respect to all matters in
dispute, such amendments shall be made to the Closing Financial Statements as
may be necessary to reflect such agreement or such decision, as the case may be.
In such event, references in this Agreement to the Closing Financial Statements,
Closing Balance Sheet and Closing Income Statement shall refer to the Closing
Financial Statements, as so amended.
2.5. PURCHASE PRICE ADJUSTMENT
Intentionally Deleted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE VENDORS AND THE CORPORATION
The Vendors and the Corporation jointly and severally represent and
warrant to the Purchaser as follows and acknowledge that the Purchaser is
relying on such representations and warranties in connection with its purchase
of the Purchased Shares:
3.1. ORGANIZATION
The Corporation is duly incorporated and organized and validly
subsisting under the laws of the Province of Ontario and has the corporate power
to own or lease its property, to carry on the Business as now being conducted by
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it, to enter into this Agreement and to perform its obligations hereunder. The
Corporation is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the Business or the property and assets
owned or leased by it makes such qualification necessary.
3.2. AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by each
of the Vendors and the Corporation and is a legal, valid and binding obligation
of each of the Vendors and the Corporation, enforceable against the Vendors or
the Corporation, as the case may be, by the Purchaser in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency and other
laws affecting the rights of creditors generally and except that equitable
remedies may be granted only in the discretion of a court of competent
jurisdiction.
3.3. NO OTHER AGREEMENTS TO PURCHASE
No person other than the Purchaser has any written or oral agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Vendors of any of the Purchased Shares.
3.4. AUTHORIZED AND ISSUED CAPITAL
The authorized capital of the Corporation consists of an unlimited
number of Class A Common Shares, and an unlimited number of Class B Common
Shares of which only 100 Class A Shares and 100 Class B Shares have been duly
issued and are outstanding as fully paid and nonassessable. The Purchased Shares
represent all of the issued and outstanding shares in the capital of the
Corporation.
3.5. OPTIONS
No person, firm or corporation has any agreement or option or any right
or privilege (whether by law, pre-emptive or contractual) capable of becoming an
agreement, including convertible securities, warrants or convertible obligations
of any nature, for the purchase, subscription, allotment or issuance of any
unissued shares or other securities of the Corporation.
3.6. OWNERSHIP OF PURCHASED SHARES
The Vendors are the beneficial owners of record of the Purchased Shares,
with good and marketable title thereto, free and clear of all Encumbrances and,
without limiting the generality of the foregoing, none of the Purchased Shares
are subject to any voting trust, shareholder agreement or voting agreement.
3.7. NO SUBSIDIARIES
The Corporation does not own and does not have any agreements of any
nature to acquire, directly or indirectly, any shares in the capital of or other
equity or proprietary interests in any person, firm or corporation, and the
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Corporation does not have any agreements to acquire or lease any other business
operations.
3.8. NO VIOLATION
The execution and delivery of this Agreement by the Vendors and the
Corporation and the consummation of the transactions herein provided for will
not result in either:
(a) the breach or violation of any of the provisions of, or
constitute a default under, or conflict with or cause the acceleration of any
obligation of the Vendors or the Corporation under:
(i) any Contract to which the Vendors or the Corporation
is a party or by which any of them is, or either of their properties are, bound;
(ii) any provision of the constating documents, by-laws or
resolutions of the board of directors (or any committee thereof) or shareholders
of the Corporation;
(iii) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over the Vendors or the
Corporation;
(iv) any licence, permit, approval, consent or
authorization held by the Vendors or the Corporation or necessary to the
ownership of the Purchased Shares or the operation of the Business; or
(v) to the best of the Vendors' knowledge, any applicable
law, statute, ordinance, regulation or rule; or
(b) the creation or imposition of any Encumbrance on any of the
Purchased Shares or any of the property or assets of the Corporation, save and
except as contemplated by this Agreement or any of the documents to be delivered
on Closing.
3.9. BUSINESS OF THE CORPORATION
The Business is the only business operation carried on by the
Corporation. During the two years preceding the date of this Agreement, there
has not been any significant interruption of operations (being an interruption
of more than one day) of the Business due to inadequate maintenance of any of
the property and assets owned and used by the Corporation. With the exception of
inventory in transit, all the tangible assets of the Corporation are situate at
the locations set out in Schedule 3.
3.10. TITLE TO PERSONAL AND OTHER PROPERTY
The property and assets of the Corporation (other than the Real
Property) are owned beneficially by the Corporation as the beneficial owner
thereof with a good and marketable title thereto, free and clear of all
Encumbrances other than (a) the Permitted Encumbrances; and (b) the security
interest registered in favour of The Toronto-Dominion Bank and bearing
Registration No. 19991203 1424 1530 6624, which shall be discharged on or prior
to Closing.
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3.11. LOCATION OF REAL PROPERTY
Schedule 5 sets forth the municipal address of the premises leased by
the Corporation (the "Leased Property"). The Corporation does not own or lease
and has not agreed to acquire or lease any real property or interest in real
property and the Leased Property.
3.12. TITLE TO REAL PROPERTY
The Corporation is not the beneficial or registered owner of and has not
agreed to acquire any real property or any interest in any real property.
3.13. REAL PROPERTY LEASES
(a) The Corporation is not a party to any lease or agreement in
the nature of a lease in respect of any real property, whether as lessor or
lessee, other than the leases (the "Leases") described in Schedule 5 relating to
the Leased Property.
(b) Schedule 5 describes each of the Leases.
(c) Except as described in Schedule 5, the Corporation occupies
the Leased Property and has the exclusive right to occupy and use the Leased
Property in accordance with the terms of the Leases.
(d) Each of the Leases is in good standing and in full force and
effect without amendment thereto, and, to the best of the Vendor's knowledge,
neither the Corporation nor any other party thereto is in breach of any
covenants, conditions or obligations contained therein.
(e) The Vendors have provided a true copy of each Lease to the
Purchaser.
3.14. INVENTORIES
The inventories of the Corporation do not include any material items
that are slow moving, below standard quality or of a quality or quantity not
useable or saleable in the normal course of business, the value of which has not
been written down on its books of account to net realizable market value. The
inventory levels of the Corporation have been maintained at such amounts as are
required for the operation of the Business as previously conducted and as
proposed to be conducted, and such inventory levels are adequate therefor.
3.15. ACCOUNTS RECEIVABLE
To the best of the Vendors' knowledge, all accounts receivable, book
debts and other debts due or accruing to the Corporation are bona fide and good
and, subject to an allowance for doubtful accounts that has been reflected on
the books of the Corporation in accordance with generally accepted accounting
principles, are collectible without act-off or counterclaim.
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3.16. INTELLECTUAL PROPERTY
(a) The Corporation does not have any trade names (other than its
corporate name and any derivative or short form thereof), registered trade-xxxx
rights, industrial designs, copyrights (other than unregistered copyright in
mechanical drawings prepared by the Corporation in the ordinary course of its
business) or patents.
(b) Neither the Vendors nor the Corporation:
(i) is aware of a claim of any infringement or breach of
any industrial or intellectual property rights of any other person by the
Corporation; or
(ii) have received any notice that the conduct of the
Business infringes upon or breaches any industrial or intellectual property
rights of any other person.
(c) To the best of the Vendors' knowledge, but without having
made any enquiries (but the failure to make enquiries shall not relieve the
Vendors from responsibility if they have actual knowledge or notice of a
matter), the conduct of the Business does not infringe upon the patents, trade
marks, licences, trade names, business names, copyright or other industrial or
intellectual property rights, domestic or foreign, of any other person.
3.17. INSURANCE
(a) The Corporation has in effect the insurance set out on
Schedule 7.
(b) Schedule 7 sets out all insurance policies (specifying the
insurer, the type of insurance, the policy number and any pending claims
thereunder) maintained by the Corporation on its property and assets or
personnel as of the date hereof and true and complete copies of the most recent
inspection reports, if any, received from insurance underwriters or others as to
the condition of the property and assets of the Corporation.
(c) The Corporation is not in default with respect to any of the
provisions contained in any such insurance policy and has not failed to give any
notice or present any claim under any such insurance policy in a due and timely
fashion.
(d) The Vendors have provided to the Purchaser, or made available
for the Purchaser's inspection, a true copy of each insurance policy referred to
in Schedule 7.
3.18. NO EXPROPRIATION
No property or asset of the Corporation has been taken or expropriated
by any federal, provincial, state, municipal or other authority nor has any
notice or proceeding in respect thereof been given or commenced nor is the
Vendors or the Corporation aware of any intent or proposal to give any such
notice or commence any such proceeding.
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3.19. AGREEMENTS AND COMMITMENTS
Except as described on Schedule 5, 6, 8, 17 and 19, the Corporation is
not a party to or bound by any Contract relating to the property, assets,
Business or operations of the Corporation, including, without limiting the
generality of the foregoing:
(a) any distributor, sales, advertising, agency or manufacture's
representative Contract;
(b) any collective bargaining agreement or other contract with
any labour union;
(c) any continuing Contract for the purchase of materials,
supplies, equipment or services;
(d) any employment or consulting Contract or any other written
Contract with any officer, employee or consultant other than oral Contracts of
indefinite hire terminable by the employer without cause on reasonable notice;
(e) any profit sharing, bonus, stock option, pension, retirement,
disability, stock purchase, medical, dental, hospitalization, insurance or
similar plan or agreement providing benefits to any current or former director,
officer, employee or consultant;
(f) any trust indenture, mortgage, promissory note, loan
agreement, guarantee or other Contract for the borrowing of money or a leasing
transaction of the type required to be capitalized in accordance with generally
accepted accounting principles;
(g) any commitment for charitable contributions;
(h) any Contract for capital expenditures in excess of $10,000.00
in the aggregate;
(i) any Contract for the sale of any assets, other than sales of
inventory to customers in the ordinary course of the Business;
(j) any Contract pursuant to which the Corporation is a lessor of
any machinery, equipment, motor vehicles, office furniture, fixtures or other
personal property;
(k) any confidentiality, secrecy or non-disclosure Contract
(whether the Corporation is a beneficiary or obliger thereunder) relating to any
proprietary or confidential information or any non-competition or similar
Contract;
(l) any licence, franchise or other agreement that relates in
whole or in part to any Intellectual Property;
(m) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any other similar commitment with respect to,
the obligations, liabilities (whether accrued, absolute, contingent or
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otherwise) or indebtedness of any other person (except for cheques endorsed for
collection);
(n) any Contract that expires, or may expire if the same is not
renewed or extended at the option of any person other than the Corporation;
(o) any Contract entered into by the Corporation other than in
the ordinary course of the Business.
The Corporation has performed, or is performing, all of the obligations
required to be performed by it and is entitled to all benefits under, and, to
the best of the Vendors' knowledge, is not in default or alleged to be in
default in respect of, any Contract relating to the Business to which it is a
party or by which it is bound, all such Contracts are in good standing and in
full force and effect, and, to the best of the Vendors' knowledge, no event,
condition or occurrence exists that, after notice or lapse of time or both,
would constitute a material default under any of the foregoing. The Vendors has
provided to the Purchaser, or made available for the Purchaser's inspection, a
true and complete copy of each Contract listed or described on Schedules 5, 6,
8, 17 and 19 and all amendments thereto.
3.20. COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION
(a) To the best of the Vendors' knowledge, but without making
enquiries (but the failure to make enquiries shall not relieve the Vendors from
responsibility if they have actual knowledge or notice of a matter), the
Corporation has complied with all Laws applicable to the Business or the
Corporation.
(b) Schedule 9 sets out a complete and accurate list of all
licences, permits, approvals, consents, certificates, registrations and
authorizations (whether governmental, regulatory or otherwise) (the "Licences")
held by or granted to the Corporation, and there are no other licences, permits,
approvals, consents, certificates, registrations or authorizations necessary to
carry on the Business or to own or lease any of the property or assets utilized
by the Corporation.
(c) Each Licence is valid, subsisting and in good standing and
the Corporation is not in default or breach of any Licence and, to the knowledge
of the Vendors, no proceeding is pending or threatened to revoke or limit any
Licence.
(d) The Vendors have provided a true and complete copy of each
Licence and all amendments thereto to the Purchaser, or made same available for
the Purchaser's inspection.
3.21. CONSENTS AND APPROVALS
(a) There is no requirement on the part of the Vendors or the
Corporation to make any filing with, give any notice to or to obtain any
licence, permit, certificate, registration, authorization, consent or approval
of, any governmental or regulatory authority as a condition to the lawful
consummation of the transactions contemplated by this Agreement, except for the
filings, notifications, licences, permits, certificates, registrations, consents
14
and approvals described in Schedule 10 or that relate solely to the identity of
the Purchaser or the nature of any business carried on by the Purchaser.
(b) There is no requirement under any Contract relating to the
Business or the Corporation to which the Vendors or the Corporation is a party
or by which it is bound to give any notice to, or to obtain the consent or
approval of, any party to such agreement, instrument or commitment relating to
the consummation of the transactions contemplated by this Agreement except for
the notifications, consents and approvals described in Schedule 11.
3.22. FINANCIAL STATEMENTS
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods,
are correct and complete and present fairly the assets, liabilities (whether
accrued, absolute, contingent or otherwise) and financial condition of the
Corporation as at the respective dates of the Financial Statements and the
sales, earnings and results of operations of the Corporation for the respective
periods covered by the Financial Statements. When prepared, the Closing
Financial Statements will be prepared in accordance with generally accepted
accounting principles applied on a basis consistent with those used in the
preparation of the Audited Financial Statements and will present fairly the
financial position and results of operations of the Corporation as at the close
of business on the Closing Date.
3.23. BOOKS AND RECORDS
The books and records of the Corporation fairly and correctively set out
and disclose in accordance with generally accepted accounting principles the
financial position of the Corporation as at the date hereof and all financial
transactions of the Corporation have been accurately recorded in such books and
records.
3.24. ABSENCE OF CHANGES
Since July 31, 1999 the Corporation has carried on Business and
conducted its operations and affairs only in the ordinary and normal course
consistent with past practice and there has not been:
(a) any material adverse change in the condition (financial or
otherwise), assets, liabilities, operations, earnings, business or prospects of
the Corporation;
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting the property or assets of the Corporation;
(c) any obligation or liability (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) incurred by the
Corporation, other than those incurred in the ordinary and normal course and
consistent with past practice;
(d) any payment, discharge or satisfaction of any Encumbrance,
liability or obligation of the Corporation (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) other than payment of
15
accounts payable and tax liabilities incurred in the ordinary course of business
consistent with past practice;
(e) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares in the capital of the Corporation
or any direct or indirect redemption, purchase or other acquisition of any such
shares, other than as shown on the Financial Statements;
(f) any issuance or sale by the Corporation, or any Contract
entered into by the Corporation, for the issuance or sale by the Corporation, of
any shares in the capital of or securities convertible into or exercisable for
shares in the capital of the Corporation;
(g) any labour trouble adversely affecting the Corporation;
(h) any licence, sale, assignment, transfer, disposition, pledge,
mortgage or granting of a security interest or other Encumbrances on or over any
property or assets of the Corporation, other than sales of inventory to
customers in the ordinary and normal course of the Business;
(i) any extraordinary write-down of the value of any inventory or
any write-off as uncollectible of any accounts or notes receivable or any
portion thereof of the Corporation;
(j) extraordinary cancellation of any debts or claims or any
amendment, termination or waiver of any rights of value to the Corporation;
(k) other than increases in the ordinary course, any general
increase in the compensation of employees of the Corporation, or any increase in
any such compensation or bonus payable to any officer, employee, consultant or
agent thereof (having an annual salary or remuneration in excess of $20,000.00)
or the execution of any employment contract with any officer or employee (having
an annual salary or remuneration in excess of $20,000.00), or the making of any
loan to, or engagement in any transaction with, any employee, officer or
director of the Corporation;
(l) any capital expenditures or commitments of the Corporation in
excess of $10,000.00 in the aggregate;
(m) any forward purchase commitments in excess of the
requirements of the Corporation for normal operating inventories or at prices
higher than the current market prices;
(n) any forward sales commitments other than in the ordinary and
normal course of the Business or any failure to satisfy any accepted order for
goods or services;
(o) any change in the accounting or tax practices followed by the
Corporation;
(p) any change adopted by the Corporation in its depreciation or
amortization policies or rates; or
16
(q) any change in the credit terms offered to customers of, or by
suppliers to, the Corporation.
3.25. TAXES
(a) The Corporation has duly filed on a timely basis all tax
returns required to be filed by it and has paid all taxes that are due and
payable, and all assessments, reassessments, governmental charges, penalties,
interest and fines due and payable by it.
(b) The Corporation has made adequate provision for taxes payable
by it for the current period and any previous period for which tax returns are
not yet required to be filed.
(c) There are no actions, suits, proceedings, investigations or
claims pending or, to the knowledge of the Corporation and the Vendors,
threatened against, the Corporation in respect of taxes, governmental charges or
assessments, nor are any material matters under discussion with any governmental
authority relating to taxes, governmental charges or assessments asserted by any
such authority.
(d) The Corporation has withheld from each payment made to any of
its past or present employees, officers or directors, and to any non-resident of
Canada, the amount of all taxes and other deductions required to be withheld
therefrom and has paid the same to the proper tax or other receiving officers
within the time required under any applicable legislation.
(e) The Corporation has remitted to the appropriate tax authority
when required by law to do so all amounts collected by it on account of GST.
(f) The Canadian federal income tax liability of the Corporation
has been assessed by Revenue Canada for all fiscal years up to and including the
fiscal year ended July 31, 1999 and there are no agreements, waivers or other
arrangements providing for an extension of time with respect to the filing of
any tax return by, or payment of any tax, governmental charge or deficiency
against, the Corporation.
(g) The Vendors has provided to the Purchaser, or xxxx available
for the Purchaser's inspection, a true copy of all tax returns filed by the
Corporation in respect of the five last completed fiscal years of the
Corporation.
3.26. LITIGATION
Except as described in Schedule 12, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the Corporation) pending
or, to the knowledge of the Vendors or the Corporation, threatened against or
affecting, the Corporation at law or in equity, or before or by any federal,
provincial, municipal or other governmental department, court, commission,
board, bureau, agency or instrumentality, domestic or foreign, or by or before
an arbitrator or arbitration board. Neither the Vendors nor the Corporation is
aware of any ground on which any such action, suit or proceeding might be
commenced with any reasonable likelihood of success.
17
3.27. RESIDENCY
The Vendors are residents of Canada for the purposes of the Tax Act.
3.28. GST REGISTRATION
The Corporation is a registrant for purposes of the ETA whose
registration number is #135989499.
3.29. ACCOUNTS AND ATTORNEYS
Schedule 13 sets forth a true and complete list showing:
(a) the name of each bank, trust company or similar institution
in which the Corporation has accounts or safe deposit boxes, the number or
designation of each such account and safe deposit box and the names of all
persons authorized to draw thereon or to have access thereto; and
(b) the name of each person, firm, corporation or business
organization holding a general or special power of attorney from the Corporation
and a summary of the terms thereof.
3.30. DIRECTORS AND OFFICERS
Schedule 14 sets forth the names and titles of all the officers and
directors of the Corporation.
3.31. DIVIDENDS
Except as shown on the Financial Statements, since July 31, 1999 the
Corporation has not, directly or indirectly, declared or paid any dividends or
declared or made any other distribution on any of its shares of any class and
has not, directly or indirectly, redeemed, purchased or otherwise acquired any
of its outstanding shares of any class or agreed to do so.
3.32. NON-ARM'S LENGTH TRANSACTIONS
(a) The Corporation has not since July 31, 1999 made any payment
or loan to, or borrowed any moneys from or is otherwise indebted to, any
officer, director, employee, shareholder or any other person not dealing at
arm's length with the Corporation (within the meaning of the Tax Act), except as
disclosed in the Audited Financial Statements and except for usual employee
reimbursements and compensation paid in the ordinary and normal course of the
Business.
(b) Except for Contracts of employment, the Corporation is not a
party to any Contract with any officer, director, employee, shareholder or any
other person not dealing at arm's length with the Corporation (within the
meaning of the Tax Act).
(c) No officer, director or shareholder of the Corporation and no
entity that is an Affiliate or Associate of one or more such individuals:
18
(i) owns, directly or indirectly, any interest in (except
for shares representing less than one per cent of the outstanding shares of any
class or series of any publicly traded company), or is an officer, director,
employee or consultant of, any person which is, or is engaged in business as, a
competitor of the Business or the Corporation or a lessor, lessee, supplier,
distributor, sales agent or customer of the Business or the Corporation;
(ii) owns, directly or indirectly, in whole or in part,
any property that the Corporation uses in the operation of the Business; or
(iii) has any cause of action or other claim whatsoever
against, or owes any amount to, the Corporation in connection with the Business,
except for any liabilities reflected in the Audited Financial Statements and
claims in the ordinary and normal course of business, such as for accrued
vacation pay and accrued benefits under the Employee Plans.
3.33. ENVIRONMENTAL
(a) Except as described in Schedule 16 and to the best of the
Vendors' knowledge, the Corporation has been and is in compliance with all
applicable Laws and orders, directives and decisions rendered by any ministry,
department or administrative or regulatory agency ("Environmental Laws")
relating to the protection of the environment, occupational health and safety or
the manufacture, processing, distribution, use, treatment, storage, disposal,
discharge, transport or handling of any pollutants, contaminants, chemicals or
industrial, toxic or hazardous wastes or substances ("Hazardous Substances").
(b) The Corporation has obtained all licences, permits,
approvals, consents, certificates, registrations and other authorizations under
Environmental Laws (the "Environmental Permits") required for the operation of
the Business, all of which are described in Schedule 9. Each Environmental
Permit is valid, subsisting and in good standing and the Corporation is not in
default or breach of any Environmental Permit and no proceeding is pending, or
threatened, to revoke or limit any Environmental Permit.
(c) The Corporation has not used or permitted to be used, except
in compliance with all Environmental Laws, any of its property (including the
Leased Property) or facilities or any property or facility that it previously
owned or leased, to generate, manufacture, process, distribute, use, treat,
store, dispose of, transport or handle any Hazardous Substance.
(d) The Corporation has never received any notice of, nor been
prosecuted for an offence alleging, non-compliance with any Environmental Laws,
and neither the Vendors nor the Corporation has settled any allegation on
noncompliance short of prosecution. There are no orders or directions relating
to environmental matters requiring any work, repairs, construction or capital
expenditures with respect to the Business or any property of the Corporation,
nor has the Corporation received notice of any of the same.
(e) Except as disclosed in Schedule 16, to the best of the
Vendors' knowledge, but without making any enquiries (but the failure to make
enquiries shall not relieve the Vendors from responsibility if they have actual
knowledge or notice of a matter), there are no pending or proposed changes to
Environmental Laws that would render illegal or restrict the manufacture or sale
of any product manufactured or sold or service provided by the Corporation.
19
(f) The Corporation has not caused or permitted, nor does it have
any knowledge of, the release, in any manner whatsoever, of any Hazardous
Substance on or from any of its properties (including any of the Leased
Property) or assets or any property or facility that it previously owned or
leased, or any such release on or from a facility owned or operated by third
parties but with respect to which the Corporation is or may reasonably be
alleged to have liability. All Hazardous Substances and all other wastes and
other materials and substances used in whole or in part by the Corporation or
resulting from the Business have been disposed of, treated and stored in
compliance with all Environmental Laws. Schedule 16 identifies all of the
locations where Hazardous Substances used in whole or in part by the Corporation
have been or are being stored. The Corporation retains the services of Safety
Klean to dispose of Hazardous Substances.
(g) The Corporation has not received any notice that it is
potentially responsible for a federal, provincial, municipal or local clean-up
site or corrective action under any Environmental Laws. The Corporation has not
received any request for information in connection with any federal, provincial,
municipal or local inquiries as to disposal sites.
(h) The Vendors have delivered to the Purchaser true and complete
copies of all environmental audits, evaluations, assessments, studies or tests
relating to the Corporation of which it is aware, or made same available for the
Purchaser's inspection.
3.34. EMPLOYEE PLANS
(a) Schedule 17 identifies each retirement, pension, bonus, stock
purchase, profit sharing, stock option, deferred compensation, severance or
termination pay, insurance, medical, hospital, dental, vision care, drug, sick
leave, disability, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or other compensation plan or arrangement or other employee
benefit that is maintained or otherwise contributed to, or required to be
contributed to, by the Corporation for the benefit of employees or former
employees of the Corporation (the "Employee Plans") and a true and complete copy
of each Employee Plan has been furnished to the Purchaser, or made available for
the Purchaser's inspection.
(b) Each Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Employee Plan.
3.35. COLLECTIVE AGREEMENTS
Except as described in Schedule 17, the Corporation has not made any
Contracts with any labour union or employee association nor made commitments to
or conducted negotiations with any labour union or employee association with
respect to any future agreements and, except as set out in Schedule 17, neither
the Vendors nor the Corporation is aware of any current attempts to organize or
establish any labour union or employee association with respect to any employees
of the Corporation, nor is there any certification of any such union with regard
to a bargaining unit.
20
3.36. EMPLOYEES
(a) Schedule 17 contains a complete and accurate list of the
names of all individuals who are employees or sales or other agents or
representatives of the Corporation specifying:
(i) intentionally deleted;
(ii) with respect to salaried employees and sales or other
agents or representatives, the length of service, age, title, rate of salary and
commission structure for each such employee, agent or representative.
(b) No notice has been received by the Corporation of:
(i) any complaint filed by any of the employees against
the Corporation claiming that the Corporation has violated the EMPLOYMENT
STANDARDS ACT (Ontario) or the HUMAN RIGHTS CODE (Ontario) (or any applicable
employee or human rights or similar legislation in the other jurisdictions in
which the Business is conducted or the Corporation operates); or
(ii) any complaints or proceedings of any kind involving
the Corporation or, to the Vendors' and the Corporation's knowledge, without
making any enquiries (but the failure to make enquiries shall not relieve the
Vendors from responsibility if they have actual knowledge or notice of a
matter), any of the employees of the Corporation before any labour relations
board, except as disclosed in Schedule 17.
(c) There are no outstanding orders or charges against the
Corporation under the OCCUPATIONAL HEALTH AND SAFETY ACT (Ontario) (or
applicable health and safety legislation in the other jurisdictions in which the
Business is conducted.)
(d) All levies, assessments and penalties made against the
Corporation pursuant to the WORKERS' COMPENSATION ACT (Ontario) (and any
applicable workers' compensation legislation in the other jurisdictions in which
the Business is conducted) have been paid by the Corporation and the Corporation
has not been reassessed under any such legislation during the past 5 years.
3.37. EMPLOYEE ACCRUALS
All accruals for unpaid vacation pay, premiums for unemployment
insurance, health premiums, Canada Pension Plan premiums, accrued wages,
salaries and commissions and employee benefit plan payments have been reflected
in the books and records of the Corporation.
3.38. CUSTOMERS AND SUPPLIERS
Schedule 18 sets out a customer list showing the Corporation's customers
for the period August 1, 1999 to June 6, 2000. There has been no termination or
cancellation of, and no modification or change in, the Corporation's business
relationship with any of the customers shown on Schedule 18. The Corporation has
21
no reason to believe that the benefits of any relationship with any of the
customers listed on Schedule 18 will not continue after the Closing Date in
substantially the same manner as prior to the date of the Agreement, but the
Vendors and the Corporation make no representation or warranty regarding the
likelihood of such customers making future purchases from the Corporation.
3.39. PRODUCT WARRANTIES
Schedule 19 is a complete list of all express, written warranties given
to purchasers of products supplied by the Corporation.
3.40. FULL DISCLOSURE
Neither this Agreement nor any document to be delivered pursuant to this
Agreement by the Vendors or the Corporation nor any certificate, report,
statement or other document furnished by the by the Vendors or the Corporation
in connection with the closing of the Transaction contains, or will contain, any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors as follows and
acknowledges and confirms that the Vendors is relying on such representations
and warranties in connection with the sale by the Vendors of the Purchased
Shares:
4.1. ORGANIZATION
The Purchaser is a corporation validly subsisting under the laws of the
State of New Hampshire and it has the corporate power to enter into and perform
its obligations pursuant to this Agreement.
4.2. ARS SHARES
(a) The securities of the Purchaser are listed or approved for
listing on the National Association of Securities Dealers Automated Quotation
Market System.
(b) The ARS Shares shall, when issued: (a) be validly issued by
the Corporation in accordance with all applicable Laws (including, without
limitation, securities Laws) and the requirements of the NASD OTCBB Exchange;
(b) are outstanding as fully paid and non-assessable shares in the capital of
the Corporation; (c) be free and clear of all Encumbrances (except as may be
created by the Vendors); (d) not be subject to any voting trust, shareholder
agreement or voting agreement, except as contemplated by this Agreement; and (e)
be "Restricted Securities" as that term is defined in Rule 144(a)(3) of the
United States Securities and Exchange Commission and may not be resold by the
Vendors in the absence of registration or exemption from registration.
22
4.3. NO VIOLATION
The execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions herein provided for will not result in either:
(a) the breach or violation of any of the provisions of, or
constitute a default under, or conflict with or cause the acceleration of any
obligation of the Purchaser under:
(i) any Contract to which the Purchaser is a party or by
which it is bound;
(ii) any provision of the constating documents or by-laws
or resolutions of the board of directors (or any committee thereof) or
shareholders of the Purchaser;
(iii) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over the Purchaser;
(iv) any applicable, law, statute, ordinance, regulation
or rule, including, without limitation, the rules and regulations of any
securities exchange on which the shares of the Purchaser are listed for trading;
(b) the creation or imposition of any Encumbrance on any of the
ARS Shares, when issued, or of any of the property or assets of the Purchaser.
4.4. AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by the
Purchaser and is a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser by the Vendors in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency and other laws
affecting the enforcement of rights of creditors generally and except that
equitable remedies may only be granted in the discretion of a court of competent
jurisdiction.
4.5. CONSENTS AND APPROVALS
There is no requirement for the Purchaser to make any filing with, give
any notice to or obtain any licence, permit, certificate, registration,
authorization, consent or approval of, any government or regulatory authority as
a condition to the lawful consummation of the transactions contemplated by this
Agreement.
4.6. INVESTMENT CANADA ACT
The Purchaser is a "non-Canadian" for the purposes of and within the
meaning of the Investment Canada Act.
23
4.7. LITIGATION
Except as described in Schedule 27, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the Purchaser) pending or,
to the knowledge of the Purchaser, threatened against or affecting, the
Purchaser at law or in equity, or before or by any federal, provincial,
municipal or other governmental department, court, commission, board, bureau,
agency or instrumentality, domestic or foreign, or by or before an arbitrator or
arbitration board. The Purchaser is not aware of any ground on which any such
action, suit or proceeding might be commenced with any reasonable likelihood of
success.
4.8. BUSINESS PROSPECTS
The Purchaser knows of no reason why the Purchaser's business would be
likely to decline after the Closing Date, subject to the Purchaser's management
ability and normal business risks.
4.9. FULL DISCLOSURE
Neither this Agreement nor any document to be delivered pursuant to this
Agreement by the Purchaser nor any certificate, report, statement or other
document furnished by the Purchaser in connection with the closing of the
Transaction contains, or will contain, any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND THE
CORPORATION
To the extent that they have not been fully performed at or prior to the
Time of Closing, the covenants, representations and warranties of the Vendors
and the Corporation contained in this Agreement and any agreement, instrument,
certificate or other document executed or delivered pursuant hereto shall
survive the closing of the transactions contemplated hereby until the
anniversary of the Closing Date and, notwithstanding such closing, nor any
investigation made by or on behalf of the Purchaser, shall continue in full
force and effect for the benefit of the Purchaser during such period, except
that:
(a) the representations and warranties set out in sections 3.1,
3.2, 3.3, 3.4, 3.5 and 3.6 (and the corresponding representations and warranties
set out in the certificates to be delivered pursuant to subsection 7.1 (a) (the
"Closing Certificates")) shall survive and continue in full force and effect
without limitation of time;
(b) the representations and warranties set out in section 3.25
(and the corresponding representations and warranties set out in the Closing
Certificates) shall survive the closing of the transactions contemplated hereby
and continue in full force and effect until, but not beyond, the expiration of
the period, if any, during which an assessment, reassessment or other form of
recognized document assessing liability for tax, interest or penalties under
applicable tax legislation in respect of any taxation year to which such
representations and warranties extend could be issued under such tax legislation
24
to the Corporation, provided the Corporation did not file any waiver or other
document extending such period; and
(c) a claim for any breach of any of the representations and
warranties contained in this Agreement or in any agreement, instrument,
certificate or other document executed or delivered pursuant hereto involving
fraud or fraudulent misrepresentation may be made at any time following the
Closing Date, subject only to applicable limitation periods imposed by law.
5.2. EXPIRY OF THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The representations and warranties of the Purchaser contained in this
Agreement or in any document, certificate or undertaking given pursuant hereto
shall terminate at the end of ONE (1) year after Closing or when the Vendors
have elected to retain the ARS shares whichever first occurs.
ARTICLE 6.
COVENANTS
6.1. ACCESS TO THE CORPORATION
(a) The Vendors shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser, provide a
copy to the Purchaser of, or make available for the Purchaser's inspection, all
title documents, Contracts, financial statements, minute books, share
certificate books, share registers, plans, reports, licences, orders, permits,
books of account, accounting records, constating documents and all other
documents, information or data relating to the Corporation and the Business.
(b) The Vendors and the Corporation shall afford the Purchaser
and its authorized representatives every reasonable opportunity to have free and
unrestricted access to the Business and the property, assets, undertaking,
records and documents of the Corporation at such times as agreed upon with the
Vendors.
(c) At the request of the Purchaser, the Vendors shall execute or
cause to be executed such consents, authorizations and directions as may be
necessary to permit any inspection of the Business and any property of the
Corporation or to enable the Purchaser or its authorized representatives to
obtain full access to all files and records relating to any of the assets of the
Corporation maintained by governmental or other public authorities.
(d) At the Purchaser's request, the Vendors shall co-operate with
the Purchaser in arranging any such meetings as the Purchaser should reasonably
request with:
(i) employees of the Corporation;
(ii) customers, suppliers, distributors or others who
have or have had a business relationship with the Corporation; and
25
(iii) auditors, solicitors or any other persons engaged or
previously engaged to provide services to the Corporation who have knowledge of
matters relating to the Corporation and the Business.
(e) Without limiting the generality of the preceding provisions
of this section, the Vendors shall permit the Purchaser's representatives or
consultants to conduct all such testing and inspections in respect of
environmental matters at the premises (the "Premises") which are the subject
matter of the lease described in Schedule 5 (the "Lease"), subject to obtaining
all necessary consents from the landlord under the Lease, as the Purchaser may
determine, in its sole discretion, as may be required to satisfy the Purchaser
in respect of such matters. The Purchaser shall be responsible, at its sole
cost, for making all necessary repairs to the Premises necessitated as a result
of such testing.
(f) The exercise of any rights of inspection by or on behalf of
the Purchaser under this section 6.1 shall not mitigate or otherwise affect the
representations and warranties of the Vendors and the Corporation hereunder,
which shall continue in full force and effect as provided in section 5.1, except
to the extent that the Purchaser fails to advise the Vendors and the Corporation
of its findings.
6.2. DELIVERY OF BOOKS AND RECORDS
At the Time of Closing there shall be delivered to the Purchaser, by the
Vendors, all of the books and records of and relating to the Corporation and the
Business. The Purchaser agrees that it will preserve the books and records so
delivered to it for a period of six years from the Closing Date, or for such
longer period as is required by any applicable law, and will permit the Vendors
or its authorized representatives reasonable access thereto in connection with
the affairs of the Vendors relating to its matters, but the Purchaser shall not
be responsible or liable to the Vendors for or as a result of any accidental
loss or destruction of or damage to any such books or records.
6.3. CHANGE AND USE OF NAME
Intentionally Deleted
6.4. CONDUCT PRIOR TO CLOSING
Without in any way limiting any other obligations of the Vendors and the
Corporation hereunder, during the period from the date hereof to the Time of
Closing:
(a) Conduct Business in the Ordinary Course. The Vendors shall
cause the Corporation to conduct, and the Corporation shall conduct, the
Business and the operations and affairs of the Corporation only in the ordinary
and normal course of business consistent with past practice, and the Corporation
shall not, without the prior written consent of the Purchaser, enter into any
transaction or refrain from doing any action that, if effected before the date
of this Agreement, would constitute a breach of any representation, warranty,
covenant or other obligation of the Vendors or the Corporation contained herein,
and provided further that the Vendors shall not enter into any material supply
arrangements relating to the Corporation or make any material decisions or enter
26
into any material Contracts with respect to the Corporation without the consent
of the Purchaser, which consent shall not be unreasonably withheld;
(b) Continue Insurance. The Vendors shall cause the Corporation
to continue, and the Corporation shall continue, to maintain in full force and
effect all policies of insurance or renewals thereof now in effect, shall take
out, at the expense of the Purchaser, such additional insurance as may be
reasonably requested by the Purchaser and shall give all notices and present all
claims under all policies of insurance in a due and timely fashion;
(c) Regulatory Consents. The Vendors shall use its best efforts
to obtain or cause the Corporation to obtain, and the Corporation shall use its
best efforts to obtain, at or prior to the Time of Closing, from all appropriate
federal, provincial, state, municipal or other governmental or regulatory
bodies, the licences, permits, consents, approvals, certificates, registrations
and authorizations described in Schedule 10;
(d) Contractual Consents. The Vendors shall use its best efforts
to give or obtain or cause the Corporation to give or obtain, and the
Corporation shall use its best efforts to obtain, the notices, consents and
approvals described in Schedule 11;
(e) Preserve Goodwill. The Vendors shall use its best efforts to
preserve, and cause the Corporation to preserve intact, and the Corporation
shall use its best efforts to preserve intact, the Business and the property,
assets, operations and affairs of the Corporation and to carry on the Business
and the affairs of the Corporation as currently conducted, and to promote and
preserve for the Purchaser the goodwill of suppliers, customers and others
having business relations with the Corporation;
(f) Discharge Liabilities. The Vendors shall cause the
Corporation to pay and discharge, and the Corporation shall pay and discharge,
the liabilities of the Corporation in the ordinary course in accordance and
consistent with the previous practice of the Corporation, except those contested
in good faith by the Corporation;
(g) Corporate Action. The Vendors shall use its best efforts to
take and cause the Corporation to take, and the Corporation shall use its best
efforts to take, all necessary corporate action, steps and proceedings to
approve or authorized, validly and effectively, the execution and delivery of
this Agreement and the other agreements and documents contemplated hereby and to
complete the transfer of the Purchased Shares to the Purchaser and to cause all
necessary meetings of directors and shareholders of the Vendors and the
Corporation to be held for such purpose; and
(h) Best Efforts. The Vendors shall use its best efforts to
satisfy the conditions contained in section 7.1.
6.5. FILINGS
Within 30 days following the Closing Date, the Purchaser shall file with
the state of New Hampshire the information and certificates as required pursuant
to the New Hampshire Business Corporation Act, Sections 293-A:11.02 through
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293-A:11.07 regarding the share exchange arising out of the Purchaser's purchase
of the Purchased Shares and the issuance of the ARS Shares to the Vendors.
ARTICLE VII.
CONDITIONS OF CLOSING
7.1. CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER
The sale and purchase of the Purchased Shares is subject to the
following terms and conditions for the exclusive benefit of the Purchaser, to be
fulfilled or performed at or prior to the Time of Closing:
(a) Representations and Warranties. The representations and
warranties of the Vendors and the Corporation contained in this Agreement shall
be true and accurate on the date hereof and shall be true and correct in all
material respects at the Time of Closing, with the same force and effect as if
such representations and warranties were made at and as of such time, and
certificates of the Vendors and of the President of the Corporation dated the
Closing Date to that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the Purchaser, acting
reasonably;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendors and the Corporation at
or before the Time of Closing shall have been complied with or performed in all
material respects and certificates of the Vendors and the President of the
Corporation dated the Closing Date to that effect shall have been delivered to
the Purchaser, such certificates to be in form and substance satisfactory to the
Purchaser, acting reasonably;
(c) Regulatory Consents. There shall have been obtained, from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies, such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required to be obtained by
the Vendors to permit the change of ownership of the Purchased Shares
contemplated hereby including, without limitation, those described in Schedule
10;
(d) Contractual Consents. The Vendors shall have given or
obtained the notices, consents and approvals described in Schedule 11, in each
case in form and substance satisfactory to the Purchaser, acting reasonable;
(e) Material Adverse Change. There shall have been no material
adverse changes in the condition (financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the Corporation since the date of
the Financial Statements;
(f) No Action of Proceeding. No legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin, restrict or
prohibit the purchase and sale of the purchased Shares contemplated hereby;
(g) No Material Damage. No material damage by fire or other
hazard to the whole or any material part of the property or assets of the
Corporation shall have occurred from the date hereof the to Time of Closing;
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(h) Legal Matters. All actions, proceedings, instruments and
documents required to implement this Agreement, or instrumental thereto, and all
legal matters relating to the purchase of the Purchased Shares, including title
of the Vendors to the Purchased Shares, shall have been approved as to form and
legality by Kearns, McKinnon, lawyers for the Purchaser, acting reasonably;
(i) Intentionally Deleted;
(j) Intentionally Deleted;
(k) Resignation of Directors and Officers. Such directors and
officers of the Corporation as the Purchaser may specify shall have resigned in
favour of nominees of the Purchaser effective as of the Time of Closing. In no
event, however, shall Xxxxxxxxx be required to resign prior to the Purchased
Shares being released from escrow pursuant to the terms of the Escrow Agreement;
and
(l) Intentionally Deleted.
If any of the conditions contained in this section 7.1 shall not be performed or
fulfilled at or prior to the Time of Closing to the satisfaction of the
Purchaser, acting reasonably, the Purchaser may, by notice to the Vendors,
terminate this Agreement and the obligations of the Vendors and the Purchaser
under this Agreement, other then the obligations contained in sections 10.3,
10.4 and 10.5, provided that the Purchaser may also bring an action pursuant to
Article IX against the Vendors for damages suffered by the Purchaser where the
non-performance or non-fulfillment of the relevant condition is as a result of a
breach of covenant, representation or warranty by the Vendors. Any such
condition may be waived in whole or in part by the Purchaser without prejudice
to any claims it may have for breach of covenant, representation or warranty.
7.2. CONDITIONS OF CLOSING IN FAVOUR OF THE VENDORS
The purchase and sale of the Purchased Shares is subject to the
following terms and conditions for the exclusive benefit of the Vendors, to be
fulfilled or performed at or prior to the Time of Closing:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects at the Time of Closing, with the same force and
effect as if such representations and warranties were made at and as of such
time, and a certificate of an authorized signing officer of the Purchaser dated
the Closing Date to that effect shall have been delivered to the Vendors, such
certificate to be in form and substance satisfactory to the Vendors, acting
reasonably;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser at or before the
Time of Closing shall have been complied with or performed in all material
respects and a certificate of an authorized signing officer of the Purchaser
dated the Closing Date to that effect shall have been delivered to the Vendors,
such certificate to be in form and substance satisfactory to the Vendors, acting
reasonably;
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(c) Regulatory Consents. There shall have been obtained, from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies, such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required by law to be
obtained by the Purchaser to permit the change of ownership of the Purchased
Shares contemplated hereby including those described in Schedule 10, in each
case in form and substance satisfactory to the Vendors, acting reasonably;
(d) No Action or Proceeding. No legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin, restrict or
prohibit the purchase and sale of the Purchased Shares contemplated hereby;
(e) Legal Matters. All actions, proceedings, instruments and
documents required to implement this Agreement, or instrumental thereto, shall
have been approved as to form and legality by the Vendors' lawyers, acting
reasonably; and
(f) Intentionally Deleted.
If any of the conditions contained in this section 7.2 shall not be performed or
fulfilled at or prior to the Time of Closing to the satisfaction of the Vendors,
acting reasonably, the Vendors may, by notice to the Purchaser, terminate this
Agreement and the obligations of the Vendors and the Purchaser under this
Agreement, other then the obligations contained in sections 10.3, 10.4 and 10.5,
provided that the Vendors may also bring an action pursuant to Article IX
against the Purchaser for damages suffered by the Vendors where the
non-performance or non-fulfillment of the relevant condition is as a result of a
breach of covenant, representation or warranty by the Purchaser. Any such
condition may be waived in whole or in part by the Vendors without prejudice to
any claims it may have for breach of covenant, representation or warranty.
ARTICLE VIII.
CLOSING ARRANGEMENTS
8.1. PLACE OF CLOSING
The closing shall take place at the Time of Closing at the offices of
Pallett Valo, lawyers for the Vendors, Mississauga, Ontario.
8.2. CLOSING PROCEDURES
On the Closing Date, the Vendors shall deliver the instruments of
conveyance and other documents described in section 8.3 and upon such delivery
the Purchaser shall deliver the monies and documents described in section 8.4.
8.3. VENDORS' DELIVERIES ON CLOSING
On Closing, the Vendors shall deliver to the Purchaser the following
items, in form and substance satisfactory to the Purchaser's lawyers, acting
reasonably, and, where appropriate, dated the Closing Date:
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(a) share certificates representing the Purchased Shares duly
endorsed in favour of the Purchaser in fully transferable form;
(b) the resignations contemplated in section 7.1(k);
(c) a release from the Vendors in the form attached as Schedule
22;
(d) in the case of Xxxxxxxxx, the employment agreement attached
as Schedule 20;
(e) in the case of MacArthur, the employment agreement attached
as Schedule 20A;
(f) a certificate of the Vendors that:
(i) the representations and warranties of the Vendors
contained in this Agreement are true and correct as of the Closing Date; and
(ii) the Vendors have observed and complied with all the
covenants, agreements and obligations on their respective parts to be observed
and complied with by them prior to the Closing Date;
(g) to the extent available, the consents contemplated by
Schedule 10;
(h) a certified copy of a resolution of the board of directors of
the Corporation authorizing it to enter into this Agreement and complete the
Transaction in accordance with the terms of this Agreement;
(i) resolution of the Corporation's board of directors approving
the transfer of the Purchased Shares from the Vendors to the Purchaser;
(j) a statutory declaration sworn by Xxxxxxxxx that he is not a
non-resident of Canada within the meaning of section 1 16 of the Tax Act;
(k) a statutory declaration sworn by MacArthur that he is not a
non-resident of Canada within the meaning of section 116 of the Tax Act;
(l) a certificate of status of the Corporation, with an effective
date of not earlier than 7 days prior to Closing;
(m) the minute books of the Corporation;
(n) the Escrow Agreement;
(o) the opinion of the Vendors' lawyers in the form attached as
Schedule 21;
(p) all of the documents contemplated by section 6.2. For the
purposes of this provision, it is acknowledged that there will be no physical
delivery of such items on Closing and the said items will remain in the control
31
of the Corporation at the Premises, save and except for the minute books of the
Corporation which will be delivered to the Purchaser on the Closing Date; and
(q) all such other documents and agreements as the Purchaser's
solicitors reasonably consider necessary or desirable to give effect to the
Transaction or to update the minute books of the Corporation.
8.4. PURCHASER'S DELIVERIES ON CLOSING
On Closing, the Purchaser shall deliver to the Vendors the following
items, in form and substance satisfactory to the Vendors, acting reasonably,
and, where appropriate, dated the Closing Date:
(a) the monies referred to in section 2.2(a);
(b) share certificates in the name of Xxxxxxxxx representing
100,000 of the ARS shares referred to in section 2.2(b);
(c) share certificates in the name of MacArthur representing
100,000 of the ARS shares referred to in section 2.2(b);
(d) the Promissory Note;
(e) a certified copy of a resolution of the board of directors of
the Purchaser authorizing it to enter into this Agreement and complete the
Transaction in accordance with the terms of this Agreement;
(f) the employment agreement attached as Schedule 20;
(g) the employment agreement attached as Schedule 20A;
(h) a certificate of the Purchaser that:
(i) the representations and warranties of the Purchaser
contained in this Agreement are true and correct as of the Closing Date; and
(ii) the Purchaser has observed and complied with all the
covenants, agreements and obligations on its part to be observed and complied
with by it prior to the Closing Date;
(i) a certificate of status of the Purchaser, with an effective
date of not earlier than 7 days prior to Closing;
(j) a release in the form attached as Schedule 28;
(k) the Escrow Agreement;
(l) the opinion of the Purchaser's U.S. lawyers in the form
attached as Schedule 23;
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(m) the opinion of the Purchaser's Ontario lawyers in the form
attached as Schedule 24; and
(n) all such other documents and agreements as the Vendors'
solicitors reasonably consider necessary or desirable to give effect to the
Transaction.
8.5. FURTHER ASSURANCES
Each party to this Agreement covenants and agrees that, from time to
time subsequent to the Closing Date, it will, at the request and expense of the
requesting party, execute and deliver all such documents, including, without
limitation, all such additional conveyances, transfers, consents and other
assurances and do all such other acts and things as any other party hereto,
acting reasonably, may from time to time request be executed or done in order to
better evidence or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby or thereby.
ARTICLE IX.
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE VENDORS
The Vendors agrees to indemnify and save harmless the Purchaser from all
Losses suffered or incurred by the Purchaser as a result of or arising out of or
in connection with:
(a) any breach by the Vendors or the Corporation of or any
inaccuracy of any representation or warranty of the Vendors contained in this
Agreement or in any agreement, certificate or other document delivered pursuant
hereto (provided that the Vendors shall not be required to indemnify or save
harmless the Purchaser in respect of any breach or inaccuracy of any
representation or warranty unless the Purchaser shall have provided notice to
the Vendors in accordance with section 9.3 on or prior to the expiration of the
applicable time period related to such representation and warranty set out in
section 5.1);
(b) any breach or non-performance by the Vendors or the
Corporation of any covenant to be performed by it that is contained in this
Agreement or in any agreement, certificate or other document delivered pursuant
hereto;
(c) all debts, liabilities or contracts whatsoever (whether
accrued, absolute, contingent or otherwise) of the Corporation existing at the
Time of Closing, including any liabilities for federal, provincial, sales,
excise, income, corporate or any other taxes of the Corporation for any period
up to and including the Time of Closing, and not disclosed on, provided for or
included in the balance sheets forming part of the Financial Statements, except
those liabilities:
(i) disclosed in this Agreement or any Schedule hereto; or
(ii) accruing or incurred subsequent to April 30, 2000 in
the ordinary course of the Business;
33
(iii) approved or consented to by the Purchaser prior to
the Closing Date; and
(d) any breach of the representations and warranties contained in
section 3.33.
9.2. INDEMNIFICATION BY THE PURCHASER
The Purchaser agrees to indemnify and save harmless the Vendors from all
Losses suffered or incurred by the Vendors as a result of or arising directly or
indirectly out of or in connection with:
(a) any breach by the Purchaser of or any inaccuracy of any
representation or warranty contained in this Agreement or in any agreement,
instrument, certificate or other document delivered pursuant hereto; and
(b) any breach or non-performance by the Purchaser of any
covenant to be performed by it that is contained in this Agreement or in any
agreement, certificate or other document delivered pursuant hereto.
9.3. NOTICE OF CLAIM
(a) In the event that a party (the "Indemnified Party") shall
become aware of any claim, proceeding or other matter (a "Claim") in respect of
which another party (the "Indemnifying Party") agreed to indemnify the
Indemnified Party pursuant to this Agreement, the Indemnified Party shall
promptly give written notice thereof to the Indemnifying Party. Such notice
shall specify whether the Claim arises as a result of a claim by a person
against the Indemnified Party (a "Third Party Claim") or whether the Claim does
not so arise (a "Direct Claim"), and shall also specify with reasonable
particularity (to the extent that the information is available) the factual
basis for the Claim and the amount of the Claim, if known.
(b) If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any Claim in time to contest
effectively the determination of any liability susceptible of being contested,
the Indemnifying Party shall be entitled to set off against the amount claimed
by the Indemnified Party the amount of any Losses incurred by the Indemnifying
Party resulting from the Indemnified Party's failure to give such notice on a
timely basis.
9.4. DIRECT CLAIMS
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have sixty days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such sixty day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
34
agreed amount of the Claim, failing which the matter shall be referred to
binding arbitration in such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
9.5. THIRD PARTY CLAIMS
With respect to any Third Party Claim, the Indemnifying Party shall have
the right, at its expense, to participate in or assume control of the
negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified
Party's out-of-pocket expenses as a result of such participation or assumption.
If the Indemnifying Party elects to assume such control, the Indemnified Party
shall have the right to participate in the negotiation, settlement or defence of
such Third Party Claim and to retain counsel to act on its behalf, provided that
the fees and disbursements of such counsel shall be paid by the Indemnified
Party unless:
(a) the Indemnifying Party consents to the retention of such
counsel; or
(b) unless the named parties to any action or proceeding include
both the Indemnifying Party and the Indemnified Party and a representation of
both the Indemnifying Party and the Indemnified Party by the same counsel would
be inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences).
If the Indemnifying Party, having elected to assume such control, thereafter
fails to defend the Third Party Claim within a reasonable time, the Indemnified
Party shall be entitled to assume such control, and the Indemnifying Party shall
be bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a payment to any person
(a "Third Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall, within 30 days after demand
by the Indemnified Party, reimburse the Indemnified Party for such payment. If
the amount of any liability of the Indemnified Party under the Third Party Claim
in respect of which such payment was made, as finally determined, is less than
the amount that was said by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, within 10 days after receipt of the difference from the
Third Party, pay the amount of such difference to the Indemnifying Party.
9.6. SETTLEMENT OF THIRD PARTY CLAIMS
If the Indemnifying Party fails to assume control of the defence of any
Third Party Claim, the Indemnified Party shall have the exclusive right to
contest, settle or pay the amount claimed. Whether or not the Indemnifying Party
assumes control of the negotiation, settlement or defence of any Third Party
Claim, the Indemnifying Party shall not settle any Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. If the Indemnified Party does not provide its
written consent to the settlement of the Third Party, then the liability of the
Indemnifying Party shall be limited to the proposed settlement amount.
35
9.7. CO-OPERATION
The Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).
9.8. LIMIT TO CLAIMS MADE BY PURCHASER AND CORPORATION
Regardless of any other provision of this Agreement, the Purchaser shall
not have the right to make any Claim for indemnification under this Agreement
unless the Claim or the Claims, in the aggregate, equal or exceed $7,500.00, in
which case the Vendors shall be liable in full for all of then existing Claims
and all subsequent Claims of indemnification without regard to the $7,500.00
limitation contained in this section.
9.9. EXCLUSIVITY
The provisions of this Article IX shall apply to any Claim for breach of
any covenant, representation, warranty or other provision of this Agreement or
any agreement, certificate or other document delivered pursuant hereto (other
than a claim for specific performance or injunctive relief) with the intent that
all such Claims shall be subject to the limitations and other provisions
contained in this Article IX. No party shall have the right to bring any
proceeding against any other party for a breach of any representation, warranty,
covenant or agreement contained in this Agreement whether in contract, tort or
otherwise except in accordance with the provisions of this Article 9.00.
ARTICLE X.
MISCELLANEOUS
10.1. CONFIDENTIALITY OF INFORMATION
In the event that the transactions contemplated herein are not
consummated for any reason:
(a) the Purchaser covenants and agrees that, except as otherwise
authorized by the Vendors, neither the Purchaser nor its representatives, agents
or employees will disclose to third parties, directly or indirectly, any
confidential information or confidential data relating to the Corporation or the
Business discovered by the Purchaser or its representatives as a result of the
Vendors and the Corporation making available to the Purchaser and its
representatives the information requested by them in connection with the
transactions contemplated herein; and
(b) the provisions under the heading "Confidentiality" in the
letter of intent dated May 1, 2000, between the Purchaser and the Vendors (which
are currently in full force and effect) will continue in full force and effect.
10.2. NOTICES
(a) Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be delivered in person,
36
transmitted by telecopy or similar means of recorded electronic communication or
sent by registered mail, charges prepaid, addressed as follows:
(i) if to the Vendors or the Corporation: 00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxxx or
Xxxxxxx XxxXxxxxx
Telecopier Number: 000-000-0000
together with a copy to: Xxxxxx Box
Pallett Valo 00 Xxxxxxxxxxxxx
Xxxx Xxxx Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Telecopier Number:
000-000-0000
(ii) if to the Purchaser: 0000 Xxxxxxxx Xxxxx
Attention: Xxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Telecopier Number: 000-000-0000
(b) Any such notice or other communication shall be deemed to
have been given and received on the day on which it was delivered or transmitted
(or, if such day is not a Business Day, on the next following Business Day) or,
if mailed, on the third Business Day following the date of mailing; provided,
however, that if at the time of mailing or within three Business Days thereafter
there is or occurs a labour dispute or other event that might reasonably be
expected to disrupt the delivery of documents by mail, any notice or other
communication hereunder shall be delivered or transmitted by means of recorded
electronic communication as aforesaid.
(c) Any party may at any time change its address for service from
time to time by giving notice to the other parties in accordance with this
section 10.2.
10.3. COMMISSIONS, ETC.
The Vendors agrees to indemnify and save harmless the Purchaser from and
against all Losses suffered or incurred by the Purchaser in respect of any
commission or other remuneration payable or alleged to be payable to any broker,
agent or other intermediary retained by the Vendors in connection with this
matter.
10.4. CONSULTATION
The parties shall consult with each other before issuing any press
release or making any other public announcement with respect to this Agreement
or the transactions contemplated hereby and, except as required by any
applicable law or regulatory requirement, neither the Vendors nor the Purchaser
shall issue any such press release or make any such public announcement without
37
the prior written consent of the other, which consent shall not be unreasonably
withheld or delayed.
10.5. DISCLOSURE
Prior to any public announcement of the transaction contemplated hereby
pursuant to section 10.4, neither party shall disclose this Agreement or any
aspect of such transaction except to its board of directors, its senior
management, its legal, accounting, financial or other professional advisors, any
financial institution contacted by it with respect to any financing required in
connection with such transaction and counsel to such institution, or as may be
required by any applicable law or any regulatory authority or stock exchange
having jurisdiction.
10.6. PUBLIC ANNOUNCEMENTS
No public announcement or press release not required by law or by
applicable stock exchange rule concerning the purchase and sale of the Purchased
Shares shall be made by the Vendors, the Corporation or the Purchaser without
the consent and joint approval of the Vendors and the Purchaser.
10.7. ASSIGNMENT BY PURCHASER
The Purchaser may assign its rights under this Agreement in whole or in
part to any other person; provided, however, that any such assignment shall not
relieve the Purchaser from any of its obligations hereunder.
10.8. BEST EFFORTS
The parties acknowledge and agree that, for all purposes of this
Agreement, an obligation on the part of any party to use its best efforts to
obtain any waiver, consent, approval, permit, licence or other document means
the use of reasonable commercial efforts which shall not require such party to
make any payment to any person for the purpose of procuring the same, other than
payments for amounts due and payable to such person, payments for incidental
expenses incurred by such person and payments required by any applicable law or
regulation.
10.9. COUNTERPARTS AND EXECUTION BY FAX
This Agreement may be executed by the parties in separate counterparts
each of which when so executed and delivered to all of the parties shall be
deemed to be and shall be read as a single agreement among the parties. In
addition, execution of this Agreement by any of the parties may be evidenced by
way of a faxed transmission of such party's signature (which signature may be by
separate counterpart), or a photocopy of such faxed transmission, and such faxed
signature, or photocopy of such faxed signature, shall be deemed to constitute
the original signature of such party to this Agreement.
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IN WITNESS WHEREOF this Agreement has been executed by the parties.
--------------------------------
XXXX XXXXXXXXX
--------------------------------
XXXXXXX XXXXXXXXX
ARS NETWORKS, INCORPORATED
Per:
---------------------------
Name:
---------------------------
Title:
---------------------------
Authorized Signing Officer
T & T DIESEL POWER LIMITED
Per:
---------------------------
Name:
---------------------------
Title:
---------------------------
Authorized Signing Officer
