EXHIBIT 10.3
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT is entered into as of the 12th day of
May, 2004 by and among TOTAL FIRST AID, INC., a Florida corporation ("TFA"),
Xxxxxx Xxxxx (the "PRINCIPAL HOLDER") and those persons signatory hereto
(individually a Shareholder and collectively the "SHAREHOLDERS"), who are the
holders of all of the issued and outstanding shares of FSG Consultants Inc.'s, a
Canadian corporation ("FSG").
WHEREAS the parties wish to effect TFA's acquisition of FSG, through
the purchase of all the issued and outstanding capital stock of FSG from the
Shareholders, including the Principal Holder, on the terms and conditions set
forth below. Accordingly, in consideration of the covenants, representations and
warranties set forth herein, the parties, intending to be legally bound, agree
as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms have
the respective meanings set forth below:
"Adjudication" has the meaning set forth in Section 11.5.
"Affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
"Agreement" means this Share Purchase Agreement, including the
Schedules and Exhibits, as amended from time to time.
"Applicable Law" means, with respect to a referenced Person, any
legislation, regulation, rule or procedure passed, adopted, implemented or
amended by any Governmental Entity, or any notice of a decision, finding or
action by any Governmental Entity, in each case to the extent it has become
effective, binding on the Person, its assets or operations or applicable to the
subject matter or its performance of this Agreement, from and after the date
compliance therewith is mandated by the terms thereof.
"Board" means the board of directors of a referenced Person.
"Board Diminution" has the meaning set forth in Section 9.10.
"Business Day" means a day other than Saturday, Sunday, or any other
day on which banks located in the State of Florida or the Province of Quebec are
authorized or obligated to close.
"Bylaws" means the bylaws or comparable organizational instrument of a
referenced Person, as amended and in effect on the date hereof.
"Capital Shares" means the authorized shares of capital stock of a
referenced Person having its right to participate in the distribution of
earnings and assets of that Person.
"Charter" means certificate or articles of incorporation or comparable
organizational instrument of a referenced Person, as amended and in effect on
the date hereof.
"Closing", "Closing Date" and "Closing Notice" have the respective
meanings set forth in Section 2.1.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"December 2004 Budget" means the operations budget of FSG for the
period from April 1st, 2004 to December 31, 2004 prepared by FSG management as
reproduced in Schedule 3.25.
"Derivative Securities" means any securities that are convertible into
or exchangeable for Capital Shares or any warrants, options or other rights to
subscribe for or purchase Capital Shares or any such convertible or exchangeable
securities.
"$" or dollars means Canadian denominated dollars.
"XXXXX" means the SEC's electronic data gathering and retrieval system.
"Encumbrances" has the meaning set forth in Section 3.13.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
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"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder.
"FSG" means FSG Consultants Inc., a Canadian corporation, and its
successors and permitted assigns.
"FSG Contracts" has the meaning set forth in Section 3.10.
"FSG Credit Facilities" means the bank line of credit of FSG currently
in existence under its existing terms and conditions.
"FSG Plans" means the employee benefit plans identified on Schedule
3.16.
"FSG Property Rights" has the meaning set forth in Section 3.8.
"FSG Representatives" has the meaning set forth in Section 6.2.
"FSG Shares" means all of the Outstanding Capital Shares of FSG.
"FSG Shares Sold" means those of the FSG Shares registered in the name
of a Shareholder which are sold by such Shareholder pursuant to this
Agreement.
"FSG Financial Statements" means the audited financial statements as of
and for the two fiscal years ended March 31, 2003 and 2002 and for the nine
months ended December 31, 2003, prepared in accordance with Canadian GAAP and
Canadian GAAS reproduced as Schedule 3.5.
"GAAP" means generally accepted accounting principles consistently
applied (except as reflected in the applicable notes to the financial statements
involved).
"GAAS" means generally accepted auditing standards.
"Governmental Entity" means any federal, state, local or foreign
governmental board, body, commission, authority, agency, court or other
administrative, judicial or legislative body.
"Intellectual Property Rights" means all legal, equitable or moral
intellectual property or proprietary rights or benefits, including copyrights
and materials in any media for which copyrights are held or asserted, moral
rights, trademarks, patent rights (including patent applications and
disclosures), rights of priority, mask and derivative work rights, know how and
trade secret rights.
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"Indemnified Person" means a Person claiming indemnification under
Section 11.
"Indemnifying Person" means a Person against which a claim for
indemnification is asserted under Section 11.
"Knowledge," "Known to" or any similar phrase means, with respect to
any matter in question, that, with respect to the Principal Holder, a
Shareholder, a FSG Executive Officer, or, with respect to TFA, a TFA Executive
Officer: (a) has actual knowledge of such fact or other matter, or (b) could be
expected to discover or otherwise become aware of such fact or other matter in
the course of conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
"Liabilities" means judgements, penalties (including excise and similar
taxes), fines and amounts paid in settlement, including in each case any
interest assessments or other charges payable in connection therewith.
"Litigation Expenses" means reasonable expenses incurred in connection
with a Proceeding, including attorneys' fees, retainers and disbursements, court
costs, experts' fees, travel expenses and printing costs.
"Material Adverse Effect" means any material and adverse effect on the
business, operations, properties, prospects or financial condition of a Person,
including without limitation (a) initiation or public announcement of a tender
or exchange offer for 50% or more of the Outstanding Capital Shares of TFA, (b)
initiation or public announcement of a transaction that will result in a change
of control of TFA, (c) commencement of proceedings for delisting TFA Common
Stock on its Principal Market, (d) institution of a Proceeding against a Person
before any Governmental Entity seeking damages in excess of $10,000 or remedies
that could materially adversely affect its operations and (e) initiation of a
Material Action by a Person without the consent of the other Person.
Notwithstanding the foregoing, the following shall not be a Material Adverse
Effect: (i) this Agreement or the transactions contemplated hereby or the public
announcement of this Agreement and the transactions contemplated hereby; (ii)
the economy or securities markets in general; or (iii) TFA's or FSG's industry
in general and not in whole or in any part significantly related specifically to
TFA or FSG, as applicable.
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"Material FSG Actions" have the meaning set forth in Section 3.7,
respectively.
"NASD" means the National Association of Securities Dealers, Inc.
"Outside Closing Date" means June 12th, 2004 or such later date as the
Parties may mutually determine in writing.
"Outstanding" means, at any date as of which the number of issued and
outstanding Capital Shares of any class is to be determined, all issued and
outstanding Capital Shares of that class then directly or indirectly owned or
held by or for the account of any Person other than the issuer thereof.
References in this Agreement to Outstanding Capital Shares shall not include
treasury shares.
"Party" means each of TFA, the Principal Holder, the Shareholders and
FSG.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative or any appeal therein.
"Registration Rights Agreement" means the Registration Rights Agreement
between TFA, and the Shareholders in the form of Schedule 10.10, providing for
certain piggy-back registration rights for resale of the TFA Shares under the
Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the regulations promulgated thereunder.
"Shareholder" means a Shareholder of FSG including the Principal
Holder.
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"Spearhead Canada" means Spearhead Management Canada Limited.
"Spot Rate" means the best available spot rate for the US Dollar and
Canadian Dollar, at the National Bank of Canada.
"Termination Notice" has the meaning set forth in Section 12.4
"TFA" means Total First Aid, Inc., a Florida corporation, and its
successors and permitted assigns.
"TFA Common Stock" means TFA's common stock, par value $.01 per share,
now or hereafter Outstanding, or any Capital Shares of other securities of TFA
issuable in exchange, conversion or substitution therefor.
"TFA Designees" means the two individuals to be designated by TFA for
appointment as directors of FSG on Closing as identified in Schedule 9.10.
"TFA Representatives" has the meaning set forth in Section 6.1.
"TFA Shares" means the newly issued common shares of TFA's Capital
Shares to be issued to the Shareholders pursuant to this Agreement.
"Third Person Proceeding" means any Proceeding first threatened or
initiated by a Person other than a Party or derivatively on behalf of a Party
after the Closing Date.
"Transfer Agent" means Florida Atlantic Stock Transfer, or any
successor transfer agent for TFA Common Stock.
1.2 Construction. Unless otherwise expressly provided herein,
all references to Sections, Schedules, Annexes or Exhibits refer to the
corresponding sections, schedules, annex or exhibits to this Agreement. The
Schedules and Exhibits are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. All capitalized terms used in the
Schedules and Exhibits and not otherwise defined shall have the respective
meanings ascribed to them in this Agreement.
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2. TERMS OF THE TRANSACTION
2.1 Closing Notice. On the date within two (2) Business Days
after delivery to FSG of notice from TFA certifying its satisfaction of the
conditions set forth in Xxxxxxx 0, XXX shall deliver a notice to TFA (the
"CLOSING NOTICE") certifying its satisfaction of the conditions set forth in
Section 10 and setting forth a date within two (2) Business Days after the date
of the Closing Notice (the "CLOSING DATE") on which the closing of the
acquisition of the FSG Shares hereunder (the "CLOSING") shall be held.
2.2 Acquisition of the FSG Shares. On the terms and subject to
the conditions of this Agreement, at the Closing Date each of the Shareholders
including the Principal Holder, shall transfer, assign, convey and deliver to
TFA all of FSG Shares, free and clear of all liens, claims, charges,
restrictions, equities or encumbrances of any kind.
2.3 Consideration for FSG Shares. In consideration for the FSG
Shares, TFA shall issue and deliver to each Shareholder, including the Principal
Holder, at the Closing Date its pro-rata portion of (a) CDN$350,000, in cash,
payable at the Closing Date and (b) CDN$650,000, payable in TFA Shares valued at
US$0.85 per share, to be delivered at the Closing Date, with the conversion rate
to be determined based upon the Spot Rate for Canadian dollars three business
days prior to the Closing (the "PURCHASE CONSIDERATION"), the whole in
accordance with Schedule 2.3.
2.4 Adjustment to consideration. The parties acknowledge that
the Purchase consideration was negotiated and agreed upon by reference to the
unaudited financial statements of FSG for the years ended March 31, 2003 and
2002, and the unaudited interim financial statements of FSG as of December 31,
2003. TFA has reviewed an audit of FSG's financial statement (the "NEW AUDIT").
Based on the New Audit, the parties have decided not to adjust the Purchase
consideration to be paid by TFA.
2.5 Closing Mechanics. At the Closing, (a) the Shareholders,
including the Principal Holder, shall deliver to TFA, certificates representing
the FSG Shares, duly endorsed for transfer to TFA or accompanied by duly
executed stock powers therefore, free and clear of all liens, claims, charges,
restrictions, equities or encumbrances of any kind, and (b) TFA shall deliver to
the Shareholders certificates registered in the name of the Shareholders
representing the TFA Shares, bearing a legend reflecting their restricted status
under the Securities Act.
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2.6 Other Closing Transactions. At the Closing, the following
transactions shall be consummated and deemed to occur simultaneously with the
issuance and sale of the TFA Shares in consideration for the FSG Shares.
(a) Board Augmentation. The Board Augmentation shall
be implemented in accordance with Section 9.10.
(b) Consulting Agreement and Employment Agreements.
TFA shall have entered into a consulting agreement with Principal Holder, and
TFA shall cause FSG to enter into employment agreements with Xxxxxx Xxxxxx,
Xxxxxx Xxxxxx and Xxxx Xxxxxxx in the forms attached as Schedule 2.6(b).
(c) Releases. Each Shareholder shall give complete
and final releases to TFA, Spearhead Canada, and FSG with respect to any amount
payable to such Shareholder.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL HOLDER. The
Principal Holder, represents and warrants to TFA as set forth below, subject to
the exceptions set forth in the Schedules.
3.1 Organization of FSG. FSG is a corporation duly organized
and existing in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate authority to own its properties
and to carry on its business as now being conducted. FSG is duly licensed to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes licensure necessary, except
where failure to so qualify would have no Material Adverse Effect on FSG. FSG
does not own all or any part of or control, directly or indirectly, any other
business, corporation, joint venture, partnership or proprietorship.
3.2 Capitalization. As of the Closing Date, FSG's authorized
Capital Shares consist solely of an unlimited number of Class A, Class B, Class
C, Class D, Class E, Class F and Class G shares of which only 2,000,000 Class A
shares are Outstanding. There are (a) no Derivative Securities of FSG are
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Outstanding, (b) no Person has any agreement, right or commitment entitling it
to acquire Derivative Securities from FSG and (c) there are no agreements or
other instruments of any kind to which FSG or, to the Knowledge of the Principal
Holder, any Person is a party relating to the voting of the FSG Shares, other
than its Charter and Bylaws. All of the FSG Shares have been duly and validly
authorized and issued and are fully paid and nonassessable.
3.3 No Conflicts. The execution, delivery and performance of
this Agreement by the Principal Holder and the consummation by the Principal
Holder of the transactions contemplated hereby, including the sale and
assignment of the FSG Shares, do not and will not result in a violation of any
Applicable Law, nor is FSG or the conduct of its business otherwise in violation
of, conflict with or default under any of the foregoing, except for any
violations, conflicts, defaults or rights of termination, amendment,
acceleration or cancellation that would, individually or in the aggregate, have
no Material Adverse Effect on FSG.
3.4 Consents. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions provided for herein
will result in the creation or imposition of any lien, claim, charge,
restriction, equity or encumbrance of any kind whatever upon or give to any
other Person any interest or right (including any right of termination or
cancellation) in or with respect to FSG Contracts or the properties, assets or
operations of FSG.
3.5 Financial Statements. The FSG Financial Statements have
been provided to TFA. Subject to the assumptions and qualifications provided
therein, the FSG Financial Statements do not contain a misstatement of a
material fact or omit a fact necessary to make them not materially misleading.
3.6 No Undisclosed Liabilities. To the Knowledge of the
Principal Holder, FSG has no material liabilities or obligations not reflected
in the FSG Financial Statements, other than those incurred in the ordinary
course of its business since the date of the most recent balance sheet included
in the FSG Financial Statements and which, individually or in the aggregate, do
not or would not have a Material Adverse Effect on FSG.
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3.7 No Material Adverse Change. Since the date of the most
recent balance sheet included in the FSG Financial Statements, no event or
condition has occurred that could have a Material Adverse Effect on FSG. Since
the date of the most recent balance sheet included in the FSG Financial
Statements, FSG has not (a) issued or repurchased any Capital Shares, issued any
Derivative Securities or declared, set aside or paid any dividend or
distribution on its Outstanding Capital Shares, (b) incurred any obligation
(absolute or contingent) except current liabilities incurred in the ordinary
course of business and obligations under the contracts in effect as of that
date, (c) mortgaged, pledged or knowingly subjected to lien, charge or any other
encumbrance, any of its assets, tangible or intangible, (d) sold or transferred
any of its tangible or intangible assets, except to fund accounts payable and
otherwise in the ordinary course of business, (e) cancelled any material debts
or claims or waived any material right, (f) paid or discharged any liabilities
of any other Person, (g) sold, assigned or transferred any trademarks, trade
names, copyrights, licenses, royalty agreements, proprietary registrations,
know-how, trade secrets or other intangible assets, or granted any licenses with
respect to any of the foregoing, (h) suffered or incurred any extraordinary
expenses or losses, (i) paid or discharged any material obligation or liability,
absolute or contingent, other than current liabilities incurred since December
31st, 2003 in the ordinary course of business, (j) made any material change in
the individual or aggregate compensation in any form payable to any of its
employees, directors or consultants, (k) entered into any material transaction
of any kind except in the ordinary course of business, or entered into any
transaction or agreement whatsoever with a Control Person of FSG, (l) made any
material changes in their accounting principles or methods, or (m) agreed in
writing or, to the Knowledge of FSG, orally to take any of the actions covered
by this Section 3.3 (collectively, "MATERIAL FSG ACTIONS").
3.8 Intellectual Property Rights. Except for licences for
standard commercially available off-the-shelf software, no Intellectual Property
Rights are owned, licensed or used by FSG prior to the Closing Date or necessary
for the conduct of FSG's business as presently conducted.
3.9 Contracts. Except as set forth on Schedule 3.9, FSG is not
a Party to or is bound by any:
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(a) employment, consulting agreement or similar
arrangement that has an aggregate future liability in excess of $10,000 and is
not terminable by FSG by notice of not more than 30 days for a cost of less than
$10,000;
(b) employee collective bargaining contract with any
labor union;
(c) covenant not to compete or other covenant
restricting the operations of FSG;
(d) agreement or arrangement with any current or
former officer, director or employee of FSG or any Affiliate of FSG, other than
employment agreements covered by Section 3.9 (a);
(e) agreement or arrangement designed to shift risk
relating to currency, interest rate or other price fluctuations involving
notional amounts in excess of $10,000;
(f) lease or similar agreement with any Person under
which (i) FSG is lessee of, or holds or uses, any machinery, equipment, vehicle
or other tangible personal property owned by any Person or (ii) FSG is a lessor
or sublessor of, or makes available for use by any Person, any tangible personal
property owned or leased by FSG, in each case which has an aggregate future
liability or receivable, as the case may be, in excess of $10,000 and is not
terminable at FSG's election on less than one month notice for a cost of less
than $10,000;
(g) agreement or arrangement for the future purchase
or receipt of materials, supplies, equipment or services, which has an aggregate
future liability to FSG in excess of $10,000 and is not terminable at FSG's
election on less than one month notice for a cost of less than $10,000;
(h) material license, option or other agreement or
arrangement relating in whole or in part to the FSG Property Rights listed on
Schedule 3.9;
(i) agreement, instrument or arrangement under which
FSG has borrowed any money from, or issued any note, bond, debenture or other
evidence of indebtedness to, any Person, which individually is in excess of
$10,000;
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(j) agreement, instrument or arrangement under which
(i) any Person has directly or indirectly guaranteed indebtedness, liabilities
or obligations of FSG or (ii) FSG has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any Person (in each case other than
endorsements for the purpose of collection in the ordinary course of business),
which individually is in excess of $10,000;
(k) agreement, instrument or arrangement under which
FSG has, directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any Person, which individually
is in excess of $10,000;
(l) agreement, instrument or arrangement providing
for indemnification of any Person against claims or liabilities relating to any
current or former business of FSG or any predecessor of FSG; or
(m) other agreement, instrument or arrangement to
which FSG is a party or by or to which it or any of its assets or business is
bound or subject, having an aggregate future liability to any Person in excess
of $10,000 and is not terminable at FSG's election upon less than one month
notice for a cost of less than $10,000.
3.10 Enforceability of FSG Contracts. To the Knowledge of FSG,
(a) all agreements, instruments and arrangements listed or required to be listed
in Schedule 3.9 (collectively, the "FSG CONTRACTS") are valid, binding and in
full force and effect and are enforceable by FSG in accordance with its terms,
(b) FSG has performed all its material obligations to date under all FSG
Contracts to which it is a party or is otherwise bound or subject, (c) FSG is
not (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect under the FSG Contracts, (d) no other
Person to any of the FSG Contracts has notified FSG of the counterparty's belief
that FSG is or is likely to become in breach or default in any material respect
thereunder or of the counterparty's intention to accelerate or modify in a
manner adverse to FSG any obligations or rights thereunder and (e) no other
Person to any of the FSG Contracts is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder.
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3.11 Litigation and Other Proceedings. There are no
Proceedings pending or, to the Knowledge of FSG, threatened against FSG and
there are no judgements, orders, writs, injunctions, decrees or awards issued by
or, to the Knowledge of FSG, requested by any Governmental Entity against FSG.
3.12 Tax and Other Returns and Reports. All federal,
provincial and local tax returns, reports and statements required to be filed by
FSG have been filed with the appropriate Governmental Entities in all
jurisdictions in which the returns, reports and statements are required to be
filed, and all such returns, reports and statements properly reflect the tax
liabilities of FSG for the periods, properties or events covered thereby, (b)
all federal, provincial and local taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions have been
properly accrued or paid, (c) FSG has not received any notice of assessment or
proposed assessment by any taxing authority in connection with any of its tax
returns, and there are no pending tax examinations of or tax claims asserted
against FSG or any of its assets or properties, (d) there are no tax liens on
any of FSG's assets, and (e) the Principal Holder has no Knowledge of any basis
for any additional assessment of any taxes on FSG.
3.13 Title to Assets; Absence of Liens and Encumbrances. FSG
owns or has a valid leasehold interest in all its material assets and property
reflected in the balance sheet included in the FSG Financial Statements, except
assets and property disposed of after December 31st, 2003 in the ordinary course
of business and consistent with past practice. Except as set forth on Schedule
3.13, none of such assets or properties is subject to any material defects of
title, mortgage, pledge, lien, security interest, lease, charge, encumbrance,
objection or joint ownership (collectively, "ENCUMBRANCES"). Except as set forth
on Schedule 3.13, the facilities, machinery, furniture, office and other
equipment of FSG that are used in its business are sufficient for the operations
of FSG as currently conducted are in good operating condition and repair,
subject only to the ordinary wear and tear. FSG is not in material default under
the FSG Contracts governing any Encumbrances to which it or its properties and
assets are subject.
3.14 Compliance with Applicable Laws. FSG is in compliance in
all material respects with all Applicable Laws affecting its business or
operations, including those relating to occupational health and safety, FSG has
received no communication during the past two years from a Governmental Entity
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alleging that FSG has failed to comply in any material respect with any
Applicable Laws.
3.15 Employee and Labor Matters. FSG has made all payments and
performed all material acts, if any, required to be complied with and has
complied in all material respects with the applicable provisions, if any, of all
Applicable Laws affecting employee and labor matters. Each terminated plan, if
any, was terminated in accordance with Applicable Laws, and any agreements
relating thereto have been terminated without liability to FSG.
3.16 Benefit Plans. FSG currently maintains the employee
benefit plans described on Schedule 3.16. Each listed plan (a) has been
administered and operated in accordance with Applicable Laws and (b) has
received all contributions required to be made thereunder by FSG and any
predecessors. For each listed plan, FSG has delivered to TFA copies of (i) the
plan document setting forth the terms and conditions of the plan, (ii) any the
trust agreement established under the plan, (iii) any investment or insurance
contracts under the trust, (iv) the latest determination letter or an opinion
from the applicable Governmental Entity about the qualified status of the plan
under Applicable Law and (v) any annual reports required by Applicable Law for
the last three completed plan years. Any contributions to health plans required
to be made by employees of FSG has been paid in accordance the policies
therefor.
3.17 Insurance. FSG maintain policies of fire and casualty,
liability and other forms of insurance in amounts, with deductibles and against
risks and losses that are, in the FSG's judgement, reasonable for the business
and assets of FSG. The insurance policies maintained by FSG are listed on
Schedule 3.17. All listed policies are in full force and effect, all premiums
due and payable thereon have been paid, and no notice of cancellation or
termination has been received thereunder. The activities and operations of FSG
have been conducted in a manner conforming in all material respects to all
applicable provisions of the listed insurance policies.
3.18 Transactions with Affiliates. Except as contemplated by
Section 10.7, there is no transaction, and no transaction is now proposed, to
which FSG was or is to be a party and in which any of its officers, directors or
shareholders or any of their Affiliates had or has a direct or indirect material
interest. Any such transaction will have terminated as of the Closing Date and
neither FSG nor TFA shall have any obligation thereunder following the Closing.
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3.19 Bank Accounts; Powers of Attorney; etc. Except as set
forth on Schedule 3.19, there are no (a) safe deposit boxes, bank accounts,
brokerage accounts or similar arrangements maintained by or for the account of
FSG with any bank, financial institution or other Person or (b) any outstanding
powers of attorney or other authorizations issued by FSG to FSG, any bank or
financial institution or any other Person.
3.20 Fees. No Person acting on behalf of FSG or any of its
Affiliates is entitled to any brokerage fees or commissions of any nature
directly or indirectly from FSG in connection with any of the transactions
contemplated hereby.
3.21 Grants. Any filings made by FSG under which it has
received or is entitled to receive government assistance or incentives have been
made in accordance, in all material respects, with all applicable legislation
and contain no misrepresentations of a material fact or omit to state any
material fact which could cause any material amount previously paid or
previously accrued on its accounts to be recovered or disallowed.
3.22 Minute Books. The minute books and corporate records of
FSG have been maintained in accordance with Applicable Law and contain true and
complete records of all meetings and consents and resolutions in lieu of
meetings of its board of directors (and all committees thereof) and its
shareholders, and accurately and completely reflect, in all material respects,
all matters referred to therein, and all material transactions entered into by
FSG. All resolutions contained in FSG's minute books have been duly adopted and
all such meetings have been duly called and held. The share certificate books
and the registers of shareholders, directors and transfers of FSG are true and
complete.
3.23 Subsidiaries. FSG does not have and has never had any
equity or other interest in any Person.
3.24 FSG's Assets. Schedule 3.24 sets forth a list and
description of FSG's assets as of the Closing Date, and each of FSG's assets is
free from material defects, has been maintained in a manner consistent with good
business practices, and is in good operating condition and repair (subject to
normal wear and tear).
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3.25 Disclosure. No representation or warranty of the
Principal Holder contained in this Agreement, and no statement or information
contained in any document, certificate or Schedule to this Agreement delivered
to TFA in connection herewith by FSG, its Affiliates or any Person acting on its
or their behalf, including the December 2004 Budget, contains any untrue
statement of a material fact or omits to state any material fact necessary, in
light of the circumstances under which it was made, in order to make those
statements or information not misleading. There is no fact, condition or
circumstance which (i) materially adversely affects the prospects, or condition
of FSG or (ii) relates to the Principal Holder or FSG and which might reasonably
be expected to deter TFA from entering into this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each of the
Shareholders hereby represented by the Principal Holder pursuant to a valid
Powers of Attorney reproduced in Schedule 4A, severally and not jointly,
represents and warrants to TFA as set forth below.
4.1 Authority. The Shareholder has the requisite power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution, issuance and delivery of this Agreement, the transfer of the FSG
Shares Sold to TFA and the consummation by the Shareholder of the transactions
contemplated hereby have been duly authorized by all necessary action, and
except as contemplated by Section 5.5(b), no further consent or authorization is
required by the Board of FSG or from any other Person. This Agreement has been
duly executed and delivered by the Shareholder and constitutes a valid and
binding obligation enforceable against the Shareholder in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights and to other equitable principles of
general application.
4.2 FSG Share Ownership. The Shareholder has good and
marketable title to the FSG Shares Sold, free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind.
Upon delivery to TFA of certificates representing the FSG Shares Sold, TFA will
acquire good and valid title thereto, free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind.
Other than this Agreement, the FSG Shares Sold are not subject to any agreement,
arrangement, commitment or understanding that could impair TFA's rights thereto,
including any restriction relating to the voting, dividend rights or disposition
of the FSG Shares.
16
4.3 Investment Intent. The Shareholder is entering into this
Agreement for its own account and not with a view to any distribution of the TFA
Shares acquired by it, and it has no present arrangement to sell any of its TFA
Shares to or through any Person, provided that this representation shall not be
construed as an undertaking to hold any TFA Shares for any minimum or other
specific term, and the Shareholder reserves the right to dispose of its TFA
Shares at any time in accordance with Applicable Law.
4.4 Experience. The Shareholder has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the TFA Common Stock. The Shareholder acknowledges
that an investment in the TFA Common Stock is speculative and involves a high
degree of risk.
4.5 Intentionally deleted.
4.6 Intentionally deleted.
4.7 Access to Information. The Shareholder has received or had
access, to all documents, records and other information pertaining to its
investment in the TFA Common Stock that it has requested, including documents
filed by TFA under the Exchange Act, and has been given the opportunity, to meet
or have telephonic discussions with representatives of TFA, to ask questions of
them, to receive answers concerning the terms and conditions of this investment
and to obtain information that TFA possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
provided to the Shareholder.
4.8 Manner of Sale. At no time was the Shareholder presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising relating to TFA or any investment in the TFA Common Stock.
17
4.9 No Conflicts. The execution, delivery and performance of
this Agreement by the Shareholder and the consummation by the Shareholder of the
transactions contemplated hereby, including the sale and assignment of the FSG
Shares, do not and will not (a) result in a violation of the Charter or Bylaws
of FSG, or (b) conflict with or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture, instrument or "lock-up" arrangement or similar
provision of any underwriting or similar agreement to which the Shareholder is a
party.
4.10 Consents. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions provided for herein
(a) requires the Shareholder or FSG to obtain or make any consent,
authorization, approval, registration or filing under any Applicable Law,
judgement or decree, (b) will cause any acceleration of maturity of any note,
instrument or other obligation to which any Shareholder is a party or by which
any of them is bound or with respect to which any of them is an obligor or
guarantor.
4.11 Release. The Shareholder has no claim of any nature
whatsoever against FSG or its Affiliates, including claims for the reimbursement
any advance, loan, extension of credit or capital contribution.
4.12 Residence. The Shareholder is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada).
5. REPRESENTATIONS AND WARRANTIES OF TFA. TFA represents and warrants
to the Shareholders and the Principal Holder as set forth below, except as
otherwise disclosed in the TFA SEC Documents and subject to the exceptions set
forth in the Schedules.
5.1 Organization of TFA. TFA is a corporation duly organized
and existing in good standing under the laws of the State of Florida and has all
requisite corporate authority to own its properties and to carry on its business
as now being conducted. TFA is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes qualification necessary,
except where failure to so qualify would have no Material Adverse Effect on TFA.
18
5.2 Authority. TFA has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the TFA Shares. The execution, issuance and delivery of this Agreement,
the issuance of the TFA Shares and the consummation by TFA of the transactions
contemplated hereby have been duly authorized by all necessary corporate action,
and no further consent or authorization is required by its Boards or its
shareholders. This Agreement and the other agreements delivered or to be
delivered by TFA have been or will be at Closing duly executed and delivered by
TFA and constitute valid and binding obligations of TFA, enforceable against it
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights and to other
equitable principles of general application.
5.3 Valid Issuance. Assuming the accuracy of the
representations and warranties of the Principal Holder in Section 3 and of the
Shareholders in Section 4, both at the date hereof and at the time of issuance,
the issuance and sale of the TFA Shares will be exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof or Regulation D
thereunder and, when delivered in accordance with the terms hereof, the TFA
Shares shall be duly and validly issued, fully paid and nonassessable. Neither
the issuance and sale of the TFA Shares pursuant to this Agreement nor TFA's
performance of its other obligations hereunder will (i) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the TFA
Shares or any of the assets of TFA or (ii) entitle the holders of Outstanding
Capital Shares to preemptive or other rights to subscribe to or acquire
additional Capital Shares or other securities of TFA. The Shareholders,
including Principal Holder, will not be subject to personal liability solely by
reason of their ownership or possession of the TFA Shares.
5.4 No Conflicts. The execution, delivery and performance of
this Agreement by TFA and the consummation by TFA of the transactions
contemplated hereby, including the issuance of the TFA Shares, do not and will
not (a) result in a violation of its Charter or Bylaws, (b) conflict with or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
19
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or "lock-up" arrangement or similar provision of any underwriting or
similar agreement to which TFA is a party, or (c) result in a violation of any
Applicable Law, nor is TFA or the conduct of its business otherwise in violation
of, conflict with or default under any of the foregoing, except for any
violations, conflicts, defaults or rights of termination, amendment,
acceleration or cancellation that would, individually or in the aggregate, have
no Material Adverse Effect on TFA.
5.5 Consents. Assuming the accuracy of the representations and
warranties of the Principal Holder in Section 3 and the Shareholders in Section
4 both at the date hereof and on the Closing Date, TFA is not required by
Applicable Law to obtain any consent, authorization or order of any Governmental
Entity or to make any filing or registration with any Governmental Entity in
connection with its execution, delivery or performance of its obligations under
this Agreement, other than the filing of (a) any notices that may be required
under state or provincial securities laws subsequent to the Closing, (b) the
receipt of an exempting order from the Autorite des marches financiers du Quebec
in respect of the issuance of TFA Shares in favor of certain Shareholders who
are resident of the Province of Quebec.
5.6 SEC Documents and Financial Statements. Except as
indicated on Schedule 5.6, TFA has filed on a timely basis all documents
required to be filed by it with the SEC since January 1, 2003 (all such
documents filed since January 1, 2003 and prior to the date hereof are referred
to as the "TFA SEC Documents"). Complete and correct copies of TFA SEC Documents
have been made available to the Shareholders, including by referring
Shareholders to the SEC's website at www. xxx.xxx, where copies of all TFA SEC
Documents are available for inspection and printing. As of their respective
dates, or if amended as of the date of the last such amendment, the TFA SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and none of TFA SEC
Documents as of the date thereof contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Complete and accurate copies of the
audited consolidated balance sheet, consolidated statements of operations,
consolidated statements of stockholders' equity and consolidated statements of
cash flows (together with any supplementary information thereto) of TFA, all as
20
of and for the fiscal period ended December 31, 2003 (the "TFA FINANCIAL
STATEMENTS") have been made available to the Shareholders, including the
Principal Holder. The TFA Financial Statements fairly present, in all material
respects, the consolidated financial position of TFA, as of and for the
respective dates thereof, and the consolidated results of its operations and its
consolidated cash flows for the respective periods then ended.
5.7 No Undisclosed Liabilities. TFA has no material
liabilities or obligations not reflected in the TFA Financial Statements, other
than those incurred in the ordinary course of TFA's business since the date of
the TFA Financial Statements and which, individually or in the aggregate, do not
or would not have a Material Adverse Effect on TFA.
5.8 No Material Adverse Change. Since the date of the TFA
Financial Statements, no event or condition has occurred that could have a
Material Adverse Effect on TFA.
5.9 Litigation and Other Proceedings. There are no Proceedings
pending or, to TFA's knowledge, threatened against TFA that might have a
Material Adverse Effect on TFA, and there are no judgements, orders, writs,
injunctions, decrees or awards issued by or, to TFA's knowledge, requested by
any Governmental Entity that might have a Material Adverse Effect on TFA.
5.10 Compliance with Applicable Laws. TFA is in compliance in
all material respects with all Applicable Laws affecting its business or
operations, and TFA has received no communication during the past two years from
a Governmental Entity alleging that it has failed to comply in any material
respect with any Applicable Laws.
5.11 Intentionally deleted.
5.12 Disclosure. No representation or warranty of TFA
contained in this Agreement, and no statement contained in any document,
certificate or Schedule to this Agreement delivered to the Shareholders in
connection herewith by TFA, its Affiliates or any Person acting on its or their
behalf contains any untrue statement of a material fact or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make those statements not misleading.
21
6. DILIGENCE AND DISCLOSURE MATTERS.
6.1 TFA's Due Diligence Review. The Principal Holder shall
cause FSG to make available for inspection and review by TFA and its advisors
and representatives (collectively, "TFA REPRESENTATIVES") copies of all records
of FSG reasonably requested by them for conducting their due diligence review in
connection with the transactions contemplated by this Agreement.
6.2 FSG's Due Diligence Review. TFA shall make available for
inspection and review by FSG and its advisors and representatives (collectively,
"FSG REPRESENTATIVES") copies of all records of TFA reasonably requested by them
for conducting their due diligence review in connection with the transactions
contemplated by this Agreement.
6.3 Supplemental Disclosure. Each Party shall have the
continuing obligation until the Closing to promptly supplement or amend its
Schedules to reflect any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Schedules, provided that no supplement or
amendment to the Schedules delivered more than five (5) business days after the
date of this Agreement shall have any effect for the purpose of determining the
satisfaction of the conditions set forth in Section 9 or Section 10.
6.4 Non-Disclosure. All confidential information received by a
Party with respect to the business of the other Party shall be treated in
accordance with the restrictions set forth in the confidentiality agreement
between TFA and FSG, reproduced as Schedule 6.4.
6.5 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each Party shall use all reasonable efforts to cause the Closing
to occur by the Outside Closing Date.
6.6 Further Assurances. From time to time, as and when
requested by a Party, the other Parties shall execute and deliver, or cause to
be executed and delivered, all documents and instruments and shall take all
actions (subject to the other provisions of this Agreement) as the other Parties
may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
22
7. CONDUCT OF FSG BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing, unless otherwise approved in writing by TFA, the
Principal Holder and, to the extent set forth below, the Shareholders including
the Principal Shareholder, shall cause FSG to conduct its business in accordance
with the provisions of this Section 7.
7.1 Corporate Existence. The Principal Holder shall cause FSG
to take all steps necessary to preserve and continue its corporate existence and
franchises.
7.2 Conduct of Operations. The Principal Holder shall cause
FSG to conduct its operations in the ordinary and usual courses of business, as
currently conducted, and shall not take or agree to take any Material FSG
Actions as provided in this Agreement.
7.3 Preservation of Representations. The Principal Holder and
the Shareholders shall not take any action that (a) if taken on or before the
date hereof, would make any of their representations and warranties in Section 3
or Section 4 untrue or (b) would interfere with their ability to perform its
obligations under this Agreement.
7.4 Procuring Approvals. The Principal Holder shall use its
best efforts to cause FSG to obtain all licenses, consents or other approvals
required to be obtained from any Person in connection with the transactions
contemplated by this Agreement.
7.5 Exclusivity. Between the date of this Agreement and the
earlier to occur of the Closing or the termination of this Agreement in
accordance with Section 12, the Principal Holder, no Shareholder nor any Person
acting on their behalf shall initiate, encourage, solicit or agree to any offer
from any Person other than TFA regarding any merger, sale of securities, sale of
assets or similar transaction involving FSG or any transaction that could be
expected to impede, delay, interfere with, prevent or dilute the benefits to TFA
of the transactions contemplated hereby.
8. CONDUCT OF TFA BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing, unless otherwise approved in writing by FSG, TFA shall
conduct its business in accordance with the provisions of this Section 8.
23
8.1 Preservation of Representations. TFA shall not take any
action that (a) if taken on or before the date hereof, would make any of its
representations and warranties in Section 5 untrue or (b) would interfere with
its ability to perform its obligations under this Agreement.
8.2 Procuring Approvals. TFA shall use its best efforts to
obtain all licenses, consents or other approvals required to be obtained by it
from any Person in connection with the transactions contemplated by this
Agreement.
9. CONDITIONS PRECEDENT TO TFA'S OBLIGATIONS. The obligations of TFA
hereunder to issue the TFA Shares to the Shareholders at the Closing in exchange
of the purchase of FSG Shares and to consummate the other transactions
contemplated by Section 2 are subject to the satisfaction of or waiver by TFA on
or before the Closing Date, of each of the conditions set forth in this Section
9.
9.1 Accuracy of the Principal Holder and the Shareholders'
Representation and Warranties. The representations and warranties of the
Principal Holder and the Shareholders herein shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made as of the Closing Date.
9.2 Performance by the Principal Holder and the Shareholders.
The Principal Holder and the Shareholders shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required hereunder to be performed, satisfied or complied with by them at or
prior to the Closing Date.
9.3 No Injunction. No Applicable Law shall prohibit the
Shareholders from consummating the transactions contemplated by this Agreement,
and no proceeding for that purpose shall have been commenced.
9.4 No Adverse Changes. Since the filing date of most recent
balance sheet of FSG included in the FSG Financial Statements, no event or
condition shall have occurred that had or would likely have a Material Adverse
Effect on FSG.
24
9.5 Consents Obtained. The Principal Holder and the
Shareholders shall have obtained any written consents of any Person whose
consent is required to consummate the transactions contemplated by this
Agreement.
9.6 Financial Statements. FSG shall have delivered to TFA its
unaudited financial statements for the period ended March 31, 2004, which shall
be acceptable to TFA.
9.7 Liabilities. As of the Closing Date, FSG shall have (i) no
material liabilities other than those reflected on the Financial Statements or
incurred thereafter in the ordinary course of business, (ii) no indebtedness to
any Shareholder or Affiliate of FSG and, (iii) approximately CDN$125,000 in
unencumbered cash on hand consistent with the relative amounts of FSG
unencumbered cash and draw downs under FSG Credit Facilities over the six months
immediately preceding the date of this Agreement.
9.8 FSG's material agreement. All material agreements to which
FSG is a party on the date of this Agreement shall remain in full force and
effect following the Closing, and consummation this transaction shall not
entitle any person to terminate any material agreement to which FSG is a party
as of the date of this Agreement.
9.9 Due Diligence. TFA shall be satisfied with the completion
of due diligence.
9.10 Board Augmentation. As of the Closing Date, subject to
the Closing hereunder, FSG shall have increased the size of the FSG Board to
three members and appointing two of TFA's designees as directors of FSG as
identified in Schedule 9.10.
9.11 Officer's Certificate. TFA shall have received a
Certificate in substantially the form of Schedule 9.11, executed by the chief
executive officer of FSG as at the Closing Date.
9.12 Legal Opinion. TFA shall have received a legal opinion in
substantially the form of Schedule 9.12 from FSG's legal counsel.
9.13 Credit Facilities. TFA shall either maintain the existing
FSG Credit Facilities or establish a new credit facility equal to or greater
than FSG Credit Facilities prior to the Closing without any personal guarantees
of the Shareholders.
25
9.14 Exempting Orders. TFA shall have obtained at the Outside
Closing Date, all necessary exempting orders from the Autorite des marches
financiers du Quebec and the Ontario Securities Commission in respect of the
issuance of the TFA Shares in favor of the Shareholders.
10. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS. The
obligations of the Shareholders to assign and transfer the FSG Shares to TFA at
the Closing and to consummate the transactions contemplated by Section 2 are
subject to the satisfaction or waiver by FSG, on or before the Closing Date, of
each of the conditions set forth in this Section 10. The Shareholders may not
rely on TFA's failure to satisfy any condition set forth in this Section 10 if
the failure was caused by their own failure to act in good faith or to use all
reasonable efforts to satisfy the conditions set forth in Section 9.
10.1 Accuracy of TFA's Representation and Warranties. The
representations and warranties of TFA herein shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made as of the Closing Date.
10.2 Performance by TFA. TFA shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required hereunder to be performed, satisfied or complied with by TFA
at or prior to the Closing Date.
10.3 No Injunction. No Applicable Law shall prohibit TFA from
consummating the transactions contemplated by this Agreement, and no proceeding
for that purpose shall have been commenced.
10.4 No Adverse Changes. Since the date of the TFA Financial
Statements was filed, no event or condition shall have occurred that had or
would likely have a Material Adverse Effect on TFA.
10.5 No Trading Suspension or Delisting of Common Stock. The
trading of the Common Stock shall not have been suspended by the SEC, nor shall
TFA has received any letter or notice of any suspension or delisting.
26
10.6 Consents Obtained. TFA shall have obtained any required
written consents of any other Person whose consent is required to the
transactions contemplated by this Agreement including an exempting order from
the Autorite des marches financiers du Quebec and the Ontario Securities
Commission in respect of the issuance of TFA Shares in favor of certain
Shareholders who are resident of the Province of Quebec, and that such exempting
order shall not be received by the Closing Date.
10.7 Consulting Agreement and Employment Agreements TFA shall
have entered into a consulting agreement with the Principal Holder (the
"CONSULTING AGREEMENT"), and TFA shall cause FSG to enter into employment
agreements with three FSG executives reasonably satisfactory to TFA (the
"EMPLOYMENT AGREEMENTS"), on terms and conditions satisfactory to each of the
parties. The Consulting Agreement shall include the grant to the Principal
Holder of three-year options to purchase 100,000 shares of TFA Common Stock at
US$0.85 per share, and the Employment Agreements shall include the grant to each
of the other three FSG executives of three-year options to purchase 50,000
shares of TFA common stock each, at US$0.85 per share (collectively the
"OPTIONS"). The Options shall be subject to regulatory approvals, may not be
exercised until the expiration of nine months following the Closing Date, and
they may not be exercised after ninety (90) days of the date of termination of
the Consulting Agreement and the Employment Agreements.
10.8 Personal Obligation for Indebtedness. The Principal
Holder shall have been released from any personal obligation for indebtedness of
FSG reflected in the Financial Statements.
10.9 Accounting and Legal Fees. TFA shall cause the payment at
Closing of all accounting and legal fees of TFA and FSG attributable to the
purchase of FSG Shares and the transaction contemplated by this Agreement.
10.10 Registration Rights Agreement. TFA shall have executed
and delivered the Registration Rights Agreement.
27
10.11 Officer's Certificate. The Shareholders, including
Principal Holder, shall have received a Compliance Certificate in substantially
the form of Schedule 10.11, executed by the chief executive officer of TFA as at
the Closing Date.
10.12 Legal Opinion. FSG shall have received on the Closing
Date a legal opinion from the American legal counsel of TFA as to the validity
of the issuance of TFA Shares and the grant of Options to the Principal Holder
and the FSG executives under the Consulting Agreement and the Employment
Agreements.
10.13 Amendment of lease. TFA shall have executed and
delivered the amendment of the lease regarding the premises located at 000,
Xxxxxxxx xxxxxx, unit A, Gatineau, (Quebec), J8X 1W2 in substantially the form
of Schedule 10.13.
11. INDEMNIFICATION
11.1 Indemnification by TFA. TFA shall indemnify and hold
harmless FSG and its Affiliates, duly authorized agents and Control Persons from
and against any Liabilities and Litigation Expenses incurred by the Indemnified
Person in connection with any Proceeding to which the Indemnified Person is, was
or at any time becomes a party, arising from TFA's breach of its representations
and warranties under this Agreement or its failure to perform any of its
covenants contained in this Agreement.
11.2 Indemnification by the Principal Holder and the
Shareholders. The Principal Holder, and each of the Shareholders shall indemnify
and hold harmless TFA and its Affiliates, duly authorized agents and Control
Persons from and against any Liabilities and Litigation Expenses incurred by the
Indemnified Person in connection with any Proceeding to which the Indemnified
Person is, was or at any time becomes a party, arising from the Principal
Holder's or Shareholder's breach of its representations and warranties under
this Agreement or its failure to perform any of its covenants contained in this
Agreement.
11.3 Notice and Defence of Claim. The Indemnified Person shall
promptly notify the Indemnifying Person in writing of the commencement of any
Third Person Proceeding for which indemnification may be claimed hereunder,
provided that any failure to so notify the Indemnifying Person shall not relieve
it from its obligations under this Section 11. If it receives notice of a Third
28
Person Proceeding from the Indemnified Person, the Indemnifying Person may
participate in the Proceeding at its own expense and will be entitled to assume
the defence thereof with counsel of its choice unless counsel for the
Indemnifying Person reasonably concludes that there would be a conflict of
interest between the Indemnifying Person and the Indemnified Person that
precludes their joint representation under Applicable Law or ethical canons. If
the Indemnifying Person assumes the defence of the Third Person Proceeding, it
shall not be liable to the Indemnified Person for any Litigation Expenses
subsequently incurred by it in connection with the defence thereof, except to
the extent that the Indemnifying Person authorizes the Indemnified Person to
engage separate counsel or the Indemnifying Person or its counsel fails to act
with reasonable diligence in assuming the defence of the Proceeding, in each of
which events all Litigation Expenses thereafter incurred by the Indemnified
Person for employing separate counsel shall be subject to indemnification
hereunder. In no event shall the Indemnifying Person be obligated for the
Litigation Expenses of more than one separate counsel to represent all
Indemnified Parties in a particular Third Person Proceeding.
11.4 Advancement of Expenses. Upon written request by the
Indemnified Person in connection with a Third Person Proceeding, the
Indemnifying Person shall promptly advance all Litigation Expenses incurred by
or on behalf of the Indemnified Person to the extent authorized under Section
11.3. The request shall contain a reasonably detailed description of the
Litigation Expenses or, if available to the Indemnified Person, documentation
evidencing the amount of the Litigation Expenses. The Indemnified Person's right
to advancement of Litigation Expenses shall be conditioned upon its agreement to
repay amounts advanced if it is ultimately determined that the Indemnified
Person is not entitled to be indemnified for those Litigation Expenses under
this Section 11.
11.5 Remedies of the Indemnified Person. In the event that (a)
advances of Litigation Expenses pursuant to Section 11.4 are not timely made,
(b) payment of Liabilities or Litigation Expenses are not timely made after a
determination of entitlement to indemnification hereunder or (c) the Indemnified
Person otherwise seeks to enforce its rights under this Section 11, the
Indemnified Person shall be entitled to a final adjudication of its rights
hereunder in any court of competent jurisdiction in the venue specified in
Section 13.1 (an "Adjudication"). All Litigation Expenses reasonably incurred by
the Indemnified Person in connection with an Adjudication shall be borne by the
Indemnifying Person if the Indemnified Person is successful in the Adjudication.
29
11.6 Settlement, Compromise and Consent. Without the prior
written consent of the Indemnified Person, the Indemnifying Person shall not
settle any Third Person Proceeding, permit a default judgement to be entered
therein or consent to the entry of any adverse judgement therein unless the
settlement, compromise or consent includes an unconditional release in favor of
the Indemnified Person by all claimants from any liability therein. The
Indemnifying Person shall not be liable to indemnify the Indemnified Person
under this Section 11 for any amounts paid in settlement of a Third Person
Proceeding effected without its written consent, which the Indemnifying Person
shall not unreasonably withhold or delay.
11.7 Non-exclusivity. The rights of the Indemnified Person
under this Section 11 shall not be deemed exclusive or in limitation of any
other rights to which the Indemnified Person may be entitled under Applicable
Law.
11.8 Other Payments. The Indemnifying Person shall not be
liable to make any payment under this Section 11 to the extent that the
Indemnified Person has received payment from a third party of the amounts
otherwise payable by the Indemnifying Person hereunder.
11.9 Subrogation. The Indemnifying Person shall be subrogated,
to the extent of any indemnification payment under this Agreement, to all
related rights of recovery of the Indemnified Person, and the Indemnified Person
shall take all actions necessary to secure the Indemnifying Person's recovery
rights and perfect its ability to enforce those rights.
12. TERMINATION.
12.1 FSG Termination Event. Provided that the Shareholders
have not materially breached any of their representations, warranties, covenants
or agreements contained herein, the Shareholders may terminate this Agreement
and abandon the transactions contemplated hereby at any time prior to the
Closing if TFA shall have failed to satisfy in any material respect any of the
conditions set forth in Section 10 or any of those conditions shall have become
incapable of fulfilment and shall not have been waived by a majority of the
Shareholders, including the Principal Holder, and the failure or non fulfilment
materially reduces the benefits of the transactions contemplated hereby to the
Shareholders.
30
12.2 TFA Termination Event. Provided that TFA has not
materially breached any of its representations, warranties, covenants or
agreements contained herein, it may terminate this Agreement and abandon the
transactions contemplated hereby at any time prior to the Closing if the
Shareholders shall have failed to satisfy in any material respect any of the
conditions set forth in Section 9 or any of those conditions shall have become
incapable of fulfilment and shall not have been waived by TFA and the failure or
non fulfilment materially reduces the benefits of the transactions contemplated
hereby to TFA.
12.3 Other Termination Events. This Agreement may be
terminated and the transactions contemplated hereby abandoned by the Parties (i)
by mutual agreement, or (ii) if the Closing does not occur on or prior to the
Outside Closing Date, provided that the Party seeking termination pursuant to
this Section 12.3 is not in breach of its or their material representations,
warranties, covenants or agreements contained in this Agreement.
12.4 Notice of Termination. In the event TFA, the Principal
Holder or a Shareholder seeks to terminate this Agreement pursuant to this
Section 12, it shall provide written notice (a "TERMINATION NOTICE") thereof to
the other Party, setting forth in reasonable detail the grounds for termination,
whereupon the transactions contemplated by this Agreement shall be terminated,
without further action by any Party, subject to the provisions of Section 12.5.
12.5 Effects of Termination. If this Agreement is terminated
and the transactions contemplated hereby are abandoned as provided in this
Section 12, this Agreement shall become void and of no further force or effect,
except that each Party shall return all documents and other material received
from or on behalf of the counter Party in connection with the transactions
contemplated hereby, together with all copies thereof, whether so obtained
before or after the execution hereof. The restrictions set forth in Schedule 6.4
regarding disclosure of confidential information shall remain in full force and
effect notwithstanding any termination of this Agreement.
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13. MISCELLANEOUS.
13.1 Nature and Survival of Covenants and Representations. The
covenants, agreements, representations and warranties of the parties hereto in
this Agreement or in any Schedule or Exhibit hereto or any certificate or other
document delivered pursuant to this Agreement shall survive until the date
eighteen (18) months after the Closing Date, except for (i) the representations
and warranties of the parties regarding tax claims and liabilities which shall
survive until the statutes of limitations applicable to such matters expires,
and except for fraud matters for which they shall survive indefinitely.
13.2 Choice of Law; Venue. This Agreement shall be governed by
and construed in accordance with the laws of the Province of Quebec without
regard to principles of conflicts of laws. Any action brought by a Party against
the counter Party concerning the transactions contemplated by this Agreement may
be brought in the state courts of the Province of Quebec. All Parties agree to
submit to the jurisdiction of this court. The prevailing Party in any Proceeding
between the Parties shall be entitled to recover from the counter Party its
reasonable attorneys' fees and disbursements incurred in connection with the
Proceeding.
13.3 Assignment. Neither this Agreement nor any rights or
obligations of a Party hereunder may be assigned by any Party without the prior
written consent of the counter Party.
13.4 Binding Effect. The terms, conditions and provisions of
this Agreement and all rights and obligations of each Party hereunder shall
inure to the benefit of and be binding upon that Person and its successors and
permitted assigns. Nothing herein expressed or implied shall give or be
construed to give to any other Person any legal or equitable rights hereunder.
13.5 Amendment. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by all the
Parties.
13.6 Notices. Any notice given under this Agreement shall be
made in writing and shall be deemed to have been duly given or made if delivered
personally, mailed with postage prepaid by registered or certified mail or sent
by courier or facsimile to a Party at its address set forth or provided below.
Any notice so sent shall be deemed to have been given or delivered (a) at the
time that it is personally delivered, (b) within two business days after the
32
date deposited in the first class mail or one business day after deposit with an
overnight courier if sent by mail or courier or (c) when receipt is
acknowledged, if sent by facsimile. A Party may change its address by giving
notice in writing, stating its new address, to the other Party.
If to Shareholders or Principal Holder:
Xxxxxx Xxxxx
000, xxxxxx Xxxxxxxxx
Xxxx-Xxxxxxxxx (Xxxxxx)
X0X 0X0
with a copy to:
XXXXXXX, XXXXXXXX
Maison du citoyen
00, xxx Xxxxxxx
Xxxxxx 400
Gatineau (Quebec)
J8X 4C8
Att: Me Xxxxxx XxXxxxxx
If to TFA:
00000, Xx-Xxxxxxx Xxxx., xxxxx 000
Xxxx Xxxxx, Xxxxxxx
00000
Att: Xx. Xxxxxx Xxxxxxxxx
with a copy to:
XXXXXXXX XXXXXXXXXX
Bureau 1400, 0000, xxxx. Xxxx-Xxxxxxxx Xxxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
Att: Me Xxxxxx Xxxxxxx
13.7 Fees and Expenses. All reasonable legal fees of the
Shareholders attributable to the transactions contemplated by this Agreement
shall be paid at Closing by TFA.
33
13.8 Publicity. Except as required by Applicable Law, neither
TFA, the Principal Holder nor any Shareholder shall issue any press release or
otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
FSG, in the case of a statement or announcement by TFA, or TFA, in the case of a
statement or announcement by the Principal Holder and any Shareholder, which
shall not be unreasonably withheld, conditioned or delayed in either case.
13.9 Entire Agreement. This Agreement, including the Schedules
and Exhibits, together with the confidentiality provisions of the
confidentiality agreement, set forth the entire agreement and understanding of
the Parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between or among the
Parties, both oral and written, relating to the subject matter hereof.
13.10 Severability. In the event any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without that provision, severance of which shall not affect the validity
or enforceability of any other provision of this Agreement.
13.11 Waiver of Provisions. The waiver of compliance at any
time with any of the provisions, terms or conditions contained in this Agreement
shall not be considered a waiver of the provision, term or condition itself or
of any other provision, term or condition hereof.
13.12 Covenants. The parties agree and covenant to co-operate
fully and provide any certificates, documentation, financial statements and data
for purposes of making any filings or submissions to the regulatory authorities
having jurisdiction in the United States and Canada.
13.13 Captions. The headings and captions in this Agreement
and in the Schedules and Exhibits are for convenience and identification only
and are in no way intended to define, limit or expand the scope and intent of
this Agreement or any provision hereof.
13.14 Counterparts. This Agreement may be executed in separate
counterparts that together will constitute one and the same instrument.
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13.15 IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed by the undersigned as of the date first set forth above.
TOTAL FIRST AID, INC.
By: __________________________________
Xxxxxx Xxxxxxxxx
THE SHAREHOLDERS
By: __________________________________
Xxxxxx Xxxxx
THE PRINCIPAL HOLDER
By: __________________________________
Xxxxxx Xxxxx
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