ASSET PURCHASE AGREEMENT
dated as of February 10, 1997
by and among
XXXXXX-FIELD HEALTH PRODUCTS, INC.,
EVEREST & XXXXXXXX CANADIAN LIMITED,
MOTION 2000 INC.
and
MOTION 0000 XXXXXX INC.
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
Page
No.
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 Assets......................................................... 1
1.02 Liabilities.................................................... 5
1.03 Purchase Price; Adjustment; Allocation......................... 6
1.04 Closing; Escrow................................................ 8
1.05 Accounts Receivable Payment.................................... 9
1.06 Further Assurances; Post-Closing Cooperation................... 10
1.07 Financial Statements........................................... 11
1.08 Third-Party Consents........................................... 12
1.09 Insurance Proceeds............................................. 12
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
2.01 Organization of Sellers; Extra Provincial
Qualification.................................................. 13
2.02 Authority; Capital Stock....................................... 13
2.03 No Conflicts................................................... 14
2.04 Governmental Approvals and Filings............................. 14
2.05 Books and Records.............................................. 14
2.06 Financial Statements........................................... 15
2.07 Absence of Changes............................................. 15
2.08 No Undisclosed Liabilities..................................... 17
2.09 Taxes.......................................................... 17
2.10 Legal Proceedings.............................................. 18
2.11 Compliance With Laws and Orders................................ 18
2.12 Benefit Plans and Pension Plans................................ 18
2.13 Real Property.................................................. 20
2.14 Tangible Personal Property; Investment Assets.................. 21
2.15 Intellectual Property Rights................................... 21
2.16 Contracts...................................................... 22
2.17 Customer Orders................................................ 24
2.18 Licenses....................................................... 24
2.19 Warranty Claims................................................ 25
2.20 Product Liability Claims....................................... 25
2.21 Insurance...................................................... 25
2.22 Affiliate Transactions......................................... 25
2.23 Employees; Labor Relations..................................... 26
2.24 Environmental Matters.......................................... 28
2.25 Substantial Customers and Suppliers............................ 29
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Page
No.
2.26 Inventory; Tools, Molds and Dies............................... 29
2.27 Assembly Lines and Manufacturing Equipment;
Instruction Materials.......................................... 30
2.28 Vehicles....................................................... 30
2.29 No Guarantees.................................................. 30
2.30 No Options, Etc................................................ 30
2.31 Entire Business................................................ 30
2.32 Delivery of Evidence Relating to Retail Sales
Tax............................................................ 31
2.33 Vendor Resident of Canada...................................... 31
2.34 GST and QST Registration....................................... 31
2.35 Brokers........................................................ 31
2.36 Disclosure..................................................... 31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
3.01 Organization................................................... 32
3.02 Authority; Demand Notes........................................ 32
3.03 No Conflicts................................................... 32
3.04 Governmental Approvals and Filings............................. 33
3.05 Legal Proceedings.............................................. 33
3.06 SEC Reports and Financial Statements; No Adverse
Change......................................................... 33
3.07 GST and QST Registration....................................... 34
3.08 Brokers........................................................ 34
ARTICLE IV
COVENANTS OF SELLERS
4.01 Regulatory and Other Approvals................................. 34
4.02 Investigation by Purchaser..................................... 35
4.03 No Solicitations............................................... 35
4.04 Conduct of Business............................................ 36
4.05 Financial Statements and Reports; Filings...................... 36
4.06 Employee Matters............................................... 37
4.07 Certain Restrictions........................................... 37
4.08 Books and Records, etc.; Removal of Property................... 38
4.09 Use of "Motion 2000" Name...................................... 38
4.10 Change of Corporate Name....................................... 38
4.11 Certain Tax Matters............................................ 38
4.12 Notice and Cure................................................ 40
4.13 Fulfillment of Conditions...................................... 40
ARTICLE V
COVENANTS OF PURCHASER
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Page
No.
5.01 Regulatory and Other Approvals................................. 40
5.02 Notice and Cure................................................ 41
5.03 Fulfillment of Conditions...................................... 41
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 Representations and Warranties................................. 41
6.02 Performance.................................................... 42
6.03 Officers' Certificates......................................... 42
6.04 Orders and Laws................................................ 42
6.05 Regulatory Consents and Approvals.............................. 42
6.06 Third Party Consents........................................... 42
6.07 Release of Security Interest................................... 43
6.08 Opinion of Counsel............................................. 43
6.09 Real Property Leases........................................... 43
6.10 Deliveries..................................................... 43
6.11 Proceedings.................................................... 43
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
7.01 Representations and Warranties................................. 44
7.02 Performance.................................................... 44
7.03 Officers' Certificates......................................... 44
7.04 Orders and Laws................................................ 44
7.05 Regulatory Consents and Approvals.............................. 44
7.06 Third Party Consents........................................... 45
7.07 Release of Guarantee........................................... 45
7.08 Opinion of Counsel............................................. 45
7.09 Deliveries..................................................... 45
7.10 Proceedings.................................................... 45
ARTICLE VIII
EMPLOYMENT MATTERS
8.01 Employment..................................................... 45
9.01 Survival of Representations and Warranties..................... 46
9.02 Indemnification................................................ 46
ARTICLE X
TERMINATION
10.01 Termination................................................... 50
10.02 Effect of Termination......................................... 51
ARTICLE XI
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Page
No.
DEFINITIONS
11.01 Definitions................................................... 51
ARTICLE XII
MISCELLANEOUS
12.01 Notices....................................................... 61
12.02 Entire Agreement.............................................. 63
12.03 Expenses...................................................... 63
12.04 Public Announcements.......................................... 63
12.05 Bulk Sales Law................................................ 63
12.06 Waiver........................................................ 63
12.07 Amendment..................................................... 64
12.08 No Third Party Beneficiary.................................... 64
12.09 No Assignment; Binding Effect................................. 64
12.10 Headings...................................................... 64
12.11 Invalid Provisions............................................ 64
12.12 Governing Law................................................. 64
12.13 Counterparts.................................................. 64
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ANNEXES
ANNEX I Principal Amount of Demand Notes
EXHIBITS
EXHIBIT A Form of Demand Note
EXHIBIT B Employment and Non-Competition Agreement
EXHIBIT C Registration Rights Agreement
EXHIBIT D Escrow Agreement
EXHIBIT E Officer's Certificate of Sellers
EXHIBIT F Secretary's Certificate of Sellers
EXHIBIT G Officer's Certificate of Purchaser/Parent
EXHIBIT H Secretary's Certificate of Purchaser/Parent
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This ASSET PURCHASE AGREEMENT dated as of February 10, 1997, is made
and entered into by and among Xxxxxx-Field Health Products, Inc., a Delaware
corporation ("Parent"), Everest & Xxxxxxxx Canadian Limited, a corporation
organized under the laws of Ontario and an indirect wholly-owned subsidiary of
Parent ("Purchaser"), Motion 2000 Inc., a corporation organized under the laws
of Ontario ("Motion 2000") and Motion 0000 Xxxxxx Inc., a corporation organized
under the laws of Canada ("Motion 2000 Quebec" and, together with Motion 2000,
the "Sellers"). Capitalized terms not otherwise defined herein have the meanings
set forth in Section 11.01.
WHEREAS, Sellers are each engaged in the business of distributing
lines of walkers, rollators, extra-wide wheelchairs and other similar healthcare
products in Canada and manufacturing seating products in Canada (collectively,
the "Business"); and
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and
Parent desires that Purchaser purchase and acquire from Sellers, substantially
all of the assets of Sellers relating to the operation of the Business, and in
connection therewith, Purchaser has agreed to assume certain of the liabilities
of Sellers relating to the Business, all on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 Assets. (a) Assets Transferred. On the terms and subject to the
conditions set forth in this Agreement, Sellers will sell, transfer, convey,
assign and deliver to Purchaser, and Purchaser will purchase and pay for, at the
Closing, free and clear of all Liens other than Permitted Liens, all of Sellers'
right, title and interest in, to and under the following Assets and Properties
of Sellers used or held for use in connection with the Business, except as
otherwise provided in Section 1.01(b), as the same shall exist on the Closing
Date (collectively, the "Assets"):
(i) Real Property. The real property described in Section 1.01(a)(i)
of the Disclosure Schedule, and all of the rights arising out of the
ownership thereof or appurtenant thereto (the "Real Property"), together
with all buildings, structures, facilities, fixtures and other improvements
thereto (the "Improvements");
(ii) Real Property Leases. (A) The leases and subleases of real
property described in Section 1.01(a)(ii)(A) of the Disclosure Schedule as
to which either Seller is the lessor or sublessor and (B) the leases and
subleases of real property described in Section 1.01(a)(ii)(B) of the
Disclosure Schedule as to which either Seller is the lessee or sublessee,
together with any options to purchase the underlying property and leasehold
improvements thereon, and in each case all other rights, subleases,
licenses, permits, deposits and profits appurtenant to or related to such
leases and subleases (the leases and subleases described in subclauses (A)
and (B), the "Real Property Leases");
(iii) Inventory. All inventories of raw materials, work-in-process,
parts, finished goods, products under research and development,
demonstration equipment, office and other supplies, parts and operating
supplies, packaging materials and other accessories related thereto which
are held at, or are in transit from or to, the locations at which the
Business is conducted, or located at customers' premises on consignment, in
each case, which are used or held for use by either Seller in the conduct
of the Business, including any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other
Person, together with all rights of either Seller against suppliers of such
inventories, including but not limited to the items listed in Section
1.01(a)(iii) of the Disclosure Schedule (the "Inventory");
(iv) Accounts Receivable. All trade accounts receivable and all notes,
bonds and other evidences of Indebtedness of and rights to receive payments
arising out of sales occurring in the conduct of the Business, including
but not limited to the accounts receivable listed in Section 1.01(a)(iv) of
the Disclosure Schedule, and the security arrangements and collateral
related thereto, including any rights of or any other Actions or
Proceedings which have been commenced in connection therewith (the
"Accounts Receivable");
(v) Tangible Personal Property. All furniture, fixtures, equipment,
machinery and other tangible personal property (other than Inventory and
Vehicles) used or held for use in the conduct of the Business at the
locations which the Business is conducted or at customers' premises on
consignment, or otherwise used or held for use by either Seller in the
conduct of the Business (including but not limited to the items listed in
Section 1.01(a)(v) of the Disclosure Schedule), including any of the
foregoing purchased subject to any conditional sales or title
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retention agreement in favor of any other Person (the "Tangible Personal
Property");
(vi) Personal Property Leases. (A) The leases or subleases of tangible
personal property described in Section 1.01(a)(vi)(A) of the Disclosure
Schedule as to which either Seller is the lessor or sublessor and (B) all
leases related to computer equipment, rolling stock, telephone equipment
and other office equipment used in connection with the Business, including
the leases of tangible personal property described in Section
1.01(a)(vi)(B) of the Disclosure Schedule as to which either Seller is the
lessee, together with any options to purchase the underlying property (the
leases and subleases described in subclauses (A) and (B), the "Personal
Property Leases");
(vii) Business Contracts. All Contracts (other than the Real Property
Leases, the Personal Property Leases, the Accounts Receivable and the
Customer Orders) to which either Seller is a party and which are utilized
in the conduct of the Business, including without limitation Contracts
relating to customers, suppliers, sales representatives, distributors,
purchase orders, marketing arrangements and manufacturing arrangements,
including but not limited to the Contracts listed in Section 1.01(a)(vii)
of the Disclosure Schedule (the "Business Contracts");
(viii) Prepaid Expenses. All prepaid expenses relating to the
Business, including but not limited to the items listed in Section
1.01(a)(viii) of the Disclosure Schedule (the "Prepaid Expenses");
(ix) Intangible Personal Property. All Intellectual Property used or
held for use in the conduct of the Business (including each Seller's
goodwill therein), including the right to use the name "Motion 2000" and
all variations thereof, and all rights, privileges, claims, causes of
action and options relating or pertaining to the Business or the Assets,
including but not limited to the items listed in Section 1.01(a)(ix) of the
Disclosure Schedule (the "Intangible Personal Property");
(x) Licenses. All Licenses (including applications therefor) utilized
in the conduct of the Business, including but not limited to the Licenses
listed in Section 1.01(a)(x) of the Disclosure Schedule (the "Business
Licenses");
(xi) Vehicles. All trucks, cars and motor vehicles owned or leased by
either Seller and used or held for use in the conduct of the Business,
including but not limited to the vehicles listed in Section 1.01(a)(xi) of
the Disclosure Schedule (the "Vehicles");
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(xii) Security Deposits. All security deposits deposited by or on
behalf of either Seller as lessee or sublessee under the Real Property
Leases, including but not limited to the security deposits listed in
Section 1.01(a)(xii) of the Disclosure Schedule (the "Tenant Security
Deposits");
(xiii) Books and Records. All Books and Records, including but not
limited to, files and computer reports, used or held for use in the conduct
of the Business or otherwise relating to the Assets, other than the minute
books, stock transfer books and corporate seal of each Seller (the
"Business Books and Records");
(xiv) Tools, Molds and Dies. All of the tools, molds and dies listed
in Section 1.01(a)(xiv) of the Disclosure Schedule (the "Tools, Molds and
Dies");
(xv) Assembly Lines and Manufacturing Equipment. The
assembly/production lines described in Section 1.01(a)(xv) of the
Disclosure Schedule (the "Assembly Lines") and all other machinery used in
connection with the assembly by either Seller of the products distributed
in the Business, including but not limited to the items listed in Section
1.01(a)(xv) of the Disclosure Schedule (the "Manufacturing Equipment");
(xvi) Artworks, etc. All artworks, mechanicals or stats prepared in
connection with marketing and advertising materials, catalogs, brochures or
similar items relating to the Business, including but not limited to the
items listed in Section 1.01(a)(xvi) of the Disclosure Schedule;
(xvii) Marketing Materials. All customer lists, dealer lists, sales
representative lists, distributor lists, toll free telephone numbers,
marketing and advertising materials, catalogs and brochures used in or
generated for the Business, including but not limited to the items listed
in Section 1.01(a)(xvii) of the Disclosure Schedule (the "Marketing
Materials");
(xviii) Designs, Blueprints. All designs, products, drawings, plans,
blueprints, bills of material, flowsheets, specifications, plan sheets,
formulas, parts lists, instruction manuals, FDA Form 510K product filings
and registrations and device master records relating to the Business,
including but not limited to the items listed in Section 1.01(a)(xviii) of
the Disclosure Schedule (the "Instruction Materials");
(xix) Catalog Numbers. All catalog numbers used in connection with the
Business (the "Catalog Numbers");
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(xx) Customers Orders. The unfilled sales orders and customer
commitments relating to the Business listed in Section 1.01(a)(xx) of the
Disclosure Schedule (the "Customer Orders");
(xxi) Cash. Cash, commercial paper, certificates of deposit and other
bank deposits, treasury bills and other cash equivalents, including but not
limited to the cash and other items listed in Section 1.01(a)(xxi) of the
Disclosure Schedule;
(xxii) Goodwill. The goodwill of the Business or relating to any of
the Assets, including the exclusive right (i) to represent itself as
carrying on the Business in continuation of and in succession to the
Sellers, and (ii) to use any words indicating that the Business is so
carried on, including all of Sellers' right, title and interest in and to
the name "Motion 2000", or any variation thereof, as part of the name of or
in connection with the Business or any part thereof carried on or to be
carried on by Purchaser; and
(xxiii) Other Assets and Properties. All other Assets and Properties
of each Seller used or held for use in connection with the Business except
as otherwise provided in Section 1.01(b) (the "Other Assets").
(b) Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the following Assets and Properties of Sellers (the "Excluded Assets")
shall be excluded from and shall not constitute Assets:
(i) Employee Benefit Plans. All assets owned or held by any Benefit
Plans;
(ii) Corporate Records. The minute books, stock transfer books and
corporate seal of each Seller;
(iii) Insurance. Life insurance policies of officers and other
employees of either Seller and all other insurance policies relating to the
operation of the Business; and
(iv) Each Seller's rights under this Agreement.
1.02 Liabilities. (a) Assumed Liabilities. In connection with the
sale, transfer, conveyance, assignment and delivery of the Assets pursuant to
this Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser will assume and agree to pay, perform and
discharge when due the following obligations of Sellers arising in connection
with the operation of the Business, as the same
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shall exist on the Closing Date (the "Assumed Liabilities"), and no others:
(i) Closing Date Balance Sheet Liabilities. The Liabilities of the
Business set forth on the Closing Date Balance Sheet, other than any
Liabilities relating to amounts owed by either Seller to the other Seller,
or to Xxxxxxx Xxxxxx in connection with the loan described in Section 1.02
of the Disclosure Schedule.
(ii) Real Property Lease Obligations. All obligations of Sellers under
the Real Property Leases arising and to be performed on or after the
Closing Date and excluding any such obligations arising or to be performed
prior to the Closing Date;
(iii) Personal Property Lease Obligations. All obligations of Sellers
under the Personal Property Leases arising and to be performed on or after
the Closing Date, and excluding any such obligations arising or to be
performed prior to the Closing Date; and
(iv) Obligations under Contracts and Licenses. All obligations of
Sellers under the Business Contracts, Business Licenses and Customer Orders
arising and to be performed on or after the Closing Date, and excluding any
such obligations arising or to be performed prior to the Closing Date.
(b) Retained Liabilities. Except for the Assumed Liabilities,
Purchaser shall not assume by virtue of this Agreement or the transactions
contemplated hereby, and shall have no liability for, any Liabilities of either
Seller (including, without limitation, those related to the Business) of any
kind, character or description whatsoever (the "Retained Liabilities"). Sellers
shall discharge in a timely manner or shall make adequate provision for all of
the Retained Liabilities, provided that Sellers shall have the ability to
contest, in good faith, any such claim of liability asserted in respect thereof
by any Person other than Purchaser and its Affiliates.
1.03 Purchase Price; Adjustment; Allocation. (a) Purchase Price. The
aggregate purchase price for the Assets is Cdn.$2,900,000 (Two Million Nine
Hundred Thousand Canadian Dollars), subject to adjustment as provided in
paragraph (b) below, payable at the Closing in the manner provided in Section
1.04 (the "Purchase Price").
(b) Purchase Price Adjustment to Reflect Net Book Value. (i) On or
about the Closing Date, representatives of Sellers and their independent
chartered accountants ("Sellers' Accountants"), observed by Purchaser and/or
Purchaser's independent chartered accountants ("Purchaser's Accountants"),
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shall conduct a physical count of the inventory of the Business and shall
expeditiously perform such other procedures with respect to the Business as are
necessary and appropriate to prepare and audit the Closing Date Balance Sheet
(as defined below). Not later than forty-five (45) days following the Closing
Date, Sellers shall deliver to Purchaser a balance sheet of the Business as of
the Closing Date audited by Sellers' Accountants (the "Closing Date Balance
Sheet") which shall (I) be prepared in accordance with the Business Books and
Records, (II) present fairly the financial position of the Business as of the
Closing Date in accordance with Canadian GAAP applied consistently with those
accounting policies and practices used in the preparation of the Base Balance
Sheet and the Financial Statements, (III) be accompanied by a true and correct
copy of the unqualified report on such information by Sellers' Accountants, (IV)
not reflect thereon any Excluded Assets or Retained Liabilities and (V) have set
forth thereon the Net Book Value of the Business as of the Closing Date (the
"Closing Date Net Book Value") as determined from and supported by the Closing
Date Balance Sheet. To the extent requested by Sellers, Purchaser shall, prior
to the delivery of the Closing Date Balance Sheet, make available to Sellers and
Sellers' Accountants such of the Business Books and Records in the possession of
Purchaser and its employees as shall be reasonably necessary for the preparation
of the Closing Date Balance Sheet. Purchaser's Accountants may participate in
and observe the preparation of the Closing Date Balance Sheet. Sellers and
Sellers' Accountants shall make all of their work papers and other relevant
documents in connection with the preparation of the Closing Date Balance Sheet
available to Purchaser and Purchaser's Accountants, and shall make the persons
in charge of the preparation of the Closing Date Balance Sheet available for
reasonable inquiry by Purchaser and Purchaser's Accountants. If Purchaser fails
to timely notify Sellers of its disagreement with the Closing Date Net Book
Value set forth on the Closing Date Balance Sheet in accordance with the first
sentence of the next succeeding paragraph, the Closing Date Net Book Value set
forth on the Closing Date Balance Sheet shall be final and binding on Sellers
and Purchaser for purposes of this paragraph (b).
(ii) Purchaser shall notify Sellers in writing within twenty (20) days
following receipt of the Closing Date Balance Sheet if it does not agree with
the Closing Date Net Book Value set forth thereon, in which case Sellers and
Sellers' Accountants on the one hand, and Purchaser and Purchaser's Accountants
on the other, will use good faith efforts during the ten-day period following
the date such written notice was received by Sellers to resolve any differences
they may have as to the Closing Date Net Book Value. Such written notice will
identify with specificity the calculations with which Purchaser disagrees or
other bases for such disagreement. If Sellers and Purchaser cannot reach
agreement during such ten-day period, their disagreements shall be promptly
submitted to an independent, Canadian, nationally-
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recognized public accounting firm jointly selected by Sellers' Accountants and
Purchaser's Accountants (the "Independent Accountant"), which shall conduct such
additional review as is necessary to resolve the specific disagreements referred
to it and, based thereon, shall determine the Closing Date Net Book Value. The
review of the Independent Accountant will be restricted as to scope to address
only those matters as to which Sellers and Purchaser have not reached agreement
pursuant to the preceding sentence. The Independent Accountant's determination
of the Closing Date Net Book Value, which shall be completed as promptly as
practicable but in no event later than thirty (30) days following its selection,
shall be confirmed by the Independent Accountant in writing to, and shall be
final and binding on, each of the Sellers and Purchaser for purposes of this
paragraph (b).
(iii) In the event the Closing Date Net Book Value determined in
accordance with subparagraph (i) or (ii) of this paragraph (b), as the case may
be (the "Final Net Book Value"), is less than Cdn.$450,000, Purchaser shall,
promptly following the date of determination of the Final Net Book Value (the
"Determination Date"), deliver to the Escrow Agent the Purchase Price
Certificate referred to in the Escrow Agreement, setting forth in the
appropriate place thereon the amount (as converted into U.S. Dollars in
accordance with the Exchange Rate in effect on the Determination Date) by which
the Base Net Book Value exceeds the Final Net Book Value (such amount being
herein referred to as the "Book Value Deficiency Amount"). To the extent the
property held in escrow pursuant to the Escrow Agreement is insufficient to pay
the Book Value Deficiency Amount, Sellers shall, within five (5) days following
the Determination Date, pay to Purchaser the amount of such deficiency by wire
transfer of immediately available U.S. funds to Purchaser's account listed in
Section 12.01.
(iv) The fees and expenses of the Independent Accountant shall be
prorated between Sellers, on the one hand, and Purchaser, on the other, in
proportion to the amounts in dispute resolved against each of them.
1.04 Closing; Escrow. (a) The Closing will take place at the offices
of Xxxxxx, Xxxx & Xxxx, 0 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxx, X0X 0X0, or at
such other place as the parties mutually agree, at 10:00 A.M., local time, on
the Closing Date. At the Closing, Purchaser will pay the Purchase Price by (i)
delivering to each Seller a demand note of Purchaser, substantially in the form
of Exhibit A hereto (each, a "Demand Note"), in the principal amount set forth
opposite such Seller's name on Annex 1 hereto. Simultaneously, (i) each Seller
will assign and transfer to Purchaser all of its right, title and interest in
and to the Assets, free and clear of all Liens, other than Permitted Liens, by
delivery of such instruments of conveyance, assignment and transfer, in form and
substance
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reasonably acceptable to Purchaser's counsel, as shall be effective to vest in
Purchaser good and valid title to the Assets (such instruments being
collectively referred to herein as "Assignment Instruments"), and (ii) Purchaser
will assume from Sellers the due payment, performance and discharge of the
Assumed Liabilities by delivery of such instruments of assumption, in form and
substance reasonably acceptable to Sellers' counsel, as shall be effective to
cause Purchaser to assume the Assumed Liabilities as and to the extent provided
in Section 1.02 (such instruments being collectively referred to herein as the
"Assumption Instruments").
(b) Simultaneously with, and as a condition to, the deliveries
described in paragraph (a) above, at the Closing (i) Purchaser and Xxxxx Xxxxxxx
will enter into an Employment and Non-Competition Agreement, substantially in
the form of Exhibit B hereto, (ii) Parent and each Seller will enter into a
Registration Rights Agreement, substantially in the form of Exhibit C hereto
(the "Registration Rights Agreement"), and (iii) Motion 2000, Purchaser and
Xxxxxx X. Xxxxxx, as escrow agent, will enter into an escrow agreement,
substantially in the form of Exhibit D hereto (the "Escrow Agreement"). At the
Closing, there shall also be delivered to Sellers and Purchaser the opinions,
certificates, consents and other contracts, documents and instruments required
to be delivered under Articles VI and VII.
1.05 Accounts Receivable Payment.
(a) On the date that the Closing Date Balance Sheet is delivered by
Sellers to Purchaser under Section 1.03(b), Sellers will provide Purchaser
with a certificate, executed in the name of and on behalf of each Seller by
its President, setting forth in detail (i) the face value of the Accounts
Receivable of the Business as of the close of business on the day prior to
the Closing Date (the "Closing Date Accounts Receivable") and (ii) the
amount of any bad debt reserves with respect to the Closing Date Accounts
Receivable. The face value of the Closing Date Accounts Receivable less any
amounts of such bad debt reserves is herein referred to as the ("Net
Receivables Amount").
(b) Purchaser shall, on and after the Closing Date, use commercially
reasonable efforts to collect the Closing Date Accounts Receivable.
Purchaser shall, after the Closing Date, also provide Sellers with reports
from time to time as to the Closing Date Accounts Receivable collected.
(c) When an account debtor has more than one invoice outstanding,
amounts remitted by such account debtor shall be applied first to the
longest outstanding invoice.
(d) Not later than the fifth Business Day following the 180th day
after the Closing Date, Purchaser shall
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provide Sellers with a written notice (the "Receivables Notice") describing
in reasonable detail all uncollected Closing Date Accounts Receivable, if
any, and the total face amount thereof. To the extent that Purchaser has
collected, as of the 180th day following the Closing Date, an amount of
Closing Date Accounts Receivable equal to less than the Net Receivables
Amount (the difference between the Net Receivables Amount and the amount so
collected being herein referred to as the "Receivables Deficiency"),
Sellers agree to pay to Purchaser, in the manner provided below, the
amount, if any, by which Cdn.$450,000 exceeds (A) the sum of (x) the Final
Net Book Value and (y) the Book Value Deficiency Amount, if any, less (B)
the Receivables Deficiency (such amount, the "Receivables Payment Amount").
Promptly following its delivery of the Receivables Notice to Sellers,
Purchaser shall deliver to the Escrow Agent the Accounts Receivable
Certificate referred to in the Escrow Agreement, setting forth in the
appropriate place thereon the Receivables Payment Amount (as converted to
U.S. Dollars based on the Exchange Rate). To the extent that the property
held in escrow pursuant to the Escrow Agreement is insufficient to pay such
amount, then Sellers shall, within five (5) days following their receipt of
the Receivables Notice, pay to Purchaser the amount of such deficiency by
wire transfer of immediately available U.S. funds to Purchaser's account
listed in Section 12.01;
1.06 Further Assurances; Post-Closing Cooperation. (a) At any time or
from time to time after the Closing, at Purchaser's request and without further
consideration, each Seller shall execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, all of the
Assets, and, to the full extent permitted by Law, to put Purchaser in actual
possession and operating control of the Business and the Assets and to assist
Purchaser in exercising all rights with respect thereto, and otherwise to cause
each Seller to fulfill its obligations under this Agreement and the Operative
Agreements.
(b) Effective on the Closing Date, each Seller hereby constitutes and
appoints Purchaser the true and lawful attorney of such Seller, with full power
of substitution, in the name of such Seller or Purchaser, but on behalf of and
for the benefit of Purchaser: (i) to demand and receive from time to time any
and all the Assets and to make endorsements and give receipts and releases for
and in respect of the same and any part thereof, (ii) to institute, prosecute,
compromise and settle any and all Actions or Proceedings that Purchaser may deem
proper in order to collect, assert or enforce any claim, right or title of any
kind
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in or to the Assets, (iii) to defend or compromise any or all Actions or
Proceedings in respect of any of the Assets; and (iv) to do all such acts and
things in relation to the matters set forth in the preceding clauses (i) through
(iii) as Purchaser shall deem reasonably necessary or desirable. Each Seller
hereby acknowledges that the appointment hereby made and the powers hereby
granted are coupled with an interest and are not and shall not be revocable by
such Seller in any manner or for any reason. Each Seller shall deliver to
Purchaser at Closing an acknowledged power of attorney to the foregoing effect
executed by such Seller. Purchaser shall indemnify and hold harmless Sellers
from any and all Losses caused by or arising out of any breach of Law by
Purchaser in its exercise of such power of attorney.
(c) Following the Closing, each party will afford the other party, its
counsel and its accountants, during normal business hours, reasonable access to
the Business Books and Records and other data relating to the Business in its
possession with respect to periods prior to the Closing and the right to make
copies and extracts therefrom, to the extent that such access may be reasonably
required by the requesting party in connection with (i) the preparation of Tax
Returns, (ii) the determination or enforcement of rights and obligations under
this Agreement, (iii) compliance with the requirements of any Governmental or
Regulatory Authority, (iv) the determination or enforcement of the rights and
obligations of any party to this Agreement or (v) in connection with any actual
or threatened Action or Proceeding. Further, each party agrees for a period
extending six (6) years after the Closing Date not to destroy or otherwise
dispose of any such books, records and other data unless such party shall first
offer in writing to surrender such books, records and other data to the other
party and such other party shall not agree in writing to take possession thereof
during the ten (10) day period after such offer is made.
(d) If, in order properly to prepare its Tax Returns, other documents
or reports required to be filed with Governmental or Regulatory Authorities or
its financial statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information, documents or
records relating to the Business not referred to in paragraph (c) above, and
such information, documents or records are in the possession or control of the
other party, such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient's request, cost and expense.
1.07 Financial Statements. Not later than forty-five (45) days
following the Closing Date, Sellers shall deliver to Parent, at Parent's sole
cost and expense, such financial statements of Sellers and/or the Business
(which shall not be limited to the Financial Statements) as are sufficient to
enable Parent to comply with its obligations to file a Current Report on
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Form 8-K with the SEC and any other SEC filing related to the transactions
hereunder.
1.08 Third-Party Consents. To the extent that any Business Contract or
Business License is not assignable without the consent of another party, this
Agreement shall not constitute an assignment or an attempted assignment thereof
if such assignment or attempted assignment would constitute a breach thereof.
Sellers and Purchaser shall use their best efforts to obtain the consent of such
other party to the assignment of any such Business Contract or Business License
to Purchaser in all cases in which such consent is or may be required for such
assignment. If any such consent shall not be obtained, Sellers shall cooperate
with Purchaser in any reasonable arrangement designed to provide for Purchaser
the benefits intended to be assigned to Purchaser under the relevant Business
Contract or Business License, including enforcement at the cost and for the
account of Purchaser of any and all rights of Sellers against the other party
thereto arising out of the breach or cancellation thereof by such other party or
otherwise. If and to the extent that such arrangement cannot be made, Purchaser
shall have no obligation pursuant to Section 1.02 or otherwise with respect to
any such Business Contract or Business License.
1.09 Insurance Proceeds. If any of the Assets are destroyed or damaged
or taken in condemnation, the insurance proceeds or condemnation award with
respect thereto shall be an Asset. At the Closing, Sellers shall pay or credit
to Purchaser any such insurance proceeds or condemnation awards received by them
on or prior to the Closing and shall assign to or assert for the benefit of
Purchaser all of their rights against any insurance companies, Governmental or
Regulatory Authorities and others with respect to such damage, destruction or
condemnation. As and to the extent that there is available insurance under
policies maintained by Sellers and their Affiliates, predecessors and successors
in respect of any Assumed Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly self-insured or has
agreed to indemnify the insurer, Seller shall cause such insurance to be applied
toward the payment of such Assumed Liability. The provisions of this Section
1.09 shall not affect the right of Purchaser not to consummate the transactions
contemplated by this Agreement if the condition to its obligations hereunder
contained in Section 6.01 has not been fulfilled.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of Motion 2000, and Motion 2000 Quebec hereby represents and
warrants to each of Parent and Purchaser as follows, provided, however, that
Motion 0000 Xxxxxx represents
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and warrants as follows only as to itself and its Assets and Properties:
2.01 Organization of Sellers; Extra Provincial Qualification. (a)
Motion 2000 and Motion 2000 Quebec are corporations duly organized, validly
existing and in good standing under the Laws of Ontario and Canada,
respectively, and each has full corporate power and authority to conduct the
Business as and to the extent now conducted and to own, use and lease the
Assets. Each Seller has full corporate power and authority to execute and
deliver this Agreement and the Operative Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including without limitation to
sell and transfer (pursuant to this Agreement) the Assets.
(b) Each Seller is duly qualified, licensed or registered to carry on
business as an extra-provincial corporation in the jurisdictions listed in
Section 2.01 of the Disclosure Schedule. The jurisdictions listed in Section
2.01 of the Disclosure Schedule include all jurisdictions in which the nature of
the Assets or the Business makes such qualification necessary.
2.02 Authority; Capital Stock. (a) The execution and delivery by each
Seller of this Agreement and the Operative Agreements to which it is a party,
and the performance by each Seller of its obligations hereunder and thereunder,
have been duly and validly authorized by the Board of Directors and stockholders
of such Seller, no other corporate action on the part of such Seller or its
stockholders being necessary. This Agreement has been duly and validly executed
and delivered by each Seller and constitutes, and upon the execution and
delivery by such Seller of the Operative Agreements to which it is a party, such
Operative Agreements will constitute, legal, valid and binding obligations of
such Seller enforceable against such Seller in accordance with their terms.
(b) The authorized capital stock of (i) Motion 2000 consists solely of
(x) 300 shares of common stock, of which 200 shares have been issued, (y) an
unlimited number of Class A preference shares, none of which has been issued and
(z) an unlimited number of Class B preference shares, none of which has been
issued and (ii) Motion 2000 Quebec consists solely of (x) an unlimited number of
Class A shares, of which 100 shares have been issued, (y) an unlimited number of
Class B shares, none of which has been issued and (z) an unlimited number of
Class C shares, none of which has been issued. There are no outstanding
securities, rights, subscriptions, warrants or options with respect to either
Seller or any capital stock of such Seller.
(c) Set forth on Section 2.02 of the Disclosure Schedule is the name
of each stockholder of Motion 2000 and
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Motion 0000 Xxxxxx and the number of shares of capital stock of Motion 2000 and
Motion 2000 Quebec which will be held by such stockholder as at the Closing
Date. All such shares will be owned as at the Closing Date by the holders
thereof, beneficially and of record, free and clear of all Liens and will not be
subject to any voting arrangements or proxies.
2.03 No Conflicts. The execution and delivery by each Seller of this
Agreement do not, and the execution and delivery by each Seller of the Operative
Agreements to which such Seller is a party, the performance by each Seller of
its obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby, will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
(or other comparable corporate charter documents) of either Seller;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 2.04 of the Disclosure
Schedule, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to either Seller or any of its Assets
and Properties; or
(c) except as disclosed in Section 2.03 of the Disclosure Schedule,
(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
either Seller to obtain any consent, approval or action of, make any filing with
or give any notice to any Person as a result or under the terms of, or (iv)
result in the creation or imposition of any Lien upon either Seller or any of
its Assets and Properties under, any Contract or License to which either Seller
is a party or by which any of its Assets and Properties is bound.
2.04 Governmental Approvals and Filings. Except as disclosed in
Section 2.04 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
any Seller is required in connection with the execution, delivery and
performance of this Agreement or the Operative Agreements or the consummation of
the transactions contemplated hereby or thereby.
2.05 Books and Records. Except as set forth in Section 2.05 of the
Disclosure Schedule, none of the Business Books and Records is recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access
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thereto and therefrom) are not under the exclusive ownership and direct control
of either Seller.
2.06 Financial Statements. Prior to the execution of this Agreement,
each Seller has delivered to Purchaser true and complete copies of the unaudited
balance sheet of such Seller as of January 31, 1997, and the related unaudited
statements of operations and cash flows for the fiscal year then ended.
Except as set forth in the notes thereto or as disclosed in Section 2.06 of the
Disclosure Schedule, the Financial Statements (i) were prepared in accordance
with Canadian GAAP, (ii) fairly present the consolidated financial condition and
results of operations of Sellers as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from Business Books
and Records regularly maintained by management and used to prepare the financial
statements of Sellers in accordance with the principles stated therein. Sellers
have maintained the Business Books and Records in a manner sufficient to permit
the preparation of financial statements in accordance with Canadian GAAP, the
Business Books and Records fairly reflect, in all material respects, the income,
expenses, assets and liabilities of the Business and the Business Books and
Records provided a fair and accurate basis for the preparation of the Financial
Statements delivered to Purchaser in accordance with this Section.
2.07 Absence of Changes. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, since January 31, 1997 there has not been any material adverse
change, or any event or development which, individually or together with other
such events, could reasonably be expected to result in a material adverse
change, in the Condition of the Business. Without limiting the foregoing, except
as disclosed in Section 2.07 of the Disclosure Schedule, there has not occurred
between January 31, 1997 and the date hereof:
(i)(x) any increase in the salary, wages or other compensation of any
officer, Employee or consultant of either Seller whose annual salary is, or
after giving effect to such change would be, Cdn.$20,000 or more; (y) any
establishment or modification of (A) targets, goals, pools or similar
provisions in respect of any fiscal year under any Benefit Plan,
employment-related Contract or other employee compensation arrangement or
(B) salary ranges, increase guidelines or similar provisions in respect of
any Benefit Plan, employment-related Contract or other employee
compensation arrangement; or (z) any adoption, entering into or becoming
bound by any Benefit Plan, employment-related Contract or collective
bargaining agreement, or amendment, modification or termination (partial or
complete) of any Benefit Plan, employment-related Contract or collective
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bargaining agreement, except to the extent required by applicable Law and,
in the event compliance with legal requirements presented options, only to
the extent the option which such Seller reasonably believed to be the least
costly was chosen;
(ii)(A) incurrences by either Seller of Indebtedness in an aggregate
principal amount exceeding Cdn.$10,000 (net of any amounts discharged
during such period), or (B) any voluntary purchase, cancellation,
prepayment or complete or partial discharge in advance of a scheduled
payment date with respect to, or waiver of any right of either Seller
under, any Indebtedness of or owing to either Seller with respect to the
conduct of the Business;
(iii) any physical damage, destruction or other casualty loss (whether
or not covered by insurance) affecting any of the plant, real or personal
property or equipment of either Seller used or held for use in the conduct
of the Business in an aggregate amount exceeding Cdn.$10,000;
(iv) any material change in (x) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or policy
of the Business or (y) any method of calculating any bad debt, contingency
or other reserve of the Business for accounting, financial reporting or Tax
purposes;
(v)(A) any acquisition or disposition of any Assets and Properties
used or held for use in the conduct of the Business, other than Inventory
in the ordinary course of business consistent with past practice and other
acquisitions or dispositions not exceeding in either case Cdn.$10,000 in
the aggregate; or (B) any creation or incurrence of a Lien, other than a
Permitted Lien, on any Assets and Properties used or held for use in the
conduct of the Business;
(vi) any entering into, amendment, modification, termination (partial
or complete) or granting of a waiver under or giving any consent with
respect to (A) any Contract which is required (or had it been in effect on
the date hereof would have been required) to be disclosed in the Disclosure
Schedule pursuant to Section 2.16(a) or (B) any License disclosed in
Section 1.01(a)(x) of the Disclosure Schedule;
(vii) capital expenditures or commitments for additions to property,
plant or equipment used or held for use in the conduct of the Business
constituting capital assets in an aggregate amount exceeding Cdn.$10,000;
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(viii) any transaction with any officer, director, Affiliate or
Associate of either Seller or any Associate of any such officer, director
or Affiliate (A) outside the ordinary course of business consistent with
past practice or (B) other than on an arm's-length basis, other than
pursuant to any Contract disclosed pursuant to Section 2.16(a)(vii) of the
Disclosure Schedule;
(ix) any material adverse change in net sales, costs of goods sold or
collection of Accounts Receivable;
(x) any entering into of a Contract to do or engage in any of the
foregoing after the date hereof; or
(xi) any other material transaction involving or development affecting
the Business or the Assets outside the ordinary course of business
consistent with past practice.
2.08 No Undisclosed Liabilities. Except as reflected or reserved
against in the Base Balance Sheet or as disclosed in Section 2.08 of the
Disclosure Schedule or any other Section of the Disclosure Schedule, there are
no Liabilities against, relating to or affecting the Business or any of the
Assets, other than Liabilities (i) incurred in the ordinary course of business
consistent with past practice or (ii) which, individually or in the aggregate,
are not material to the Condition of the Business.
2.09 Taxes. Except as set forth on Section 2.09 of the Disclosure
Schedule, no claim for any Tax due from or assessed against either Seller is
being contested by such Seller, none of the Sellers' Tax Returns or reports have
been audited by Revenue Canada or any provincial or local Tax authority, and
neither Seller has received any notice of assessment or other adjustment from
Revenue Canada or any state or local Tax authority. Except as described on
Section 2.09 of the Disclosure Schedule, there are no pending Tax examinations
of or Tax claims, including, but not limited to, withholding claims asserted
against either Seller or any of its assets or properties, there are no Tax liens
on any of the assets or properties of either Seller, there are no agreements,
waivers, or other arrangements providing an extension of time with respect to
the assessment of any Tax against either Seller, nor are there any Tax
proceedings now pending or, to the best of such Seller's Knowledge, threatened
against such Seller. There is no basis for any additional assessment of any
Taxes against either Seller. Each Seller has made all deposits required by law
to be made with respect to employees' withholding and other employment Taxes,
including without limitation the portion of such deposits relating to Taxes
imposed upon such Seller. In connection with any audit of the Tax Returns of
either Seller, no issue has been raised by any Tax officials which, by the
application of similar principles, reasonably can be expected to result in a
deficiency for any other year not so examined.
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2.10 Legal Proceedings. Except as disclosed in Section 2.10 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings existing or, to the Knowledge
of Sellers, threatened against, relating to or affecting either Seller with
respect to the Business or any of the Assets which (i) could reasonably be
expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to
Purchaser, or (ii) if determined adversely to either Seller, could
reasonably be expected to result in (x) any injunction or other equitable
relief against such Seller that would interfere in any material respect
with the Business or (y) Losses by such Seller, individually or in the
aggregate with Losses in respect of other such Actions or Proceedings,
exceeding Cdn.$10,000;
(b) there are no facts or circumstances Known to Sellers that could
reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against either Seller with respect
to the Business or any of the Assets.
2.11 Compliance With Laws and Orders. Except as disclosed in Section
2.11 of the Disclosure Schedule, neither Seller is, nor has either Seller at any
time within the last five (5) years been, nor has either Seller received any
notice that it is or has at any time within the last five (5) years been, in
violation of or in default under, in any material respect, any Law or Order
applicable to the Business or the Assets.
2.12 Benefit Plans and Pension Plans.
(a) Section 2.12(a) of the Disclosure Schedule contains a true and complete
list and description of each of the written or unwritten Benefit Plans. Neither
Seller has scheduled or agreed upon future increases of benefit levels (or
creations of new benefits) with respect to any Benefit Plan, and no such
increases or creation of benefits have been proposed, made the subject of
representations to Employees or requested or demanded by Employees under
circumstances which make it reasonable to expect that such increases will be
granted. The Benefit Plans are duly registered where required by, and are in
good standing under, all applicable Laws. All required employer and employee
contributions and premiums under the Benefit Plans to the date hereof have been
made, the respective fund or funds established
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under the Benefit Plans are funded in accordance with applicable Laws, and no
past service funding liabilities exist thereunder.
(b) Neither Seller has any pension plans relating to the Employees of
the Business.
(c) Except as set forth in Section 2.12(c) of the Disclosure Schedule,
each Benefit Plan covers only Employees (or former employees or beneficiaries
with respect to service with either Seller in connection with the Business), so
that the transactions contemplated by this Agreement will require no spin-off of
assets and liabilities or other division or transfer of rights with respect to
any such plan.
(d) Each of the Benefit Plans is, and its administration is and has
been since inception, in all material respects in compliance with, and neither
Seller has received any claim or notice that any such Benefit Plan is not in
compliance with, all applicable Laws and Orders and prohibited transactions
exemptions. Each Benefit Plan which is intended to provide for the deferral of
income, the reduction of salary or other compensation or to afford other Tax
benefits complies with the requirements of the applicable provisions of the Code
or other Laws required in order to provide such Tax benefits.
(e) Neither Seller is in default in performing any of its contractual
obligations under any of the Benefit Plans or any related trust agreement or
insurance contract. All contributions and other payments required to be made by
either Seller to any Benefit Plan with respect to any period ending before or at
or including the Closing Date have been made or reserves adequate for such
contributions or other payments have been or will be set aside therefor and have
been or will be reflected in Financial Statements in accordance with Canadian
GAAP. There are no outstanding liabilities of any Benefit Plan other than
liabilities for benefits to be paid to participants in such Benefit Plan and
their beneficiaries in accordance with the terms of such Benefit Plan.
(f) No benefit under any Benefit Plan, including, without limitation,
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested, funded or payable by reason of any transaction
contemplated under this Agreement.
(g) To the Knowledge of Sellers, there are no pending or threatened
claims by or on behalf of any Benefit Plan, by any Person covered thereby, or
otherwise, which allege violations of Law which could reasonably be expected to
result in liability on the part of Purchaser or any fiduciary of any such
Benefit Plan, nor is there any basis for such a claim.
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(h) No employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan.
(i) Complete and correct copies of the following documents have been
furnished to Purchaser prior to the execution of this Agreement:
(A) the most recent accountings with respect to any Benefit Plan
funded through a trust; and
(B) all qualified domestic relations orders or other orders governing
payments from any Benefit Plan.
2.13 Real Property. (a) Neither Seller owns any Real Property. Section
1.01(a)(ii) of the Disclosure Schedule contains a true and correct list of each
parcel of real property leased by either Seller (as lessor or lessee) and used
or held for use in connection with the Business.
(b) Each Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the real properties subject to the Real Property
Leases described opposite such Seller's name in Section 1.01(a)(ii)(B) of the
Disclosure Schedule for the full term of the lease thereof. Each such Real
Property Lease is a legal, valid and binding agreement, enforceable in
accordance with its terms, of such Seller and of each other Person that is a
party thereto, and except as set forth in Section 2.13(b) of the Disclosure
Schedule, there is no, nor has such Seller received any notice of any, default
(or any condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder. Neither Seller owes any brokerage commissions
with respect to any such leased space.
(c) Sellers have delivered to Purchaser prior to the execution of this
Agreement true and complete copies of (i) all deeds, leases, mortgages, deeds of
trust, certificates of occupancy, title insurance policies, title reports,
surveys and similar documents, and all amendments thereof, with respect to the
Real Property and (ii) all Real Property Leases (including any amendments and
renewal letters) and, to the extent reasonably available, all other documents
referred to in clause (i) of this paragraph (c) with respect to the Real
Property Leases described in Section 1.01(a)(ii)(B) of the Disclosure Schedule.
(d) Except as disclosed in Section 2.13(d) of the Disclosure Schedule,
no tenant or other party in possession of any of the real properties subject to
the Real Property Leases described in Section 1.01(a)(ii)(B) of the Disclosure
Schedule has a right to purchase, or holds any right of first refusal to
purchase, such properties.
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(e) Except as disclosed in Section 2.13(e) of the Disclosure Schedule,
the Improvements are in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
Knowledge of Sellers, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
2.14 Tangible Personal Property; Investment Assets. (a) Each Seller is
in possession of and has good title to, or has valid leasehold interests in or
valid rights under Contract to use, all the Tangible Personal Property used by
such Seller in the Business, which includes all tangible personal property
reflected on the Base Balance Sheet and tangible personal property acquired
since the date of the Base Balance Sheet other than property disposed of since
such date in the ordinary course of business consistent with past practice. All
the Tangible Personal Property is free and clear of all Liens, other than
Permitted Liens and Liens disclosed in Section 2.14(a) of the Disclosure
Schedule, and is in good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with all applicable
Laws.
(b) Section 2.14(b) of the Disclosure Schedule describes each
Investment Asset included among the Assets on the date hereof. Except as
disclosed in Section 2.14(b) of the Disclosure Schedule, all such Investment
Assets are owned by Sellers free and clear of all Liens other than Permitted
Liens.
2.15 Intellectual Property Rights. Each Seller has interests in or
uses only the Intellectual Property disclosed opposite such Seller's name in
Section 1.01(a)(ix) of the Disclosure Schedule, each of which such Seller either
has all right, title and interest in or a valid and binding rights under
Contract to use. No other Intellectual Property is used or necessary in the
conduct of the Business. Except as disclosed in Section 2.15 of the Disclosure
Schedule, (i) each Seller has the exclusive right to use the Intellectual
Property disclosed opposite such Seller's name in Section 1.01(a)(ix) of the
Disclosure Schedule, (ii) all registrations with and applications to
Governmental or Regulatory Authorities in respect of such Intellectual Property
are valid and in full force and effect and are not subject to the payment of any
Taxes or maintenance fees or the taking of any other actions by such Seller to
maintain their validity or effectiveness, (iii) there are no restrictions on the
direct or indirect transfer of any Contract, or any interest therein, held by
such Seller in respect of such Intellectual Property, (iv) such Seller has
delivered to Purchaser prior to the execution of this Agreement documentation
with respect to any invention, process, design, computer program or other
know-how or trade secret included in such Intellectual Property, which
documentation is accurate in all material
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respects and reasonably sufficient in detail and content to identify and explain
such invention, process, design, computer program or other know-how or trade
secret and to facilitate its full and proper use without reliance on the special
knowledge or memory of any Person, (v) such Seller has taken reasonable security
measures to protect the secrecy, confidentiality and value of its trade secrets,
(vi) such Seller is not, nor has it received, any notice that it is, in default
(or with the giving of notice or lapse of time or both, would be in default)
under any Contract to use such Intellectual Property and (vii) to the Knowledge
of Sellers, no such Intellectual Property is being infringed by any other
Person. Neither Seller has received any notice that such Seller is infringing
any Intellectual Property of any other Person, no claim is pending or, to the
Knowledge of Sellers, has been made to such effect that has not been resolved
and, to the Knowledge of Sellers, neither Seller is infringing any Intellectual
Property of any other Person.
2.16 Contracts. (a) Section 2.16(a) of the Disclosure Schedule (with
paragraph references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts or other arrangements (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchaser prior to the
execution of this Agreement), to which either Seller is a party or by which any
of the Assets is bound:
(i) (A) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the termination of
employment of any Employee, the name, length of employment, position, rate
of compensation and benefits of each Employee party to such a Contract and
the expiration date of each such Contract; and (B) any written or unwritten
representations, commitments, promises, communications or courses of
conduct (excluding Benefit Plans and any such Contracts referred to in
clause (A)) involving an obligation of either Seller to make payments in
any year, other than with respect to salary or incentive compensation
payments in the ordinary course of business, to any Employee or former
employee;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of either Seller to engage in
any business activity or compete with any Person in connection with the
Business or prohibiting or limiting the ability of any Person to compete
with either Seller in connection with the Business;
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(iii) all partnership, joint venture, shareholders' or other similar
Contracts with any Person in connection with the Business;
(iv) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees with whom either Seller
deals in connection with the Business;
(v) all Contracts relating to the future disposition or acquisition of
any Assets other than dispositions or acquisitions of Inventory in the
ordinary course of business consistent with past practice;
(vi) all Contracts between Xxxxx Xxxxxxx and either Seller;
(vii) all collective bargaining or similar labor Contracts covering
any Employee; and
(viii) all other Contracts (other than Benefit Plans, the Real
Property Leases and insurance policies listed in Section 2.21 of the
Disclosure Schedule) with respect to the Business that (A) involve the
payment or potential payment, pursuant to the terms of any such Contract,
by or to either Seller of more than Cdn.$10,000 annually and (B) cannot be
terminated within thirty (30) days after giving notice of termination
without resulting in any material cost or penalty to either Seller.
(b) Each Contract required to be disclosed in Section 2.16(a) of the
Disclosure Schedule is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, of each party
thereto; and except as disclosed in Section 2.16(b) of the Disclosure Schedule
neither Sellers nor, to the Knowledge of Sellers, any other party to such
Contract is, or has received notice that it is, in violation or breach of or
default under any such Contract (or with notice or lapse of time or both, would
be in violation or breach of or default under any such Contract) in any material
respect.
(c) Except as disclosed in Section 2.16(c) of the Disclosure Schedule,
(i) the execution, delivery and performance by each Seller of this Agreement and
the Operative Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, will not (A) result in or give to
any Person any right of termination, cancellation, acceleration or modification
in or with respect to, (B) result in or give to any Person any additional rights
or entitlement to increased, additional, accelerated or guaranteed payments
under, or (C) result in the creation or imposition of any Lien upon such Seller
or any of the Assets under, any Business Contract, and
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(ii) neither Seller is a party to or bound by any Business Contract that has
been or could reasonably be expected to be, individually or in the aggregate
with any other Business Contracts, materially adverse to the Condition of the
Business.
2.17 Customer Orders. (a) Each Customer Order is in full force and
effect and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of each party thereto; and except as disclosed in
Section 1.01(a)(xx) of the Disclosure Schedule neither Sellers nor, to the
knowledge of Sellers, any other party to such Customer Order is, or has received
notice that it is, in violation or breach of or default under any such Customer
Order (or with notice or lapse of time or both, would be in violation or breach
of or default under any such Customer Order) in any material respect.
(b) Section 2.17(b) of the Disclosure Schedule contains a true and
complete list of all Customer Orders as of the day immediately preceding the
date hereof to which either Seller is a party.
2.18 Licenses. Section 1.01(a)(x) of the Disclosure Schedule contains
a true and complete list of all material Licenses used or held for use in the
Business (and all pending applications for any such Licenses), setting forth the
grantor, the grantee, the function and the expiration and renewal date of each.
Prior to the execution of this Agreement, Sellers have delivered to Purchaser
true and complete copies of all such Licenses. Except as disclosed in Section
2.18 of the Disclosure Schedule:
(i) Sellers own or validly hold all Licenses that are material,
individually or in the aggregate, to the Business;
(ii) each Business License is valid, binding and in full force and
effect;
(iii) neither Seller is, nor has it received any notice that it is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any Business License;
(iv) the execution, delivery and performance by each Seller of this
Agreement or the Operative Agreements to which it is a party, and the
consummation of the transactions contemplated hereby or thereby, will not
(A) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give
to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under, or (C) result in the
creation or imposition of any Lien upon such Seller or
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any of its Assets and Properties under, any Business License.
2.19 Warranty Claims. Except as set forth in Section 2.19 of the
Disclosure Schedule, there are no existing claims against either Seller arising
out of or relating to any products manufactured or sold in connection with the
Business under any warranties, whether express or implied, nor, to the Knowledge
of Sellers, does there exist, or during the past five (5) years has there
existed, any reasonable basis therefor.
2.20 Product Liability Claims. Except as set forth in Section 2.20 of
the Disclosure Schedule, there are, and during the past five (5) years there
have been, no product liability claims with respect to any products now or
previously manufactured and/or sold by Sellers in connection with the Business,
nor to the Knowledge of Sellers, does there exist, or during the past five (5)
years has there existed, any reasonable basis therefor.
2.21 Insurance. (a) Section 2.21 of the Disclosure Schedule contains a
true and complete list (including the names and addresses of the insurers, the
names of the Persons to whom such policies have been issued, the expiration
dates thereof, the annual premiums and payment terms thereof, whether it is a
"claims made" or an "occurrence" policy and a brief description of the interests
insured thereby) of all liability, property, workers' compensation, and other
insurance policies currently in effect that insure the Business, the Employees
or the Assets. Each policy listed in Section 2.21 of the Disclosure Schedule is
valid and binding and in full force and effect, no premiums due thereunder have
not been paid and neither Seller has received any notice of cancellation or
termination in respect of any such policy or is in default thereunder. Neither
Sellers nor the Person to whom such policy has been issued has received notice
that any insurer under any policy referred to in this Section is denying
liability with respect to a claim thereunder or defending under a reservation of
rights clause.
(b) Each Seller has complied with and maintains in full force and
effect all applicable employment insurance required by law.
2.22 Affiliate Transactions. Except as disclosed in Section 2.22(a) of
the Disclosure Schedule, (i) no officer, director or Affiliate of either Seller
provides or causes to be provided any assets, services or facilities used or
held for use in connection with the Business, and (ii) the Business does not
provide or cause to be provided any assets, services or facilities to any such
officer, director or Affiliate. Except as disclosed in Section 2.22(b) of the
Disclosure Schedule, each of the transactions listed in Section 2.22(a) of the
Disclosure Schedule is engaged in on an arm's-length basis.
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2.23 Employees; Labor Relations. (a) Section 2.23(a) of the Disclosure
Schedule contains a correct and complete list of the name of each Employee at
the date hereof, together with such Employee's position or function, length of
service, annual base salary or wages and any incentive or bonus arrangement or
benefits with respect to such Employee in effect on such date, including those
on lay-off (as well as the reason for their absence) but other than those
receiving benefits under workers' compensation legislation. To Sellers'
Knowledge, neither Seller has received any information that would lead it to
believe that any Employees will or may cease to be Employees, or will refuse
offers of employment from Purchaser, because of the consummation of the
transactions contemplated by this Agreement.
(b) Except as disclosed in Section 2.23(b) of the Disclosure Schedule, (i)
no Employee is presently a member of a collective bargaining unit or represented
by a similar employee association and, to the Knowledge of Sellers, there are no
threatened or contemplated attempts to organize for collective bargaining
purposes any of the Employees, (ii) no collective bargaining agreement is
currently being negotiated by either Seller with respect to any Employees of the
Business, and (iii) no unfair labor practice, complaint, grievance or
arbitration against either Seller is pending or, to the Knowledge of Sellers,
threatened or has been brought during the last five (5) years against either
Seller with respect to the conduct of the Business. Since February 1, 1992,
there has been (i) no work stoppage, slowdown, dispute, labor strike or other
concerted action against either of the Sellers with respect to the Business and
(ii) no proceedings pending or, to the Knowledge of Sellers, threatened before
any labor relations board or similar Governmental or Regulatory Authority
against either of the Sellers with respect to the Business.
(c) Except as disclosed in Section 2.23(c) of the Disclosure Schedule,
Sellers are in compliance with all Laws respecting employment and employment
practices, terms and conditions of employment, pay equity and wages and hours
and have not and are not engaged in any unfair labor practice.
(d) Except as disclosed in Section 2.23(d) of the Disclosure Schedule, no
Employee of either Seller with respect to the Business has any agreement as to
length of notice required to terminate his or her employment, other than such as
results by law from the employment of an Employee without agreement as to such
notice or as to length of employment.
(e) All vacation pay (including all banked vacation pay), bonuses,
commissions and other Employee benefit payments are reflected and have been
accrued in the books of account of Sellers with respect to the Business.
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(f) Section 2.23(f) of the Disclosure Schedule contains a correct and
complete list showing all amounts due or accrued due for all salary, wages,
bonuses, commissions, vacation with pay, pension benefits and other employee
benefits relating to all Employees. The aggregate amount of salaries, pensions,
bonuses or other remuneration of any nature paid or payable by Sellers to or for
their present or former officers, directors, shareholders, Employees or Persons
not dealing at arm's length (as such term is construed under the Income Tax Act
(Canada)) with them during the year ended January 31, 1997, amounted to not more
than Cdn.$600,000, and since that date, such payments have been made at no
greater rates.
(g) Except as disclosed in Section 2.23(g) of the Disclosure Schedule,
there are no complaints, claims or charges outstanding, or to the Knowledge of
Sellers, anticipated, nor are there any orders, decisions, directions or
convictions currently registered or outstanding by any tribunal or agency
against or in respect of Sellers under or in respect of any employment
legislation. Section 2.23(g) of the Disclosure Schedule lists all Employees in
respect of whom either Seller has been advised by the Workers' Compensation
Board that such Employees are in receipt of benefits under the Workers'
Compensation Act (Ontario). Sellers are in compliance with the Employment
Standards Act (Ontario), the Workers' Compensation Act (Ontario) and other
employment legislation and, without limiting the generality of foregoing: (i)
there are no appeals pending before a workers' compensation tribunal involving
either Seller; (ii) all levies, assessments and penalties made against either
Seller pursuant to the Workers' Compensation Act (Ontario) has been paid for by
such Seller; (iii) Sellers are currently in Rate Group 1.34 for workers'
compensation purposes; (iv) there has been no change in the rating assessment
applicable to each Seller or the Business under the Workers' Compensation Act
(Ontario) during the past five years, except as described in Section 2.23(g)(iv)
of the Disclosure Schedule; (v) Sellers are not aware of any audit currently
being performed by the Workers' Compensation Board; and (vi) all payments
required to be made in trust to the Director of Employment Standards in respect
of termination and/or severance pay under the Employment Standards Act (Ontario)
in respect of the Employees have been made.
(h) all accruals for unpaid vacation pay, premiums for unemployment
insurance or employment 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 Sellers.
(i) except as disclosed in Section 2.23(i) of the Disclosure Schedule, no
loan is outstanding between either Seller or any Employee.
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2.24 Environmental Matters. Sellers have obtained all Licenses which
are required under applicable Environmental Laws in connection with the conduct
of the Business or the Assets. Each of such Licenses is in full force and
effect. Sellers have conducted the Business in compliance in all material
respects with the terms and conditions of all such Licenses and with any
applicable Environmental Law. In addition, except as set forth in Section 2.24
of the Disclosure Schedule (with paragraph references corresponding to those set
forth below):
(a) No Order has been issued, no Environmental Claim has been filed,
no penalty has been assessed and no investigation or review is pending or, to
the Knowledge of Sellers, threatened by any Governmental or Regulatory Authority
with respect to any alleged failure by either Seller to have any License
required under applicable Environmental Laws in connection with the conduct of
the Business or with respect to any generation, treatment, storage, recycling,
transportation or Release of any Hazardous Material in connection with the
Business, and to the Knowledge of Sellers there are no facts or circumstances in
existence which could reasonably be expected to form the basis for any such
Order, Environmental Claim, penalty or investigation.
(b) Neither Seller owns, operates or leases a treatment, storage or
disposal facility on any of the Real Property; and, without limiting the
foregoing, (i) no polychlorinated biphenyl is or has been present, (ii) no
asbestos or asbestos-containing material is or has been present, (iii) there are
no underground storage tanks or surface impoundments for Hazardous Materials,
active or abandoned, and (iv) no Hazardous Material has been Released in a
quantity reportable under, or in violation of, any Environmental Law or
otherwise Released, in the cases of clauses (i) through (iv), at, on or under
any such site or facility during any period that either Seller owned, operated
or leased such property.
(c) Neither Seller has transported or arranged for the transportation
of any Hazardous Material in connection with the operation of the Business to
any location that is (i) outside Canada or (ii) the subject of enforcement
actions by federal, provincial, state or local Governmental or Regulatory
Authorities that may lead to Environmental Claims against either Seller or the
Business.
(d) No Hazardous Material generated in connection with the operation
of the Business has been recycled, treated, stored, disposed of or Released by
either Seller at any location.
(e) No oral or written notification of a Release of a Hazardous
Material in connection with the operation of the Business has been filed by or
on behalf of either Seller.
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(f) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by either Seller on any of the
Real Property, and no federal, provincial, state or local Governmental or
Regulatory Authority action has been taken or, to the Knowledge of Sellers, is
in process that could subject any such site or facility to such Liens, and
neither Seller would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any such site or facility in any deed to
the Real Property on which such site or facility is located.
(g) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or that are in the possession of,
either Seller in relation to any site or facility now or previously owned,
operated or leased by either Seller on any of the Real Property which have not
been delivered to Purchaser prior to the execution of this Agreement.
2.25 Substantial Customers and Suppliers. Section 2.25(a) of the
Disclosure Schedule lists the ten (10) largest customers of the Business, on the
basis of revenues for goods sold or services provided for the most
recently-completed fiscal year. Section 2.25(b) of the Disclosure Schedule lists
the ten (10) largest suppliers of the Business, on the basis of cost of goods or
services purchased for the most recently- completed fiscal year. Except as
disclosed in Section 2.25(c) of the Disclosure Schedule, no such customer or
supplier has ceased or materially reduced its purchases from, use of the
services of, sales to or provision of services to the Business since December
31, 1995, or to the Knowledge of Sellers, has threatened to cease or materially
reduce such purchases, use, sales or provision of services after the date
hereof. Except as disclosed in Section 2.25(d) of the Disclosure Schedule, to
the Knowledge of Sellers, no such customer or supplier is threatened with
bankruptcy or insolvency.
2.26 Inventory; Tools, Molds and Dies. (a) All the Inventory consists
of a quality and quantity usable and salable in the ordinary course of business
consistent with past practice, subject to (i) specific write-offs that have been
taken, (ii) the fact that demonstration products are often sold at reduced costs
and (iii) normal and customary allowances in the industry for spoilage, damage
and outdated items. All items included in the Inventory are the property of
Sellers, free and clear of any Lien other than Permitted Liens, have not been
pledged as collateral, are not held by Sellers on consignment from others and
conform in all material respects to all standards applicable to such inventory
or its use or sale imposed by Governmental or Regulatory Authorities.
(b) Set forth opposite each Seller's name on Section 1.01(a)(xiv) of
the Disclosure Schedule is a list of all tools, molds and dies used by such
Seller in the Business. Such
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Seller is in possession of and has good and valid title to such Tools, Molds and
Dies. The Tools, Molds and Dies are free and clear of all Liens, are in good
working order and condition and are all the tools, molds and dies required to
conduct the Business in the same manner conducted by Sellers immediately prior
to the Closing Date.
2.27 Assembly Lines and Manufacturing Equipment; Instruction
Materials. (a) Sellers are in possession of and have good title to the Assembly
Lines and the Manufacturing Equipment. The Assembly Lines and Manufacturing
Equipment are free and clear of all Liens, other than Permitted Liens, are in
good working order and condition, and are all the equipment used by Sellers in
the assembly of products distributed in the Business.
(b) Neither Seller owns or uses any Instruction Materials.
2.28 Vehicles. Section 1.01(a)(xi) of the Disclosure Schedule contains
a true and complete list of all motor vehicles owned or leased by either Seller
and used or held for use in the conduct of the Business. Except as set forth in
Section 2.28 of the Disclosure Schedule, either Seller has good and valid title
to, or has valid leasehold interests in or valid rights under Contract to use,
each Vehicle, free and clear of all Liens other than Permitted Liens.
2.29 No Guarantees. Except as disclosed on Section 2.29 of the
Disclosure Schedule, none of the Liabilities of the Business or of Sellers
incurred in connection with the conduct of the Business is guaranteed by or
subject to a similar contingent obligation of any other Person, nor has either
Seller guaranteed or become subject to a similar contingent obligation in
respect of the Liabilities of any customer, supplier or other Person to whom
such Seller sells goods or provides services in the conduct of the Business or
with whom such Seller otherwise has significant business relationships in the
conduct of the Business.
2.30 No Options, Etc. Except for Purchaser under this Agreement, and
except as disclosed in Section 2.30 of the Disclosure Schedule, no Person has
any written or oral agreement, option, understanding or commitment, or any right
or privilege capable of becoming such, for the purchase from either Seller of
any of the Assets, other than pursuant to purchase orders accepted by such
Seller in the ordinary course of the Business.
2.31 Entire Business. The sale of the Assets by Sellers to Purchaser
pursuant to this Agreement will effectively convey to Purchaser the entire
Business and all of the tangible and intangible property used by Sellers
(whether owned, leased or held under license by either Seller, by any of
Sellers'
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Affiliates or by others) in connection with the conduct of the Business as
heretofore conducted by Sellers (except for the Excluded Assets and subject to
Section 1.08), including, without limitation, all tangible Assets and Properties
of Sellers reflected in the Base Balance Sheet and Assets and Properties
acquired since the date of the Base Balance Sheet in the conduct of the
Business, other than the Excluded Assets and Assets and Properties disposed of
since such date, consistent with Section 2.07(v). Except as disclosed in Section
2.31 of the Disclosure Schedule, there are no shared facilities or services
which are used in connection with any business or other operations of either
Seller or any of Sellers' Affiliates other than the Business.
2.32 Delivery of Evidence Relating to Retail Sales Tax. Each Seller
has delivered to Purchaser evidence that all Taxes required to be paid by such
Seller under the Quebec Sales Tax Act have been paid. Neither Seller is required
to pay any Taxes under the Retail Sales Tax Act (Ontario).
2.33 Vendor Resident of Canada. Neither Seller is a non-resident of
Canada within the meaning of the Income Tax Act (Canada).
2.34 GST and QST Registration. Motion 2000 is a registrant for Goods
and Services Tax purposes whose registration number is 121184881RT. Motion 2000
Quebec is a registrant for Goods and Services Tax and Quebec Sales Tax purposes
whose registration numbers for such purposes are 141270421RT and
1010550820TQ0001, respectively.
2.35 Brokers. Except for Xxxxxx Xxxxxx, whose fees, commissions and
expenses are the sole responsibility of Sellers, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Sellers directly with Parent and Purchaser without the intervention of any
Person on behalf of Sellers in such manner as to give rise to any valid claim by
any Person against Parent or Purchaser for a finder's fee, brokerage commission
or similar payment.
2.36 Disclosure. All material facts relating to the Condition of the
Business have been disclosed to Purchaser in or in connection with this
Agreement. The representations and warranties contained in this Agreement, and
the statements contained in the Disclosure Schedule or in any certificate, list
or other writing furnished to Purchaser pursuant to any provision of this
Agreement (including without limitation the Financial Statements), do not
contain, when taken together in the aggregate, any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser hereby jointly and severally represents
and warrants to each Seller as follows:
3.01 Organization. Each of Parent and Purchaser is a corporation duly
incorporated or amalgamated, as the case may be, validly existing and in good
standing under the Laws of the State of Delaware and the province of Ontario,
respectively. Each of Parent and Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Operative Agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
3.02 Authority; Demand Notes. (a) The execution and delivery by each
of Parent and Purchaser of this Agreement and the Operative Agreements to which
it is a party, and the performance by each of Parent and Purchaser of its
obligations hereunder and thereunder, have been duly and validly authorized by
the Board of Directors of Parent and Purchaser, no other corporate action on the
part of Parent or Purchaser or their stockholders being necessary. This
Agreement has been duly and validly executed and delivered by Parent and
Purchaser and constitutes, and upon the execution and delivery by each of Parent
and Purchaser of the Operative Agreements to which it is a party, such Operative
Agreements will constitute legal, valid and binding obligations of Parent and
Purchaser enforceable against Parent and Purchaser in accordance with their
terms.
(b) The Demand Notes have been duly authorized by all necessary
corporate action on the part of Purchaser and, when issued to each Seller in
accordance with this Agreement, will constitute the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
terms.
3.03 No Conflicts. The execution and delivery by Parent and Purchaser
of this Agreement do not and the execution and delivery of the Operative
Agreements to which it is a party, the performance by Parent and Purchaser of
their obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
(or other comparable corporate charter document) of Parent or Purchaser;
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(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Schedule 3.04 hereto, conflict
with or result in a violation or breach of any term or provision of any Law or
Order applicable to Parent or Purchaser or any of their respective Assets and
Properties; or
(c) except as disclosed in Schedule 3.03 hereto, (i) conflict with or
result in a violation or breach of, (ii) constitute (with or without notice or
lapse of time or both) a default under, (iii) require Parent or Purchaser to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon Parent or Purchaser or any of their
respective Assets or Properties under, any Contract or License to which Parent
or Purchaser is a party or by which any of their respective Assets and
Properties are bound.
3.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04 hereto, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Parent or Purchaser
is required in connection with the execution, delivery and performance of this
Agreement or the Operative Agreements or the consummation of the transactions
contemplated hereby or thereby.
3.05 Legal Proceedings. There are no Actions or Proceedings pending
or, to the knowledge of Parent, threatened against, relating to or affecting
Parent or Purchaser or any of their respective Assets and Properties which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
3.06 SEC Reports and Financial Statements; No Adverse Change. Parent
delivered to Sellers prior to the execution of this Agreement a true and
complete copy of each form, report, schedule, registration statement, definitive
proxy statement and other document (together with all amendments thereof and
supplements thereto) filed by Parent or any of its subsidiaries with the SEC
since December 31, 1995 (as such documents have since the time of their filing
been amended or supplemented, the "Parent SEC Reports"), which are all the
documents (other than preliminary material) that Parent and its subsidiaries
were required to file with the SEC since such date. As of their respective
dates, the Parent SEC Reports (i) complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the
- 33 -
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in the
Parent SEC Reports (the "Parent Financial Statements") complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with U.S. GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments) the consolidated financial position of Parent and
its consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, since September 30, 1996 there has not been any
change, event or development having, or that could be reasonably expected to
have, individually or in the aggregate, a material adverse effect on Parent and
its subsidiaries taken as a whole.
3.07 GST and QST Registration. The Purchaser is a registrant for Goods
and Services Tax purposes whose registration number is 101702413RT. The
Purchaser is a registrant for Quebec Sales Tax purposes whose registration
number is 1001826804.
3.08 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Parent or Purchaser
directly with Sellers without the intervention of any Person on behalf of Parent
or Purchaser in such manner as to give rise to any valid claim by any Person
against Sellers for a finder's fee, brokerage commission or similar payment.
ARTICLE IV
COVENANTS OF SELLERS
Sellers covenant and agree with Purchaser that, at all times from and
after the date hereof until the Closing and, with respect to any covenant or
agreement by its terms to be performed in whole or in part after the Closing,
for the period specified therein or, if no period is specified therein,
indefinitely, Sellers will comply with all covenants and provisions of this
Article IV, except to the extent Purchaser may otherwise consent in writing.
4.01 Regulatory and Other Approvals. Sellers will, as promptly as
practicable, (a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and give
all notices to
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Governmental or Regulatory Authorities or any other Person required of Sellers
to consummate the transactions contemplated hereby and by the Operative
Agreements, including without limitation those described in Sections 2.03 and
2.04 of the Disclosure Schedule, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Purchaser or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (c) cooperate with Purchaser in
connection with the performance of its obligations under Sections 5.01 and 5.02.
Sellers will provide prompt notification to Purchaser when any such consent,
approval, action, filing or notice referred to in clause (a) above is obtained,
taken, made or given, as applicable, and will advise Purchaser of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
4.02 Investigation by Purchaser. Sellers will (a) provide Purchaser
and its officers, directors, employees, agents, counsel, accountants, financial
advisors, consultants and other representatives with full access, upon
reasonable prior notice and during normal business hours, to the Employees and
such other officers, employees and agents of Sellers who have any responsibility
for the conduct of the Business, to Sellers' accountants and to the Assets, and
(b) furnish Purchaser and such other Persons with all such information and data
(including without limitation copies of Business Contracts, Business Licenses,
Benefit Plans and other Business Books and Records) concerning the Business, the
Assets and the Assumed Liabilities as Purchaser or any of such other Persons
reasonably may request in connection with such investigation.
4.03 No Solicitations. Sellers will not take, nor will they permit any
Affiliate of either Seller (or authorize or permit any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of Sellers or any such Affiliate) to take, directly or
indirectly, any action to solicit, encourage, receive, negotiate, assist or
otherwise facilitate (including by furnishing confidential information with
respect to the Business or permitting access to the Assets and Properties and
Books and Records of Sellers) any offer or inquiry from any Person concerning
the direct or indirect acquisition of the Business by any Person other than
Purchaser or its Affiliates. If Sellers or any such Affiliate (or any such
Person acting for or on their behalf) receives from any Person any offer,
inquiry or informational request referred to above, Sellers will promptly advise
such Person, by written notice, of the terms of this Section 4.03 and will
promptly, orally and in writing, advise
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Purchaser of such offer, inquiry or request and deliver a copy of such notice to
Purchaser.
4.04 Conduct of Business. Sellers will operate the Business only in
the ordinary course consistent with past practice. Without limiting the
generality of the foregoing, Sellers will:
(a) use commercially reasonable efforts to (i) preserve intact the
present business organization and reputation of the Business, (ii) keep
available (subject to dismissals and retirements in the ordinary course of
business consistent with past practice) the services of the Employees, (iii)
maintain the Assets in good working order and condition, ordinary wear and tear
excepted, (iv) maintain the good will of customers, suppliers, lenders and other
Persons to whom Sellers sells goods or provides services or with whom Sellers
otherwise has significant business relationships in connection with the Business
and (v) continue all current sales, marketing and promotional activities
relating to the Business;
(b) except to the extent required by applicable Law, (i) cause the
Business Books and Records to be maintained in the usual, regular and ordinary
manner, and (ii) not permit any material change in any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax practice or
policy of Sellers that would adversely affect the Business, the Assets or the
Assumed Liabilities;
(c) use commercially reasonable efforts to maintain in full force and
effect until the Closing substantially the same levels of coverage as the
insurance afforded under the Contracts listed in Section 2.21 of the Disclosure
Schedule; and
(d) comply, in all material respects, with all Laws and Orders
applicable to the Business and promptly following receipt thereof to give
Purchaser copies of any notice received from any Governmental or Regulatory
Authority or other Person alleging any violation of any such Law or Order.
4.05 Financial Statements and Reports; Filings.
(a) As promptly as practicable, Sellers will deliver to Purchaser true
and complete copies of such financial statements, reports and analyses relating
to the Business as may be prepared or received by Seller or as Purchaser may
otherwise reasonably request.
(b) As promptly as practicable, Sellers will deliver copies of all
License applications and other filings made by Sellers in connection with the
operation of the Business after the date hereof and before the Closing Date with
any Governmental or Regulatory Authority (other than routine, recurring filings
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made in the ordinary course of business consistent with past practice).
4.06 Employee Matters. Except as may be required by Law, Seller will
refrain from directly or indirectly:
(a) making any representation or promise, oral or written, to any
Employee concerning any Benefit Plan, except for statements as to the rights or
accrued benefits of any Employee under the terms of any Benefit Plan;
(b) making any increase in the salary, wages or other compensation of
any Employee;
(c) adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining agreement with respect to
the Business or any of the Employees, or amending, modifying or terminating
(partially or completely) any such Benefit Plan, employment-related Contract or
collective bargaining agreement, except to the extent required by applicable Law
and, in the event compliance with legal requirements presents options, only to
the extent that the option which Sellers reasonably believe to be the least
costly is chosen; or
(d) establishing or modifying any (i) targets, goals, pools or similar
provisions in respect of any fiscal year under any Benefit Plan or any
employment-related Contract or other compensation arrangement with or for
Employees or (ii) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan or any employment-related Contract or other
compensation arrangement with or for Employees.
4.07 Certain Restrictions. Sellers will refrain from:
(a) acquiring or disposing of any Assets and Properties used or held
for use in the conduct of the Business, other than Inventory in the ordinary
course of business consistent with past practice and other acquisitions or
dispositions not exceeding in either case Cdn.$10,000 in the aggregate, or
creating or incurring any Lien, other than a Permitted Lien, on any Assets and
Properties used or held for use in the conduct of the Business;
(b) entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to any
Business Contract or any material Business License;
(c) violating, breaching or defaulting under in any material respect,
or taking or failing to take any action that (with or without notice or lapse of
time or both) would constitute a material violation or breach of, or default
under,
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any term or provision of any Business Contract or any Business License;
(d) except as disclosed in Section 4.07 of the Disclosure Schedule,
incurring, purchasing, canceling, prepaying or otherwise providing for a
complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of either Seller under, any Liability of or
owing to such Seller in connection with the Business, other than in the ordinary
course of business consistent with past practice;
(e) engaging in any transaction with respect to the Business with any
officer, director or Affiliate of either Seller, either outside the ordinary
course of business consistent with past practice or other than on an
arm's-length basis;
(f) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets on behalf of the
Business in an aggregate amount exceeding Cdn.$10,000; or
(g) entering into any Contract to do or engage in any of the
foregoing.
4.08 Books and Records, etc.; Removal of Property. On the Closing
Date, each Seller will deliver or make available to Purchaser at the location at
which the Business is conducted all of the Business Books and Records and such
other Assets as are in such Seller's possession at other locations, and if at
any time after the Closing such Seller discovers in its possession or under its
control any other Business Books and Records or other Assets, it will forthwith
deliver such Business Books and Records or other Assets to Purchaser.
4.09 Use of "Motion 2000" Name. Immediately following the Closing
Date, each Seller and its Affiliates will cease using the name "Motion 2000" and
any trade dress, designs or logos associated with such name, or any confusingly
similar variations thereof.
4.10 Change of Corporate Name. On the Closing Date, each Seller shall
take all steps necessary to change its corporate name to a non-similar name.
4.11 Certain Tax Matters.
(a) Tax Elections/Allocation of Transfer Consideration. The Purchase
Price shall be allocated by the parties to each of the assets among the Assets
in the manner to be mutually agreed upon by the parties prior to the Closing.
The allocation of the Purchase Price shall be final and binding upon the parties
for all purposes, including, without limitation, the
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filing of all tax or other returns and the preparation of all financial
statements and other documents and records.
The parties shall also file an election with respect to the Accounts
Receivable under Section 22 of the Income Tax Act (Canada), Section 184 of the
Taxation Act (Quebec), and the corresponding sections of any other applicable
provincial statute and any regulations under such statutes in a manner
consistent with the above allocation. The parties further agree to make jointly
the necessary elections and execute and file, within the prescribed delays, the
prescribed election forms and any other documents required to give effect to the
foregoing and shall also prepare and file all of their respective tax returns in
a manner consistent with the aforesaid allocations.
(b) Transfer Taxes. Purchaser shall be liable and shall pay all land
transfer taxes, sales taxes, registration fees or other like charges properly
payable upon and in connection with the sale, assignment and transfer of the
Assets from Sellers to Purchaser hereunder.
(c) Other Taxes. Sellers shall file all Tax Returns with respect to
the business and affairs of Sellers and remit to the applicable Governmental or
Regulatory Authority all Taxes shown as due thereon. Purchaser agrees to
cooperate with Sellers in connection with the filing of such Tax Returns and
obtaining exemptions from such Taxes.
(d) Goods and Services Tax Election. The parties shall on the Closing
Date jointly execute an election under Section 167 of the ETA and Section 75 of
the QST on the forms prescribed for such purposes along with any documentation
necessary or desirable in order to effect the transfer of the Assets by Sellers
without payment of any Goods and Services Tax or Quebec Sales Tax. Purchaser
shall on the Closing Date file the election forms referred to above, along with
any documentation necessary or desirable to give effect to such, with Revenue
Canada and the Ministere du Revenu du Quebec, respectively, and shall provide
Sellers within twenty (20) days of the Closing Date with a photocopy of a
written acknowledgement of Revenue Canada and of the Ministere du Revenu du
Quebec of the receipt of the relevant election.
Notwithstanding such election, in the event that it is determined by
Revenue Canada or by the Ministere du Revenu du Quebec that Purchaser is liable
to pay Goods and Services Tax or Quebec Sales Tax on all or any part of the
Assets, Purchaser shall indemnify and hold Sellers harmless with respect to any
assessment for, or obligation of Sellers to remit, Goods and Services Tax or
Quebec Sales Tax with respect to the sale, assignment and transfer of the Assets
from Sellers to Purchaser and with respect to any interest and penalties related
thereto.
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4.12 Notice and Cure. Sellers will notify Purchaser in writing (where
appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Purchaser with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes Known to Sellers,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Sellers under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Sellers
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
4.13 Fulfillment of Conditions. Each Seller will execute and deliver
at the Closing each Operative Agreement that such Seller is required hereby to
execute and deliver as a condition to the Closing (including without limitation
the agreements referred to in Section 1.04(b)), will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Purchaser and Parent
contained in this Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment of any such
condition.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times from
and after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this Article V, except to the extent Sellers may
otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will, as promptly as
practicable, (a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other Person
required of Purchaser to consummate the transactions contemplated hereby and by
the Operative Agreements, including without limitation those described in
Schedules 3.03 and 3.04 hereto, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Sellers or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (c) cooperate with Sellers in
connection with the performance of
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its obligations under Sections 4.01 and 4.02. Purchaser will provide prompt
notification to Sellers when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Sellers of any communications (and, unless precluded
by Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
5.02 Notice and Cure. Purchaser will notify Seller in writing of, and
contemporaneously will provide Seller with true and complete copies of any and
all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Purchaser,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Purchaser under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Purchaser
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
5.03 Fulfillment of Conditions. Purchaser will execute and deliver at
the Closing each Operative Agreement that it is required hereby to execute and
deliver as a condition to the Closing (including without limitation the
agreements referred to in Section 1.04(b)), will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Sellers contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Assets and to
assume and to pay, perform and discharge the Assumed Liabilities are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Purchaser in its sole
discretion):
6.01 Representations and Warranties. Each of the representations and
warranties made by Sellers in this Agreement and any Operative Agreement (other
than those made as of a
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specified date earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct in all material respects on and as of such earlier date.
6.02 Performance. Sellers shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Sellers at or before the
Closing.
6.03 Officers' Certificates. Each Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed in the name and on
behalf of such Seller by the President of such Seller, substantially in the form
and to the effect of Exhibit E hereto, and a certificate, dated the Closing Date
and executed by the Secretary of such Seller, substantially in the form and to
the effect of Exhibit F hereto.
6.04 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to Purchaser, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Purchaser
or the transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law.
6.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Seller to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall be in form and substance reasonably satisfactory to Purchaser,
(c) shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements shall have occurred.
6.06 Third Party Consents. The consents (or in lieu thereof waivers)
(i) listed in Section 6.06 of the Disclosure
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Schedule and (ii) all other consents (or in lieu thereof waivers) to the
performance by Purchaser and Sellers of their obligations under this Agreement
and the Operative Agreements or to the consummation of the transactions
contemplated hereby and thereby as are required under any Contract to which
Purchaser or either Seller is a party or by which any of their respective Assets
and Properties are bound (a) shall have been obtained, (b) shall be in form and
substance reasonably satisfactory to Purchaser, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, except (in the case of clause (ii) above
where the failure to obtain any such consent (or in lieu thereof waiver) could
not reasonably be expected, individually or in the aggregate with other such
failures, to materially adversely affect Purchaser, the Assets, the Assumed
Liabilities or the Business or otherwise result in a material diminution of the
benefits of the transactions contemplated by this Agreement and the Operative
Agreements to Purchaser.
6.07 Release of Security Interest. Purchaser shall have received
evidence of the release by the Canadian Imperial Bank of Commerce of the
security interests described in Section 6.07 of the Disclosure Schedule.
6.08 Opinion of Counsel. Purchaser shall have received an opinion of
Xxxxxx, Xxxx & Xxxx, special counsel to Sellers, dated the Closing Date,
reasonably satisfactory in form and substance to Purchaser.
6.09 Real Property Leases. For each of the Real Property Leases
described in Section 1.01(a)(ii)(B) of the Disclosure Schedule, Seller shall
have delivered to Purchaser an estoppel certificate and consent to assignment
from the lessor thereunder in form and substance reasonably satisfactory to
Purchaser.
6.10 Deliveries. Sellers shall have delivered to Purchaser the
Assignment Instruments.
6.11 Proceedings. All proceedings to be taken on the part of Sellers
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell the Assets are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Sellers in their sole
discretion):
7.01 Representations and Warranties. Each of the representations and
warranties made by Purchaser and Parent in this Agreement and any Operative
Agreement shall be true and correct in all material respects on and as of the
Closing Date as though such representation or warranty was made on and as of the
Closing Date.
7.02 Performance. Purchaser shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 Officers' Certificates. Each of Purchaser and Parent shall have
delivered to Sellers a certificate, dated the Closing Date and executed in the
name and on behalf of Purchaser and Parent, respectively, by its Vice President,
substantially in the form and to the effect of Exhibit G hereto, and a
certificate, dated the Closing Date and executed by the Secretary of Purchaser
and Parent, respectively, substantially in the form and to the effect of Exhibit
H hereto.
7.04 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law that became effective after the date of this Agreement
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Sellers and Purchaser to perform their obligations under
this Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements shall have occurred.
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7.06 Third Party Consents. All consents (or in lieu thereof waivers)
to the performance by Sellers of their obligations hereunder and to the
consummation of the transactions contemplated hereby as are required under the
Contracts listed in Section 7.06 of the Disclosure Schedule (a) shall have been
obtained, (b) shall be in form and substance reasonably satisfactory to Sellers,
(c) shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect.
7.07 Release of Guarantee. Sellers shall have received evidence of the
release of Xxxxx Xxxxxxx from his guarantee obligations described in Section
7.07 of the Disclosure Schedule, and shall have been released by the Canadian
Imperial Bank of Commerce in respect of the indebtedness owing by Sellers to
such bank.
7.08 Opinion of Counsel. Sellers shall have received the opinion of
Stikeman, Elliott, special counsel to Purchaser, and Milbank, Tweed, Xxxxxx &
XxXxxx, special counsel to Purchaser, each dated the Closing Date, reasonably
satisfactory in form and substance to Sellers.
7.09 Deliveries. Purchaser shall have delivered to Seller the
Assumption Instruments.
7.10 Proceedings. All proceedings to be taken on the part of Purchaser
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of all such
documents and other evidences as Sellers may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VIII
EMPLOYMENT MATTERS
8.01 Employment. (a) On or prior to the Closing Date, Purchaser will
offer employment to all of the Employees listed in Section 8.01 of the
Disclosure Schedule ("Designated Employees"), effective as at the Closing Date,
on terms and conditions of employment (including salary, incentive compensation,
benefits, pension and vacation entitlement) which are at least as favorable to
the Designated Employees in respect of those terms and conditions upon which
such Designated Employees are employed by Sellers at the Closing Date.
(b) Sellers shall be responsible for all wages, bonuses, earned
vacations, sick leave, termination pay, severance pay and other remuneration and
benefits accruing or payable on or
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prior to the Closing Date for all of the Designated Employees and Employees,
except to the extent such remuneration and benefits are reflected on the Closing
Date Balance Sheet. Purchaser shall be responsible for all such remuneration and
benefits accruing and payable after the Closing Date and reflected on the
Closing Date Balance Sheet with respect to the Designated Employees who accept
Purchaser's offer of employment under paragraph (a) ("Transferred Employees").
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.01 Survival of Representations and Warranties. Notwithstanding any
right of Purchaser (whether or not exercised) to investigate the Business or any
right of any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement,
Sellers and Purchaser have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements contained in this
Agreement and the statements contained in the Disclosure Schedule or in any
certificate, list or other writing furnished pursuant to any provision of this
Agreement, will survive the Closing (a) indefinitely with respect to (i) the
representations and warranties contained in Section 2.01, 2.02, 2.35, 3.01, 3.02
and 3.08 and (ii) the covenants and agreements contained in Section 1.01, 1.02,
1.06 and 12.03, (b) until sixty (60) days after the expiration of all applicable
statutes of limitation (including all periods of extension, whether automatic or
permissive) with respect to matters covered by Sections 2.09, 2.20 and 2.24, (c)
until August 1, 1998 in the case of all other representations and warranties and
any covenant or agreement to be performed in whole or in part on or prior to the
Closing or (d) with respect to each other covenant or agreement contained in
this Agreement, until sixty (60) days following the last date on which such
covenant or agreement is to be performed or, if no such date is specified,
indefinitely; provided that any representation, warranty, covenant or agreement
that would otherwise terminate in accordance with clause (b), (c), or (d) above
will continue to survive if an Indemnity Notice shall have been timely given
under Section 9.02 on or prior to such termination date, until the related claim
for indemnification has been satisfied or otherwise resolved as provided in
Section 9.02.
9.02 Indemnification.
(a) Each Seller shall indemnify the Purchaser Indemnified Parties in
respect of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject,
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resulting from, arising out of or relating to (i) any misrepresentation, breach
of warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of such Seller contained in this Agreement or any Operative
Agreement, (ii) the termination or cancellation of any material agreement or
contract of such Seller due to the execution of this Agreement, (iii) any
noncompliance with any applicable bulk sales Laws or any other Law relating to
notice to or rights of creditors in connection with the transactions
contemplated by this Agreement, compliance with which Laws is hereby waived by
the parties, (iv) any Actions or Proceedings which may be asserted by any
Transferred Employee against Purchaser in respect of any matter arising out of
the employment or termination of employment of such Transferred Employee by
either of the Sellers prior to the Closing, (v) any claim against such Seller or
its directors, officers, employees or agents based on any deficiency or
noncompliance with the filing or payment, or the failure to properly file or
pay, by such Seller, or an agent for such Seller any Tax or Tax Return, (vi) any
Environmental Matter existing prior to the date hereof or arising out of actions
or events occurring prior to the date hereof or (vii) a Retained Liability;
provided, that no indemnity may be sought hereunder in respect of Accounts
Receivable except to the extent that amounts are payable pursuant to Section
1.05, nor may any indemnity be sought to the extent the loss has already been
reflected in the Closing Date Balance Sheet, except to the extent amounts are
payable pursuant to Section 1.03.
(b) Purchaser and Parent shall jointly and severally indemnify the
Seller Indemnified Parties in respect of, and hold each of them harmless from
and against, any and all Losses suffered, incurred or sustained by any of them
or to which any of them becomes subject, resulting from, arising out of or
relating to (i) any misrepresentation, breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of Purchaser
contained in this Agreement or any Operative Agreement, (ii) any Actions or
Proceedings which may be asserted by any Transferred Employee against either
Seller in respect of any termination of employment of such Transferred Employee
by Purchaser after the Closing or as a result of the Closing or (iii) an Assumed
Liability.
(c) No amounts of indemnity shall be payable as a result of any claim
in respect of a Loss arising under Sections 9.02(a) or 9.02(b) (i) unless and
until the Indemnified Parties thereunder have suffered, incurred, sustained or
become subject to Losses referred to in such Sections in excess of Cdn.$50,000
in the aggregate, in which event the Indemnified Parties shall be entitled to
seek indemnity for the full amount of such Losses in excess of Cdn.$25,000 and
(ii) for any Losses referred to in such Sections which in the aggregate are in
excess of the Purchase Price, as the same may be reduced by Section 1.03(b), in
the aggregate.
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(d) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under this Section 9.02 is asserted
against or sought to be collected from such Indemnified Party by a Person other
than a party hereto or any of its Affiliates (a "Third Party Claim"), then such
Indemnified Party shall give written notice to the latter of such Third Party
Claim, provided that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 9.02, except to the extent that the Indemnifying Party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, the Indemnifying Party shall be entitled
to participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof; provided that the Indemnified Party may
participate in such defense at the Indemnified Party's expense. If the
Indemnifying Party is not entitled to, or elects not to, assume the defense of a
Third Party Claim, it will not be obligated to pay the fees and expenses of more
than one counsel for the Indemnified Parties with respect to such claim, unless
the Indemnified Parties shall have been advised by counsel that representation
of any such Indemnified Parties by the same counsel would be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them, in which case such Indemnified Parties shall
have the right to select separate counsel the fees and expenses of which shall
be paid by the Indemnifying Party. No Indemnifying Party shall consent to entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party, which consent will not be unreasonably withheld or delayed.
No Indemnifying Party shall be subject to any liability for any settlement made
without its consent, which consent shall not be unreasonably withheld or
delayed.
(e) In the event of any claim or demand, including Third Party Claims,
in respect of which an Indemnified Party might seek indemnity under this Section
9.02, the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. The Indemnifying Party will notify the
Indemnified Party within the thirty (30) day period following its receipt of
such Indemnity Notice (the "Dispute Period") as to whether the Indemnifying
Party disputes its liability to the Indemnified Party hereunder. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim
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described in such Indemnity Notice, or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim
described in such Indemnity Notice, the Loss specified in the Indemnity Notice
will be conclusively deemed a liability of the Indemnifying Party under this
Section 9.02 and the Indemnifying Party shall pay the amount of such Loss, when
it has been finally determined, to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within sixty (60) days following the Indemnified Party's receipt of a written
notice from the Indemnifying Party disputing such claim, such dispute shall be
finally settled by arbitration in accordance with paragraph (e) of this Section
9.02.
(f) Any dispute submitted to arbitration pursuant to this Section 9.02
shall be finally and conclusively settled by the decision of a board of
arbitration consisting of three (3) members (hereinafter sometimes called the
"Board of Arbitration") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one (1) member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty (20)
days after their selection, such third member shall thereafter be selected by a
judge of the appropriate court of Ontario in accordance with the Arbitrations
Act (Ontario) upon application made to it for a third member possessing
expertise or experience appropriate to the dispute by either of the Indemnified
Party and the Indemnifying Party after giving two days' written notice to the
other party of its intention to make such an application. The provisions of he
Arbitration Act (Ontario) shall apply to any court application pursuant to this
Section 9.02. If the parties agree in writing, the Board of Arbitration may be
composed of a single arbitrator. The Board of Arbitration shall meet in Toronto,
Ontario or such other place as a majority of the members of the Board of
Arbitration determines more appropriate, and shall reach and render a decision
in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. It is
the intent of the parties hereto that, barring extraordinary circumstances,
decisions of the Board of Arbitration shall be rendered no more than thirty (30)
days following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to the Indemnified
Party and the Indemnifying Party. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period)
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shall be final, binding and conclusive on the Indemnified Party and the
Indemnifying Party and entitled to be enforced to the fullest extent permitted
by law and entered in any court of competent jurisdiction. Each party to any
arbitration shall bear its own expense in relation thereto, including but not
limited to such party's attorneys' fees, if any, and the expenses and fees of
the Board of Arbitration shall be divided between the Indemnifying Party and the
Indemnified Party in the same proportion as the portion of the related claim
determined by the Board of Arbitration to be payable to the Indemnified Party
bears to the portion of such claim determined not to be so payable.
(g) The Purchaser Indemnified Parties' right to indemnity contained in
this Agreement shall not be limited to the property held in escrow under the
Escrow Agreement.
(h) If the payment by an Indemnifying Party of any indemnity amount is
subject to Goods and Services Tax or Quebec Sales Tax, or is deemed by
applicable legislation to be inclusive of Goods and Services Tax or Quebec Sales
Tax, or is subject to any other tax, the Indemnifying Party shall pay to the
Indemnified Parties, in addition to such indemnity amount, an amount equal to
the tax payable in connection with the payment of such indemnity amount.
ARTICLE X
TERMINATION
10.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers and Purchaser;
(b) at any time before the Closing, by Sellers or Purchaser, in the
event (i) of a material breach hereof by the non-terminating party if such
non-terminating party fails to cure such breach within five (5) Business Days
following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after March 1, 1997 by Sellers or Purchaser upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party.
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10.02 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 10.01, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of Sellers or Purchaser
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provision with respect to expenses in Section 12.03
will continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to Section 10.01(b), (c) or (d), Sellers will remain liable to
Purchaser for any breach of this Agreement by Sellers existing at the time of
such termination, and Purchaser will remain liable to Seller for any breach of
this Agreement by Purchaser existing at the time of such termination, and
Sellers or Purchaser may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such breach as are provided in
this Agreement or as are otherwise available at Law or in equity.
ARTICLE XI
DEFINITIONS
11.01 Definitions. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Accounts Receivable" has the meaning ascribed to it in Section
1.01(a)(iv).
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
"Agreement" means this Asset Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with Sections 6.03 and 7.03, as the same shall be amended from time
to time.
"Assembly Lines" has the meaning ascribed to it in Section
1.01(a)(xv).
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"Assets" has the meaning ascribed to it in Section 1.01(a).
"Assets and Properties" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Assignment Instruments" has the meaning ascribed to it in Section
1.04(a).
"Assumed Liabilities" has the meaning ascribed to it in Section
1.02(a).
"Assumption Instruments" has the meaning ascribed to it in Section
1.04(a).
"Base Balance Sheet" means the balance sheet of the Business dated
January 31, 1997, prepared by Sellers in accordance with the Books and Records
of Sellers and in accordance with Canadian GAAP consistently applied.
"Base Net Book Value" means Cdn.$500,000.
"Benefit Plans" means all employee benefit plans relating to the
Employees of the Business, including profit sharing, deferred compensation,
phantom stock option, stock option, employee stock purchase, bonus, retirement,
health or insurance plans (oral or written) which are disclosed as benefit plans
on Section 2.12(a) of the Disclosure Schedule.
"Board of Arbitration" has the meaning ascribed to it in Section
9.02(f).
"Book Value Deficiency Amount" has the meaning ascribed to it in
Section 1.03(b)(iii).
"Books and Records" of any Person means all files, data, reports,
lists, documents, instruments, papers, books and records relating to the
business, operations, condition of (financial or otherwise), results of
operations and Assets and Properties of such Person, including without
limitation financial statements, Tax Returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Licenses, customer and supplier lists, computer files and programs,
retrieval programs, operating data and plans and environmental studies and
plans.
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"Business" has the meaning ascribed to it in the forepart of this
Agreement.
"Business Books and Records" has the meaning ascribed to it in Section
1.01(a)(xiii).
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York or the Province of Ontario are
authorized or obligated to close.
"Business Contracts" has the meaning ascribed to it in Section
1.01(a)(vii).
"Business Licenses" has the meaning ascribed to it in Section
1.01(a)(x).
"Canadian Dollars" and the symbol "Cdn.$" each means lawful money of
Canada.
"Canadian GAAP" means generally accepted accounting principles in
Canada, consistently applied throughout the specified period and in the
immediately prior comparable period.
"Catalog Numbers" has the meaning ascribed to it in Section
1.01(a)(xix).
"Closing" means the closing of the transactions contemplated by
Section 1.04.
"Closing Date" means (a) the fifth Business Day after the day on which
the last of the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in Sections 6.04
through 6.06 and Sections 7.04 through 7.06 has been obtained, made or given or
has expired, as applicable, or (b) such other date as Purchaser and Sellers
mutually agree upon in writing.
"Closing Date Accounts Receivable" has the meaning ascribed to it in
Section 1.06(a).
"Closing Date Balance Sheet" has the meaning ascribed to it in Section
1.03(b)(i).
"Closing Date Net Book Value" has the meaning ascribed to it in
Section 1.03(b)(i).
"Condition of the Business" means the business, condition (financial
or otherwise), results of operations and Assets and Properties of the Business.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security
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agreement, engagement or commitment of any nature or other contract (whether
written or oral).
"Customer Orders" has the meaning ascribed to it in Section
1.01(a)(xx).
"Designated Employees" has the meaning ascribed to it in Section
8.01(a).
"Determination Date" has the meaning ascribed to in Section
1.03(b)(iii).
"Disclosure Schedule" means the record delivered to Purchaser by
Sellers herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Sellers pursuant to this Agreement.
"Dispute Period" has the meaning ascribed to it in Section 9.02(e).
"Employees" means those Persons employed by either Seller in the
conduct of the Business.
"Environmental Claim" means, with respect to any Person, any written
or oral notice, claim, demand or other communication (collectively, a "claim")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, Governmental or Regulatory Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence, or Release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
Governmental or Regulatory Authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" means any Law or Order relating to the regulation
or protection of human health, safety or the environment or to Releases or
threatened Releases of pollutants, contaminants, deleterious substances,
Hazardous Materials or wastes into the environment (including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
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transport or handling of pollutants, contaminants, Hazardous Materials or
wastes.
"Environmental Matter" means any matter arising out of or relating to
pollution, contamination or protection of the environment, and any matters
relating to Releases or threatened Releases of pollutants, contaminants,
deleterious substances, Hazardous Materials or wastes into the environment
(including, without limitation, ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Materials or wastes.
"Escrow Agreement" has the meaning ascribed to it in Section 1.04(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Rate" means, for any date, the late New York trading rate of
exchange of Canadian Dollars for U.S. Dollars, as published in the Wall Street
Journal's "Key Currency Gross Rates" chart or, if such rate is not published
therein or otherwise reasonably available, the rate as mutually agreed upon by
the parties hereto.
"Excluded Assets" has the meaning ascribed to it in Section 1.01(b).
"Final Net Book Value" has the meaning ascribed to it in Section
1.03(b)(iii).
"Financial Statements" means the financial statements of each Seller
delivered to Purchaser pursuant to Section 2.06.
"Governmental or Regulatory Authority" means (i) any multinational,
federal, provincial, state, municipal, local or other governmental or public
department, court, commission, board, bureau, agency or instrumentality,
domestic or foreign; (ii) any subdivision, agent, commission, board, or
authority of any of the foregoing; or (iii) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under or for
the account of any of the foregoing.
"Hazardous Material" means (A) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
liquid industrial
- 55 -
wastes," "toxic substances," "toxic pollutants" or words of similar import under
any Environmental Law; and (C) any other chemical or other hazardous material,
waste or substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority under any Environmental
Law.
"Improvements" has the meaning ascribed to it in Section 1.01(a)(i).
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification under
any provision of Section 9.02, including without limitation a Person asserting a
claim pursuant to Section 9.02(d).
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Section 9.02, including
without limitation a Person against whom a claim is asserted pursuant to Section
9.02(d).
"Indemnity Notice" means written notification pursuant to Section
9.02(e) of a claim for indemnity under Section 9.02 by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such claim.
"Independent Accountant" has the meaning ascribed to it in Section
1.03(b)(ii).
"Instruction Materials" has the meaning ascribed to it in Section
1.01(a)(xviii).
"Intangible Personal Property" has the meaning ascribed to it in
Section 1.01(a)(ix).
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, brand
names, inventions, trade secrets, processes, formulae, copyrights and copyright
rights, trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical information,
manufacturing, engineering and technical
- 56 -
drawings, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights.
"Inventory" has the meaning ascribed to it in Section 1.01(a)(iii).
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by either Seller
(other than trade receivables generated in the ordinary course of business of
such Seller).
"Knowledge of Sellers", "Known to Sellers" or "to Sellers' Knowledge"
means the knowledge of Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx or
Xxxxxxx Xxxxxx.
"Laws" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, policies, voluntary restraints, guidelines, or any provisions of the
foregoing, including general principles of common and civil law and equity,
binding on or affecting the Person referred to in the context in which such word
is used; and "Law" means any one of them.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, hypothecation, pledge, assessment,
security interest, movable security, lease, lien, adverse claim, levy, defect of
title, charge or other encumbrance of any kind, or any conditional sale
Contract, title retention Contract or other Contract to give any of the
foregoing and any other rights of third parties relating to the property,
including rights of set-off, voting trusts and other encumbrances of any kind.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
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"Manufacturing Equipment" has the meaning ascribed to it in Section
1.01(a)(xv).
"Marketing Materials" has the meaning ascribed to it in Section
1.01(a)(xviii).
"Motion 2000" has the meaning ascribed to it in the forepart of this
Agreement.
"Motion 0000 Xxxxxx" has the meaning ascribed to it in the forepart of
this Agreement.
"Net Book Value of the Business" means the total assets of the
Business (net of allowances for doubtful accounts and accumulated depreciation)
minus the Assumed Liabilities as shown on the applicable balance sheet of the
Business, calculated in accordance with Canadian GAAP.
"Net Receivables Amount" has the meaning ascribed to it in Section
1.05(a).
"Operative Agreements" means, collectively, the Assignment
Instruments, the Assumption Instruments, the Escrow Agreement, the Registration
Rights Agreement, that certain letter agreement, dated February 10, 1997,
between Motion 2000 and Parent, and that certain letter agreement, dated
February 10, 1997, between Motion 0000 Xxxxxx and Parent.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Parent" has the meaning ascribed to it in the forepart of this
Agreement.
"Parent Financial Statements" has the meaning ascribed to it in
Section 3.06.
"Parent SEC Reports" has the meaning ascribed to it in Section 3.06.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with Canadian GAAP, (ii)
any statutory Lien arising in the ordinary course of business by operation of
Law with respect to a Liability that is not yet due or delinquent, (iii)
assignments of insurance provided to landlords (or their mortgagees) pursuant to
the terms of any lease, and liens or rights reserved in any lease for rent or
for compliance with the terms of such lease, (iv) 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 operation of the
Business, other than security for borrowed
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money, (v) the encumbrances listed on Section 11.01 of the Disclosure Schedule
and (vi) any minor imperfection of title or similar Lien which individually or
in the aggregate with other such Liens does not materially impair the value of
the property subject to such Lien or the use of such property in the conduct of
the Business.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Prepaid Expenses" has the meaning ascribed to it in Section
1.01(a)(viii).
"Purchase Price" has the meaning ascribed to it in Section 1.03(a).
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Purchaser's Accountants" has the meaning ascribed to it in Section
1.03(b)(i).
"Purchaser Indemnified Parties" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"Real Property" has the meaning ascribed to it in Section 1.01(a)(i).
"Real Property Leases" has the meaning ascribed to it in Section
1.01(a)(ii).
"Receivables Deficiency" has the meaning ascribed to it in Section
1.05(c).
"Receivables Notice" has the meaning ascribed to it in Section
1.05(c).
"Receivables Payment Amount" has the meaning ascribed to it in Section
1.05(c).
"Registration Rights Agreement" has the meaning ascribed to it in
Section 1.04(b).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
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"Resolution Period" means the period ending thirty (30) days following
receipt by an Indemnified Party of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a claim set forth in a Claim
Notice or an Indemnity Notice.
"Revenue Canada" means Revenue Canada Customs, Excise and Taxation.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Sellers" has the meaning ascribed to it in the forepart of this
Agreement.
"Sellers' Accountants" has the meaning ascribed to it in Section
1.03(b)(i).
"Seller Indemnified Parties" means each Seller and its officers,
directors, employees, agents and Affiliates.
"Tangible Personal Property" has the meaning ascribed to it in Section
1.01(a)(v).
"Taxes" means any federal, provincial, state, county, local or foreign
income, profits, gross receipts, franchise, sales, use, occupancy, excise,
gains, value added, withholding, employment, payroll, social security, general
property, personal property, intangible property and all other taxes of any
nature, fees, levies, duties, assessments, reassessments, deficiencies or
charges imposed by any Governmental or Regulatory Authority, and includes any
interest and penalties (civil or criminal) on or additions to any such taxes and
any reasonable expenses incurred in connection with the determination,
settlement or litigation of any Tax Liability.
"Tax Returns" means a report, return or other information (including
any amendments) required to be supplied to a Governmental or Regulatory
Authority with respect to Taxes.
"Tenant Security Deposits" has the meaning ascribed to it in Section
1.01(a)(xii).
"Third Party Claim" has the meaning ascribed to it in Section 9.02(d).
"Tools, Molds and Dies" has the meaning ascribed to it in Section
1.01(a)(iv).
"Transferred Employees" has the meaning ascribed to it in Section
8.01(c).
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"U.S. Dollars" means lawful money of the United States of America.
"U.S. GAAP" means generally accepted accounting principles in the
United States of America, consistently applied throughout the specified period
and in the immediately prior comparable period.
"Vehicles" has the meaning ascribed to it in Section 1.01(a)(xi).
(b) Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Seller in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under Canadian GAAP, with
respect to any financial statements of Sellers referred to herein, and U.S.
GAAP, with respect to any financial statements of Parent and its subsidiaries
referred to herein.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (by postage prepaid
registered or certified), return receipt requested, to the parties at the
following addresses or facsimile numbers:
If to Parent or Purchaser, to:
Xxxxxx-Field Health Products, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Plaza
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Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
and:
Stikeman, Xxxxxxx
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxx, Esq.
Purchaser Wire Transfer Instructions
Bank: The Chase Manhattan Bank
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA No.: 000000000
Beneficiary: Xxxxxx-Field, Inc.
825-134498
If to either Seller, to:
Motion 2000 Inc.
00 Xxxx Xxxxxx Xxxxxx, Xxxx 00
Xxxxxxxx Xxxx, Xxxxxxx X0X 0X0
Facsimile No.: (000) 000-0000
Attn: Xx. Xxxxx Xxxxxxx
with a copy to:
Devry, Xxxxx & Xxxxx
00 Xxxxxx Xxxxx Xxxx, Xxx 000
Xxx Xxxxx, Xxxxxxx X0X0X0
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt if received on a Business
Day and on the next Business Day if received on a day that is not a Business
Day, and (iii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice, request or other communication
is to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto.
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12.02 Entire Agreement. This Agreement and the Operative Agreements
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof, including without limitation that
certain letter of intent between the parties dated January 15, 1997, and contain
the sole and entire agreement between the parties hereto with respect to the
subject matter hereof and thereof.
12.03 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 10.02), whether
or not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the Operative Agreements and the
transactions contemplated hereby; provided, however, that it is hereby expressly
acknowledged that (except for the fees, commissions and expenses of Xxxxxx
Xxxxxx referred to in Section 2.35) Sellers' legal and accounting expenses
incurred in connection with the transactions contemplated hereunder will be paid
out of Assets being transferred and will be reflected in the Closing Date
Balance Sheet as having been paid out of the Assets, and Sellers will have no
obligation to Purchasers to reimburse such amounts, except pursuant to the
Purchase Price adjustment mechanism of Section 1.03.
12.04 Public Announcements. Each party hereto will obtain the other
party's prior approval of any press release relating to the transactions
contemplated hereunder to be issued at any time prior to the Closing.
12.05 Bulk Sales Law. The parties hereto believe that, assuming
compliance with this Agreement by Sellers and Purchaser, it is both unnecessary
for the protection of Sellers' creditors and impractical to comply with the bulk
sales legislation in the various jurisdictions in which the Assets are located.
Accordingly, in the event that any creditor of Sellers should take any action
against either Purchaser or the Assets which is wholly or partially based on the
bulk sales legislation of any such jurisdiction, Sellers agree to indemnify and
save Purchaser harmless from and against any such action, as provided in Section
9.02(a)(iii).
12.06 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
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12.07 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
12.08 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Section 9.02.
12.09 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchaser may assign any or all of its rights, interests and
obligations hereunder to a wholly-owned subsidiary, provided that any such
subsidiary agrees in writing to be bound by all of the terms, conditions and
provisions contained herein, but no such assignment shall relieve Purchaser of
its obligations hereunder. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
12.10 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
12.11 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
12.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the Province of Ontario and the Laws of Canada
applicable to such province.
12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized, as of the date first above
written.
EVEREST & XXXXXXXX CANADIAN LIMITED
By:____________________________________
Name:
Title:
XXXXXX-FIELD HEALTH PRODUCTS, INC.
By:____________________________________
Name:
Title:
MOTION 2000 INC.
By:____________________________________
Name:
Title:
MOTION 2000 QUEBEC INC.
By:____________________________________
Name:
Title:
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