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EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
December 14, 1999, between Eagle USA Airfreight, Inc., a Texas corporation
("Eagle"), Eagle Canada Airfreight, Inc., an Ontario corporation ("Buyer"),
Commercial Transport Management Ltd., an Ontario corporation ("CTM"), and Xxxx
Xxxxxxx, Xxxxxxxxxxx Xxxxxx and Xxxxxx Xxxx (collectively, the "Principals").
W I T N E S S E T H:
WHEREAS, CTM owns all of the issued and outstanding shares
(the "Shares") of Commercial Transport International (Canada) Ltd. ("CTI"), a
Canada corporation; and
WHEREAS, Buyer desires to acquire the Shares from CTM, and CTM
desires to sell the Shares to Buyer, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Principals own all of the issued and outstanding
shares of CTM;
NOW, THEREFORE, in consideration of the sum of ten dollars
($10) now paid by each of Eagle and the Buyer to each of the Principals (the
receipt and sufficiency of which are hereby acknowledged), and of the premises
and respective representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms set forth below in this Article I shall have the
meanings ascribed to them below:
Affiliate: with respect to any person, means any person that
directly or indirectly controls, is controlled by or is under common control
with such person.
Agreement: means this agreement and all schedules and exhibits
attached hereto.
Approved Reorganization: means a reorganization generally as
described in the Memorandum of Steps previously delivered by the Principals to
Eagle affecting one or more of the CTM Companies, subject to the provisions of
Section 6.2(d) and Section 6.15 of the CTM Agreement, that is completed prior to
the Closing under the CTM Agreement.
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best efforts: means a party's efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
best knowledge of the Principals: means, in respect of the
Principals, all matters which the Principals actually knew or which should have
been known by the Principals after appropriate and diligent inquiry of all
relevant management personnel of CTI and any Subsidiary as to the accuracy and
completeness of such representation and warranty.
Closing and Closing Date: have the meanings set out in Article
III.
Combined Business: means the combined entity comprised of CTM,
Ontco, Fastair, CTI, AOG Freight Systems Ltd. and Eagle Canada.
Contract: means any agreement, indenture, contract, lease,
deed of trust, license, option, instrument or other commitment, whether written
or oral.
Consolidation: means the purchase by CTM of the 50% interest
in CTI held by CTI Holding Co. Ltd.
CTI: means Commercial Transport International (Canada) Ltd.
CTI Financial Statements: has the meaning set out in Section
4.13(a).
CTM: has the meaning set out in the recitals to this Agreement
and following the completion of an Approved Reorganization shall mean Amalco as
referred to in the Memorandum of Steps previously delivered by the Principals to
Eagle.
CTM Agreement: means the Stock Purchase Agreement, dated as of
December 14, 1999, between Eagle, Buyer and the Principals listed on Schedule 1
thereto.
CTM Companies: means CTM, Ontco, CTI and any entities that are
individually or collectively Subsidiaries of one or more CTM Companies.
Dollars or $: shall, unless otherwise specified herein, refer
to Canadian dollars.
Eagle Canada: means, collectively, Eagle Canada Airfreight,
Inc. and Eagle Canada Freight Services, Inc.
Employee Plans: has the meaning set out in Section 4.8.
Employment Agreement: has the meaning set out in Section 2.5.
Environmental Laws: means all Laws relating to Hazardous
Substances or the use, consumption, handling, transportation, storage or Release
thereof, including, without limitation (and in addition to any such Laws
relating to the environment generally), hazardous goods transport
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licenses and similar licenses and permits and any Environmental Laws relating to
public health, occupational health and safety, product liability or
transportation, and "Environmental Law" shall have a corresponding meaning.
Environmental Order: means any prosecution, order, decision,
notice, direction, report, recommendation or request issued, rendered or made by
any Governmental Body in connection with Environmental Laws, and "Environmental
Orders" shall have a corresponding meaning.
Fastair: means Fastair Cargo Systems Ltd.
GAAP: means Canadian generally accepted accounting principles.
Governmental Body: means any (a) nation, province, state,
county, city, town, village, district, or other jurisdiction of any nature; (b)
federal, provincial, state, local, municipal, foreign, or other government; (c)
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal); (d) multinational organization or body; or (e) body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature.
Hazardous Substances: means any pollutant, toxic substance,
asbestos, hazardous waste, or any constituent of any such substance, waste or
product, whether solid, liquid or gaseous in form and/or any substance which is
or may become hazardous, toxic, injurious or dangerous to any person, property,
air, land, water, flora, fauna or wildlife, and includes, but is not limited to,
contaminants, pollutants, wastes and dangerous, toxic, deleterious or designated
substances as defined in or pursuant to any Environmental Laws or Environmental
Orders, including, without limitation, "hazardous products" as defined in the
Hazardous Products Act (Canada), "dangerous goods" as defined in the
Transportation of Dangerous Goods Act, 1992 (Canada) and "dangerous goods" as
defined in the Dangerous Goods Transportation Act (Ontario), and as such
substances are described in or regulated under US Department of Transportation
("DOT"), International Civil Aviation Organization ("ICAO"), International Air
Transport Association ("IATA") and the International Maritime Dangerous Goods
Code ("IMDGC") and shall include, without limitation, petroleum, natural gas,
natural gas liquids, crude oil and any fraction or product thereof.
Intellectual Property: means each of the properties separately
described in Schedule 4.12.
Laws: means all statutes, codes, ordinances, decrees, rules,
regulations, municipal bylaws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, published policies, certificates, published codes, licenses, permits,
certificates of approval, published guidelines, voluntary restraints, inspection
reports, or any provisions of such laws, including general principles of common
law and equity and the requirements of all Governmental Bodies, binding or
affecting the person referred to in the context in which such word is used; and
"Law" means any one of them.
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Leased Property: has the meaning set out in Section 4.11(a).
Leases: has the meaning set out in Section 4.11(c).
Lien: means any lien, pledge, hypothecation, claim, charge,
security interest of any nature, mortgage option, title retention agreement,
adverse claim, exception, reservation, easement, right of occupation, any matter
capable of registration against title, option, right of preemption, privilege or
other encumbrance, or any Contract to create any of the foregoing or other
rights of any third person of any nature whatsoever.
Material Contract: has the meaning set out in Section 4.9.
Ontco: means 1215650 Ontario Ltd.
Permit: means any license, permit, consent, approval,
authorization, qualification, certificate, registration or order of any
Governmental Body.
Permitted Liens: means:
(i) liens for taxes, assessments and governmental charges due
and being contested in good faith and diligently by appropriate proceedings (and
for the payment of which adequate provision has been made);
(ii) servitudes, easements, restrictions, rights-of-way and
other similar rights in real property or any interest therein, provided the same
are not of such nature as to materially adversely affect the use of the property
subject thereto by CTI or any Subsidiary, as applicable;
(iii) liens for taxes either not due and payable or due but
for which notice of assessment has not been given;
(iv) undetermined or inchoate liens, charges and privileges
incidental to current construction or current operations and statutory liens,
charges, adverse claims, security interests or encumbrances of any nature
whatsoever claimed or held by any governmental authority that have not at the
time been filed or registered against the title to the asset or served upon CTI
or any Subsidiary pursuant to law or that relate to obligations not due or
delinquent;
(v) 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;
(vi) security given in the ordinary course of the business of
CTI and its Subsidiaries to any public utility, municipality or government or to
any statutory or public authority in connection with the operations of the
business of CTI and its Subsidiaries, other than security for borrowed money;
and
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(vii) the reservations in any original grants from the Crown
of any real property or interest therein and statutory exceptions to title that
do not materially detract from the value of the real property concerned or
materially impair its use in the operation of the business of CTI and its
Subsidiaries.
(viii) the Permitted Liens described in Schedule 0.
person: means any individual, firm, corporation, partnership,
limited liability company, joint venture, association, syndicate, trust,
unincorporated organization, Governmental Body, or subdivision thereof or any
other entity.
Prime Rate: means the rate of interest per annum equal to the
per annum rate of interest quoted, published and commonly known as the "prime
rate" of Royal Bank of Canada which such bank establishes at its main office in
Toronto, Canada as the reference rate of interest in order to determine interest
rates for loans in Dollars to its Canadian borrowers, adjusted automatically
with each quoted or published change in such rate, all without necessity of any
prior notice thereof.
Release: includes abandon, add, deposit, discharge, disperse,
dispose, dump, emit, empty, escape, leach, leak, migrate, pour, pump, release or
spill, and "Released" shall have a corresponding meaning.
Subsidiary: of any person, means any entity more than 50%
(except as provided below) of the outstanding voting stock or other interests of
which are owned, directly or indirectly, by such person, by one or more other
Subsidiaries of such person or by such person and one or more other Subsidiaries
of such person. Unless the context otherwise requires, references to
Subsidiaries are to Subsidiaries of CTI.
Tax Authority: means any authority whether foreign, federal,
provincial, state or locale competent to or able to raise any Taxes whatsoever
wheresoever.
Tax Returns: means all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes.
Taxes: means all federal, provincial, state, local, foreign
and other taxes, levies, or other assessments, customs, duties, imposts, charges
or fees, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, profit share,
real or personal property, asset, license, lease, service, service use, value
added (includes GST), withholding, payroll, employment, excise, estimated
severance, transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, Canada Pension Plan premiums, workers
compensation, utility, severance, production, employment insurance, stamp,
occupation, premium, property, windfall profits, other governmental taxes
imposed or payable to any Governmental Body, or other taxes of any kind
whatsoever, together with any interests, penalties, additions to tax, fines,
requirements to report information with respect thereto and any damages, costs,
expenses, fees or other liability arising from such Tax or reporting
requirements or other additional amounts imposed thereon or related thereto, and
the term "Tax" means any one of the foregoing Taxes.
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ARTICLE II
PURCHASE AND SALE
Section 2.1 The Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing CTM will sell, assign, transfer and
deliver to Buyer the Shares (together with a stock power or powers executed in
blank), and Buyer will purchase and acquire the Shares.
Section 2.2 Purchase Price. The aggregate purchase price for
all the Shares (the "Purchase Price") shall be $3,500,000 to be paid at the
Closing. The Purchase Price will be paid by wire transfer of an aggregate of
$3,500,000 in immediately available funds to accounts designated in writing by
CTM (such designation to be made at least two business days prior to the
Closing). CTM shall be permitted to distribute to the Principals the Purchase
Price, less the CTI Advance Repayment and Corporate Tax (net of Dividend Refund)
as specified on the Flow of Funds included in Schedule 2.2 hereto as a capital
dividend and a taxable dividend as specified in such schedule, prior to the
closing of the transactions under the CTM Agreement.
Section 2.3 Exchange Rate. For purposes of any conversion to
be made pursuant to this Agreement between Canadian dollars and U.S. dollars,
the applicable exchange rate shall be the New York foreign exchange mid-range
rate of Canadian dollars per U.S. dollar, as published in the Wall Street
Journal for the then current exchange rate (and not for forward contracts).
Section 2.4 Interest on Overdue Payments. Any party owing any
amounts under this Agreement to another party shall pay interest at the rate of
Prime Rate plus 1% per annum on all due yet unpaid amounts.
Section 2.5 Consolidation Expenses. Principals agree that on
or prior to the Closing they will have paid all amounts used to pay for the
Consolidation and related costs and expenses (which the Principals represent is
approximately $2.4 million) and will have repaid in full any financing
arrangements, including any bridge loan, used to finance the Consolidation.
ARTICLE III
CLOSING
The closing of the transactions contemplated hereby (the
"Closing") shall take place at such time and at such date as are mutually agreed
to by Buyer, CTM and Principals at the offices of Xxxxxx/Xxxx/Xxxxxxx LLP,
0000-000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx, but in no event later than
January 7, 2000. Such closing shall be in escrow and not completed or effective
until the conditions specified in Section 8.1(h) and 8.2(g) are satisfied. The
date on which the Closing is held is referred to in this Agreement as the
"Closing Date."
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL PARTIES
Each of CTM and each Principal jointly and severally
represents and warrants to Buyer and Eagle the following (except that a
Principal makes no representation as to any matter that solely relates to
another Principal).
Section 4.1 Organization and Good Standing of CTI. CTI is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation and has full corporate power and authority
to own, operate and lease its respective assets in the manner currently owned,
operated and leased by it. CTI has no Subsidiaries. CTI is duly qualified to do
business as a foreign or extra-provincial corporation in all jurisdictions in
which the nature of its business requires such qualification and the failure to
do so would have an adverse effect on such entity. The Shares constitute all the
issued and outstanding capital stock of CTI. None of the Shares were issued in
violation of any preemptive right or other right to purchase securities.
Schedule 4.1 sets forth the jurisdiction of incorporation and capitalization of
CTI. Principals have previously furnished Buyer true and correct copies of the
certificate or articles of incorporation and bylaws or other organizational
documents of CTI. CTM is not a nonresident of Canada for the purposes of the
Income Tax Act (Canada).
Section 4.2 Power of CTM and the Principals; Approval of the
Acquisition. CTM and each Principal has the full power, legal capacity and
authority, and CTM and each Principal has taken all necessary action required to
be taken by it and him, respectively, to execute and deliver this Agreement and
the exhibits and schedules hereto, to consummate the transactions contemplated
herein and to take all actions required to be taken by it and him, respectively,
pursuant to the provisions hereof, and each of this Agreement and the exhibits
hereto constitutes the valid and binding obligation of CTM and each Principal,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally, and to the principles of equity (whether
enforcement is sought in a proceeding in equity or at law).
Section 4.3 Non-Contravention. (a) Except as set forth in
Schedule 4.3(a), neither the execution and delivery of this Agreement or any
documents executed in connection herewith, nor the consummation of the
transactions contemplated herein or therein, does or will (a) violate, conflict
with, result in a breach of or require notice or consent or decrease the rights
of CTI or its Subsidiaries or increase the rights of any third party under any
Law, the constituent documents, bylaws or other organizational documents of CTI
or any Subsidiary or any provision of any agreement or instrument to which CTM,
any Principal, CTI or any Subsidiary is a party or any legal duty owed by any
officer, director, shareholder, or agent of CTI or any Subsidiary; (b)
contravene, conflict with, or result in a violation of, or give any Governmental
Body or other person the right to challenge any of such transactions or to
exercise any remedy or obtain any relief under, any order, constitution, law,
ordinance, regulation, statute or treaty or award, decision, injunction,
judgment, ruling or verdict to which any Principal, CTM, CTI, its Subsidiaries,
or any of their respective assets, may be subject; (c) contravene, conflict
with, or result in a violation of any of the terms or requirements of, or give
any Governmental Body the right to revoke, withdraw, suspend, cancel,
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terminate, or modify, any Permit that is held by CTI, or its Subsidiaries or
that otherwise relates to the business of CTI, or any Subsidiary; (d) otherwise
require notice to or consent of any Governmental Body; (e) result in the
imposition or creation of any Lien upon or with respect to the Shares or any of
the assets owned or used by CTI or its Subsidiaries; or (f) result in the
acceleration or mandatory prepayment of any indebtedness, or any guaranty of CTI
or any Subsidiary or afford any holder of any indebtedness, or any beneficiary
of any guaranty the right to require CTI or any Subsidiary to redeem, purchase
or otherwise acquire, reacquire or repay any indebtedness, or to perform any
guaranty.
(b) Except as disclosed in Schedule 4.3(b), the Consolidation
and any documents executed in connection therewith did not (a) violate, conflict
with, result in a breach of or require notice or consent or decrease the rights
of CTI or its Subsidiaries or increase the rights of any third party under any
Law, constituent documents, bylaws or other organizational documents of CTI or
any Subsidiary or any provision of any agreement or instrument to which any
Principal, CTM, CTI or any Subsidiary is a party or any legal duty owed by any
officer, director, shareholder, or agent of CTI or any Subsidiary; (b)
contravene, conflict with, or result in a violation of, or give any Governmental
Body or other person the right to challenge any of such transactions or to
exercise any remedy or obtain any relief under, any order, constitution, law,
ordinance, regulation, statute or treaty or award, decision, injunction,
judgment, ruling or verdict or to which any Principal, CTM, CTI, its
Subsidiaries, or any of their respective assets, may be subject; (c) contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Permit that is held by CTI or its Subsidiaries or that
otherwise relates to the business of CTI or any Subsidiary; (d) otherwise
require notice to or consent of any Governmental Body; (e) result in the
imposition or creation of any Lien upon or with respect to the Shares or any of
the assets owned or used by CTI or its Subsidiaries; (f) result in the
acceleration or mandatory prepayment of any indebtedness, or any guaranty of CTI
or any Subsidiary or afford any holder of any indebtedness, or any beneficiary
of any guaranty the right to require CTI or any Subsidiary to redeem, purchase
or otherwise acquire, reacquire or repay any indebtedness, or to perform any
guaranty; (g) result in the imposition of any Tax payable on the part of the
Buyer, Eagle or any CTM Companies; or (h) result in the incurrence by Buyer or
Eagle or any CTM Companies of any liabilities in connection therewith. There are
no pending or, to the best knowledge of the Principals, threatened judicial or
administrative actions, proceedings or investigations which question the
validity of the Consolidation or any action taken or contemplated by any
Principal, CTM, CTI or any Subsidiary thereof in connection with the
Consolidation.
(c) The CTM Companies in the aggregate do not own US$15
million in assets that are located in the United States nor have they in their
most recent fiscal year made US$25 million in sales into the United States.
(d) For purposes of the Competition Act, prior to the Closing,
CTI, together with its affiliates,
(i) do not have assets in Canada that exceed
$390 million in aggregate value, determined
as of such time and in such manner as
prescribed
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by the Notifiable Transactions Regulation
made under the Competition Act; and
(ii) do not have gross revenues from sales in,
from or into Canada, determined for such
annual period and in such manner as
prescribed in the Notifiable Transactions
Regulation made under the Competition Act
that exceed $380 million in aggregate value.
For purposes of this Section 4.3(d), "affiliates"
shall have the same meaning as that contained in
Subsection 2(2) of the Competition Act (Canada) and
the references therein to "subsidiary corporation"
and "control" shall have the same meaning as that
contained in Subsections 2(3) and (4) of said Act.
Section 4.4 Validity. There are no pending or, to the best
knowledge of the Principals, threatened judicial or administrative actions,
proceedings or investigations which question the validity of this Agreement or
any action taken or contemplated by any Principal, CTM, CTI or any Subsidiary
thereof in connection with this Agreement.
Section 4.5 Broker Involvement. Any fees or expenses relating
to the hiring, retaining or dealing with any broker or finder by the Principals,
CTM, CTI or any Subsidiary in connection with the transactions contemplated by
this Agreement will be paid by the Principals and not CTM or CTI or its
Subsidiaries.
Section 4.6 Litigation. Except as set forth on Schedule 4.6,
there is no investigation, claim or proceeding or litigation of any type pending
or, to the best knowledge of the Principals, threatened involving any Principal,
CTM, CTI or any Subsidiary that might have an adverse effect on CTI, Eagle,
Buyer or any of their respective Subsidiaries, and there is no judgment, order,
writ, injunction or decree of any court, government or governmental agency, or
arbitral tribunal against or involving any Principal, CTM, CTI or any Subsidiary
that might have an adverse effect on CTI, Eagle, Buyer or any of their
respective Subsidiaries.
Section 4.7 Title to Shares. The beneficial owner and owner of
record of the Shares is CTM, such Shares are owned by CTM free and clear of all
Liens, and such Shares are not subject to any agreements or understandings with
respect to the voting or transfer of any of the Shares. There are no outstanding
subscriptions, options, convertible securities, warrants or calls or preemptive
rights of any kind issued or granted by, or binding upon, CTI or any Subsidiary
to purchase or otherwise acquire or to sell or otherwise dispose of any security
of or equity interest in CTI or any Subsidiary. CTM has full legal right to
sell, assign and transfer the Shares owned by it to Buyer and will, upon
delivery of a certificate or certificates representing such Shares to Buyer
pursuant to the terms hereof, transfer to Buyer title to such Shares, free and
clear of any Liens other than Permitted Liens.
Section 4.8 Continuity Prior to Closing Date. Except as set
forth on Schedule 4.8, from December 31, 1998, to and including the Closing
Date, CTI and its Subsidiaries have not conducted their respective businesses
otherwise than in the usual and customary manner and in the ordinary course of
business, consistent with historical practice, and there has not been:
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(a) any sale, lease, distribution, transfer, mortgage, pledge
or subjection to lien of any of the assets of CTI or any of its
Subsidiaries, except sales of inventory and obsolete or surplus
equipment in the ordinary and usual course of business and the creation
of Permitted Liens;
(b) any material transaction by CTI or any Subsidiary not in
the ordinary and usual course of business;
(c) any material damage, destruction or loss to the assets of
CTI or any Subsidiary, whether or not covered by insurance;
(d) a termination, or, to the best knowledge of the
Principals, a threatened termination, or material adverse modification,
in each case not in the ordinary course of business, of any material
Contract or the relationship of CTI or any Subsidiary with any customer
or supplier, who in the aggregate accounted for in excess of 10% of
sales or purchases during CTI's last full fiscal year;
(e) any change in accounting methods or principles or the
application thereof or any change in policies or practices with respect
to items affecting working capital;
(f) any delay or reduction in capital expenditures in
contemplation of this Agreement or otherwise, or any failure to
continue to make capital expenditures in the ordinary course of
business consistent with past practice;
(g) any acceleration of shipments, sales or orders or other
similar action in contemplation of this Agreement or otherwise not in
the ordinary course of business consistent with past practice;
(h) any waiver of any rights that, singly or in the aggregate,
are material to CTI or any Subsidiary or the financial condition or
results of operation of CTI or any Subsidiary;
(i) any labor strikes, union organizational activities or
other similar occurrence;
(j) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of CTI or its
Subsidiaries, or any direct or indirect redemption, purchase or other
acquisition by CTI or any Subsidiary of any such stock;
(k) any loss in the financial results of CTI and the
Subsidiaries on a combined basis; or
(l) any Contract to do or cause to be done any of the
foregoing.
Section 4.9 Contracts and Commitments. Schedule 4.9 lists all
Contracts to which CTI or any Subsidiary is a party, including, but not limited
to, commercial airline, cargo airline, ocean and ground transportation supplier
contacts, trademark, trade name or patent license agreements, service
agreements, consulting agreements, leases, purchase or sale agreements, supply
agreements, distribution or distributor agreements, purchase orders, customer
orders and equipment
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rental agreements that are either material to CTI or any of its Subsidiaries or
involve consideration with a value of $50,000 or more. None of CTI nor any
Subsidiary is in material breach of or default under any Contract listed or of a
type required to be listed in Schedule 4.9 (collectively, the "Material
Contracts"). Each Material Contract is a valid, binding and enforceable
agreement of CTI or a Subsidiary and the other parties thereto. There has not
occurred any material breach or default which is continuing under any Material
Contract on the part of the other parties thereto, and no event has occurred
which with the giving of notice or the lapse of time, or both, would constitute
a material default under any Material Contract or entitles any person to obtain
any Lien (other than a Permitted Lien) upon any property or assets of CTI or its
Subsidiaries (or upon any revenues, income or profits of CTI or its
Subsidiaries). There is no dispute between the parties to any Material Contract
as to the interpretation thereof or as to whether any party is in breach or
default thereunder, and no party to any Material Contract has indicated to the
other party thereto its intention to, or suggested it may evaluate whether to,
terminate or seek to amend any Material Contract. None of CTI nor any Subsidiary
is a party to any covenant or obligation of any nature limiting the freedom of
CTI or any Subsidiary to compete in any line of business after the Closing. CTI
and its Subsidiaries are not a party to or otherwise bound by any Contract
which, upon completion, is reasonably expected to result in a net loss to CTI
and its Subsidiaries of more than $50,000 or any other Contract (contractual or
otherwise) which is reasonably expected to result in a material adverse effect
to CTI and its Subsidiaries.
Section 4.10 Taxes. Except as set forth in Schedule 4.10
hereto:
(i) All Tax Returns that are required to be filed
(taking into account all extensions) on or before the Closing
Date for, by, on behalf of or with respect to CTI or any
Subsidiary, have been timely filed with the appropriate
foreign, federal, provincial, state and local authorities and
all Taxes shown to be due and payable on such Tax Returns or
related to such Tax Returns have been timely paid in full to
the proper Tax or other receiving officers within the time
required under any applicable legislation;
(ii) All such Tax Returns and the information and
data contained therein have been, in all respects, properly
and accurately compiled and completed, fairly present in all
respects the information purported to be shown therein, and
reflect all liabilities for Taxes for the periods covered by
such Tax Returns;
(iii) None of such Tax Returns are now under audit or
examination by any Tax Authority and there are no agreements,
waivers or other arrangements providing for an extension of
time with respect to the filing of any Tax Return, or the
assessment or collection of any Tax or deficiency of any
nature against CTI, any Subsidiary or their respective
properties, or with respect to any such Tax Return, or any
suits or other actions, proceedings, investigations or claims
now pending or threatened against CTI, any Subsidiary or their
respective properties with respect to any Tax, or any matters
under discussion with any foreign, federal, provincial, state
or local authority relating to any Tax, or any claims for any
additional Tax asserted by any such authority;
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(iv) All Taxes due and required to be paid by CTI or
any Subsidiary on or before the Closing Date or assessed and
due and required to be paid by CTI or any Subsidiary on or
before the Closing Date have been timely paid in full;
(v) All withholding Tax and source deduction
requirements imposed on CTI, any Subsidiary or their
respective properties, including, without limitation, from
each payment made to any of its past or present employees,
officers or directors, and to any nonresident of Canada, for
any and all periods prior to and including the Closing Date
have been timely satisfied in full on or before the Closing
Date;
(vi) CTI and each Subsidiary have each made adequate
provision for the payment in full of any and all unpaid Taxes
for any and all periods or portions thereof ending on or
before the date of the Closing;
(vii) The Canadian federal Tax liability of CTI and
each Subsidiary has been assessed by Revenue Canada for all
fiscal years up to and including the fiscal year ended
December 31, 1998. The provincial corporate Tax liability of
CTI and each Subsidiary has been assessed by the Ministry of
Revenue Ontario for all fiscal years up to and including the
fiscal year ended December 31, 1998; and
Section 4.11 Real Property.
(a) Location of Real Property. Schedule 4.11 sets forth a
municipal address, the owner and a complete and accurate legal description of
all the real property leased by CTI or any Subsidiary (the "Leased Property").
None of CTI or any Subsidiary owns or leases or has agreed to acquire or lease
any real property or interest in real property other than the Leased Property.
(b) Title to Real Property. All buildings, structures,
improvements and appurtenances situated on the Leased Property are in good
operating condition and in a state of good maintenance and repair, are adequate
and suitable for the purposes for which they are currently being used and CTI or
a Subsidiary, as applicable, has adequate rights of ingress and egress for the
operation of their business in the ordinary course. None of such buildings,
structures, improvements or appurtenances (or any equipment therein), nor the
operation or maintenance thereof, violates any restrictive covenant or
encroaches on any property owned by others. Without limiting the generality of
the foregoing:
(i) the Leased Property, the current uses thereof and the conduct
of the businesses of CTI or any Subsidiary, as applicable,
comply in all material respects with all regulations,
statutes, enactments, laws and bylaws, including, without
limitation, those dealing with zoning, parking, access,
loading facilities, landscaped areas, building construction,
fire and public health and safety and Environmental Laws;
(ii) no alteration, repair, improvement or other work has been
ordered, directed or requested in writing to be done or
performed to or in respect of the Leased Property or to any of
the plumbing, heating, elevating, water, drainage or
electrical systems, fixtures or works by any municipal,
provincial or other competent authority, which
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alteration, repair, improvement or other work has not been
completed, and the Principals know of no written notification
having been given to CTI or any Subsidiary of any such
outstanding work being ordered, directed or requested, other
than those that have been complied with;
(iii) all accounts for work and services performed and materials
placed or furnished upon or in respect of the Leased Property
at the request of CTI or a Subsidiary, as applicable, have
been fully paid and satisfied, and no person is entitled to
claim a lien under the Construction Lien Act (Ontario) (or
similar legislation in jurisdictions in which the Leased
Property is situated) against the Leased Property or any part
thereof, other than current accounts in respect of which the
payment due date has not yet passed;
(iv) there is nothing owing in respect of the Leased Property by
CTI or any Subsidiary to any municipal corporation or to any
other corporation or commission owning or operating a public
utility for water, gas, electrical power or energy, steam or
hot water, or for the use thereof, other than current accounts
in respect of which the payment due date has not yet passed;
(v) no part of the Leased Property has been taken or expropriated
by any federal, provincial, municipal or other competent
authority nor has any notice or proceeding in respect thereof
been given or commenced;
(vi) the Permitted Liens constitute all of the encumbrances,
agreements, indentures and other matters that affect the
Leased Property;
(vii) the Leased Property (including all buildings, improvements and
fixtures) is fit for its present use, and there are no
material or structural repairs or replacements that are
necessary or advisable and, without limiting the foregoing,
there are no repairs to, or replacements of, the roof or the
mechanical, electrical, heating, ventilating,
air-conditioning, plumbing or drainage equipment or systems
that are necessary or advisable, and none of the Leased
Property is currently undergoing any alteration or renovation
nor is any such alteration or renovation contemplated; and
(viii) the Leased Property is fully serviced and has suitable access
to public roads, and there are no outstanding levies, charges
or fees assessed against the Leased Property by any public
authority (including development or improvement levies,
charges or fees).
(c) Real Property Leases. None of CTI or any Subsidiary is a
party to any lease or agreement in the nature of a lease in respect of any real
property, whether as lessor or lease, other than the leases (the "Leases")
described in Schedule 4.11 relating to the Leased Property. Schedule 4.11 sets
out the parties to each of the Leases, their dates of execution and expiry
dates, any options to renew, the locations of the leased lands and premises and
the rent payable thereunder. Except as described in Schedule 4.11, CTI or a
Subsidiary, as applicable, occupies the Leased Property and has the exclusive
right to occupy and use the Leased Property (save and except, in some cases, for
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the right of Fastair). Each of the Leases is in good standing and in full force
and effect without amendment thereto, and none of CTI, any Subsidiary, or any
other party thereto is in material breach of any covenants, conditions or
obligations contained therein. The Principals have provided a true copy of each
Lease to the Buyer or Eagle.
Section 4.12 Trademarks, Trade Names and Intellectual
Property. (a) Schedule 4.12 contains an accurate and complete list of (i) all
registered trademarks, trade names and logos owned or used by CTI or any
Subsidiary, and all registrations thereof, and (ii) all unregistered trademarks,
trade names and logos used by CTI or any Subsidiary thereof. CTI or its
Subsidiaries have the right to use all trademarks, trade names and logos
referred to in Schedule 4.12, except as may be set out therein. There is no
pending or, to the best knowledge of the Principals, threatened action or claim
that would materially impair any such right.
(b) CTI carries on its business solely under their corporate
name and without infringement of any proprietary right or interest of any other
person and without liability to pay any royalty or similar sum. CTI and its
Subsidiaries have not (except for the purpose of carrying on their business in
the ordinary course and subject to an obligation of confidentiality) disclosed,
or authorized the disclosure of, any of their lists of suppliers or customers,
trade secrets or technological or confidential information concerning its
business to third parties.
(c) The Intellectual Property is subsisting and enforceable
and (if it is registered) valid; or if it is the subject of an application for
registration or grant, the application has been duly made and is subsisting and
the Intellectual Property is capable of registration or grant. All renewal fees
payable in respect of any of the Intellectual Property have been paid up to
date. Except as disclosed in Schedule 4.12, no person has been granted any
interest in or right to use all or any portion of the Intellectual Property.
Section 4.13 Financial Records; Budget.
(a) (i) The audited financial statements of CTI as of and for
the year ended December 31, 1998, previously delivered to the
Buyer or Eagle (the "CTI Audited Statements"), in all material
respects, are accurate and complete, were prepared in
accordance with Canadian GAAP (except as set forth therein)
and fairly present the financial condition and results of
operations of CTI; and
(ii) the unaudited financial statements of CTI as of and for
the period ended September 4, 1999 and the unaudited financial
statements of CTI as of and for the period ended October 30,
1999, previously delivered to the Buyer or Eagle (the "CTI
Interim Statements"), in all material respects, are accurate
and complete and were prepared on a basis consistent with
prior periods and the CTI Audited Statements.
The CTI Audited Statements and the CTI Interim Statements are collectively the
"CTI Financial Statements".
(b) CTI's fiscal 1999 budget and capital budget previously
furnished by CTI to Buyer (i) are true and complete copies of CTI's most recent
internal budgets for fiscal 1999, (ii)
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were prepared by management of CTI in good faith and (iii) were prepared on a
reasonable basis and were, and continue as of the date hereof to be, reasonable.
(c) Without limiting the generality of any other provision
hereof, with respect to the CTI Financial Statements; (i) xxxxxxxx for shipments
or services have been made in advance of the services being performed, (ii)
proper matching of shipment revenues and the direct costs related to shipments
has occurred on a consistent basis, (iii) all customer xxxxxxxx have been made
solely in accordance with customer tariffs, subject to revenue and rate
adjustments in the ordinary and normal course of business, (iv) a majority of
shipments occurring in each period covered by such financial statements were
prepaid and not "collect" and (v) net revenue with respect to international
shipments (which is comprised of gross revenue less the cost of transportation)
from agent controlled shipments do not account for more than 15% of net revenue
in both 1998 and the period ending September 4, 1999.
Section 4.14 Condition of Assets and Supplies. All the assets
of CTI and its Subsidiaries are in good and serviceable condition and fit for
the particular purposes for which they are used in the business of the owner
thereof, subject only to normal maintenance requirements and normal wear and
tear reasonably expected in the ordinary course of business. All items of
supplies, packing, crating and shipping material of CTI and its Subsidiaries are
suitable and useable for their intended purpose, and none of such items is below
standard quality, obsolete or obsolescent. CTI owns or leases all assets
necessary to operate its business or which are material to the operation of its
business.
Section 4.15 Liabilities. Except as set forth in Schedule 4.15
or in the financial statements and notes thereto referred to in Section 4.13,
there is no existing, contingent or, to the best knowledge of Principals,
threatened material liability, including any liability that may become due on
the proclamation of the Unclaimed Intangible Property Act (Ontario) R.S.O. 1990,
Chap. U.1, as amended up to the Closing Date, or the coming into force of
comparable legislation in other jurisdictions in which CTI or any Subsidiary
operates, obligation, Lien or claim of any nature (absolute, accrued, contingent
or otherwise) that relates to or has been or may be asserted against CTI or any
Subsidiary, other than liabilities arising after the date of the CTI Financial
Statements in the ordinary course of business consistent with past practice,
other than Permitted Liens.
Section 4.16 Employees and Related Matters. (a) Schedule 4.16
is a complete list of all employees (including directors) of CTI and its
Subsidiaries, listing the title or position held, commencement date, base
salary, any commissions or other compensation paid or payable, all employee
benefits received by such employees and any other material terms of any oral or
written employment related agreement between such employees and CTI or any
Subsidiary, CTM, Principal or Affiliate thereof; and, except as provided by
legislation or as described in Schedule 4.16, all Contracts of employment or for
the provision of such services to which CTI or any Subsidiary are a party can be
terminated by it, without payment of compensation, by not more than 30 days'
notice, except oral contacts of employment terminable on reasonable notice
pursuant to the common law. Schedule 4.16 also includes a list of all
consultants and agents of CTI and its Subsidiaries and a complete and accurate
description of all oral and written consulting or agency agreements with such
consultants and agents, amounts, and a list of all amounts paid or payable to
them thereunder by CTI
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or its Subsidiaries. Schedule 4.16 also sets forth all persons who are
independent contractors and who own or operate vehicles on behalf of CTI or any
Subsidiary.
(b) No notice has been received by CTI or any Subsidiary of
any complaint filed by any of the employees or any other party against CTI or
any Subsidiary claiming that CTI or any Subsidiary has violated the Canada
Labour Code, Employment Standards Act (Ontario), the Canadian Human Rights Act
or the Human Rights Code (Ontario) (or any applicable employee or human rights
or similar legislation in the other jurisdictions in which CTI or any Subsidiary
operates) or of any complaints or proceedings of any kind involving CTI or any
Subsidiary or, to any of the Principals', CTM's or CTI's knowledge, after due
inquiry, any of the employees of CTI or any Subsidiary before any labour or
industrial relations board, except as disclosed in Schedule 4.16(b). There are
no outstanding orders or charges against CTI or any Subsidiary under the
Occupational Health and Safety Act (Ontario) (or any applicable health and
safety legislation in the other jurisdictions in which CTI or any Subsidiary
operates). All levies, assessments and penalties made against CTI or any
Subsidiary pursuant to the Workplace Safety and Insurance Act, 1997 (Ontario) or
the predecessor Workers' Compensation Act (Ontario) (and any applicable worker's
compensation legislation in the other jurisdictions in which CTI or any
Subsidiary operates) have been paid by CTI or a Subsidiary, as applicable, and
none of CTI or any Subsidiary has been reassessed under any such legislation
during the past five years. CTI and each Subsidiary is operating in compliance
with all pay equity legislation in each jurisdiction in which CTI or any
Subsidiary operates.
Section 4.17 No Material Change. Except as disclosed in
Schedule 4.8, there has been no material adverse change in the business,
prospects, results of operations, assets or financial position of CTI or any
Subsidiary from December 31, 1998, to and including the Closing Date, and no
event has occurred which could be reasonably expected to lead to or cause such a
material adverse change.
Section 4.18 Employee Plans. (a) Schedule 4.18 identifies each
retirement, pension, bonus, stock purchase, profit sharing, stock option,
deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
continuation, legal benefits, unemployment benefits, vacation, incentive or
other compensation plan or arrangement or other employee benefit that is
maintained or otherwise contributed to, or required to be contributed to, by CTI
or any Subsidiary for the benefit of their employees or former employees (the
"Employee Plans") and a true and complete copy of each Employee Plan has been
furnished to the Buyer or Eagle. Each Employee Plan has been maintained in
compliance with its terms and with the requirements prescribed by any and all
Laws that are applicable to such Employee Plan. The Principals or CTM have
delivered to the Buyer or Eagle the actuarial valuations, if any, prepared for
each Employee Plan during the past three years. Except as described in Schedule
4.18:
(i) all contributions to, and payments from, each
Employee Plan that may have been required to be made in
accordance with the terms of any such Employee Plan, or with
the recommendation of the actuary for such Employee Plan, and,
where applicable, the laws of the jurisdictions that govern
such Employee Plan, have been made in a timely manner;
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(ii) all material reports, returns and similar
documents (including applications for approval of
contributions) with respect to any Employee Plan required to
be filed with any Governmental Body or distributed to any
Employee Plan participant have been duly filed on a timely
basis or distributed;
(iii) there are, to the best knowledge of the
Principals, no pending investigations by any Governmental Body
involving or relating to an Employee Plan, no threatened or
pending claims (except for claims for benefits payable in the
normal operation or under the Employee Plans), suits or
proceedings against any Employee Plan or asserting any rights
or claims to benefits under any Employee Plan that could give
rise to a liability nor, to the best knowledge of the
Principals, CTM, CTI or the Subsidiaries, are there any facts
that could give rise to any liability in the event of such
investigation, claim, suit or proceeding;
(iv) no notice has been received by CTI or any
Subsidiary of any complaints or other proceedings of any kind
involving CTI or any Subsidiary or, to the best knowledge of
the Principals, any of the employees of CTI or any Subsidiary
before any pension board or committee relating to any Employee
Plan or to CTI or any Subsidiary; and
(v) the assets of each Employee Plan are at least
equal to the liabilities of such Employee Plans based on the
actuarial assumptions utilized in the most recent valuation
performed by the actuary for such Employee Plan, and neither
the Buyer nor any of its Associates (as defined in the
Business Corporations Act (Ontario)) or Affiliates (other than
CTI or any Subsidiary) will incur any liability with respect
to any Employee Plan as a result of the transactions
contemplated by this Agreement.
(b) Collective Agreements. Except as described in Schedule
4.18, neither CTI nor any of its Subsidiaries has made any Contracts with any
labour union or employee association nor made commitments to or conducted
negotiations with any labour union or employee association with respect to any
future agreements and, except as set out in Schedule 4.16(b), none of the
Principals is aware of any current attempts to organize or establish any labour
union or employee association with respect to any employees of CTI or any
Subsidiary, nor is there any certification of any such union with regard to a
bargaining unit.
(c) Employee Accruals. All accruals for unpaid vacation pay,
premiums for employment insurance, health insurance premiums, Canada Pension
Plan premiums, accrued wages, salaries and commissions and Employee Plan
payments have been reflected in the books and records of CTI or any Subsidiary,
as applicable.
Section 4.19 Compliance With Law. None of CTI or any
Subsidiary is in violation (other than immaterial violations) of any provision
of any Law, or any legally recognizable duty to any person, including, without
limitation, those (a) relating to health, the environment or Hazardous
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Substances; (b) applicable to indirect cargo carriers under the Federal Aviation
Act; (c) adopted or promulgated under the Motor Vehicle Transport Act (Canada)
or the Truck Transportation Act (Ontario) (or any applicable truck
transportation or load brokerage legislation in the other jurisdictions in which
CTI or any Subsidiary operates), by the Ontario Registrar of Motor Vehicles (or
any comparable Governmental Body in the jurisdictions in which CTI or any
Subsidiary operates) or by the Surface Transportation Board of the United
States, including, without limitation, regulations applicable to motor carrier
operations and truck brokerage operations; (d) safety regulations applicable to
commercial vehicle operators that have been prescribed under the Highway Traffic
Act (Ontario) (or any applicable highway safety legislation in the other
jurisdictions in which CTI or any Subsidiary operates) or by Transport Canada,
or applicable to interstate motor carrier operations or indirect cargo carriers
that have been prescribed by the Department of Transportation of the United
States; (e) adopted or promulgated by the Federal Maritime Commission of the
United States and/or those otherwise relating to Non-Vessel Operating Common
Carriers; (f) adopted or promulgated by the Customs Service of Revenue Canada,
the Customs Service of the Department of the Treasury of the United States
and/or those otherwise relating to customs brokers; or (g) safety guidelines
outlined in the National Safety Code. None of CTI or any Subsidiary has received
notice of any alleged violation of any such law, decree, order, regulation,
license, permit, consent, approval, authorization or qualification or order.
Section 4.20 Environmental.
(a) Except as described in Schedule 4.20, the CTI each
Subsidiary have been and are in compliance in all material respects with all
Environmental Laws;
(b) CTI and each Subsidiary have obtained all licenses,
permits, approvals, consents, certificates, registrations and other
authorizations under Environmental Laws (the "Environmental Permits") required
for the operation of their respective businesses, all of which are described in
Schedule 4.20. Each Environmental Permit is valid, subsisting and in good
standing and none of CTI or any Subsidiary is in default or breach in any
material respect of any Environmental Permit and no proceeding is pending, or,
to the best knowledge of the Principals, threatened, to revoke or limit any
Environmental Permit;
(c) None of CTI or any Subsidiary has used or permitted to be
used, except in compliance with all Environmental Laws, any of its property or
facilities or any property (including the Leased Property) or facility that it
previously owned or leased, to generate, manufacture, process, distribute, use,
treat, store, dispose of, transport or handle any Hazardous Substance;
(d) None of CTI or any Subsidiary has ever received any notice
of, nor been prosecuted for an offence alleging, noncompliance with any
Environmental Laws, and none of the Principals, CTM, CTI or any Subsidiary has
settled any allegation on noncompliance short of prosecution. There are no
orders or directions relating to environmental matters requiring any work,
repairs, construction or capital expenditures with respect to the respective
businesses or properties (including the Leased Properties) of CTI or any
Subsidiary, nor has CTI or any Subsidiary received notice of any of the same;
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(e) Except as disclosed in Schedule 4.20, there are no
published pending or proposed published changes to Environmental Laws that would
render illegal or materially restrict the sale of any service provided by CTI or
any Subsidiary;
(f) None of CTI or any Subsidiary has caused or permitted, nor
do any of the foregoing have any knowledge of, the release, in any manner
whatsoever, of any Hazardous Substance on or from any of its properties
(including any Leased Property) or assets or any property or facility that it
previously owned or leased, or any such release on or from a facility owned or
operated by third parties but with respect to which CTI or any Subsidiary is or
may reasonably be alleged to have liability. All Hazardous Substances and all
other wastes and other materials and substances used in whole or in part by CTI
or any Subsidiary or resulting from their respective businesses have been
disposed of, treated and stored in compliance with all Environmental Laws.
Schedule 4.20 identifies all of the locations where Hazardous Substances used in
whole or in part by CTI or any Subsidiary have been or are being stored or
disposed of;
(g) None of CTI or any Subsidiary has received any notice that
any of them is potentially responsible for a federal, provincial, municipal or
local cleanup site or corrective action under any Environmental Laws. None of
CTI or any Subsidiary has received any request for information in connection
with any federal, provincial, municipal or local inquiries as to disposal sites;
(h) The Principals or CTM have delivered to the Buyer true and
complete copies of all environmental audits, evaluations, assessments, studies
or tests relating to CTI or any Subsidiary of which they are aware.
Section 4.21 Insurance. CTI has heretofore delivered to Buyer
a list and copies of all insurance policies of CTI or any Subsidiary or relating
to the conduct of the business of CTI or any Subsidiary. Such policies are in
full force and effect, and neither CTI nor any Subsidiary is in default in any
material respect under any of them. Except as set forth in Schedule 4.21: (a) no
insurance carried by CTI or any Subsidiary has been canceled by the insurer
during the past five years, and neither CTI nor any Subsidiary has been denied
coverage during the past ten years and (b) neither CTI nor any Subsidiary, CTM
or Principal has received any notice or other communication from any issuer of
any such insurance policy of any material increase in any deductibles, retained
amounts or the premiums payable thereunder, and, to the best knowledge of the
Principals, no such increase in deductibles, retainages or premiums is
threatened. All owner operators utilized by CTI are adequately insured in
compliance with specific regulatory guidelines in Canada and the United States.
Except as set forth in Schedule 4.21 there are no claims for which CTI or any
Subsidiary may have any liability that is not fully covered by insurance.
Section 4.22 Permits and Related Approvals. Schedule 4.22
hereto sets forth a list of all Permits required for, or used in, the conduct of
business of CTI or any Subsidiary, all of which are in full force and effect and
CTI and its Subsidiaries have full right to use all such Permits listed on such
Schedule and have not received any notice from any Governmental Body which
asserts, or erases the possibility of assertion of, any noncompliance with such
Permit nor, to the best knowledge of the Principals, does any condition or state
of facts exist which provide a valid basis for such assertion.
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Section 4.23 Disclosure. No representation or warranty by CTM
or any Principal in this Agreement or in any schedule or exhibit to this
Agreement, or in any written statement or certificate or other document
furnished to Buyer or Eagle by CTM or any Principal, CTI, their Subsidiaries or
any representative of CTM or any Principal or CTI or their Subsidiaries,
contains or will contain, as of the date it is given and, pursuant to Section
8.1(a), as of the Closing Date, any untrue statement of a material fact or omits
or will omit, as of the date it is given and, pursuant to Section 8.1(a), as of
the Closing Date, a material fact necessary to make the statements therein not
misleading.
Section 4.24 Safety Reports. Schedule 4.24 sets forth a
complete listing of all workers' compensation claims under the Workplace Safety
and Insurance Act, 1997 (Ontario) and other similar legislation in other
jurisdictions in which CTI operates, dangerous goods occurrences, warning
letters, sanctions or other statements evidencing intervention by the Ministry
of Transportation (Ontario), the Minister of Transport (Canada), Ministry of
Labor (Ontario) or the Governmental Body in the other jurisdictions in which CTI
operates and all documents relating to any of the foregoing since September 30,
1996.
Section 4.25 Transactions with Certain Persons. Except as set
forth on Schedule 4.25, during the past three years none of CTI nor any
Subsidiary has, directly or indirectly, purchased, leased or otherwise acquired
any property or obtained any services from, or sold, leased or otherwise
disposed of any property or furnished any services to, or otherwise dealt with
(except with respect to remuneration for services rendered as a director,
officer or employee of CTI or any Subsidiary), in the ordinary course of
business or otherwise, (a) any Principal, any Affiliate thereof or any other
person not dealing at arm's length with any of the foregoing (within the meaning
of the Income Tax Act (Canada)) ("Arm's Length"); (b) any Principal or any
Affiliate thereof or any person that directly or indirectly owns or in the last
24 months has owned any equity interest in CTI or any Subsidiary; or (c) any
person, firm or corporation which, directly or indirectly, alone or together
with others, controls, is controlled by or is under common control with any
Principal or any Affiliate thereof or any person that directly or indirectly
owns or in the last 24 months has owned any equity interest in CTI or any
Subsidiary. Except as set forth in Schedule 4.25, none of CTI nor any Subsidiary
owes any amount to, or has any Contract with or commitment to, any of its
shareholders, directors, officers, employees or consultants or any other person
not dealing at Arm's Length with CTI or any Subsidiary (other than compensation
for current services not yet due and payable and reimbursement of expenses
arising in the ordinary course of business not in excess of $100,000 in the
aggregate), and none of such persons owes any amount to CTI or any Subsidiary.
Schedule 4.25 reflects all transactions between CTI or any Subsidiary and any
Principals or any Affiliate thereof for the year ended 1998. Except as set out
in Schedule 4.25, no person who is or was in the last three years an officer,
director or shareholder of CTI or any Subsidiary and no other person not dealing
at Arm's Length with CTI or any Subsidiary:
(i) owns, directly or indirectly, any interest in
(except for shares representing less than one per cent of the
outstanding shares of any class or series of any publicly
traded company), or is an officer, director, employee or
consultant of, any person which is, or is engaged in business
as, a competitor of the business of CTI
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or any Subsidiary or a lessor, lessee, supplier, distributor,
sales agent or customer of CTI or any Subsidiary;
(ii) owns, directly or indirectly, in whole or in
part, any property that CTI or any Subsidiary uses in the
operation of their respective businesses; or
(iii) has any cause of action or other claim
whatsoever against, or owes any amount to, CTI or any
Subsidiary, except for any liabilities reflected in the CTI
Financial Statements and claims in the ordinary and normal
course of business, such as for accrued vacation pay and
accrued benefits under the Employee Plans.
Section 4.26 Accounts Receivable. The accounts receivable of
CTI and the Subsidiaries are valid, genuine and subsisting, arise out of bona
fide sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, are owned free and clear and
not subject to any Lien except Permitted Liens, and are, as of the date hereof
and, pursuant to Section 8.1(a), the Closing Date, current and collectible, net
of any reserves shown on the CTI Financial Statements and the interim unaudited
financial statements of CTI for the respective four-week periods subsequent
thereto that have been delivered to Eagle or Buyer prior to the date hereof
(which reserves are adequate and were calculated consistent with past practice).
Subject to such reserve, each of such accounts receivable are, as of the date
hereof and, pursuant to Section 8.1(a), the Closing Date, collectible in full,
without any setoff and without resort to litigation, within 180 days after the
day on which it became due and payable.
Section 4.27 Year 2000. No computer system owned or operated
by CTI or any Subsidiary, and, to the best knowledge of each Principal, no
computer system of any substantial or critical supplier to or customer of CTI or
any Subsidiary the operation of which is relevant to the business of CTI or any
Subsidiary, will fail or produce corrupt data or otherwise have its operation
interrupted or adversely affected as a result of the year 2000 or any subsequent
year being reached or being in any way referred to in any operating system,
application software or data file. For the purposes of the foregoing, a computer
system includes any computer hardware or software, and any plant, machinery,
equipment or control system in which any computer program is embedded.
Section 4.28 Business and Management of CTI. The business of
CTI and the Subsidiaries is managed exclusively by their officers and employees;
and no person has authority to bind CTI and the Subsidiaries other than its
officers and employees acting in the ordinary and ostensible course of their
duties. CTI and the Subsidiaries are not, nor have they agreed to become, a
member of any partnership, joint venture, consortium, trade association or any
other association of persons (whether incorporated or not incorporated) except
those listed on Schedule 4.28; and CTI and the Subsidiaries have at all times
been in compliance in all material respects with all regulations, guidelines and
codes of conduct by such trade or other association.
Section 4.29 Certain Payments. Within the last two years no
current or former director, executive, officer, representative, agent, equity
owner or employee of CTI or any Subsidiary (when acting in such capacity or
otherwise on behalf of CTI or any Subsidiary or any of their predecessors), (a)
has used or is using any corporate funds for any illegal contributions, gifts,
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entertainment or other unlawful expenses relating to political activity; (b) has
used or is using any corporate funds for any direct or indirect unlawful
payments to any foreign or domestic government officials or employees; (c) has
violated or is violating any provision of the Foreign Corrupt Practices Act of
1977 of the United States or of the Corruption of Foreign Public Officials Act
(Canada); (d) has established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other properties; (e) has made at any
time any false or fictitious entries on the books and records of any of CTI or
any Subsidiary; (f) has made any bribe, rebate, payoff, influence payment,
kickback or other similar or unlawful payment of any nature using corporate
funds or otherwise on behalf of CTI or any Subsidiary; or (g) made any material
favor or gift that is not deductible for income Tax purposes using corporate
funds or otherwise on behalf of CTI or any Subsidiary.
Section 4.30 Accounts and Attorneys. Schedule 4.30 sets forth
a true and complete list showing:
(i) the name of each bank, trust company or similar
institution in which CTI or any Subsidiary has
accounts or safe deposit boxes, the number or
designation of each such account and safe deposit box
and the names of all persons authorized to draw
thereon or to have access thereto; and
(ii) the name of each person, firm, corporation or
business organization holding a general or special
power of attorney from CTI or any Subsidiary and a
summary of the terms thereof.
Section 4.31 Directors and Officers. Schedule 4.31 sets forth
the names and titles of all the officers and directors of CTI and each
Subsidiary.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Eagle jointly and severally represent and warrant to
CTM and each Principal the following:
Section 5.1 Corporate Status and Good Standing. Buyer and
Eagle are corporations duly organized, validly existing and in good standing
under the laws of Ontario and Texas, respectively, with full corporate power and
authority under their respective certificates or articles of incorporation and
bylaws or other organizational documents to conduct their business as the same
exists on the date hereof and on the Closing Date.
Section 5.2 Authorization. Each of Buyer and Eagle has full
corporate power and authority under its certificate or articles of incorporation
and bylaws or other organizational documents, and its board of directors has
taken all necessary corporate action to authorize it, to execute and deliver
this Agreement and the exhibits and schedules hereto, to consummate the
transactions contemplated herein and to take all actions required to be taken by
it pursuant to the
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provisions hereof or thereof, and each of this Agreement and the exhibits hereto
constitutes the valid and binding obligation of Buyer and Eagle, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to the principles of equity (whether enforcement is sought in a
proceeding in equity or at law).
Section 5.3 Non-Contravention. Neither the execution and
delivery of this Agreement and the schedules and exhibits hereto, nor the
consummation of the transactions contemplated herein or therein, does or will
violate, conflict with or result in breach of or require notice or consent under
any law, the charter or bylaws of Buyer or Eagle or any provision of any
agreement or instrument to which Buyer or Eagle is a party.
Section 5.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which question
the validity of this Agreement or any action taken or contemplated by Buyer or
Eagle in connection with this Agreement.
Section 5.5 Broker Involvement. Neither Buyer nor Eagle has
not hired, retained or dealt with any broker or finder in connection with the
transactions contemplated by this Agreement.
Section 5.6 Litigation. Except as set forth on Schedule 5.6,
there is no claim or proceeding or litigation of any type pending or threatened
involving Eagle or Eagle Canada that would have a material adverse effect on
Eagle or Eagle Canada.
ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
Section 6.1 Other Offers. From and after the date hereof and
until the Closing, none of CTI nor its Subsidiaries nor any of their respective
officers, directors, shareholders, employees, Affiliates, representatives or
agents shall, directly or indirectly, (a) solicit, enter into or conduct
discussions relating to, initiate or knowingly encourage any offer or proposal
for, or any indication of interest in, a merger or business combination
involving CTI or any of its Subsidiaries or the acquisition of an equity
interest in, or a substantial portion of the assets of, CTI or any of its
Subsidiaries, or (b) disclose any nonpublic information relating to CTI or any
of its Subsidiaries or their respective businesses, or afford access to the
properties, books or records of CTI or any of its Subsidiaries, to any person or
entity.
Section 6.2 Conduct of the Business Pending the Closing. Until
the Closing, CTM and each Principal shall comply, and Principals shall cause CTI
and its Subsidiaries to comply, with the provisions set forth below:
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(a) CTI and its Subsidiaries shall operate their respective
businesses only in the ordinary course;
(b) CTM or Principals shall promptly notify Buyer of, and
furnish to Buyer any information that Buyer may reasonably request with
respect to, the occurrence of any event or the existence of any state
of facts that may result in the representations and warranties of CTM
or any Principal not being true if they were made at any time prior to
or as of the Closing Date;
(c) Except as required by the Employee Plans and set forth on
Schedule 4.16 and except in the ordinary and normal course of business,
neither CTI nor any of its Subsidiaries shall (i) grant or agree to
grant any bonuses to any employee, (ii) grant any general increase in
the rates of salaries or compensation of its or their employees or any
specific increase to any employee, (iii) provide for any new pension,
retirement or other employment benefits to any of its or their
employees or any increase in any existing benefits or (iv) terminate or
amend in any respect or provide for any material increase in benefits
under any Employee Plan;
(d) Except in connection with the continuance of CTI into the
Province of Ontario as described in Section 6.14, CTI shall not amend
its respective bylaws, articles, or other organizational and
constituent documents, nor shall it enter into any merger, exchange or
consolidation agreement;
(e) CTI and its Subsidiaries shall not implement or adopt (i)
any change in its accounting methods or principles or the application
thereof (including depreciation lives) or (ii) any material change in
their tax methods or principles or the application thereof (including
depreciation lives).
(f) The Principals, CTM and CTI and its Subsidiaries shall use
best efforts to maintain and preserve the business of CTI and its
Subsidiaries intact, to retain their present employees so that they
will be available after the Closing and to maintain existing
relationships with customers, suppliers and others so that those
relationships will be preserved after the Closing;
(g) CTI shall not sell, assign or dispose of any of its assets
or properties, tangible or intangible, or incur or assume any
liabilities or enter into any sale/leaseback or similar transaction,
except for sales and dispositions made, or liabilities incurred, in the
ordinary course of business consistent with past practices;
(h) Neither CTI nor any of its Subsidiaries shall assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person or entity except in the ordinary course of business consistent
with past practices and in amounts not material to their respective
businesses;
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(i) CTI and its Subsidiaries shall maintain in full force and
effect all insurance currently maintained;
(j) Neither CTI nor its Subsidiaries shall take, or agree in
writing or otherwise to take, any of the actions described in this
Section 6.2 or any action that would make any representation or
warranty inaccurate or untrue or that would result in any of the
conditions set forth in Article VIII hereof not being satisfied;
(k) CTI and its Subsidiaries shall comply with all Laws,
including, without limitation, Environmental Laws;
(l) CTI and its Subsidiaries shall maintain their books of
account and records in the usual, regular and customary manner
consistent with practices employed prior to the date hereof;
(m) Except with the prior written consent of Buyer, neither
CTI nor any of its Subsidiaries shall authorize for issuance, issue,
sell, deliver or agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any capital stock of
any class or any other securities or equity equivalents or amend any of
the terms of any such securities or agreements; and
(n) Except as provided in Schedule 2.2 hereof, neither CTI nor
any of its Subsidiaries shall declare, set aside or pay any dividend or
other distribution in respect of the capital stock of CTI or any of its
Subsidiaries, and neither CTI nor any of its Subsidiaries shall make
any direct or indirect redemption, purchase or other acquisition of any
such stock.
Section 6.3 Public Announcements. (a) The Principals, CTM and,
prior to the Closing, CTI or any of its Subsidiaries shall not, without the
prior approval of Buyer, issue, or permit any of CTI's partners, directors,
officers, employees, agents or Subsidiaries or Affiliates to issue, any press
release or other public announcement with respect to this Agreement or the
transactions contemplated hereby, provided that the parties may make such
disclosure as is required by applicable law or regulation in the reasonable
opinion of their respective counsel and upon prior notification of and
consultation with the other party.
(b) Prior to the Closing, the Buyer and Eagle or any of their
Subsidiaries shall not, without the prior approval of Xxxx Xxxxxxx, issue, or
permit any of Eagle's or the Buyer's partners, directors, officers, employees,
agents or Subsidiaries or Affiliates to issue, any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby, provided that the parties may make such disclosure as is required by
applicable law or regulation in the reasonable opinion of their respective
counsel and upon prior notification of and consultation with the other party.
Section 6.4 Further Assurances. Each of CTM, the Principals,
the Buyer and Eagle will execute and deliver, or cause to be executed and
delivered, with reasonable diligence,
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such other documents and do such other things as the other parties hereto, or
any one of them, may from time to time reasonably request either before or after
Closing which may be reasonably necessary or desirable to complete the
transactions contemplated by this Agreement or any agreement entered into
pursuant hereto and to carry out its provisions, including, without limitation,
the execution and delivery and the doing of all other things necessary or
desirable to transfer the Shares to the Buyer in accordance with and subject to
this Agreement, in a form and substance satisfactory to the party making such
request and without further consideration.
Section 6.5 Covenants Against Competition and Solicitation.
(a) Definitions. For purposes of this Section 6.5, the
following words shall have the following meanings:
Business: means the business, as carried on by CTI and its
Subsidiaries at the Closing Date or during the five years
prior thereto, of providing or arranging, in relation to the
goods of third parties, air and sea freight forwarding,
trucking, air import and air export, air, sea or land cargo
transportation, special crating, ground transportation, local
pickup and delivery, customs brokerage, load brokerage,
logistics, warehousing or storage services, and any other
business which CTI or its Subsidiaries are currently planning
or intend to pursue;
Customers: means the customers, accounts or Intermediaries of
CTI or its Subsidiaries or the Combined Business at the
Closing Date or during the five years prior thereto;
Employee: means any person who is or has been an employee or
broker of CTI or its Subsidiaries at the Closing Date or
during the one year prior thereto;
Intermediary: means any person who is an affiliate, agent or
intermediary (including, without limitation, Commercial
Transport International or any of its network of affiliates or
relationships) which CTI or its Subsidiaries use, engage or
rely upon to carry on the Business at the Closing Date or
during the five years prior thereto;
(b) Noncompetition and Nonsolicitation. As an essential
consideration for the obligations of Eagle and Buyer under this
Agreement, including the consent of Buyer to the dividend paid to the
Principals described in Schedule 2.2, each Principal hereby agrees and
covenants that, for a period of three years following the Closing Date,
no Principal or Affiliate thereof shall, for whatever reason and with
or without cause, either individually or in partnership or jointly or
in conjunction with any person, as principal, agent, employee,
shareholder (other than a holding of shares listed on a Canadian or
United States stock exchange that does not exceed 5% of the outstanding
shares so listed), owner, investor, partner or in any other manner
whatsoever, directly or indirectly:
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(i) carry on, be engaged in or employed with, or
otherwise render services to or on behalf of, any person which
competes with the Business, or do any of the foregoing
through, with or in reliance upon any Intermediary;
(A) in Canada, whether such services relate
to domestic, transborder (Canada-U.S.A. or
U.S.A.-Canada) or international shipments or whether
originating from or destined to points in Canada;
(B) in each locale or over each gateway in
or outside Canada in or over which CTI or its
respective Subsidiaries currently engage or plan or
intend to engage in the Business; or
(ii) solicit or knowingly assist any person, directly
or indirectly, to solicit any Customers if such solicitation
is intended or calculated to obtain the custom or trade of
such Customers for a business which competes with the
Business; or
(iii) induce or attempt to induce any Customers to
reduce or curtail their business with or to terminate their
relationship with CTI or its Subsidiaries or the Combined
Business; or
(iv) induce or encourage any Employee to terminate
his or her employment with CTI or its Subsidiaries or the
Combined Business; or
(v) hire or attempt to hire or otherwise solicit any
Employee; or
(vi) interfere in any manner with the relationship of
CTI or its Subsidiaries or the Combined Business with any
Customers or Employee;
provided that the foregoing provisions shall not apply to any Principal
in his capacity as an employee of any of CTI or its respective
Subsidiaries or the Combined Business and provided that the foregoing
provisions shall not prevent or in any way adversely affect the ability
of Xxxxxx Xxxx and/or Xxxx Xxxxxxx to engage in any business which
competes with the Business within India and/or Sri Lanka.
(c) Separate and Distinct. If Eagle or Buyer believes any
Principal or Affiliate has violated the provisions of this Section 6.5,
Eagle or Buyer shall have the right to seek relief from any court of
competent jurisdiction. Each Principal acknowledges that money damages
alone will not adequately compensate Eagle or Buyer in the event of a
breach of the covenants of this Section 6.5. Therefore, each Principal
agrees that in addition to all remedies available at law, in equity or
under this Agreement, Eagle or Buyer shall be entitled to injunctive
relief for the enforcement of this covenant. If any covenant or
provision in this Section 6.5 is determined to be void or unenforceable
in whole or in part, it shall not be deemed to affect or impair the
validity of any other covenant or provision and, without limitation,
paragraphs (i), (ii), (iii), (iv), (v) and (vi) of subsection (b)
hereof and clauses (A) and (B) of paragraph (i) are declared to be
separate and distinct covenants. Each Principal agrees that the
covenants in this Section 6.5 are reasonable with respect to their
duration,
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scope and geographical area. To the fullest extent allowed by law, if,
at the time of enforcement of this Section, a court should hold that
the restrictions herein are unreasonable under the circumstances then
existing or otherwise, the parties agree that the maximum duration,
scope or geographical area legally permissible under such circumstances
will be substituted for the duration, scope or area stated herein.
(d) Independent Covenant. All the covenants in this Section
6.5 are intended by each party hereto to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Principal against
Eagle or Buyer, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Eagle or Buyer of
any covenant in this Section 6.5 unless and until such claim or action
has been found in Principal's favor by an arbitrator under Section
10.13 or a court of competent jurisdiction and Buyer has failed to
promptly comply with such an arbitral award or order by such court and
such failure is continuing. It is specifically agreed that the period
specified in Section 6.5 shall be computed in the case of each
Principal by excluding from that computation any time during which that
Principal is in violation of any provision of Section 6.5. The
covenants contained in this Section 6.5 shall not be affected by any
breach of any other provision hereof by any party hereto.
(e) Materiality. CTI and its Subsidiaries and each Principal,
severally and not jointly with any other person, hereby agree that this
Section 6.5 is a material and substantial part of the transactions
contemplated hereby.
Section 6.6 Governmental Filings. As promptly as practicable
after the execution of this Agreement, each party shall, in cooperation with the
other, file any reports or notifications that may be required to be filed by it
under applicable law.
Section 6.7 Access to Information. Prior to Closing, Eagle and
Buyer may make such investigation of the business and properties of CTI and its
Subsidiaries as Eagle and Buyer may desire and, upon reasonable notice, CTI and
its Subsidiaries shall give to Eagle and Buyer and their counsel, accountants
and other representatives reasonable access, during normal business hours
throughout the period prior to the Closing, to the property, books, commitments,
agreements, records, files and personnel of CTI and its Subsidiaries, and CTI
shall furnish to Eagle and Buyer during that period all copies of documents and
information concerning the respective businesses of CTI and its Subsidiaries as
Eagle and Buyer may reasonably request, subject to applicable law. Eagle and
Buyer shall hold all such information and documents in confidence.
Section 6.8 Other Action. Each of the parties shall use its
reasonable best efforts to cause the fulfillment at the earliest practicable
date but, in any event, prior to the Closing Date of all conditions to their
respective obligations to consummate the transactions under this Agreement.
Section 6.9 Consents. After the Closing, CTM and the
Principals will use their best efforts to obtain any consents or approvals or
assist in any filings required in connection with the transactions contemplated
hereby that are requested by Buyer and that have not been previously obtained or
made.
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Section 6.10 Cooperation with Financings and Financial
Reporting. The Principals and CTM acknowledge and understand that Eagle may be
required to obtain certain information relating to the business of CTI and its
Subsidiaries, including, but not limited to, audited or unaudited financial
statements of CTI and its Subsidiaries, and disclose such information in
registration statements and other documents filed with the Securities and
Exchange Commission under the federal securities laws or in disclosure documents
given investors in certain securities offerings. The Principals and CTM agree to
use their best efforts to cooperate fully and promptly, and shall cause their
affiliates, accountants, counsel and other agents and representatives to
cooperate fully and promptly, with Eagle in connection therewith.
Section 6.11 Shareholder Loan. No later than 180 days
following the Closing, and earlier as the cash flow of the Combined Business
permits (in the opinion of Buyer), the Buyer shall cause CTI to pay to or for
the benefit of the Principals, in consideration for services rendered by the
Principals prior to the Closing and as repayment of a loan to CTI by the
Principals, the aggregate amount, without any interest thereon, not to exceed
$1,500,000, less any applicable withholding Taxes. Notwithstanding anything to
the contrary contained herein, management fees will no longer accrue beginning
September 5, 1999.
Section 6.12 Tax Returns and Audits. After the Closing, each
of the Principals and CTM agrees to provide (in addition to any other assistance
or information required hereunder):
(a) the Buyer, Eagle, CTI and each Subsidiary with such
assistance as may be reasonably requested by such entity in connection with the
preparation of any tax return, election, filing or report relating to liability
for taxes, in respect of CTI or any Subsidiary for any or all taxation periods
all or part of which end on or prior to the Closing;
(b) the requesting party any records or information which may
be relevant to such tax return, election, filing or report or any audit or
examination referred to in section (a); and
(c) such assistance as may be reasonably requested by the
Buyer, Eagle, CTI or any Subsidiary in connection with any audit or examination
by any taxing authority, or any judicial or administrative proceedings relating
to liability for taxes in respect of CTI or any Subsidiary for any or all
taxation periods all or part of which end on or prior to the Closing.
Section 6.13 Tax Set-Off. Anything to the contrary herein or
in the CTM Agreement notwithstanding, the Principals agree that they shall pay,
either by direct payments to CTM from the Principals' personal funds or through
set-off against the Guaranteed Payments (as defined under the CTM Agreement) or
other amounts due to the Principals under the CTM Agreement, all Taxes to which
CTM and/or CTI or their successors becomes liable in excess of the amounts
specified on Schedule 2.2 hereto as a consequence of the transactions provided
for in this Agreement (the "Transaction Taxes"). Such payment shall be made by
the Principals on or before the date which is the earliest date on which any
Transaction Taxes are required to be paid by CTM and/or CTI or their successors
to a relevant Tax Authority. If Principals have not made such payment in full on
or before such date, Principals hereby irrevocably direct Buyer to effect the
set-off described above in an amount calculated to reimburse to CTM and/or CTI
or their successors the cost to it of the Transaction Taxes which the Principals
have not paid together with interest
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thereon, if any, imposed by such Tax Authority from the date the payment should
have been made to the date on which sufficient Guaranteed Payments or other
amounts become due to the Principals to permit the Buyer to effect each such
set-off. Such right to set-off shall be at Buyer's election and shall not
restrict Buyer's ability to seek payment directly from Principals' personal
funds.
Section 6.14 Continuance of CTI. The Principals and CTM shall
cause CTI to be continued as a corporation governed by the Business Corporations
Act (Ontario) pursuant to Section 180 of such Act and the corresponding Section
188 of the Canada Business Corporations Act.
ARTICLE VII
EXTENT AND SURVIVAL OF REPRESENTATIONS;
WARRANTIES, COVENANTS AND AGREEMENTS;
INDEMNIFICATION
Section 7.1 CTM's and Principal's Indemnity Obligations. Each
Principal and, solely in the event that the Closing does not occur, CTM, jointly
and severally, agrees to indemnify Eagle and Buyer (including their officers,
directors, employees and agents) against, and hold harmless from and against,
any and all claims, actions, causes of action, arbitrations, proceedings,
losses, damages, liabilities, judgments, fines, penalties, assessments, fees for
investigation and expenses (including, without limitation, reasonable attorneys'
fees) ("Indemnified Amounts") incurred by Eagle and Buyer or any of their
Affiliates, CTI or any of their respective Subsidiaries as a result of (a) any
error, inaccuracy, breach or misrepresentation in any of the representations and
warranties made by or on behalf of CTM or any Principal in this Agreement; (b)
any violation or breach by CTM or any Principal of or default by CTM or any
Principal under the terms of this Agreement; (c) the past or present presence,
release, remediation or cleanup of, or exposure to, Hazardous Substances
relating to or located on, within or under any assets owned, leased or used by
CTI or any Subsidiary; (d) the Consolidation; and (e) claims of persons who were
equity holders of any CTM Companies prior to the Closing (in their capacity as
such). Eagle and Buyer shall be entitled to recover their reasonable and
necessary attorneys' fees and litigation and arbitration expenses incurred in
connection with successful enforcement of their rights under this Section.
Section 7.2 Buyer's Indemnity Obligations. Buyer and Eagle
shall indemnify CTM and each Principal against, and hold it or him harmless from
and against, any and all Indemnified Amounts incurred by CTM or such Principal
as a result of (a) any error, inaccuracy, breach or misrepresentation in any of
the representations and warranties made by or on behalf of Buyer and Eagle in
this Agreement or (b) any violation or breach by Buyer or Eagle of or default by
Buyer or Eagle under the terms of this Agreement, except to the extent such
Indemnified Amount relates to a matter for which indemnification would be
provided under Section 7.1 without regard to the indemnification limitations
provided herein or to an action or omission by CTM or such Principal after the
Closing. The failure of Buyer or Eagle to cure, remediate or otherwise repair
any
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condition or circumstance existing at the Closing or caused by CTM or any
Principal shall not be deemed an "omission" for purposes hereof. Each Principal
and CTM shall be entitled to recover its reasonable and necessary attorneys'
fees and litigation expenses incurred in connection with successful enforcement
of its rights under this Section.
Section 7.3 Survival; Threshold and Limits of Liability. (a)
The representations and warranties, and covenants and agreements to be performed
prior to the Closing that are set forth in this Agreement or in any certificate
or instrument delivered in connection herewith shall be continuing and shall
survive the Closing for three years (including any extensions thereof) except
(i) the representations and warranties set out in Sections 4.1, 4.2 and 4.7 (and
the corresponding representations and warranties set out in or in any
certificate or instrument delivered in connection herewith) shall survive and
continue in full force and effect without limitation of time; (ii) in the case
of the representations and warranties relating to any Taxes which shall survive
the Closing and continue in full force and effect until, but not beyond, the
expiration of the period, if any, during which an assessment, reassessment or
other form of recognized document assessing liability for Tax under applicable
Tax legislation in respect of any taxation year to which such representations
and warranties extend could be issued under such Tax legislation to CTI or any
Subsidiary, provided CTI or any Subsidiary did not file any waiver or other
document extending such period; or (iii) in the case of a claim for any breach
of any of the representations and warranties contained in this Agreement or in
any agreement, instrument, certificate or other document executed or delivered
pursuant hereto involving fraud or fraudulent misrepresentation shall survive
and continue in full force and effect without limitation of time, subject only
to applicable limitation periods imposed by law) (the period during which the
representations and warranties and covenants shall survive being referred to
herein with respect to such representations and warranties as the "Survival
Period"), but shall thereafter terminate and be of no further force and effect
unless a written notice asserting a claim shall have been made pursuant to this
Article VII within the Survival Period with respect to such matter. Any claim
for indemnification made during the Survival Period shall remain in effect for
purposes of such indemnification notwithstanding that such claim may not be
resolved within the Survival Period. The covenants and agreements entered into
pursuant to this Agreement to be performed after the Closing shall survive the
Closing without limitation. No party shall be liable under this Article VII for
the breach of any representation or warranty unless the aggregate amount of such
liability (for all such claims) exceeds $100,000 under Article VII of this
Agreement and Article VII of the CTM Agreement, in which event the Indemnifying
Party shall be fully liable without regard to such threshold; solely for
purposes of this Section 7.3, in determining whether there has occurred a breach
of a representation or warranty under Article IV, the provisions of the
representations and warranties contained in such article shall be read and
interpreted as if the words "material," "in all material respects" and other
materiality qualifications were not contained therein. The limit in the
preceding sentence of this Section 7.3 shall not apply with respect to amounts
due under any provisions of this Agreement other than this Article VII. The
maximum aggregate amount that the Principals may be liable for pursuant to this
Section 7.3 and Section 7.3 of the CTM Agreement shall be $17,000,000.
(b) Non-Waiver. No investigations made by or on behalf of the
parties at any time shall have the effect of superseding, prejudicing, waiving,
diminishing the scope of or
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otherwise affecting any representation or warranty made by any party to any
other party herein or pursuant hereto or in any certificate or instrument
delivered in connection herewith.
Section 7.4 Indemnification Procedures. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall with reasonable promptness (i) notify the party from
whom indemnification is sought (the "Indemnifying Party") of any third-party
claim or claims asserted against the Indemnified Party ("Third-Party Claim") for
which indemnification is sought and (ii) transmit to the Indemnifying Party a
copy of all papers served with respect to such claim (if any) and a written
notice ("Claim Notice") containing a description in reasonable detail of the
nature of the Third-Party Claim, an estimate of the amount of damages
attributable to the Third-Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Within 15 days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party disputes its potential liability to the
Indemnified Party with respect to such Third-Party Claim and, if the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party with respect to such Third-Party Claim, whether the Indemnifying Party
elects to defend the Indemnified Party with respect to such Third-Party Claim.
If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party within the Election Period and notifies the
Indemnified Party that it elects to defend such Third-Party Claim, the
Indemnifying Party shall control negotiations toward resolution of such claim
without the necessity of litigation, and if litigation ensues, defend the same
with counsel reasonably acceptable to the Indemnified Party, at the Indemnifying
Party's expense, and the Indemnified Party shall extend reasonable cooperation
in connection with such defense. The Indemnified Party shall be entitled to
participate in, but not to control, the defense of any Third-Party Claim
resulting in litigation, at its own cost and expense; provided, however, that if
the parties to any suit or proceeding shall include the Indemnifying Party as
well as the Indemnified Party, and the Indemnified Party shall have been advised
by counsel that one or more legal defenses may be available to it that may not
be available to the Indemnifying Party, then the Indemnified Party shall be
entitled to elect to control such suit or proceeding, but the Indemnifying Party
shall be obligated to bear the fees and expenses of counsel of the Indemnified
Party, which shall be selected by the Indemnified Party in its complete and sole
discretion. If the Indemnifying Party does not dispute its potential liability
to the Indemnified Party within the Election Period and the Indemnifying Party
fails to assume control of the negotiations prior to litigation or to defend
such action within a reasonable time, the Indemnified Party shall be entitled,
but not obligated, to assume control of such negotiations or defense of such
action, and the Indemnifying Party shall be liable to the Indemnified Party for
its expenses reasonably incurred or amounts paid in connection therewith. If the
Indemnifying Party disputes its potential liability to the Indemnified Party
within the Election Period or does not elect to defend such Third-Party Claim,
then the Indemnified Party shall be entitled to assume control of such
negotiations or defense of action, and the liability for the expense thereof, as
well as any liability with respect to such Third-Party Claim, shall be
determined as provided in Section 7.5
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below. An Indemnified Party shall promptly provide all assistance reasonably
requested by an Indemnifying Party in connection with the defense of any
Third-Party Claim.
If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to the preceding paragraph, or if the
Indemnifying Party elects to defend the Indemnified Party but fails to prosecute
or settle the Third-Party Claim as herein provided, then the Indemnified Party
shall have the right to defend, at the sole cost and expense of the Indemnifying
Party (if the Indemnified Party is entitled to indemnification hereunder), the
Third-Party Claim by all appropriate proceedings, which proceedings shall be
promptly and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full control of such
defense and proceedings. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article VII and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 7.4, and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.
Neither the Indemnifying Party nor the Indemnified Party shall
settle, compromise or make any other disposition of any Third Party Claim which
would or might result in any liability to the Indemnified Party or the
Indemnifying Party under this Article VII without the written consent of such
other party.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third-Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not notify
the Indemnified Party within 15 days from its receipt of the Indemnity Notice
that the Indemnifying Party disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder.
Section 7.5 Arbitration of Disputes. If the Indemnifying Party
disputes, either as to the amount or liability, that any claim described in a
Claim Notice or an Indemnity Notice, as the case may be, is covered by such
Indemnifying Party's covenant to indemnify contained in this Article VII, then
the Indemnifying Party and the Indemnified Party agree to promptly negotiate in
good faith to resolve their differences and to mutually agree upon an amount, if
any, owed to Indemnified Party by the Indemnifying Party hereunder. If the
Indemnifying Party and the Indemnified Party fail to agree within 30 days
thereafter, the dispute shall be resolved by binding and final arbitration as
set forth in Section 10.13.
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Section 7.6 General. The covenants and agreements entered into
pursuant to this Agreement to be performed after the Closing shall survive the
Closing without limitation. The indemnification obligations under this Article
VII shall apply regardless of whether any suit or action results solely or in
part from the active, passive or concurrent negligence of the Indemnified Party.
The rights of the parties to indemnification under this Article VII shall not be
limited due to any investigations heretofore or hereafter made by such parties
or their representatives, regardless of negligence in the conduct of any such
investigations. All representations, warranties and covenants and agreements
made by the parties shall not be deemed merged into any instruments or
agreements delivered in connection with the Closing or otherwise in connection
with the transactions contemplated hereby.
Section 7.7 Release. Subject to the limitations set forth in
the last sentence in this Section and contingent upon the Closing occurring,
Principals hereby unconditionally and irrevocably release and forever discharge,
effective as of and forever after the Closing, to the fullest extent permitted
by applicable law, Buyer, Eagle, its Subsidiaries and Affiliates and its and
their respective officers, directors, employees and agents (including, after the
Closing, each of CTI and its Subsidiaries) (collectively, the "Released
Parties") from any and all debts, liabilities, obligations, claims, demands,
actions or causes of action, suits, judgments or controversies of any kind
whatsoever (collectively, "Pre-Acquisition Claims") against CTI and its
Subsidiaries, if any, or any of them that arises out of or is based on any
agreement or understanding or act or failure to act (INCLUDING ANY ACT OR
FAILURE TO ACT THAT CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR
WILLFUL, WANTON MISCONDUCT), misrepresentation, omission, transaction, fact,
event or other matter occurring prior to the Closing (whether based on any Law
or right of action, at law or in equity or otherwise, foreseen or unforeseen,
matured or unmatured, known or unknown, accrued or not accrued) (collectively,
"Pre-Acquisition Matters"), including without limitation: (a) claims by the
Principal with respect to repayment of loans or indebtedness (other than
pursuant to Section 6.12); (b) any rights, titles and interests in, to or under
any agreements, arrangements or understandings to which the Principal is a
party; and (c) claims by the Principal with respect to dividends, violation of
preemptive rights, or payment of salaries or other compensation or in any way
arising out of or in connection with the Principal's employment with CTI or any
Subsidiary, the cessation of that employment, the Principal's status as an
officer, director or stockholder of CTI or otherwise (but excluding any and all
claims in respect of (i) accrued and unpaid amounts owing to the Principal
pursuant to each Employment Agreement disclosed in Schedule 4.16 in respect of
their employment; (ii) accrued and unpaid cash compensation owing to the
Principal in the normal and ordinary course of business and consistent with past
practices; (iii) benefits accrued under each benefit plan the existence of which
has been disclosed in Schedule 4.18, (iv) amounts or other obligations owing to
the Principal pursuant to each agreement, if any, which is disclosed in Schedule
4.9 and to which the Principal is a party) and (v) claims for indemnification,
contribution, advancement of funds or reimbursement with respect to Principal's
role as an officer, director, agent, equity owner, employee or fiduciary of CTI
or any Subsidiary. The Principal further agrees not to file or bring any
litigation before any Governmental Body on the basis of or respecting any
Pre-Acquisition Claim concerning any Pre-Acquisition Matter against any Released
Party. Each Principal (a) acknowledges that he fully comprehends and understands
all the terms of this Section and their legal effects and (b) expressly
represents and warrants that (i) he is competent to effect the release made in
this Section knowingly and voluntarily and without reliance on any statement or
representation of any
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Released Party or its representatives and (ii) he had the opportunity to consult
with an attorney of his or her choice regarding this Section. This Section shall
not affect the rights of the Principals under this Agreement or under any
Employment Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions Precedent to Obligations of Buyer. The
obligation of Buyer to consummate the purchase under this Agreement is subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions (any or all of which may be waived by Buyer):
(a) all representations and warranties of the CTM and
Principals contained in this Agreement shall be true and correct in all
respects at and as of the time of the Closing with the same effect as
though made again at, and as of, that time, except such as will not
have a material adverse effect and except such as would not reasonably
be expected to have a material adverse effect on CTM's or any
Principal's or CTI's ability to perform their respective obligations
under this Agreement;
(b) CTM and the Principals shall have performed and complied
in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by CTM and the
Principals prior to or at the Closing;
(c) Buyer shall have been furnished with a certificate, dated
the Closing Date, executed by the president of CTM, each Principal and
by the president of CTI certifying to the fulfillment of the conditions
specified in Section 8.1(a) and (b) hereof;
(d) no provision of any applicable law or regulation shall
prohibit, and there shall not be in effect any injunction, restraining
order or decree issued by a court of competent jurisdiction or any
Governmental Body that shall prohibit, the consummation of this
Agreement and there shall be no action or proceeding pending or
threatened by any person seeking any such injunction, order or decree
or seeking material damages in connection with the consummation of the
transactions contemplated by this Agreement;
(e) CTM and Principals shall have delivered an opinion dated
the Closing Date and addressed to Buyer from counsel for CTI, CTM and
the Principals, in a form satisfactory to the Buyer, acting reasonably;
(f) all orders, consents, Permits, authorizations, approvals,
waivers of every Governmental Body or other Person required in
connection with the consummation of the transactions contemplated
hereby and all filings, notifications, registrations, notices herewith
of all Governmental Bodies or other persons required with respect to
the consummation of such transactions shall have been obtained or
given;
(g) the Buyer shall have, in its sole discretion, received a
favourable response from the Minister Responsible for the Investment
Canada Act (Canada) determining that the
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Buyer's direct or indirect acquisition and continued direct or indirect
ownership of CTI and each Subsidiary by the Buyer is allowed. For
greater certainty, the Buyer shall not, as a condition of obtaining
such allowance, be required to deliver any undertaking or agree to any
condition, which, in its sole discretion, is not favourable to the
Buyer;
(h) the closing under the CTM Agreement shall have occurred;
and
(i) the Buyer and each of the parties thereto shall have
entered into the Employment Agreements.
(j) CTM shall have obtained a certificate under section 116 of
the Income Tax Act (Canada) with a "certificate limit" in an amount not
less than the "proceeds of disposition", as those terms are defined for
purposes of section 116, in respect of the Consolidation.
Section 8.2 Conditions Precedent to Obligations of CTM and the
Principals. The obligation of CTM and the Principals to consummate the sale
under this Agreement is subject to the fulfillment, prior to or at the Closing,
of each of the following conditions (any or all of which may be waived by CTM or
the Principals):
(a) all representations and warranties of Eagle and Buyer
contained in this Agreement shall be true and correct in all respects
at and as of the time of the Closing with the same effect as though
made again at, and as of, that time, except such as would not
reasonably be expected to have a material adverse effect on Buyer's
ability to perform its obligations under this Agreement;
(b) Buyer shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement
to be performed or complied with by Buyer prior to or at the Closing;
(c) CTM and the Principals shall have been furnished with a
certificate, dated the Closing Date, executed by an officer of Buyer
certifying to the fulfillment of the conditions specified in Section
8.2(a) and (b) hereof;
(d) no provision of any applicable law or regulation shall
prohibit, and there shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in any
action or proceeding against, the consummation of this Agreement;
(e) subject to delivery of the opinion described in Section
8.1(e), Buyer and Eagle shall have delivered an opinion dated the
Closing Date and addressed to CTM and the Principals from counsel for
the Buyer and Eagle, in a form satisfactory to the Principals, acting
reasonably;
(f) all orders, consents, Permits, authorizations, approvals,
waivers of every Governmental Body or other person required in
connection with the consummation of the transactions contemplated
hereby and all filings, notifications, registrations, notices herewith
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of all Governmental Bodies or other persons required with respect to
the consummation of such transactions shall have been obtained or
given;
(g) the closing under the CTM Agreement shall have occurred;
and
(h) the Buyer and each of the parties thereto shall have
entered into the Employment Agreements.
ARTICLE IX
ACTIONS TO BE TAKEN AT CLOSING
Section 9.1 Actions to be Taken by CTM and the Principals at
the Closing. CTM and the Principals shall take the following actions at the
Closing:
(a) CTI shall deliver to Buyer copies certified by its
secretary of resolutions duly adopted by its board of directors and
shareholders and authorizing and approving the transfer of the Shares
pursuant to this Agreement, including the exhibits and schedules
hereto, and the consummation of the transactions contemplated herein.
(b) CTM and the Principals shall deliver the officer's
certificates referred to in Section 8.1(c).
(c) Principals and Xxx Xxxxx shall execute and deliver their
respective Employment Agreements.
(d) CTM shall deliver the share certificates for the Shares,
endorsed in blank for transfer or accompanied by duly executed blank
stock powers together with such other instruments as shall reasonably
be required by Buyer, and Principals shall deliver documents effecting
the resignations of directors of CTI and the Subsidiaries and the
election as such directors of those persons designated by Buyer.
(e) CTM and Principals shall deliver the opinion of counsel
referred to in Section 8.1(e).
(f) Principals shall execute and deliver a Statutory
Declaration in the form of Exhibit A to the effect that each of the
Principals are not nonresidents of Canada for purposes of the Income
Tax Act of Canada.
(g) Each of the Principals shall execute and deliver a release
in the form of Exhibit B.
(h) The Principals shall deliver resignations of the directors
and officers of CTI and the Subsidiaries requested by Buyer.
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Section 9.2 Actions to be Taken by Buyer at the Closing. Buyer
shall take the following actions at the Closing:
(a) Each of Eagle and Buyer shall deliver to Principals a copy
certified by its secretary of resolutions duly adopted by the board of
directors of Buyer or Eagle, as the case may be, authorizing and
approving the execution and delivery of this Agreement, including the
exhibits and schedules hereto.
(b) Buyer shall make the payment of funds specified for
payment at Closing under Section 2.2 above.
(c) Buyer shall deliver the officer's certificate referred to
in Section 8.2(c).
(d) Buyer shall execute and deliver the Employment Agreements.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement executed by CTM, the
Principals and Buyer;
(b) by Buyer, if any of the conditions specified in Section
8.1 hereof shall not have been satisfied or waived in writing by Buyer
on or before February 15, 2000; or
(c) by CTM or the Principals, if any of the conditions
specified in Section 8.2 hereof shall not have been satisfied or waived
in writing by CTM or the Principals on or before February 15, 2000;
provided, however, that a party shall not be allowed to exercise any right of
termination pursuant to this Section 10.1 if the event giving rise to such
termination right shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe in any material respect any of the
covenants or agreements set forth herein to be performed or observed by such
party.
Upon such termination, neither of the parties nor any other
person shall have any liability or further obligation arising out of this
Agreement except for any liability resulting from its breach of this Agreement
prior to termination, except that the provisions of Sections 10.3, 10.8, 10.10,
10.11 and 10.13 shall continue to apply.
In the event the Agreement is terminated as a result of the
Buyer discovering at any time prior to the Closing in the course of its due
diligence review a material inaccuracy or omission in the information regarding
CTI and its Subsidiaries provided in writing by CTM or the Principals
to the Buyer or Eagle, then the deposit paid by the Buyer or Eagle pursuant to
the Due Diligence
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Agreement, dated October 27, 1999, shall not be retained by the Principals and
or their counsel and Principals shall cause such deposit to be returned, with
interest, to the Buyer or Eagle.
Section 10.2 Confidentiality; Publicity; Books and Records.
(a) No Principal or CTM after the date hereof, or any Affiliate thereof (and
prior to the Closing, neither CTI nor its Subsidiaries) will, directly or
indirectly, disclose or provide to any other person any nonpublic information of
a confidential nature concerning CTI or any Subsidiary of their business or
operations, except as is required in governmental filings or judicial,
administrative or arbitration proceedings. During such times, in the event that
CTM, any Principal, CTI or their Subsidiaries or any Affiliate becomes legally
required to disclose any such information in any governmental filings or
judicial, administrative or arbitration proceedings, it shall, and shall cause
such Affiliate to, provide Buyer with prompt notice of such requirement so that
Buyer may seek a protective order or other appropriate remedy. In the event that
such protective order or other remedy is not obtained, such Principal, CTM or
CTI or such Subsidiary of CTI shall, and shall cause such Affiliate to, furnish
only that portion of the information that it or such Affiliate, as the case may
be, is advised by its counsel is legally required, and such disclosure shall not
result in any liability hereunder unless such disclosure was caused by or
resulted from a previous disclosure by it or any Affiliate which was not
permitted by this Agreement.
(b) For a period of three years after the Closing Date or such
longer period as may be required by law, Buyer will preserve and retain the
books and records of CTI and make such books and records available at the then
current administrative headquarters of Buyer to CTM and each Principal upon
reasonable notice and at reasonable times, at CTM's or such Principal's cost and
expense, it being understood that CTM or such Principal shall be entitled to
make copies of any such books and records as shall be reasonably necessary
solely for purposes of their personal tax obligations and not for any
competitive or business use.
Section 10.3 Expenses. Eagle, Buyer and each Principal shall
pay their own respective expenses, including the fees and disbursements of their
respective counsel in connection with the negotiation, preparation and execution
of this Agreement and the consummation of the transactions contemplated herein
except as otherwise provided herein. Notwithstanding the foregoing, following
the Closing, the Buyer will reimburse the Principals in respect of 75% of their
expenses incurred in connection with the transactions contemplated by this
Agreement and the CTM Agreement, to a maximum aggregate reimbursed amount under
this Agreement and the CTM Agreement of $100,000. Without Buyer's consent, no
such expenses will be paid by any of the CTM Companies.
Section 10.4 Entire Agreement. This Agreement and the CTM
Agreement, including all schedules and exhibits hereto and thereto, constitute
the entire agreement of the parties with respect to the subject matter hereof
and thereof, respectively, and may not be modified, amended or terminated except
by a written instrument specifically referring to this Agreement or the CTM
Agreement, respectively, signed by all the parties hereto or thereto, as the
case may be.
Section 10.5 Waivers and Consents. All waivers and consents
given hereunder shall be in writing. No waiver by any party hereto of any breach
or anticipated breach of any provision hereof by any other party shall be deemed
a waiver of any other contemporaneous,
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preceding or succeeding breach or anticipated breach, whether or not similar.
Any waiver or consent with respect to any Principals who were shareholders of
CTM may be obtained from those Principals who immediately prior to the Closing
owned a majority of the voting shares of CTM and such waiver or consent shall be
binding upon all other Principals who are former shareholders of CTM.
Section 10.6 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been received only if
and when (i) personally delivered; (ii) on the third day after mailing, by
United States or Canada mail (as applicable), first class, postage prepaid, by
certified mail, return receipt requested, addressed in each case as follows (or
to such other address as may be specified by like notice); or (iii) received by
facsimile at the phone number listed below:
If to Buyer or Eagle, to:
Eagle USA Airfreight, Inc.
0000 X. Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxx Xxxxxx
Xxxxx & Xxxxx L.L.P.
0000 Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(a) If to Xx. Xxxx Xxxxxxx to:
Xx. Xxxx Xxxxxxx
00 Xxxxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
If to Xx. Xxxxxx Xxxx, to:
Xx. Xxxxxx Xxxx
0000 Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
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If to Xx. Xxxxxxxxxxx Xxxxxx, to:
Xx. Xxxxxxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxx
Gowling, Strathy & Xxxxxxxxx
Suite 0000
Xxxxxxxx Xxxxx Xxxx
Xxxxxx X0X 0X0
Fax: (000) 000-0000
Section 10.7 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, legal representatives and assigns. No third party shall
have any rights hereunder. No assignment shall release the assigning party. It
is understood and agreed that Buyer may, without the consent of CTM or any
Principal, assign all or any portion of its rights hereunder to a subsidiary of
Buyer, in which event the assignee of Buyer shall execute and deliver all
documents, certificates and other instruments to be executed and delivered by
Buyer at the Closing in lieu of Buyer. No assignment shall release a party of
any of its obligations under this Agreement. The Principals or CTM may not
assign their rights hereunder without the consent of Buyer.
Section 10.8 Performance. The Principals agree to cause CTM to
perform all its obligations and agreements under this Agreement and hereby
guarantee the payment and performance by CTM of all such obligations and
agreements.
Section 10.9 Limitation on Interest. Regardless of any
provision contained herein or any other document executed in connection with
this Agreement, the parties hereto shall not be obliged to pay, and the parties
hereto shall never be entitled to charge, reserve, receive, collect or apply, as
interest (it being understood that interest shall be calculated as the aggregate
of all charges that are contracted for, charged, reserved, received, collected,
applied or paid that constitute interest under applicable law) payable hereunder
any amount in excess of the maximum nonusurious contract rate of interest
allowed from time to time by applicable law, and in the event any of the parties
hereto ever charges, reserves, receives, collects or applies, as interest, any
such excess, at the option of the payor of such interest, such amount shall be
deemed a partial prepayment of the amount payable hereunder or promptly refunded
to the payor of such interest. Notwithstanding the foregoing, it is understood
that no payment to be made pursuant to this Agreement that is not past due shall
be paid with any interest thereon.
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Section 10.10 Section Headings; Table of Contents. The section
headings and any table of contents contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
Section 10.11 Choice of Law; Jurisdiction and Venue. This
Agreement shall be constructed, interpreted and enforced in accordance with, and
the respective rights and obligations of the parties shall be governed by, the
laws of the Province of Ontario and the federal laws of Canada applicable
therein, without regard to principles of conflicts of law, and each party hereby
irrevocably and unconditionally attorns to the nonexclusive jurisdiction of both
the courts of such province and any federal or state court in Xxxxxx County,
Texas and all courts competent to hear appeals therefrom.
Section 10.12 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
Section 10.13
(a) Arbitration of Claims. Notwithstanding the
provisions of Section 10.11 with respect to attornment to
courts, any dispute, controversy, difference or claim arising
out of or in connection with this Agreement, or the breach,
termination or validity thereof, which cannot be amicably
resolved by the parties within 30 calendar days after receipt
by a party of written notice from any other party that such a
dispute, controversy, difference or claim exists shall be
settled by final and binding arbitration in Xxxxxxx, Xxxxxxx,
Xxxxxx, in accordance with the International Arbitration Rules
of the American Arbitration Association (the "AAA
International Rules"). The arbitration shall be conducted by
one arbitrator who shall be appointed in accordance with the
AAA International Rules.
(b) Finality of Award. The parties agree that the
award of the arbitral tribunal (the "Arbitration Award"): (i)
shall be conclusive, final and binding upon the parties; (ii)
shall be the sole and exclusive remedy between the parties
regarding any and all claims and counterclaims presented to
the arbitral tribunal; and (iii) if containing elements of
injunctive relief, as provided in Section 10.13(i) of this
Agreement, may be made in such interim manner (pending final
resolution of the controversy presented) as the arbitral
tribunal may deem appropriate to protect the interests of any
aggrieved or potentially aggrieved party.
(c) Applicable Law. The Arbitration Award shall be
based exclusively on the provisions of this Agreement;
provided, however, that to the extent that the subject matter
for the Arbitration Award is not set forth within this
Agreement, it shall be based on the laws of the province of
Ontario, Canada (without giving effect to internal principles
of conflict of laws) and the federal laws of Canada applicable
therein. In addition, in the case of any conflict between the
provisions of the AAA
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International Rules and the provisions of this Agreement, the
provisions of this Agreement shall govern.
(d) Waiver of Immunity. The parties further agree:
(i) that their mutual decision to resolve their disputes by
arbitration as provided in this Agreement is an explicit
waiver of immunity against enforcement and execution of the
Arbitration Award and any judgment thereon and (ii) that the
Arbitration Award and any judgment thereon, if unsatisfied,
may be entered in and shall be enforceable by the courts of
any nation having jurisdiction over the person or property of
the party against whom the Arbitration Award has been
rendered.
(e) Notice. All notices to be given in connection
with the arbitration shall be as provided in Section 10.6 of
this Agreement.
(f) Payment. The Arbitration Award shall include
interest, at the rate specified in Section 2.7.
(g) Expenses. All costs of arbitration and
enforcement of the Arbitration Award, including reasonable
attorneys' fees and court costs, costs of expert witnesses,
transportation, lodging and meal costs of the parties and
witnesses, costs of transcript preparation and other
reasonable and necessary direct and incidental costs shall be
apportioned by the arbitrator selected pursuant to Section
10.13(a) hereof with a view to allocating costs to the party
that does not prevail in the arbitration.
(h) Arbitral Ruling. The parties will obtain the
agreement of the arbitrator to the following: (i) the
arbitrator shall provide a written ruling, stating in separate
sections the finding of fact and conclusions of law on which
the ruling is based and (ii) such ruling shall be due no later
than thirty days after the final hearing.
(i) Specific Performance. In the event of any breach
by a party of the terms of this Agreement which would cause
any nonbreaching party to be irreparably harmed or for which
such nonbreaching party could not be made whole by monetary
damages, then in such circumstances such nonbreaching party,
in addition to any other remedy to which it may be entitled at
law or in equity, shall be entitled to compel specific
performance of this Agreement in any action instituted
pursuant to this Section 10.13 and in any action instituted in
any court of applicable jurisdiction to enforce any interim or
final Arbitration Award rendered pursuant to this Section
10.13.
(j) Validity. The validity of this Section 10.13
shall be governed by the International Commercial Arbitration
Act (Ontario).
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Section 10.14 Remedies Cumulative. No right, remedy or
election given by any term of this Agreement shall be deemed exclusive, but each
shall be cumulative with all other rights, remedies and elections available at
law or in equity.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
EAGLE USA AIRFREIGHT, INC.
By: /s/ XXXXXX X. XXXXXX
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EAGLE CANADA AIRFREIGHT, INC.
By: /s/ XXXXXX X. XXXXXX
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COMMERCIAL TRANSPORT MANAGEMENT LTD.
By: /s/ XXXX XXXXXXX
---------------------------------------
PRINCIPALS:
/s/ XXXX XXXXXXX
------------------------------------------
Xxxx Xxxxxxx
/s/ XXXXXX XXXX
------------------------------------------
Xxxxxx Xxxx
/s/ XXXXXXXXXXX XXXXXX
------------------------------------------
Xxxxxxxxxxx Xxxxxx
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