Exhibit 2.1
BUSINESS COMBINATION AGREEMENT
THIS BUSINESS COMBINATION AGREEMENT dated as of the 16th day of February, 2000.
BETWEEN:
MED-EMERG INTERNATIONAL INC., a corporation incorporated under
the laws of Ontario (hereinafter referred to as "MEII")
- and -
LASER REJUVENATION CLINICS LTD., a corporation incorporated
under the laws of Alberta (hereinafter referred to as "LRC")
- and -
▇▇▇▇▇▇ ▇▇▇▇▇, an individual of the City of Calgary, Province
of Alberta (hereinafter referred to as "Coren")
- and -
▇▇▇ ▇▇▇, an individual of the City of Calgary, Province of
Alberta (hereinafter referred to as "Woo") (Coren and Woo are
hereinafter referred to as the "Principal Shareholders")
WITNESSES THAT:
WHEREAS MEII intends to make an offer to purchase all of the issued and
outstanding securities of LRC in accordance with the provisions hereof;
AND WHEREAS the Principal Shareholders have agreed to tender all of their
securities of LRC to MEII's offer in accordance with the provisions hereof and
the Lock-Up Agreement;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereto hereby covenant and agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS: In this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the
following capitalized words and terms shall have the following
meanings:
(a) "ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), chapter
B-15, as amended;
(b) "AGREEMENT" means this Business Combination Agreement, including
the schedules, annexes and exhibits hereto, as the same may be
supplemented or
amended from time to time and the expressions "Article",
"Section", "subsection", "Exhibit" and "Schedule" followed by
a number or letter means and refers to the specified Article,
Section, subsection, Exhibit or Schedule of this Agreement;
(c) "ASC" means the Alberta Securities Commission;
(d) "ASE" means The Alberta Stock Exchange;
(e) "BEST OF LRC'S KNOWLEDGE" means the knowledge of the LRC
officers listed in Schedule 1.1(e), after due inquiry and
investigation;
(f) "BEST OF MEII'S KNOWLEDGE" means the knowledge of the MEII
officers listed in Schedule 1.1(f), after due inquiry and
investigation;
(g) "BEST OF THE PRINCIPAL SHAREHOLDERS' KNOWLEDGE" means the
knowledge of Coren and Woo, each after due inquiry and
investigation;
(h) "BSE" means the Boston Stock Exchange;
(i) "BUSINESS DAY" means a day that is not a Saturday, Sunday or
statutory holiday in the Province of Ontario or the Province of
Alberta;
(j) "CDNX" means the Canadian Venture Exchange;
(k) "CHARTER DOCUMENTS" means the articles and by-laws of a
corporation;
(l) "ITA" means the INCOME TAX ACT (Canada), as amended;
(m) "INTERIM LRC FINANCIAL STATEMENTS" means the interim unaudited
financial statements of LRC, together with the notes thereto,
for the three months ended September 30, 1999;
(n) "INTERIM MEII FINANCIAL STATEMENTS" means the interim unaudited
financial statements of MEII, together with the notes thereto,
for the nine months ended September 30, 1999;
(o) "LRC ANNUAL REPORT" means the annual report of LRC for the
financial year ended June 30, 1999;
(p) "LRC ASSETS" means the assets, property and undertaking of LRC
and the LRC Subsidiaries;
(q) "LRC DISCLOSURE SCHEDULE" means the schedule attached hereto and
identified as Schedule 1.1(q);
(r) "LRC COVENANT SCHEDULE" means the schedule attached hereto and
identified as Schedule 1.1(r);
(s) "LRC FINANCIAL STATEMENTS" mean the audited consolidated
financial statements of LRC, together with the notes thereto,
for the financial years ended June 30, 1998 and June 30, 1999;
(t) "LRC OPTIONS" means outstanding options to purchase an aggregate
of 1,145,200 LRC Shares at prices ranging from $0.15 to $1.38
per share;
(u) "LRC PRESS RELEASES" means press releases of LRC issued since
December 31, 1998;
(v) "LRC SECURITIES" means LRC Shares and LRC Options;
(w) "LRC SHARES" means the common shares of LRC, as the same are
constituted on the date hereof;
(x) "LRC SUBSIDIARIES" means the companies listed in Schedule
1.1(x);
(y) "LOCK-UP AGREEMENT" has the meaning ascribed thereto in Section
2.2;
(z) "MATERIAL ADVERSE CHANGE" means any change (or any condition,
event or development involving a prospective change) in the
business, operations, affairs, assets, liabilities (including
any contingent liability that may arise through outstanding,
pending or threatened litigation or otherwise), capitalization,
financial condition, licences, permits, rights or privileges or
prospects of a Person which could reasonably be expected to
materially and adversely affect such Person;
(aa) "MATERIAL FACT", "MATERIAL CHANGE" and "MISREPRESENTATION" are
used as defined under the SECURITIES ACT (Ontario);
(bb) "MEII ANNUAL REPORT" means the annual report of MEII for the
financial year ended December 31, 1998;
(cc) "MEII ASSETS" means the assets, property and undertakings of
MEII and the MEII Subsidiaries;
(dd) "MEII FINANCIAL STATEMENTS" means the audited financial
statements of MEII, together with the notes thereto, for the
financial years ended December 31, 1997 and December 31, 1998;
(ee) "MEII PRESS RELEASES" means press releases of MEII issued since
December 31, 1998;
(ff) "MEII SECURITIES" means the MEII Shares and the Series C
Warrants;
(gg) "MEII SHARES" means the common shares of MEII, as the same are
constituted on the date hereof;
(hh) "MEII SUBSIDIARIES" means the companies listed in Schedule
1.1(hh);
(ii) "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System Inc.;
(jj) "NON-ARM'S LENGTH TRANSACTIONS" means transactions between
Persons that are not dealing with each other at "arm's length",
within the meaning of such term in the ITA;
(kk) "OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), R.S.O.
1990, c.B.16, as amended;
(ll) "OFFER" has the meaning ascribed thereto in Section 2.1;
(mm) "OSC" means the Ontario Securities Commission;
(nn) "PERSON" means and includes an individual, sole proprietorship,
partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate, a
trustee, executor, administrator or other legal representative
and the Crown or any agency or instrumentality thereof, and
"PERSONS" means more than one Person;
(oo) "SEC" means the United States Securities and Exchange
Commission;
(pp) "SECOND TRANCHE" has the meaning ascribed thereto in the Escrow
Agreement between MEII, the Principal Shareholders, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ and Olympia Trust Company dated February 16, 2000;
(qq) "SERIES C WARRANTS" means non-assignable, redeemable Series C
warrants of MEII, such that one Series C warrant entitles the
holder thereof to acquire one MEII Share at an exercise price of
US $3.00 per share for a period of three years from the date of
issue of such warrants, and attached hereto as Schedule (qq) is
the form of the certificate relating to such warrants;
(rr) "SUBSIDIARY" means, with respect to a specified body corporate,
a body corporate of which more than 50% of the outstanding
shares ordinarily entitled to elect a majority of the directors
thereof, whether or not shares of any other class or classes
shall or might be entitled to vote upon the happening of any
event or contingency, are at the time owned, directly or
indirectly, by such specified body corporate, and includes a
body corporate in like relation to a Subsidiary;
(ss) "TAKE-OVER BID CIRCULAR" has the meaning ascribed thereto in
Section 2.3;
(tt) "Y2K COMPLIANCE" means that:
(i) the functions, calculations, and other computing processes of
the software used by LRC in its business (the "Software")
(collectively, the "Processes") performs in an accurate manner
regardless of the date in time on which the Processes are
actually performed and regardless of the date input to such
Software, whether before, on, or after January 1, 2000, and
whether or not the dates are affected by leap years;
(ii) the Software accepts, stores, sorts, extracts, sequences and
otherwise manipulates date inputs and date values, and returns
and displays date values, in an accurate manner regardless of
the dates used, whether before, on, or after January 1, 2000;
(iii) the Software will function without interruptions caused by the
date in time on which the Processes are actually performed or
by the date input to the Software, whether before, on, or after
January 1, 2000;
(iv) the Software accepts and responds to two (2) digit year and
four (4) digit year date input in a manner that resolves any
ambiguities as to the century in a defined, predetermined, and
accurate manner;
(v) the Software displays, prints, and provides electronic output
of date information in ways that are unambiguous as to the
determination of the century; and
(vi) the Software has been tested by LRC to determine whether it is
Y2K compliant or it has been represented to LRC that the
Software is Y2K compliant; and
(uu) "YFMC CIRCULAR" means the take-over bid circular dated November
4, 1999 and the related information circular (prepared in
connection with a meeting of the shareholders of MEII) dated
October 8, 1999 relating to MEII's offer to acquire all of the
outstanding securities of YFMC Healthcare Inc.
SECTION 1.2 CURRENCY. All amounts of money that are referred to in this
Agreement are expressed in lawful money of Canada, unless otherwise
specified.
SECTION 1.3 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this
Agreement into articles, sections, subsections, paragraphs and
subparagraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of
the provisions of this Agreement. The terms "this Agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement and
the schedules hereto as a whole and not to any particular article,
section, subsection, paragraph or subparagraph hereof and include any
agreement or instrument supplementary or ancillary hereto.
SECTION 1.4 NUMBER AND GENDER Unless the context otherwise requires, words
importing the singular number only shall include the plural and vice versa
and words importing the use of either gender shall include both genders and
the neuter and words importing persons shall include firms and
corporations.
SECTION 1.5 DATE FOR ANY ACTION. In the event that any date on which any action
is required to be taken hereunder by any of the parties hereto is not a
Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
SECTION 1.6 EXHIBITS. The following are the Exhibits attached and incorporated
in this Agreement by reference and are deemed to be a part hereof:
Exhibit A - Form of Lock-Up Agreement
Exhibit B - Form of Series C Warrant Certificate
Exhibit C - Form of Escrow Agreement
ARTICLE 2
BUSINESS COMBINATION
SECTION 2.1 OFFER.
(a) Subject to the terms and conditions provided for herein, MEII agrees to
make a take-over bid offer (the "Offer") to purchase all of the issued
and outstanding LRC Shares in exchange for MEII Securities on the basis
of: (i) 7.782% of a MEII Share for each LRC Share held and 2.594% of a
Series C Warrant for each LRC Share held if, before the Offer is made
and the Circular is mailed, the 20-day weighted average closing price
of the MEII Shares on NASDAQ does not fall below U.S. $2.00; or (ii)
10% of a MEII Share for each LRC Share held and 3.33% of a Series C
Warrant for each LRC Share held if, before the Offer is made and the
Circular is mailed, the 20-day weighted average closing price of the
MEII Shares on NASDAQ falls below U.S. $2.00. The initial term of the
Offer will be open for a period of 30 days from the date of the Offer.
(b) In connection with, but not as part of the Offer, with respect to the
outstanding LRC Options, LRC and MEII agree, subject to the terms of
the LRC stock option plan and the LRC Options, upon completion of the
Offer, to exchange the LRC Options for options to acquire MEII Shares
(the "MEII Options") on the basis that: (i) for every 12.85 LRC
Options, there shall be exchanged the right to acquire one MEII Share
at U.S. $2.00 per Share if, before the Offer is made and
the Circular is mailed, the 20-day weighted average closing price of
the MEII Shares on NASDAQ does not fall below U.S. $2.00; or (ii)
for every 10 LRC Options, there shall be exchanged the right to
acquire one MEII Shares at U.S. $2.00 per Share if, before the Offer
is made and the Circular is mailed, the 20-day weighted average
closing price of the MEII Shares on NASDAQ falls below U.S. $2.00.
The MEII Options shall vest and terminate in accordance with the
terms of the LRC Options for which they were exchanged except that,
in respect of LRC Options granted to directors of LRC, the MEII
Options shall not terminate by reason only of the termination of
directorship or employment, in respect of LRC Options granted to
officers of LRC, the MEII Options shall terminate one year after the
termination of employment, and in respect of all other LRC Options
granted, the MEII Options shall terminate three months after the
termination of employment. Set out in Schedule 2.1(b) is a
description of the various LRC Options granted by LRC and the
corresponding number of MEII Options for which they shall be
exchanged in connection with the Offer.
(c) MEII and LRC agree to use reasonable commercial efforts to accomplish
the foregoing, including obtaining all necessary SEC, NASDAQ and other
regulatory approvals, shareholder approvals and consents of any Person,
in a form acceptable to MEII and LRC, acting reasonably.
(d) The Offer will be made as promptly as practicable after the date
hereof, but in any event not later than June 16, 2000.
SECTION 2.2 LOCK-UP AGREEMENT. The Offer is subject to the conditions set out in
Article 5 including, without limitation, the execution by the Principal
Shareholders of a lock-up agreement (the "LOCK-UP AGREEMENT") which will be
substantially in the form of Exhibit A annexed hereto.
SECTION 2.3 MAILING OF TAKE-OVER BID CIRCULAR.
(a) Subject to the conditions set out in Article 5 hereof, upon the
Principal Shareholders executing the Lock-Up Agreement and agreeing to
deposit their LRC Shares pursuant thereto and upon the mailing by MEII
to its shareholders of an information circular relating to the business
combination contemplated herein, MEII shall as soon as practicable
thereafter, but in any event no later than June 16, 2000 mail and file
with the ASC, OSC and any other applicable securities commission a
take-over bid circular (the "TAKE-OVER BID CIRCULAR") in order to
effect the Offer.
(b) LRC agrees to provide such information with respect to itself as MEII
may require, acting reasonably, for insertion in the Take-Over Bid
Circular and take all such steps and do all such acts and things as are
necessary or desirable to give full effect to the Offer, including
providing MEII with a current list of LRC's securityholders of all
classes, including names, addresses and number of securities held and
advising LRC's registrar and transfer agent to assist MEII in
completing
the Offer and the transactions contemplated thereby and permitting
LRC's registrar and transfer agent to act as depositary under the
Offer.
SECTION 2.4 DIRECTORS' CIRCULAR. LRC agrees to take all reasonable steps to
assist its board of directors to:
(a) support the Offer and recommend acceptance of the Offer by the
securityholders of LRC; and
(b) prepare, file and mail along with the Take-Over Bid Circular, as
required by applicable law, a directors' circular recommending the
Offer.
SECTION 2.5 COMPULSORY ACQUISITION. Subject to completion of the Offer, MEII may
acquire all outstanding LRC Shares that it did not acquire pursuant to the
terms of the Offer under the compulsory acquisition provisions of
applicable corporate legislation or otherwise.
SECTION 2.6 INVESTIGATIONS. Until completion of the Offer, MEII and its
solicitors, accountants, appraisers and other advisers shall, during normal
business hours, have reasonable access to the premises, books, leases and
all other records of LRC for the purposes of investigating its affairs. In
addition, LRC shall make available to MEII such documents and data as MEII
may request, acting reasonably, relating to LRC.
SECTION 2.7 RETURN OF DOCUMENTS. If the business combination contemplated hereby
is not completed, LRC shall return to MEII all books, accounts, records and
other data of MEII (including any copies thereof) that are in LRC's
possession, and MEII shall return to LRC all books, accounts, records and
other data of LRC (including any copies thereof) that are in MEII's
possession.
SECTION 2.8 EFFECTIVE DATE. The business combination contemplated hereby shall
become effective upon MEII taking up any of the LRC Shares under the Offer.
MEII shall not be obligated to take up any of the LRC Shares until a
minimum of 66 2/3% of the LRC Shares have been validly deposited and not
withdrawn under the Offer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF MEII. MEII hereby represents and
warrants to and in favour of LRC and the Principal Shareholders that:
(a) MEII has been duly incorporated and is a valid and subsisting
corporation under the provisions of the OBCA, has all requisite
corporate power and authority to carry on its business as now
being carried on by it and to own or lease and operate its
properties and assets and is duly licenced or otherwise
qualified to carry on business in each jurisdiction in which a
material amount of its business is conducted or
wherein the character of the properties and assets now owned
by it makes such qualification necessary;
(b) as of the date hereof, the issued and outstanding capital of
MEII consists of 4,912,433 MEII Shares and 500,000 preferred
shares, all of which are outstanding as fully paid and
non-assessable;
(c) except as disclosed in the YFMC Circular and except in respect
of 320,000 MEII Shares to be issued to ▇▇▇▇▇ E-Commerce Corp.,
none of MEII or any of its Subsidiaries has any outstanding
agreements, subscriptions, warrants, options or commitments, nor
has it granted any rights or privileges capable of becoming an
agreement, subscription, warrant, option or commitment
obligating MEII or its Subsidiaries, as the case may be, to
issue any additional shares or other securities, except as
disclosed in the MEII Financial Statements or Interim MEII
Financial Statements;
(d) MEII is a reporting issuer "not in default" under the securities
laws of Ontario, Alberta and Quebec and, to the Best of MEII's
Knowledge, MEII is in compliance with the UNITED STATES
SECURITIES AND EXCHANGE ACT OF 1933, the rules and regulations
of the SEC and of NASDAQ, and no Material Adverse Change
relating to MEII has occurred within the past 24 months which
has not been disclosed in the MEII Press Releases or the YFMC
Circular;
(e) all press releases, material change reports and other documents
required to be filed with NASDAQ and the ASC within the past 24
months have been filed by or on behalf of MEII and were true and
correct in all material respects, provided full, true and plain
disclosure of the matters referred to therein and did not
contain any misrepresentation, as at the respective dates of
such filings;
(f) no order ceasing or suspending trading in securities of MEII or
prohibiting the sale of securities by MEII has been issued and,
to the Best of MEII's knowledge, no proceedings for this purpose
have been instituted or are pending, contemplated or threatened;
(g) the execution, delivery and performance of this Agreement, the
consummation of the Offer and the agreements, documents and
transactions contemplated herein are within the corporate power
and authority of MEII and, subject to MEII obtaining the
approval of the Offer by the holders of MEII Shares, have been
duly authorized by all necessary corporate action and this
Agreement constitutes a valid and binding obligation of MEII,
enforceable in accordance with its terms, subject to the
customary qualifications for a commercial transaction of this
nature;
(h) the MEII Financial Statements present fairly all of the assets
and liabilities of MEII on a consolidated basis and the
financial condition and results of operations of MEII as at the
dates thereof and for the financial periods then ended and have
been
prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis with that
of prior periods, except as otherwise stated in the notes to
the MEII Financial Statements;
(i) the MEII Shares and Series C Warrants will, upon the closing of
the Offer, be qualified investments for trusts governed by
registered retirement savings plans and registered retirement
income funds, in each case, within the meaning of the ITA;
except as disclosed in the YFMC Circular or the Interim MEII
Financial Statements, since December 31, 1998, there has been
no Material Adverse Change with respect to MEII from that shown
in the MEII Financial Statements;
MEII is the beneficial owner of the shares of the MEII
Subsidiaries with good and marketable title thereto free and
clear of any material covenant, condition or restriction on
sale or other disposition, lien, charge, +security interest
or encumbrance;
(j) except as disclosed in the YFMC Circular, none of MEII or any of
the MEII Subsidiaries has any liability or obligation, whether
accrued, absolute, contingent or otherwise, not reflected in the
MEII Financial Statements or the Interim MEII Financial
Statements, except liabilities and obligations incurred in the
ordinary course of business since December 31, 1998, which
liabilities and obligations are not materially adverse in the
aggregate;
(k) each of the MEII Subsidiaries that carries on a material portion
of the business of MEII or which owns a material portion of the
MEII Assets on a consolidated basis is duly incorporated and is
a valid and subsisting corporation under the laws of the
jurisdiction of incorporation and has all requisite corporate
power and authority to carry on its business as now carried on
by it and to own or lease and to operate its properties and
assets and is duly licensed or otherwise qualified in each
jurisdiction in which a material amount of its business is
conducted or wherein the character of the properties and assets
now owned by it makes such qualifications necessary;
(l) except as disclosed in the MEII Financial Statements, the
Interim MEII Financial Statements or the YFMC Circular, there
are no actions, suits, proceedings, investigations or
outstanding claims or demands, whether or not purportedly on
behalf of MEII or any of the MEII Subsidiaries, instituted,
pending, or, to the Best of MEII's Knowledge, threatened against
or affecting MEII or any of the MEII Subsidiaries at law or in
equity or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
or before any arbitrator, nor is there any judgment, order,
decree or award of any court or other governmental authority
having jurisdiction, obtained, pending or, to the Best of MEII's
Knowledge, threatened against MEII or any of the MEII
Subsidiaries, and to the Best of MEII's Knowledge, there are no
grounds upon which any such actions, suits, proceedings,
investigations, claims or demands may be commenced or made with
a reasonable likelihood of success;
(m) since December 31, 1998, MEII has not declared or paid any
dividends or made any distribution of its properties or assets
to its shareholders and none of MEII or any of the MEII
Subsidiaries has disposed of, or agreed to dispose of, any of
its material properties or assets or incurred or agreed to
incur, any material indebtedness, except in the ordinary course
of business or among the MEII Subsidiaries, except as disclosed
in the MEII Financial Statements, the Interim MEII Financial
Statements or the YFMC Circular;
(n) the business of MEII and the MEII Subsidiaries is being
conducted in compliance with all applicable laws, regulations
and ordinances of all authorities having jurisdiction;
(o) each contract or agreement between MEII or any of the MEII
Subsidiaries and any other Person which is material to the
ownership, use or operation of a material portion of the
business, properties or assets of MEII or the MEII Subsidiaries
on a consolidated basis, is in full force and effect and, to the
Best of MEII's Knowledge, is valid, binding and enforceable
against each of the parties thereto in accordance with its
terms, subject to the customary qualifications for a commercial
transaction of this nature, and no material breach or default
exists in respect thereof on the part of any party thereto and
no event has occurred which, with the giving of notice or the
lapse of time or both, would constitute such a material breach
or default;
(p) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the
fulfillment of or compliance with the terms and provisions
hereof do or will, nor will they with the giving of notice or
the lapse of time or both:
(i) violate any provision of any material law or administrative
regulation or any material judicial or administrative order,
award, judgment or decree applicable to MEII or any of the MEII
Subsidiaries;
(ii) conflict with any of the terms, conditions or provisions of the
Charter Documents of MEII or any of the MEII Subsidiaries;
(iii) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the
performance required by, any material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree or
award to which MEII or any of the MEII Subsidiaries is a party
or by which any of them is bound or to which the property of any
of them is subject; or
(iv) result in the cancellation, suspension or material alteration in
the terms of any material licence, permit or authority held by
MEII or any of the MEII Subsidiaries or in the creation of any
lien, charge, security interest or encumbrance in a material
amount upon any material assets of MEII or any of the MEII
Subsidiaries under any such material agreement, covenant,
undertaking,
commitment, instrument, judgment, order, decree or award or
give to any other Person any material interest or rights,
including rights of purchase, termination, cancellation or
acceleration, under any such material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree
or award;
(q) MEII has not incurred any liability for brokerage fees, finder's
fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or the Offer;
(r) other than as disclosed in writing to LRC or as disclosed in the
MEII Financial Statements or the YFMC Circular, MEII has no
agreement of any nature to acquire any Subsidiary or any
interest in any other Person, or to acquire or lease any other
business operations out of the ordinary course;
(s) the respective minute books of MEII and the MEII Subsidiaries
are complete and accurate in all material respects and contain
the minutes of all meetings and all resolutions of the directors
and shareholders thereof;
(t) except as disclosed in the MEII Financial Statements, the
Interim MEII Statements or the YFMC Circular, since December 31,
1998, MEII has:
(i) not amended its articles, by-laws or other constating documents;
(ii) conducted its business and that of each of the MEII Subsidiaries
in all material respects in the ordinary course;
(iii) not suffered (on a consolidated basis) any Material Adverse
Change or any occurrences or circumstances which have resulted
or might reasonably be expected to result in a Material Adverse
Change;
(iv) not made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis
upon which its assets and liabilities are recorded on its books
and its earnings and profits and losses are ascertained; and
(v) maintained in effect (on a consolidated basis) salary and other
compensation levels in accordance with its then existing salary
administration program;
(u) each of MEII and the MEII Subsidiaries:
(i) has duly and in a timely manner filed all returns, elections,
filings and reports required pursuant to any income, sales or
value added tax legislation of any jurisdictions having
jurisdiction over the affairs of MEII or any of the MEII
Subsidiaries for all prior periods in respect of which such
filings have heretofore been required, and such filings are
substantially true, complete and correct, the tax
liability of MEII and each of the MEII Subsidiaries is as
indicated by the above returns and filings, and MEII and each
of the MEII Subsidiaries has made timely payment of or has
duly and properly accrued on the books thereof, the taxes
(including interest and penalties thereon) shown in these
returns and filings, with respect to periods ending on or
prior to the date hereof, and any subsequent assessments,
reassessments or determinations thereof;
(ii) has made adequate provision for taxes or other amounts payable
pursuant to any legislation referred to in (i) above for the
current period for which returns, reports, elections or other
filings are not yet required to be filed, and has paid all
required installments of income, capital, property and business
taxes payable on account of the current period;
(iii) is not aware of any contingent tax liability or any grounds that
could prompt an assessment or reassessment and has not received
any indication from any taxation authorities that an assessment
or reassessment, regardless of its merits, is proposed or is
under consideration, other than as disclosed in the MEII
Financial Statements or the YFMC Circular;
(iv) is not a party to any agreements or waivers extending the
statutory period of limitations applicable to any federal,
provincial or other tax return for any period;
(v) has withheld, and will continue to withhold until the date of
closing of the Offer, from each payment made to any of its
officers, directors and employees, former officers, directors
and employees and to all non-residents of Canada and other
persons with respect to whom it is required by law to withhold
any amounts, the amount of all taxes (including, without
limitation, income tax) and other deductions required to be
withheld therefrom and has paid the same to the proper tax or
other authority within the time required under any applicable
legislation; and
(vi) has not undergone an acquisition of control, for the purposes of
the ITA or any relevant provincial statute, that would affect
any taxation years of such corporations ending before the date
hereof, except as a result of transactions contemplated by this
Agreement;
(v) all filings made by MEII or any of the MEII Subsidiaries under
which it has received or is entitled to government incentives,
have been made in accordance, in all material respects, with all
applicable legislation and contain no misrepresentations of
material fact or omit to state any material fact which could
cause any amount previously paid to MEII or the MEII
Subsidiaries or previously accrued on the accounts thereof to be
recovered or disallowed;
(w) neither MEII nor any of the MEII Subsidiaries is a party to any
written contracts of employment, management services contracts
or collective bargaining agreements,
other than as disclosed in the YFMC Circular or entered into
in the ordinary course of business;
(x) MEII is a reporting issuer in the Provinces of Alberta, Ontario
and Quebec and has not been notified and, to the Best of MEII's
Knowledge, is not aware of any material default of any
requirement of securities or corporate laws, regulations,
orders, notices and policies;
(y) all ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
the material MEII assets or the receipt of proceeds therefrom
payable in respect of or in relation to any material MEII assets
have been properly and fully paid and discharged or have been
properly accrued on the books of MEII and each of the MEII
Subsidiaries;
(z) all material documents and agreements of whatsoever nature and
kind affecting title to the material MEII assets which are in
the possession of MEII or of which MEII is otherwise aware have
been made available for review by LRC;
(aa) to the Best of MEII's Knowledge, MEII has done no act or thing,
nor has MEII suffered or permitted any act or omission, whereby
its title to any material MEII assets may be cancelled or
terminated, except as disclosed in the YFMC Circular;
(bb) to the Best of MEII's Knowledge, MEII has been and is in
compliance in all material respects with all Environmental Laws
and MEII has received no written notice of non-compliance, and
does not know, and does not have reasonable grounds to know, of
any facts which could give rise to a notice of non-compliance,
and for greater certainty and without limiting the foregoing, to
the Best of MEII's Knowledge:
(i) there have been no material unrectified spills, material
releases, material deposits or material discharges of hazardous
or toxic substances, contaminants or wastes on any of the real
property owned or leased by MEII or any of the MEII Subsidiaries
or under their respective control, nor has any such real
property been used at any time by any person as a landfill or
waste disposal site;
(ii) there have been no material releases, material deposits or
material discharges in violation of Environmental Laws of any
hazardous or toxic substances, contaminants or wastes into the
earth, air or into any body of water or any municipal or other
sewer or drain water systems by MEII or the MEII Subsidiaries;
(iii) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the
material business or material assets of MEII or any of the MEII
Subsidiaries; and
(iv) each of MEII and the MEII Subsidiaries holds all material
licences, permits and approvals required under any Environmental
Laws in connection with the operation of its business and the
ownership and use of its assets, all such licences, permits and
approvals are in full force and effect, and none of MEII or the
MEII Subsidiaries has received any notification pursuant to any
Environmental Laws that any work, repairs, construction or
capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws or
any licence, permit or approval issued pursuant thereto, or that
any licence, permit or approval referred to above is about to be
reviewed, made subject to limitations or conditions, revoked,
withdrawn or terminated;
(cc) MEII has not received any notices of material violation or
alleged material violation of the provisions of any agreement in
respect of the MEII Assets and, to the Best of MEII's Knowledge,
the properties and assets comprising the MEII Assets have been
used and operated in accordance with all material agreements
that relate to them;
(dd) there is no fact which MEII has not disclosed to LRC in writing
with reasonable specificity and detail of which any of its
directors, officers or members of senior management is aware and
which has or would reasonably be expected to have a material
adverse effect on MEII or materially impede the completion of
the Offer or the other transactions contemplated in this
Agreement;
(ee) each of MEII and/or the MEII Subsidiaries has all necessary
governmental authorizations and permits required to enable them
to carry on their respective businesses as conducted by them and
all such licenses, permits and approvals are in full force and
effect and neither MEII nor the MEII Subsidiaries has received
any notification pursuant to applicable laws that any matters
must be undertaken by them as a condition of the continued
compliance of any such licenses, permits and approvals or any
license, permit or approval issued to them is about to be
reviewed, made subject to limitations or conditions, revoked,
withdrawn or terminated; and
(ff) to the Best of MEII's Knowledge, there are no material Y2K
issues relating to the business and operations of MEII and the
MEII Subsidiaries, other than those disclosed in the MEII
Financial Statements, the Interim MEII Financial Statements or
the YFMC Circular.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF LRC. LRC hereby represents and
warrants to and in favour of MEII that:
(a) LRC has been duly incorporated and is a valid and subsisting
corporation under the provisions of the ABCA, has all requisite
corporate power and authority to carry on its business as now
being carried on by it and to own or lease and operate its
properties and assets and is duly licenced or otherwise
qualified to carry on business in each jurisdiction in which a
material amount of its business is conducted or
wherein the character of the properties and assets now owned
by it makes such qualification necessary;
(b) as of the date hereof, the issued and outstanding share capital
of LRC consists of 15,003,122 LRC Shares, all of which are
issued and outstanding as fully paid and non-assessable shares;
(c) except as disclosed in the LRC Disclosure Schedule, none of LRC
or any of the LRC Subsidiaries has any outstanding agreements,
subscriptions, warrants, options or commitments, nor has it
granted any rights or privileges capable of becoming an
agreement, subscription, warrant, option or commitment
obligating LRC or the LRC Subsidiaries, as the case may be, to
issue any additional shares or other securities, except for the
LRC Options;
(d) except as disclosed in the LRC Disclosure Schedule, LRC is a
reporting issuer "not in default" under the securities laws of
Alberta and British Columbia and, to the Best of LRC's
Knowledge, is in compliance with the by-laws, rules and
regulations of the ASE and/or the CDNX and no Material Adverse
Change relating to LRC has occurred within the past 24 months
which has not been disclosed in the LRC Financial Statements or
the LRC Press Releases;
(e) except as disclosed in the LRC Disclosure Schedule, all press
releases, material change reports and other documents required
to be filed with the ASC, the ASE and CDNX within the past 24
months have been filed by or on behalf of LRC and were true in
all material respects, provided full, true and plain disclosure
of the matters referred to therein and did not contain any
misrepresentation, as at the respective dates of such filings;
(f) no order ceasing or suspending trading in securities of LRC or
prohibiting the sale of securities by LRC has been issued and,
to the Best of LRC's Knowledge, no proceedings for this purpose
have been instituted, or are pending, contemplated or
threatened.
(g) the execution, delivery and performance of this Agreement, the
consummation of the Offer and the agreements, documents and
transactions contemplated herein are within the corporate power
and authority of LRC and have been duly authorized by all
necessary corporate action and this Agreement constitutes a
valid and binding obligation of LRC, enforceable in accordance
with its terms, subject to the customary qualifications for a
commercial transaction of this nature;
except as disclosed in the LRC Disclosure Schedule and except as
otherwise stated in the notes to the LRC Financial Statements,
the LRC Financial Statements present fairly all of the assets
and liabilities of LRC on a consolidated basis and the financial
condition and results of operations of LRC as at the dates
thereof and for the financial periods then ended and have
been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis with that
of prior periods;
except as disclosed in the LRC Disclosure Schedule, the Interim
LRC Financial Statements, the LRC Annual Report or the LRC Press
Releases, since December 31, 1998, there has been no Material
Adverse Change with respect to LRC from that shown in the LRC
Financial Statements;
except as disclosed in the LRC Disclosure Schedule and except
for security granted by LRC and certain of the LRC Subsidiaries
to the Bank of Montreal, Newcourt Financial Ltd., AT&T Capital
Corporation and B.A.C.C. Capital Corporation or security granted
in the ordinary course of business each of LRC and the LRC
Subsidiaries was the beneficial owner of the properties and
assets described as being owned by it in the LRC Financial
Statements as at the dates thereof with good and marketable
title thereto free and clear of material encumbrances and, in
particular, LRC was at the dates thereof, the beneficial owner
of the shares of the LRC Subsidiaries as listed in Schedule
1.1(x) with good and marketable title thereto free and clear of
any material covenant, condition or restriction on sale or other
disposition, lien, charge, security interest or encumbrance, and
no person has any agreement, option, right or privilege
(including, without limitation, by law, pre-emptive right,
contract or otherwise) to purchase, convert into, exchange for
or otherwise acquire, nor any agreement, option, right or
privilege capable of becoming any such agreement, right, option
or privilege, any of such securities or any interest therein;
(h) except as disclosed in the LRC Disclosure Schedule and except
liabilities and obligations incurred in the ordinary course of
business since December 31, 1998, which liabilities and
obligations are not materially adverse in the aggregate, none of
LRC or any of the LRC Subsidiaries has any liability or
obligation, whether accrued, absolute, contingent or otherwise,
not reflected in the LRC Financial Statements or the Interim LRC
Financial Statements;
(i) each of the LRC Subsidiaries that carries on a material portion
of the business of LRC or which owns a material portion of the
LRC Assets on a consolidated basis is duly incorporated and is a
valid and subsisting corporation under the laws of its
jurisdiction of incorporation and has all requisite corporate
power and authority to carry on its business as now carried on
by it and to own or lease and to operate its properties and
assets and is duly licenced or otherwise qualified in each
jurisdiction in which a material amount of its business is
conducted or wherein the character of the properties and assets
now owned by it makes such qualification necessary;
(j) except as disclosed in the LRC Disclosure Schedule or the LRC
Financial Statements, there are no actions, suits, proceedings,
investigations or outstanding claims or demands, whether or not
purportedly on behalf of LRC or any of the LRC Subsidiaries,
instituted, pending, or, to the Best of LRC's Knowledge,
threatened against or affecting LRC or any of the LRC
Subsidiaries at law or in equity or before or by any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator,
nor is there any judgment, order, decree or award of any court
or other governmental authority having jurisdiction, obtained,
pending or, to the Best of LRC's Knowledge, threatened against
LRC or any of the LRC Subsidiaries, and to the Best of LRC's
Knowledge, there are no grounds upon which any such actions,
suits, proceedings, investigations, claims or demands may be
commenced or made with a reasonable likelihood of success;
(k) except as disclosed in the LRC Disclosure Schedule, since
December 31, 1998, LRC has not declared or paid any dividends or
made any distribution of its properties or assets to its
shareholders and none of LRC or any of the LRC Subsidiaries has
disposed of any of its material properties or assets or incurred
any material indebtedness, except in the ordinary course of
business or among the LRC Subsidiaries;
(l) the business of LRC and the LRC Subsidiaries is being conducted
in material compliance with all applicable laws, regulations and
ordinances of all authorities having jurisdiction;
(m) except as disclosed in the LRC Disclosure Schedule, each
contract or agreement between LRC or any of the LRC Subsidiaries
and any other Person which is material to the ownership, use or
operation of a material portion of the business, properties or
assets of LRC or the LRC Subsidiaries on a consolidated basis,
is in full force and effect and, to the Best of LRC's Knowledge,
is valid, binding and enforceable against each of the parties
thereto in accordance with its terms, subject to the customary
qualifications for a commercial transaction of this nature, and
no material breach or default exists in respect thereof on the
part of any party thereto and no event has occurred which, with
the giving of notice or the lapse of time or both, would
constitute such a material breach or default;
(n) with the exception of obtaining the consent of the ASE/CDNX and
the ASC for the release from escrow of the LRC Shares of the
Principal Shareholders, none of the execution and delivery of
this Agreement, the consummation of the transactions
contemplated hereby or the fulfillment of or compliance with the
terms and provisions hereof do or will, nor will they with the
giving of notice or the lapse of time or both:
(i) violate any provision of any material law or administrative
regulation or any material judicial or administrative order,
award, judgment or decree applicable to LRC or any of the LRC
Subsidiaries;
(ii) conflict with any of the terms, conditions or provisions of the
Charter Documents of LRC or any of the LRC Subsidiaries;
(iii) except as disclosed in this LRC Disclosure Schedule, conflict
with, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of the performance
required by, any material agreement, covenant, undertaking,
commitment, instrument, judgment, order, decree or award to
which LRC or any of the LRC Subsidiaries is a party or by which
any of them is bound or to which the property of any of them is
subject; or
(iv) result in the cancellation, suspension or material alteration in
the terms of any material licence, permit or authority held by
LRC or any of the LRC Subsidiaries or in the creation of any
lien, charge, security interest or encumbrance in a material
amount upon any material assets of LRC or any of the LRC
Subsidiaries under any such material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree or
award or give to any other Person any material interest or
rights, including rights of purchase, termination, cancellation
or acceleration, under any such material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree or
award;
(o) LRC has not incurred any liability for brokerage fees, finder's
fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or the transactions
contemplated hereby;
(p) other than as disclosed in writing to MEII or as disclosed in
the LRC Disclosure Schedule, LRC has no agreements of any nature
to acquire any Subsidiary or any interest in any other Person,
or to acquire or lease any other business operations out of the
ordinary course;
(q) except as disclosed in the LRC Disclosure Schedule, the
respective minute books of LRC and the LRC Subsidiaries are
complete and correct in all material respects and contain the
minutes of all meetings and all resolutions of the directors and
shareholders thereof;
(r) except as disclosed in the LRC Disclosure Schedule, since
December 31, 1998, LRC has:
(i) not amended its articles, by-laws or other constating documents;
(ii) conducted its business and that of each of the LRC Subsidiaries
in all material respects in the ordinary course;
(iii) not suffered (on a consolidated basis) any Material Adverse
Change or any occurrences or circumstances which have resulted
or might reasonably be expected to result in a Material Adverse
Change;
(iv) not made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis
upon which its assets and
liabilities are recorded on its books and its earnings and
profits and losses are ascertained; and
(v) maintained in effect (on a consolidated basis) salary and other
compensation levels in accordance with its then existing salary
administration program;
(s) each of LRC and the LRC Subsidiaries:
(i) has duly and in a timely manner filed all returns, elections,
filings and reports required pursuant to any income, sales or
value added tax legislation of any jurisdictions having
jurisdiction over the affairs of LRC or any of the LRC
Subsidiaries for all prior periods in respect of which such
filings have heretofore been required, and such filings are
substantially true, complete and correct, in all material
respects the tax liability of LRC and each of the LRC
Subsidiaries is as indicated by the above returns and filings,
and LRC and each of the LRC Subsidiaries has made timely payment
of or has duly and properly accrued on the books thereof, the
taxes (including interest and penalties thereon) shown in these
returns and filings, with respect to periods ending on or prior
to the date hereof, and any subsequent assessments,
reassessments or determinations thereof;
(ii) has made adequate provision for taxes or other amounts payable
pursuant to any legislation referred to in (i) above for the
current period for which returns, reports, elections or other
filings are not yet required to be filed, and has paid all
required installments of income, capital, property and business
taxes payable on account of the current period;
(iii) is not aware of any contingent tax liability or any grounds that
could prompt an assessment or reassessment and has not received
any indication from any taxation authorities that an assessment
or reassessment, regardless of its merits, is proposed or is
under consideration, other than as disclosed in the LRC
Financial Statements;
(iv) is not a party to any agreements or waivers extending the
statutory period of limitations applicable to any federal,
provincial or other tax return for any period;
(v) has withheld, and will continue to withhold until the date of
closing of the Offer, from each payment made to any of its
officers, directors and employees, former officers, directors
and employees and to all non-residents of Canada and other
persons with respect to whom it is required by law to withhold
any amounts, the amount of all taxes (including, without
limitation, income tax) and other deductions required to be
withheld therefrom and has paid the same to the proper tax or
other authority within the time required under any applicable
legislation; and
(vi) has not undergone an acquisition of control, for the purposes of
the ITA or any relevant provincial statute, that would affect
any taxation years of such corporations ending before the date
hereof, except as a result of transactions contemplated by this
Agreement;
(t) all filings made by LRC or any of the LRC Subsidiaries under
which it has received or is entitled to government incentives,
have been made in accordance, in all material respects, with all
applicable legislation and contain no misrepresentations of
material fact or omit to state any material fact which could
cause any amount previously paid to LRC or its Subsidiaries or
previously accrued on the accounts thereof to be recovered or
disallowed;
(u) neither LRC nor any of the LRC Subsidiaries is a party to any
written contracts of employment, management services contracts
or collective bargaining agreements, other than as entered into
in the ordinary course of business or as disclosed in the LRC
Disclosure Schedule;
(v) LRC is a reporting issuer in the Provinces of Alberta and
British Columbia and has not been notified and, to the Best of
LRC's Knowledge, is not aware of any material default of any
requirement of securities or corporate laws, regulations,
orders, notices and policies;
(w) LRC has not received any notices of material violation or
alleged material violation of the provisions of any agreement in
respect of the LRC Assets and, to the Best of LRC's Knowledge,
the material properties and material assets comprising the LRC
Assets have been used and operated in all material respects with
all material agreements that relate to them;
(x) all ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
the material LRC Assets or the receipt of proceeds therefrom
payable in respect of or in relation to any material LRC Assets
have been properly and fully paid and discharged or have been
properly accrued on the books of LRC and each of its
Subsidiaries;
(y) all material documents and agreements of whatsoever nature and
kind affecting title to the material LRC Assets which are in the
possession of LRC or of which LRC is otherwise aware have been
made available for review by MEII;
(z) except as disclosed in the LRC Disclosure Schedule or the LRC
Annual Report, to the Best of LRC's Knowledge, LRC has done no
act or thing, nor has LRC suffered or permitted any act or
omission, whereby its title to any material LRC Assets may be
cancelled or terminated;
(aa) to the Best of LRC's Knowledge, LRC has been and is in
compliance in all material respects with all Environmental Laws
and LRC has received no written
notice of non-compliance, and does not know, and does not
have reasonable grounds to know, of any facts which could
give rise to a notice of non-compliance, and for greater
certainty and without limiting the foregoing, to the Best of
LRC's Knowledge:
(i) there have been no material unrectified spills, material
releases, material deposits or material discharges of hazardous
or toxic substances, contaminants or wastes on any of the real
property owned or leased by LRC or any of the LRC Subsidiaries
or under their respective control, nor has any such real
property been used at any time by any person as a landfill or
waste disposal site;
(ii) there have been no material releases, material deposits or
material discharges in violation of Environmental Laws of any
hazardous or toxic substances, contaminants or wastes into the
earth, air or into any body of water or any municipal or other
sewer or drain water systems by LRC or the LRC Subsidiaries;
(iii) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the
material business or material assets of LRC or any of the LRC
Subsidiaries; and
(iv) each of LRC and the LRC Subsidiaries holds all material
licences, permits and approvals required under any Environmental
Laws in connection with the operation of its business and the
ownership and use of its assets, all such licences, permits and
approvals are in full force and effect, and neither LRC nor the
LRC Subsidiaries has received any notification pursuant to any
Environmental Laws that any work, repairs, construction or
capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws or
any licence, permit or approval issued pursuant thereto, or that
any licence, permit or approval referred to above is about to be
reviewed, made subject to limitations or conditions, revoked,
withdrawn or terminated;
(bb) except as disclosed in the LRC Disclosure Schedule, there is no
fact which LRC has not disclosed to MEII in writing with
reasonable specificity and detail of which any of its officers
or members of senior management is aware and which has or would
reasonably be expected to have a material adverse effect on LRC
or materially impede the completion of the Offer or the other
transactions contemplated in this Agreement;
(cc) each of LRC and the LRC Subsidiaries has all material
governmental authorizations and permits required to enable them
to carry on their respective businesses as conducted by them and
all such licenses, permits and approvals are in full force and
effect and neither LRC or its Subsidiaries has received any
notification pursuant to applicable laws that any matters must
be undertaken by them as a condition of the continued compliance
of any such licenses, permits and
approvals or any license, permit or approval issued to them
is about to be reviewed, made subject to limitations or
conditions, revoked, withdrawn or terminated;
(dd) except as disclosed in the LRC Disclosure Schedule, to the Best
of LRC's Knowledge, there are no material Y2K Compliance issues
relating to the business and operations of LRC and the LRC
Subsidiaries;
(ee) to the best of LRC's knowledge, without inquiry or
investigation, all of the registered and beneficial owners of
LRC securities are residents of the Provinces of British
Columbia, Alberta, Manitoba and Ontario and the United States of
America.
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
SHAREHOLDERS. Each of the Principal Shareholders hereby jointly
and severally represents and warrants to and in favour of MEII
that, to the Best of the Principal Shareholders' Knowledge:
(a) as of the date hereof, the issued and outstanding share capital
of LRC consists of 15,003,122 LRC Shares, all of which are
issued and outstanding as fully paid and non-assessable shares;
(b) except as disclosed in the LRC Disclosure Schedule, LRC is a
reporting issuer "not in default" under the securities laws of
Alberta is in material compliance with the by-laws, rules and
regulations of the ASE and/or the CDNX and no material change
relating to LRC has occurred within the past 24 months which has
not been publicly disclosed;
except as disclosed in the LRC Disclosure Schedule, none of LRC
or any of the LRC Subsidiaries has any outstanding agreements,
subscriptions, warrants, options or commitments, nor has it
granted any rights or privileges capable of becoming an
agreement, subscription, warrant, option or commitment
obligating LRC or the LRC Subsidiaries as the case may be, to
issue any additional shares or other securities, except for the
LRC Options;
except as disclosed in the LRC Disclosure Schedule and except as
otherwise stated in the notes to the LRC Financial Statements,
the LRC Financial Statements present fairly all of the assets
and liabilities of LRC and the financial condition and results
of operations of LRC as at the dates thereof and for the
financial periods then ended and have been prepared in
accordance with Canadian generally accepted accounting
principles applied on a consistent basis with that of prior
periods;
except as disclosed in the LRC Disclosure Schedule, the Interim
LRC Financial Statements, the LRC Annual Report or the LRC Press
Releases, since December 31, 1998, there has been no Material
Adverse Change with respect to LRC on a consolidated basis from
that shown in the LRC Financial Statements;
except as disclosed in the LRC Disclosure Schedule and except
for security granted by LRC and certain of the LRC Subsidiaries
to the Bank of Montreal, Newcourt Financial Ltd., AT&T
Capital Corporation and B.A.C.C. Capital Corporation or
security granted in the ordinary course of business or as
disclosed in the Interim LRC Financial Statements, each of
LRC and the LRC Subsidiaries was the beneficial owner of the
properties and assets described as being owned by it in the
LRC Financial Statements and Interim LRC Financial Statements
as at the dates thereof with good and marketable title
thereto free and clear of material encumbrances, and, in
particular, LRC is the beneficial owner of the shares of the
LRC Subsidiaries as listed in Schedule 1.1(x) with good and
marketable title thereto free and clear of any material
covenant, condition or restriction on sale or other
disposition, lien, charge, security interest or encumbrance,
and no person has any agreement, option, right or privilege
(including, without limitation, by law, pre-emptive right,
contract or otherwise) to purchase, convert into, exchange
for or otherwise acquire, nor any agreement, option, right or
privilege capable of becoming any such agreement, right,
option or privilege, any of such securities or any interest
therein;
(c) except as disclosed in the LRC Disclosure Schedule and except
for liabilities and obligations incurred in the ordinary course
of business since December 31, 1998, which liabilities and
obligations are not materially adverse in the aggregate, none of
LRC or any of the LRC Subsidiaries has any liability or
obligation, whether accrued, absolute, contingent or otherwise,
not reflected in the LRC Financial Statements or the Interim LRC
Financial Statements;
(d) except as disclosed in the LRC Disclosure Schedule or the LRC
Financial Statements, there are no actions, suits, proceedings,
investigations or outstanding claims or demands, whether or not
purportedly on behalf of LRC or any of the LRC Subsidiaries,
instituted, pending, or threatened against or affecting LRC or
any of the LRC Subsidiaries at law or in equity or before or by
any governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, or before any
arbitrator, nor is there any judgment, order, decree or award of
any court or other governmental authority having jurisdiction,
obtained, pending or threatened against LRC or any of the LRC
Subsidiaries and there are no grounds upon which any such
actions, suits, proceedings, investigations, claims or demands
may be commenced or made with a reasonable likelihood of
success; and
(e) the business of LRC and the LRC Subsidiaries is being conducted
in all material respects in compliance with all applicable laws,
regulations and ordinances of all authorities having
jurisdiction.
SECTION 3.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF LRC AND MEII. The
representations and warranties contained herein and given by LRC to MEII
and by MEII to and LRC shall, in each case, survive completion of the
transaction contemplated by the Offer for a period of 15 months after the
date of this Agreement.
SECTION 3.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
SHAREHOLDERS AND MEII. The representations and warranties contained herein
and
given by the Principal Shareholders to MEII and by MEII to the
Principal Shareholders shall, in each case, survive completion of the
transaction contemplated by the Offer for a period of 15 months after the
date of this Agreement. Notwithstanding anything to the contrary, the
liability of each of the Principal Shareholders to MEII for breaches of any
representation or warranty contained herein and given by them to MEII shall
be limited to the value of the Second Tranche of MEII Shares held in escrow
pursuant to the Escrow Agreement. No notice of a claim shall be given to
the Principal Shareholders after the release from Escrow of the Second
Tranche and no claim shall be otherwise initiated after such date.
SECTION 3.6 INDEMNITY. Subject to Section 3.7, the Principal Shareholders shall
indemnify and hold MEII harmless in respect of any claim, demand, action,
cause of action, damage, loss, cost, liability or expense (a "Claim") which
may be made or brought against MEII or which it may suffer or incur
directly or indirectly as a result of, in respect of or arising out of any
incorrectness in or breach of any representation or warranty of the
Principal Shareholders contained in Section 3.3.
SECTION 3.7 LIMITATIONS. The Principal Shareholders shall not have any liability
for indemnification pursuant to Section 3.6, or relating to any breach of
any of the representations and warranties contained in Section 3.3, in
excess of the value of the Second Tranche of MEII Shares held in escrow
pursuant to the Escrow Agreement. No notice of a Claim shall be given to
the Principal Shareholders after the release from escrow of the Second
Tranche and no claim shall be otherwise initiated after such date.
ARTICLE 4
COVENANTS
SECTION 4.1 COVENANTS OF MEII. Until the Offer is completed or this Agreement is
terminated, MEII hereby covenants and agrees with LRC and the Principal
Shareholders as follows:
MEII will make available and cause to be made available to LRC and its
agents and advisors, as soon as possible, all documents and agreements as
may be necessary to enable LRC to effect a thorough examination of MEII and
its Subsidiaries, its business, properties and financial status, and shall
co-operate with LRC in securing access for LRC to any such documentation
not in possession or under the control of MEII;
MEII will not subdivide, consolidate, redeem, purchase, offer to purchase
or otherwise acquire or reclassify any of its outstanding shares of any
class, declare any dividends or make other distributions (whether in cash,
shares or property, or any combination thereof) or reduce the stated
capital in respect of its shares of any class; provided, however, the
parties hereto recognize that MEII may make a distribution to its
shareholders of the shares it holds in ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. with the
understanding that if such occurs before the completion of the Offer, the
Offer will be amended so as to ensure that LRC shareholders will be treated
the same as if they had been MEII shareholders at the date of such
distribution.
MEII will not alter or amend its Charter Documents as the same exist at the
date of this Agreement;
MEII will: (i) make all required filings pursuant to the SECURITIES
EXCHANGE ACT OF 1934, as amended; and (ii) use its reasonable best efforts
to maintain the NASDAQ SmallCap Marketing listing of the MEII Shares;
MEII will use its reasonable best efforts to maintain its status as a
reporting issuer not in default under the securities laws of Alberta,
Ontario and Quebec and will use its reasonable best efforts to remain in
compliance with the by-laws, rules and regulations of NASDAQ and the TSE
such that no order ceasing or spending trading in securities of MEII or
prohibiting the sale of securities of MEII will be instituted, contemplated
or threatened;
MEII will use its reasonable best efforts to obtain listing on NASDAQ and
the BSE of the MEII Shares to be issued pursuant to the Offer and the MEII
Shares issuable upon exercise of MEII Securities issued pursuant to or in
connection with the Offer which contain rights to receive MEII Shares;
subject to Section 2.1 and Section 6.1 hereof, MEII will, in a timely and
expeditious manner, file the Take-Over Bid Circular in all jurisdictions
where it is required to be filed and mail the same to LRC's shareholders in
accordance with applicable law;
MEII will use its reasonable best efforts to obtain the consents required
as a result of the transactions provided for herein pursuant to any
contract to which MEII is a party or by which it is bound;
MEII will use its reasonable best efforts to do all such other acts and
things as may be necessary or required in order to give effect to the Offer
and, without limiting the generality of the foregoing, MEII will use its
reasonable best efforts to apply for and/or obtain such other consents,
orders and approvals as it determines are necessary or desirable, acting
reasonably, for the implementation of the Offer, including those referred
to in Section 5.1 hereof;
MEII will use its reasonable best efforts to cause each of the conditions
precedent set forth in Article 5 hereof to be complied with on or before
the
date of closing of the Offer and will not take or fail to take any action
reasonably within its control which would result in a condition precedent
to the Offer not being satisfied; and
(a) except as may be required to complete the Offer, MEII nor any
other party acting jointly or in concert with MEII shall acquire
or dispose of securities of LRC, directly or indirectly, during
the period commencing on the date hereof and ending on the date
of termination of this Agreement.
SECTION 4.2 COVENANTS OF LRC AND THE PRINCIPAL SHAREHOLDERS. Until the
transaction contemplated by the Offer is completed or this Agreement is
terminated, LRC hereby covenants and agrees with MEII, and the Principal
Shareholders covenant and agree with MEII to use their reasonable best
efforts to cause LRC, to do the following:
LRC and the Principal Shareholders shall in a timely and expeditious manner
apply to the ASC (and any other applicable regulatory authority) to have
the LRC Shares currently under escrow released from escrow so that such
shares may be tendered under the Offer;
except as set out in the LRC Covenant Schedule and except as contemplated
in this Agreement, the Interim LRC Financial Statements, the LRC Annual
Report or as otherwise agreed in writing by MEII, acting reasonably, LRC
and the LRC Subsidiaries will carry on business in the ordinary course
consistent with past practice and will not enter into any transaction or
incur any material obligation or liability out of the ordinary course of
business;
LRC will make available and cause to be made available to MEII and its
agents and advisors, as soon as possible, all documents and agreements
(including without limitation, minute books) as may be necessary to enable
MEII to effect a thorough investigation of LRC, its business, properties
and financial status and to enable MEII to provide all disclosure necessary
or advisable to the holders of LRC Shares or MEII Shares in connection with
the Offer, except where LRC is contractually precluded from making such
document or agreement available, and shall co-operate with MEII in securing
access for MEII to any such documentation not in the possession or under
the control of LRC;
except as set out in the LRC Covenant Schedule, LRC will not, and will not
permit any of the LRC Subsidiaries to, merge into or with, or amalgamate or
consolidate with, or enter into any other corporate reorganization with,
any other corporation or Person or perform any act or enter into any
transaction or negotiation which interferes or is inconsistent with the
completion of the transactions contemplated hereby or would render
inaccurate in any material respect any of the representations and
warranties set forth in Section 3.2 and 3.3 hereof if such representations
and warranties were made at a date subsequent to such act, negotiation or
transaction and all references to the date of this Agreement were deemed to
be such later date, except as contemplated in this Agreement, the Interim
LRC Financial Statements or the LRC Annual Report, and without limiting the
generality of the foregoing, LRC will not:
(i) make any distribution by way of dividend, return of capital or
otherwise to or for the benefit of its shareholders;
(ii) issue any shares, except upon the due exercise of outstanding
options, warrants or other rights to purchase LRC Shares, or
other securities convertible into or exchangeable for shares or
enter into any commitment or agreement therefor;
(iii) increase or decrease its paid-up capital; or
(iv) enter into any Non-Arm's Length Transactions except transactions
with or among the LRC Subsidiaries in the ordinary course;
(b) LRC will not alter or amend its Charter Documents as the same
exist at the date of this Agreement;
(c) LRC will not subdivide, consolidate, redeem, purchase, offer to
purchase or otherwise acquire or reclassify any of its
outstanding shares, declare any dividends or make other
distributions (whether in cash, shares or property, or any
combination thereof) or reduce the stated capital in respect of
its shares;
(d) LRC will use its reasonable best efforts to maintain its status
as a reporting issuer "not in default" under the securities laws
of Alberta and will use its reasonable best efforts to remain in
compliance with the by-laws, rules and regulations of the ASE
and CDNX such that no order ceasing or suspending trading in
securities of LRC or prohibiting the sale of securities by LRC
will be instituted, contemplated or threatened;
(e) LRC will use it reasonable best efforts to assist MEII in
obtaining listing on NASDAQ and the BSE of the MEII Shares to be
issued pursuant to or in connection with the Offer and the MEII
Shares issuable upon the exercise of the Series C Warrants
issued pursuant to the Offer;
(f) except as set out in the LRC Covenant Schedule, LRC will not,
and will not permit any of its Subsidiaries to, engage in any
business, enterprise or activity materially different from that
carried on by it at the date of this Agreement or enter into any
transaction or incur any obligation if the same would have a
material adverse effect on LRC or the Offer, other than in the
ordinary course of business;
(g) LRC will use its reasonable best efforts to do all such other
acts and things as may be necessary or required in order to give
effect to the Offer and, without limiting the generality of the
foregoing, LRC will use its reasonable best efforts to apply for
and/or obtain such other consents, orders and approvals as
counsel may advise are necessary or desirable for the
implementation of the Offer, including those referred to in
Section 5.1 hereof;
(h) LRC will use its reasonable best efforts to cause each of the
conditions precedent set forth in Article 5 hereof to be
complied with on or before the date of closing of the Offer and
will not take or fail to take any reasonable action reasonably
within its control which would result in a condition precedent
to the Offer not being satisfied;
(i) LRC agrees that it shall not solicit any offers to purchase any
of the LRC Shares or any of its material assets and will not
initiate or encourage directly or indirectly, any discussions or
negotiations with any third party with respect to such a
transaction or similar business combination during the period
commencing on the date hereof and ending on the date of
termination of this Agreement;
(j) LRC and any other party acting jointly or in concert with LRC
shall not acquire or dispose of securities of MEII, directly or
indirectly, except pursuant to existing rights and obligations,
during the period commencing on the date hereof and ending on
the date of termination of this Agreement;
(k) LRC agrees to use its best reasonable efforts to assist MEII to
successfully complete the Offer, including co-operating in
making all requisite regulatory filings and mailings to
shareholders;
(l) LRC will not take any action of any kind which may reduce the
likelihood of success of or delay the take up and payment of LRC
Shares deposited under the Offer or the completion of the Offer,
including but not limited to any action to solicit, initiate,
assist or encourage inquiries, submissions, proposals or offers
from any other Person, entity or group relating to:
(i) the direct or indirect acquisition or disposition of all or any
shares or securities of LRC; or
(ii) any amalgamation, merger, sale (other than a sale in the
ordinary course of business consistent with past practice) of
any material part of the LRC Assets, take-over bid, plan of
arrangement, reorganization, recapitalization, liquidation or
winding-up or reverse take-over or other business combination or
similar transaction involving LRC or any of its material assets;
(m) LRC will use its reasonable best efforts to obtain the consents
required as a result of the transactions provided for herein
pursuant to any contract to which LRC is a party or by which it
is bound;
(n) LRC will use its reasonable best efforts to do all such other
acts and things as may be necessary or required in order to give
effect to the Offer and, without limiting the generality of the
foregoing, will use its best efforts to apply for and obtain
such consents, orders and approvals as it determines are
necessary or desirable for the implementation of the Offer;
(o) LRC will use its reasonable best efforts to obtain the execution
of the Lock-Up Agreement by the Principal Shareholders and the
deposit of LRC Shares pursuant to the terms thereof;
(p) LRC will use all reasonable efforts to cause each of the
conditions precedent set forth in Article 5 hereof to be
complied with on or before the commencement of the Offer; and
(q) other than the right to convert LRC Options into MEII Options
and except as set out in the LRC Disclosure Schedule, neither
LRC nor any of the LRC Subsidiaries shall adopt or amend or make
any contribution to any bonus, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive
compensation, other compensation or other similar plan,
agreement, trust, fund or arrangements for the benefit of
employees, except as is necessary to comply with law or with
respect to existing provisions of any such plans, programs,
arrangements or agreements.
ARTICLE 5
CONDITIONS
SECTION 5.1 MEII CONDITIONS PRECEDENT. Notwithstanding Section 2.1, MEII shall
not be required to make the Offer (and MEII may, without prejudice to any
other rights, by notice to LRC, terminate this Agreement) if:
prior to the making of the Offer:
(i) any act, action, suit or proceeding shall have been taken before
or by any domestic or foreign arbitrator, court or tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official or private person (including, without
limitation, any individual, corporation, firm, group or other
entity) in Canada or elsewhere, whether or not having the force
of law; or
(ii) any law, regulation, rule or policy shall have been proposed,
enacted, promulgated or applied, in the case of (i) above:
(1) to cease trade, enjoin, prohibit or impose material limitations
or conditions on the purchase by or the sale to MEII of the LRC
Shares or the rights of MEII to own or exercise full rights or
ownership of the LRC Shares; or
(2) which as resulted in, or if the Offer was consummated would
result in, a Material Adverse Change;
provided that if in the judgment of MEII, acting reasonably,
there is a reasonable risk that circumstances referred to above
would result in the occurrence of any of the consequences
referred to above and further
provided, however, MEII shall not be required to make the
Offer as a result of any action, suit or proceeding taken by
a private Person only if such act, action, suit or proceeding
shall be resolved in favour of private Person as evidenced by
an order, ruling or decision by any domestic or foreign
arbitrator, court or tribunal or governmental agency or other
regulatory authority or administrative agency or commission
in Canada or elsewhere having jurisdiction in respect of MEII
the Offer, or if, in the opinion of MEII acting reasonably,
there is a reasonable risk that such act, action, suit or
proceeding will be so resolved in favour of such private
Person;
at the time MEII proposes to make the Offer, there exists any
prohibition at law against MEII making the Offer or taking up
and paying for the LRC Shares under the Offer;
LRC shall not have taken all steps requested by MEII, acting
reasonably (other than steps which would have a material adverse
effect on LRC's business if the Offer was not completed), in
connection with the Offer, including, without limitation, any
steps required up to the date of the Offer to satisfy the
regulatory requirements or approvals (domestic or foreign) in
order for MEII to purchase the LRC Shares;
any representation or warranty of LRC or the Principal
Shareholders in this Agreement is not, as of the date made, true
and correct, the result of which is a Material Adverse Change to
LRC or its business and operations;
LRC shall not have performed or complied in all material
respects with any of its covenants or agreements herein and such
non-performance or non-compliance gives rise to a Material
Adverse Change;
LRC or the Principal Shareholders shall not have applied to the
ASC (and any other applicable regulatory authority) for the
release from escrow of the LRC Shares currently being held in
escrow;
NASDAQ shall not have conditionally approved the listing thereon
of the MEII Shares to be issued in connection with the Offer,
subject to compliance with the usual requirements of NASDAQ;
all other consents, orders, regulations and approvals, including
regulatory and judicial approvals and orders and all other
consents, orders and approvals required or necessary for the
making of the Offer provided for in the Offer shall not have
been obtained or received from the persons, authorities or
bodies having jurisdiction in the circumstances; or
there shall have been no Material Adverse Change since the date
hereof with respect to MEII or the MEII Subsidiaries on a
consolidated basis or LRC or the LRC Subsidiaries on a
consolidated basis or any occurrences or circumstances which
have resulted or might reasonably be expected to result in a
Material Adverse Change thereto.
The foregoing conditions are for the sole benefit of MEII, may
be waived by MEII at any time and shall be deemed to have been
waived by the making of the Offer.
SECTION 5.2 LRC CONDITIONS PRECEDENT. LRC's obligations hereunder to complete
the transactions contemplated by this Agreement shall be subject to the
satisfaction of the following conditions by June 16, 2000:
(a) the Offer shall have been made in accordance with this Agreement;
NASDAQ shall have conditionally approved the listing thereon of the
MEII Shares to be issued in connection with the Offer including those
issuable upon the exercise of the Series C Warrants, subject to
compliance with the usual requirements of NASDAQ;
all other consents, orders, regulations and approvals, including
regulatory and judicial approvals and orders and all other consents,
orders and approvals required or necessary for the making of the Offer
provided for in the Offer shall have been obtained or received from the
persons, authorities or bodies having jurisdiction in the
circumstances;
thereshall be no (i) action, suit or proceeding taken or commenced
before or by any domestic or foreign arbitrator, court or tribunal or
governmental agency or other regulatory authority or administrative
agency or commission or by any elected or appointed public official or
private person (including, without limitation, any individual,
corporation, firm, group or other entity) in Canada or elsewhere,
whether or not having the force of law, or (ii) any law, regulation,
rule or policy proposed, enacted, promulgated or applied:
(1) to cease trade, enjoin, prohibit or impose material limitations or
conditions on the purchase by or the sale to MEII of the LRC Shares or
the rights of MEII to own or exercise full rights or ownership of the
LRC Shares; or
(2) which has resulted in, or if the Offer was consummated would result in,
a Material Adverse Change;
there shall have been no Material Adverse Change since the date hereof
with respect to MEII or the MEII Subsidiaries on a consolidated basis
or LRC or the LRC Subsidiaries on a consolidated basis or any
occurrences or circumstances which have resulted or might reasonably be
expected to result in a Material Adverse Change thereto; and
any representation or warranty of MEII in this Agreement is, as of the
date made, true and correct.
SECTION 5.3 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligation of each of
the LRC and MEII to complete the transactions contemplated by this
Agreement is further subject to the condition, which may be waived by each
of LRC or MEII without prejudice to its right to rely on any other
condition in their respective favour that the covenants of the other party
hereto to be performed on or before the commencement of the Offer pursuant
to the provisions of this Agreement shall have been duly performed by such
other party and that, except as affected by the transactions contemplated
by this Agreement, the representations and warranties of such other party
shall be true and correct as at the commencement of the Offer, with the
same effect as if such representations and warranties had been made at, and
as of, such time and each of LRC and MEII shall receive a certificate,
dated the commencement of the Offer, of a senior officer of LRC or MEII, as
the case may be, to such effect.
ARTICLE 6
TERMINATION
SECTION 6.1 RIGHTS OF TERMINATION. (1) If any of the conditions contained in
Sections 5.1 shall not be fulfilled or performed on or before June 16,
2000, MEII may terminate this Agreement by notice to LRC, or if any of the
conditions contained in Sections 5.2 shall not be fulfilled or performed on
or before June 16, 2000, either of LRC or MEII, as applicable, may
terminate this Agreement by notice to the other party hereto, and in such
event LRC and MEII shall be released from all obligations under this
Agreement (with the exception of the obligations contained in Section
7.10), all rights of specific performance by any such party shall terminate
and, unless such party can show that the condition or conditions the
non-performance of which has caused such party to terminate this Agreement
were reasonably capable of being performed by the other party, then the
other party shall also be released from all obligations hereunder; provided
that such party can show that the other party could reasonably have
performed such condition or conditions, then that party shall not be
released from its obligations hereunder, and further provided that any of
such conditions may be waived in full or in part by any of the parties
without prejudice to its rights of termination in the event of the
non-fulfillment or non-performance of any other condition.
(2) TERMINATION BY CONSENT. This Agreement may be terminated, at any
time with the mutual consent of all of the parties hereto.
(3) OUTSIDE DATE. This Agreement shall terminate if the Offer has not
been made and the Take-Over Bid Circular has not been mailed by June 16, 2000.
SECTION 6.2 NOTICE OF UNFULFILLED CONDITIONS. If any party shall determine at
any time prior to the completion of the Offer that it intends to refuse to
consummate any of the transactions contemplated hereby because of any
unfulfilled or unperformed condition precedent contained in this Agreement
on the part of the other party to be
fulfilled or performed, such party shall so notify the other party
forthwith upon making such determination in order that any one or more
of the other parties shall have the right and opportunity to take such
steps, at its own expense, as may be necessary for the purpose of
fulfilling or performing such condition precedent within a reasonable
period of time, but in any event no later than June 16, 2000.
SECTION 6.3 BREAK-UP FEE. Notwithstanding anything to the contrary contained
herein, the board of directors of LRC may withdraw, modify or change any
recommendation regarding the Offer if, in the opinion of the board of
directors of LRC, acting reasonably, and upon the written advice of
counsel, such withdrawal, modification or change is required in the
discharge of the fiduciary duties of the board of directors of LRC.
Notwithstanding any termination of this Agreement, if the board of
directors of LRC withdraws, modifies or changes its recommendation
regarding the Offer, other than by mutual agreement of the parties, or as a
result of any condition precedent in Section 5.2 not being fulfilled or as
a result of a Material Adverse Change in respect of MEII and the MEII
Subsidiaries on a consolidated basis, LRC shall forthwith pay MEII a
break-up fee of $500,000.
ARTICLE 7
GENERAL
SECTION 7.1 NOTICES. All notices which may or are required to be given pursuant
to any provision of this Agreement shall be given or made in writing and
shall be served personally or by telecopy, in each case addressed to the
attention of the following persons at:
in the case of MEII:
Med-Emerg International Inc.
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Attention: President
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Suite 2800
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Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
in the case of LRC:
Laser Rejuvenation Clinics Ltd.
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Attention: President
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
in the case of Coren:
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Suite ▇▇▇▇
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Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
in the case of Woo:
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Suite 401
2675 - 36th Street N.E.
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Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Any such communication so given or made shall be deemed to have been given or
made and to have been received on the day of delivery if delivered, or on the
day of faxing or sending by other means of recorded electronic communication,
provided that such day in either event is a Business Day and the communication
is so delivered, faxed or sent before 4:30 p.m. (local time at place of receipt)
on such day, with a confirmation of receipt printed from the sender's machine.
Otherwise, such communication shall be deemed to have been given and made and to
have been received on the next following Business Day. Any such communication
sent by mail shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof; provided,
however, that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made or to have been
received only upon actual receipt.
SECTION 7.2 ASSIGNMENT. A party may not assign its rights or obligations under
this Agreement without the prior written consent of the other parties
hereto, which consent shall not be unreasonably withheld.
SECTION 7.3 BINDING EFFECT. This Agreement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
SECTION 7.4 WAIVER. Any waiver or release of any of the
provisions of this Agreement, to be effective, must be in writing and
executed by the party granting such waiver or release.
SECTION 7.5 GOVERNING LAW. This Agreement shall be governed by and be construed
in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein and shall be treated in all respects as an
Ontario contract.
SECTION 7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. Counterparts
may executed either in original or faxed form and the parties adopt any
signatures received by a receiving fax machine as original signatures of
the parties; provided, however, that any party providing its signature in
such manner shall promptly forward to the other party an original of the
signed copy of this Agreement which was so faxed.
SECTION 7.7 ENTIRE AGREEMENT. This Agreement, the Lock-Up Agreement,
Non-Competition Agreement and Escrow Agreement constitute the entire
agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, between the parties hereto with
respect to the subject matter hereof.
SECTION 7.8 EXPENSES. All expenses incurred in connection with this Agreement
and the transactions contemplated hereby and thereby shall be paid by the
party incurring such expense. The provisions of this Section 7.8 shall
survive the termination of this Agreement.
SECTION 7.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
SECTION 7.10 CONFIDENTIALITY. The parties to this Agreement agree to hold in
confidence all confidential information disclosed to them by the other
party or parties or as a result of these negotiations, except for any
information that (a) was or is in the public domain, (b) was previously
known to the other party, as the case may be, (c) becomes generally
available to the public other than through the breach of any obligation of
confidentiality by any party hereto, (d) is obtained in good faith from a
third party, (e) is independently developed by the other party, or (f) the
disclosure of which is required by operation of law. The parties to this
Agreement also agree that, without the express written consent of the other
parties, they shall not disclose to any third party (other than to their
respective advisors, officers, directors and subsidiaries) the confidential
information of the other party. The parties to this Agreement further agree
that the confidentiality provisions of this Agreement shall apply to its
employees and advisors and to advise such employees and advisors of the
confidential nature of such information. If the transaction contemplated
herein is not consummated, the parties to this Agreement agree that they
will not, directly or indirectly, use such confidential information for
their own benefit, and the parties shall, upon written request of the other
party, return, and shall cause their advisors to return, to the other party
all such confidential information in their possession and shall destroy,
and shall cause their advisors to destroy, portions of any notes,
projections and other internally-created documents to the extent they
contain such confidential information.
SECTION 7.11 PRESS RELEASES. MEII and LRC agree that, other than as may be
required by applicable law or the requirements of the ASE, CDNX or NASDAQ,
all press releases issued in connection with the Offer shall be joint press
releases of such companies.
SECTION 7.12 NO THIRD PARTY BENEFICIARIES. Nothing contained herein shall confer
any rights or benefits on any third party.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first written above.
MED-EMERG INTERNATIONAL INC.
Per:
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Authorized Signing Officer
Per:
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Authorized Signing Officer
LASER REJUVENATION CLINICS LTD.
Per:
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Authorized Signing Officer
Per:
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Authorized Signing Officer
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