ASSET PURCHASE AGREEMENT
as of June 28, 2002
between
Dumex Medical Inc., Dumex Medical Surgical Products Limited,
1013172 Ontario Limited and Dumex Quebec Inc.
- and -
4087755 Canada Inc.
ARTICLE 1 INTERPRETATION...........................................2
1.1 Definitions..............................................2
1.2 Statutes.................................................8
1.3 Headings.................................................8
1.4 Reference................................................8
1.5 Number and Gender........................................8
1.6 Entire Agreement.........................................8
1.7 Amendment................................................8
1.8 Waiver of Rights.........................................9
1.9 Schedules................................................9
1.10 Applicable Law...........................................9
1.11 Currency.................................................9
1.12 Third Party Beneficiaries................................9
1.13 Appeal of Order..........................................9
ARTICLE 2 PURCHASE AND SALE.......................................10
2.1 Purchase and Sale of Purchased Assets...................10
2.2 Purchase Price..........................................11
2.3 Deposits................................................11
2.4 Payment of Purchase Price...............................12
2.5 Taxes...................................................13
2.6 Assumption of Liabilities...............................14
2.7 Offer of Employment.....................................14
2.8 Place of Closing........................................14
2.9 Seller's Actions at Closing.............................14
2.10 Buyer's Actions at Closing..............................15
2.11 Adoption by Receiver....................................15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES..........................16
3.1 Representations and Warranties of the Seller............16
3.2 Representations and Warranties of the Buyer.............17
3.3 Interpretation..........................................18
3.4 Commission..............................................18
3.5 Survival of Representations and Warranties..............18
ARTICLE 4 CONDITIONS PRECEDENT....................................18
4.1 Conditions of Closing...................................18
4.2 Conditions of Closing for Buyer.........................19
4.3 Conditions of Closing for Seller........................21
4.4 Waiver..................................................21
ARTICLE 5 Covenants...............................................21
5.1 Break-Up Fee............................................21
5.2 No-Shop.................................................22
5.3 Change of Name..........................................22
5.4 Post-Closing............................................22
ARTICLE 6 GENERAL.................................................22
6.1 Expenses................................................22
6.2 Time....................................................22
6.3 Notices.................................................23
6.4 Public Announcements....................................24
6.5 Assignment..............................................24
6.6 Further Assurances......................................24
6.7 Remedies Cumulative.....................................24
6.8 Counterparts............................................25
6.9 Facsimile Execution.....................................25
ARTICLE 7 Termination and expenses................................25
7.1 Termination of Agreement by the Buyer...................25
7.2 Termination of Agreement by the Seller..................25
7.3 Effect of Termination...................................25
SCHEDULES
Schedule b Receiver's Certificate
Schedule c leased premises
Schedule D Permitted Encumbrances
Schedule E Accounts Receivable
Schedule F Prepaid Expenses
Schedule g Inventory
Schedule h Fixed Assets AND EQUIPMENT
SCHEDULE i CONTRACTS AND EQUIPMENT leases
schedule J subsidiary assets
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 28th day of June, 2002
BETWEEN:
Dumex Medical Inc., a corporation incorporated under the
laws of Canada, Dumex Medical Surgical Products Limited, a
corporation incorporated under the laws of Canada, 1013172
Ontario Limited, a corporation incorporated under the laws
of Ontario, and Dumex Quebec Inc., a corporation
incorporated under the laws of Canada
(collectively, the "Dumex Entities")
OF THE FIRST PART
- and -
4087755 Canada Inc., a corporation incorporated under the
laws of Canada
(the "Buyer")
OF THE SECOND PART
RECITALS:
1. The Buyer wishes to purchase all of the right, title and interest, if
any, of the Dumex Entities in and to the Purchased Assets (as
hereinafter defined), subject to the terms and conditions of this
Agreement.
2. In furtherance of the Transaction (as hereinafter defined), X. Xxxxxx
& Partners Inc., or such Person as is otherwise agreed upon by the
Parties, shall be appointed as interim receiver (the "Interim
Receiver") of the property, assets and undertaking of the Dumex
Entities pursuant to the provisions of the Bankruptcy and Insolvency
Act, R.S.C. 1985, c. B-3, as amended, for the purpose of adopting this
Agreement and completing the Transaction as Seller.
3. Pursuant to the Approval and Vesting Order (as hereinafter defined),
the Interim Receiver shall be authorized and directed to adopt this
Agreement and to complete the Transaction contemplated by this
Agreement and all right, title and interest of the Seller in and to
the Purchased Assets shall be vested in the Buyer at Closing, free and
clear of any Encumbrances (as hereinafter defined) save and except for
the Permitted Encumbrances (as hereinafter defined) and Priority
Claims (as hereinafter defined).
IN CONSIDERATION of the premises and the mutual agreements contained in this
Agreement, and of other consideration (the receipt and sufficiency of which are
acknowledged by each Party), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement,
"Adoption Agreement" has the meaning given thereto in Section 2.11;
"Agreement" means this Asset Purchase Agreement and all attached schedules,
in each case as the same may be supplemented, amended, restated or replaced
from time to time;
"Appeal Proceedings" means any proceeding occurring after the Court has
issued the Approval and Vesting Order capable of resulting in the appeal,
amendment, nullification, quashing or revocation of the Approval and
Vesting Order;
"Applicable Law" means any domestic or foreign statute, law (including the
common law), ordinance, rule, regulation, restriction, regulatory policy or
guideline, by-law (zoning or otherwise), Order, or any consent, exemption,
approval or License of any Governmental Authority, that applies in whole or
in part to the Transaction, the Seller, the Buyer, any of the Dumex
Entities, the Business, the way the Business is carried on or to any of the
Purchased Assets;
"Appointment Order" means the order of the Court appointing X. Xxxxxx &
Partners Inc., or such Person as is otherwise agreed upon by the Parties,
as Interim Receiver of all of the assets, property and undertaking of the
Dumex Entities, including the Purchased Assets pursuant to section 47.1 of
the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended;
"Approval and Vesting Order" means an order of the Court in the proceedings
in which the Interim Receiver shall be appointed as interim receiver of the
assets, property and undertaking of the Dumex Entities, on terms acceptable
to the Buyer and the Seller acting reasonably, approving this Agreement and
the completion of the Transaction and vesting in the Buyer as of Closing
all right, title and interest of the Seller in and to the Purchased Assets
free and clear of any Encumbrances save and except for the Permitted
Encumbrances and Priority Claims, and approving and authorizing the payment
and/or assumption of indebtedness referred to in Section 2.4;
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"Assumed Liabilities" means the obligations owed by any of the Dumex
Entities specifically agreed to be assumed by the Buyer in its sole
discretion on or before the Closing Date;
"Bank" means Laurentian Bank of Canada;
"Business" means the business carried on by the Dumex Entities;
"Business Day" means a day other than a Saturday or Sunday, on which
chartered banks are open for the transaction of domestic business in
Toronto, Ontario;
"Buyer" has the meaning given thereto in the introduction to this
Agreement;
"Closing" means the completion of the sale to and purchase by the Buyer of
the Purchased Assets and the completion of all other transactions
contemplated by this Agreement which are to occur contemporaneously with
the purchase and sale of the Purchased Assets;
"Closing Date" means the earlier of: (i) the date that is two Business Days
following the date upon which the Court has issued the Approval and Vesting
Order and the same is final and no longer subject to Appeal Proceedings;
(ii) the first Business Day following the thirty-first day after the
granting of the Approval and Vesting Order; or (iii) such other Business
Day as the Parties agree in writing as the date that the Closing shall take
place;
"Closing Document" means any document delivered at or subsequent to the
Closing Time as provided in or pursuant to this Agreement;
"Closing Time" means 2 o'clock p.m. (Toronto time) on the Closing Date or
such other time on the Closing Date as the Parties agree in writing that
the Closing shall take place;
"Court" means the Ontario Superior Court of Justice (Commercial List);
"Delayed Closing Date" has the meaning given thereto in Section 1.13;
"Deposits" has the meaning given thereto in Section 2.3;
"Derma" means Derma Sciences, Inc., a Pennsylvania corporation and the
registered and beneficial owner of all the issued and outstanding shares of
the Buyer;
"Due Diligence Period" means from June 20, 2002 to 9 a.m. (Toronto time) on
July 9, 2002;
"Dumex" means Dumex Medical Inc.;
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"Dumex Entities" has the meaning given thereto in the introduction to this
Agreement;
"Encumbrances" means with respect to the Purchased Assets the estates,
titles, rights, benefits, interests, claims, liens, hypothecs, security
interests, trusts or deemed trusts, whether statutory or otherwise,
assignments, executions, judgments, rights of distress, legal, equitable or
contractual set-offs, options, adverse claims, levies, agreements, taxes,
disputes, debts, charges, mortgages, encumbrances or any other rights or
claims howsoever arising, whether contractual, statutory, by operation of
law or otherwise, or whether or not they have attached or been perfected,
registered or filed, whether secured or unsecured or otherwise, by or of
all Persons, including, any right, title interest of the Bank;
"First Deposit" has the meaning given thereto in Section 2.3;
"Governmental Authority" means any domestic or foreign government whether
federal, provincial, state, local or municipal and any governmental agency,
governmental authority, governmental tribunal or governmental commission of
any kind whatever;
"Guarantor" means Xxxxxxx Xxxxxxx;
"Including" means including without limitation and the term "including"
shall not be construed to limit any general statement which it follows to
the specific or similar items or matters immediately following it;
"Interim Receiver" has the meaning given thereto in Recital 2;
"Interim Receiver's Certificate" means a certificate executed by the
Interim Receiver and delivered to the Buyer pursuant to subsection 2.9(a)
in the form set forth in Schedule B;
"Leased Premises" means the premises leased by any of the Dumex Entities
listed in Schedule C;
"License" means any license, permit, approval, right, privilege, concession
or franchise issued, granted, conferred or otherwise created by a
Governmental Authority;
"Offer of Finance" means the operative agreement with respect to the
revolving credit facility and term loan to be entered into by and between
the Bank, the Guarantor, Derma and the Buyer on July 8, 2002 (unless
otherwise agreed to be extended) on the terms and conditions and in such
form as is agreed to by the Bank, the Buyer, Derma and the Guarantor, the
effectiveness of which shall be conditioned upon the Closing;
"Operations Agreement" means the operative agreement with respect to
conduct of the Business to be entered into by and between the Bank, Derma,
the Guarantor
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and the Dumex Entities on July 8, 2002 (unless otherwise agreed to be
extended) on the terms and conditions and in such form as is agreed to by
the Bank, Derma, the Guarantor and Dumex Entities;
"Order" means any order, judgment, injunction, decree, award or writ of any
court, tribunal, arbitrator, Governmental Authority or other Person;
"Parties" means the Buyer and the Seller collectively, and "Party" means
any one of them;
"Permitted Encumbrances" means the Encumbrances with respect to the
Purchased Assets specifically listed in Schedule D to be provided at
Closing;
"Person" shall be broadly interpreted and includes an individual, body
corporate, partnership, joint venture, trust, association, unincorporated
organization or other business entity, and any Governmental Authority or
any other entity recognized by law;
"Priority Claims" means any estates, titles, rights, benefits, interests,
claims, liens, hypothecs, security interests, mortgages, charges, trusts or
deemed trusts, whether statutory or otherwise, assignments, executions,
judgments, rights of distress, legal, equitable or contractual set-offs,
options, adverse claims, levies, agreements, taxes, disputes, debts,
encumbrances or any other rights or claims against or to any of the
Purchased Assets, howsoever arising, whether contractual, statutory, by
operation of law or otherwise and whether they have attached or been
perfected, registered or filed, which ranks pari passu with or in priority
to those of the Bank;
"Purchased Assets" means the following assets of the Business carried on by
the Dumex Entities on the Closing Date:
(i) "Accounts Receivable" means all those accounts receivable due, owing
or accruing due to any of the Dumex Entities (and specifically
including any and all deposits received from customers of the Business
and amounts due from affiliates of the Dumex Entities) in connection
with the Business as at the Closing Date including those accounts
receivables specifically listed in Schedule E;
(ii) "Prepaid Expenses" means any of the Dumex Entities' rights in respect
of prepayments made for expenses and purchases, in connection with the
Business, exclusive of income or other taxes which are personal to the
Dumex Entities or not incurred in connection with the Business,
including those Prepaid Expenses specifically listed in Schedule F;
(iii) "Inventory" means all inventories wherever situated, of raw
materials, work-in-progress, finished goods, goods in transit,
operating supplies and packaging materials of or relating to the
Business (including consignment inventory), including the inventory
reflected on the Balance Sheet of
5
Dumex as of May 30, 2002 and the inventory specifically listed in
Schedule G;
(iv) "Fixed Assets and Equipment" means all the fixed assets, machinery,
equipment, computers, hardware and software, fixtures, furniture,
furnishings, vehicles, boilers, material handling equipment, parts,
tools, jigs, discs, molds, patterns and tooling owned by any of the
Dumex Entities and used in the Business and other tangible property
(other than Inventory) owned by any of the Dumex Entities and used in
the Business on the Closing Date, including any of the rights of the
Dumex Entities in, to or with respect to the Fixed Assets and
Equipment specifically listed in Schedule H;
(v) "Contracts" and "Equipment Leases" means all right, title and interest
of any of the Dumex Entities in and to and benefits under the
contracts and the equipment leases listed in Schedule J, under all
service contracts relating to any equipment leases or any equipment or
other assets covered thereby and under any leases for real property or
of motor vehicles listed in Schedule I and all options to purchase
thereunder;
(vi) "Warranty Rights" means the full benefit of all warranties and
warranty rights (implied, express or otherwise) against manufacturers
or sellers which apply to any of the Purchased Assets, including all
warranty claims outstanding at the Closing Date;
(vii) "Leases" means the existing leases with respect to the Leased
Premises including all Seller's benefits under such leases and with
respect to all leasehold improvements and fixtures located on, in or
about each of the Leased Premises and all appurtenances thereto except
to the extent that new leases therefor are negotiated by Buyer, as
determined by Buyer prior to the Closing Date;
(viii) "Patents" means all patents and applications for patents, all
reissues, divisions, continuations and extensions thereof, and all
licenses and other rights relating to patents, inventions and
discoveries owned or held by any of the Dumex Entities and any of
their rights in, to or with respect to same;
(ix) "Trade Marks" and "Copyrights" means all trade-marks, trade names and
related registrations of any of the Dumex Entities; all designs,
logos, graphics, commercial symbols and rights for all intellectual
property of any of the Dumex Entities; all copyrights, copyright
registrations and applications therefor; and all renewals,
modifications and extensions of any of the aforesaid rights, and all
licenses and other rights relating thereto and any rights of the Dumex
Entities in, to or with respect to same;
(x) "Technology" means all Technical Information of any of the Dumex
Entities and all computer software licenses and agreements to which
any
6
of the Dumex Entities is a party, including all licenses, agreements
and other contracts or commitments relating to any of the foregoing to
which any of the Dumex Entities is a party, and in any case used in
relation to the conduct of the Business;
(xi) "Goodwill" means the goodwill of the Business and information and
documents relevant thereto, including books, records, lists of
customers and suppliers, credit information, and including the right
of the Buyer to represent itself as carrying on the Business in
succession to the Dumex Entities and all right, title and interest of
any of the Dumex Entities in, to and in respect of all names used by
any of the Dumex Entities in connection with the Business, including
the name "Dumex Medical" and all styles and variations thereof and
trade names related thereto;
(xii) "Subsidiary Assets" means either the assets or the issued and
outstanding shares of each of Dumex Medical Corp. and Dumex Medical
Holding Corp., as determined by the Buyer prior to the Closing Date,
and the issued and outstanding shares of Nantong Dumex Medical
Products Company, including those assets and/or shares listed in
Schedule J;
(xiii) "Other Assets" means the Licenses and financial records of the Dumex
Entities relating to the Business and all their respective right,
interest and benefit, if any, thereunder and to and in the domain
names, telephone numbers and facsimile numbers used by any of them in
the conduct of the Business and all other properties, assets and
undertakings of whatever nature or kind;
provided, however, that the Buyer may elect, on or before the Closing
Date, to exclude from the Purchased Assets any of the foregoing
assets;
"Purchase Price" means the purchase price to be paid by the Buyer to the
Seller for the Purchased Assets as provided in Section 2.4;
"RoyNat" means RoyNat Capital Inc.;
"RoyNat Priority Loan" means the indebtedness of the Dumex Entities to
RoyNat which is secured in priority to the security of the Bank as
specifically set forth in Section 3.1 of the Priorities Agreement dated as
of 30 April 2001 between the Bank, RoyNat, Business Development Bank of
Canada and the Dumex Entities;
"Second Deposit" has the meaning given thereto in Section 2.3;
"Seller" means the Dumex Entities, and upon its appointment pursuant to the
Appointment Order, the Interim Receiver;
"Technical Information" means all right, title and interest in and to all
know-how of any of the Dumex Entities including:
7
(a) all information of a scientific, technical or business nature whether
in oral, written, graphic, machine readable, electronic or physical
form; and
(b) all patterns, plans, designs, design rights, art, research data,
research plans, trade secrets and other proprietary know-how,
processes, formulas, drawings, technology, computer software and
related manuals, unpatented blue prints, flow sheets, equipment and
parts lists, instructions, manuals, data, records and procedures;
"Termination Event" has the meaning given thereto in Section 2.3;
"Third Deposit" has the meaning given thereto in Section 2.3;
"Transaction" means the purchase and sale of the Purchased Assets and other
transactions contemplated by this Agreement;
"Transaction Costs" has the meaning given thereto in Section 2.4; and
"Transfer Taxes" has the meaning given thereto in subsection 2.5(b).
1.2 Statutes
Unless specified otherwise, reference in this Agreement to a statute refers
to that statute as it may be amended, or to any restated or successor
legislation of comparable effect.
1.3 Headings
The division of this Agreement into articles, sections, subsections and
schedules and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.
1.4 References
References to a specified article, section, subsection or schedule shall be
construed as references to that specified article, section, subsection or
schedule to this Agreement unless the context otherwise requires.
1.5 Number and Gender
In this Agreement, words in the singular include the plural and vice-versa
and words in one gender include all genders.
1.6 Entire Agreement
This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior agreements,
negotiations, discussions and understandings, written or oral, between the
Parties.
8
1.7 Amendment
This Agreement may be amended, modified or supplemented only by a written
agreement signed by each Party.
1.8 Waiver of Rights
Any waiver of, or consent to depart from, the requirements of any provision
of this Agreement shall be effective only if it is in writing and signed by the
Party giving it, and only in the specific instance and for the specific purpose
for which it has been given. No failure on the part of any Party to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver of such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of any
other right.
1.9 Schedules
The following Schedules form part of this Agreement:
Schedule B Interim Receiver's Certificate
Schedule C Leased Premises
Schedule D Permitted Encumbrances
Schedule E Accounts Receivable
Schedule F Prepaid Expenses
Schedule G Inventory
Schedule H Fixed Assets and Equipment
Schedule I Contracts and Equipment Leases
Schedule J Subsidiary Assets
1.10 Applicable Law
This Agreement shall be governed by, and interpreted and enforced in
accordance with, the laws in force in Ontario (excluding any conflict of laws
rule or principle which might refer such interpretation to the laws of another
jurisdiction). Each Party irrevocably submits to the exclusive jurisdiction of
the courts of Ontario with respect to any matter arising hereunder or related
hereto.
1.11 Currency
Unless specified otherwise, all statements of or references to dollar
amounts in this Agreement are to Canadian dollars.
1.12 Third Party Beneficiaries
Nothing in this Agreement or in any Closing Document is intended expressly
or by implication to, or shall, confer upon any Person other than the Parties
and their representatives, any rights or remedies of any kind.
9
1.13 Appeal of Order
In the event that the Appointment Order and/or the Approval and Vesting
Order has, prior to the date set forth in (ii) of the definition of Closing Date
become subject to Appeal Proceedings, the Closing Date shall be automatically
rescheduled to occur on the 14th day following the date of the service of notice
of the Appeal Proceeding upon the Interim Receiver (the "Delayed Closing Date").
If such Appeal Proceedings have not been finally settled among the parties
thereto by the Delayed Closing Date, then each of the Seller and the Buyer shall
be relieved of their obligations under this Agreement and the Second Deposit and
Third Deposit, including accrued interest, shall be returned to the Buyer.
ARTICLE 2 PURCHASE AND SALE
2.1 Purchase and Sale of Purchased Assets
(a) The Seller shall sell to the Buyer and the Buyer shall purchase all of
the right, title and interest, if any, of the Seller in and to the
Purchased Assets pursuant to the Approval and Vesting Order and the
Buyer shall pay the Purchase Price and assume the Assumed Liabilities
on the Closing Date, subject to the terms and conditions contained in
this Agreement.
(b) The Buyer hereby acknowledges to and in favour of the Seller that the
Buyer has conducted its own investigations and inspections of the
Purchased Assets and that the Buyer is responsible to conduct its own
inspections and investigations of all matters and things connected
with or in any way related to the Purchased Assets, that the Buyer has
satisfied itself with respect to the Purchased Assets and all matters
and things connected with or in any way related to the Purchased
Assets, that the Buyer has relied entirely upon its own investigation
and inspections in entering into this Agreement, that the Buyer is
purchasing the Purchased Assets on an "as is, where is" basis as at
the Closing Date, that the Buyer will accept the Purchased Assets in
their present state, condition and location and that the Buyer hereby
acknowledges that the Seller has made no representations, warranties,
conditions, statements, promises or collateral agreements, express or
implied save and except as are contained herein, with respect to the
Purchased Assets, including as to title, encumbrances, assignability,
description, fitness for purpose, merchantability, quantity, condition
or the quality of any matter or thing whatsoever, and with respect to
shares of subsidiaries of any of the Dumex Entities, the number and
the class thereof and any of the rights, privileges or restrictions
and conditions which might attach thereto, the issuance value,
subscription, priority, restriction, donation, reduction, conversion
or quality thereof, any matters relating to corporate governance, any
transfers, put or call options or other rights or restrictions which
might exist by contract or law which might prevent, limit or restrict
the Seller's ability to transfer the shares or the Seller's right to
sell, assign, transfer or convey any of the Purchased Assets. Without
limiting the generality of the foregoing, any and all conditions,
10
warranties and representations expressed or implied pursuant to the
Sale of Goods Act (Ontario) do not apply to the sale of the Purchased
Assets and have been waived by the Buyer. Except as expressly set
forth in this Agreement, no adjustments shall be allowed to the Buyer
for any changes in condition, quality or quantity of the Purchased
Assets to and including the Closing Date. The Buyer acknowledges that
the Seller is not required to inspect or count, or provide any
inspection or counting, of the Purchased Assets or any parts thereof
and the Buyer shall be deemed, at its own expense, to have relied
entirely upon its own inspection and investigation of the Purchased
Assets. Nothing contained herein shall require the Seller following
Closing to take possession of, protect, preserve or otherwise
safeguard any Purchased Assets which are not assignable without the
consent of any Person.
(c) The Buyer acknowledges that it shall be the Buyer's responsibility to
obtain at its own expense (other than payment of Transaction Costs
discussed in Section 2.4) any consents, approvals or any further
documentation or assurances which may be required to carry out the
terms of this Agreement, including obtaining any rights in and to any
assets subject to lease or any of the Purchased Assets which are not
assignable without the consent or other action of a third party (or
parties). The Seller agrees to cooperate to obtain any such consents,
approvals, and it shall do such acts and shall execute such further
documents, conveyances, deeds, assignments, transfers and the like,
and will cause the doing of such acts and will cause the execution of
such further documents as are within its power, as the Buyer may
reasonably request be done and or executed, in order to carry out the
terms of this Agreement.
(d) Subject to Sections 2.4 and 6.1 hereof, the Buyer shall assume at its
own cost complete responsibility for compliance with all Applicable
Laws in connection with the Transaction and to the extent such laws
apply to the Purchased Assets, or the use thereof by the Buyer, after
the Closing Date.
2.2 Purchase Price
The Purchase Price for the Purchased Assets is as set forth in Section 2.4
and shall be allocated amongst the Purchased Assets for the purposes of Canadian
taxes due in connection with the Transaction on a basis to be agreed by the
Buyer and Seller acting reasonably prior to the Closing Date. The Purchased
Assets will be purchased subject to the Permitted Encumbrances and the Priority
Claims.
2.3 Deposits
The Buyer has paid to Dumex a deposit in the amount of $25,000 (the "First
Deposit") and a second deposit in the amount of $50,000 (the "Second Deposit")
both of which are being held in trust by counsel to Dumex. The Buyer shall make
a third deposit on July 8, 2002 in the amount of $125,000 (the "Third Deposit")
to be held in trust by counsel to Dumex. (The First Deposit, Second Deposit and
Third Deposit shall be referred to collectively as the "Deposits"). The Deposits
plus accrued interest shall be paid over to the Seller and credited
11
against payment of the cash component of the Purchase Price payable on Closing.
The First Deposit plus accrued interest shall be non-refundable. The Second
Deposit and the Third Deposit plus accrued interest shall be immediately
returned to the Buyer upon the occurrence of any of the following events (a
"Termination Event"): (i) the transactions contemplated by this Agreement, the
Operations Agreement or the Offer of Finance do not close as a result of a
breach thereof by a party thereto other than the Buyer or Derma; (ii) the Court
fails to approve of a sale of the Purchased Assets to the Buyer in accordance
with the terms and conditions of this Agreement; (iii) a suit or proceeding is
initiated or threatened by creditors, shareholders, lienholders or any other
stakeholders of any of the Dumex Entities or Governmental Authority with the
purpose or effect of preventing in any manner the consummation of the sale of
the Purchased Assets in the manner contemplated by this Agreement; or (iv) the
Bank determines to proceed with the enforcement of its security prior to
Closing. In the event that the Buyer determines not to proceed with the purchase
of the Purchased Assets for reasons other than (a) the reasons set forth above
or (b) a failure by parties other than the Buyer or Derma to satisfy the
conditions to Closing outlined in this Agreement, the Operations Agreement or
the Offer of Finance, the Second Deposit and the Third Deposit plus all accrued
interest shall be forfeited.
2.4 Payment of Purchase Price
The Buyer shall pay the following amounts (including the Deposits being
held in trust and to be paid by counsel to the Dumex Entities over to the
Seller) to the Seller or as the Seller may direct at the Closing Time
(collectively, the "Purchase Price") as follows:
(a) as to the sum of $200,000, the Buyer shall pay the costs of the
Transaction (the "Transaction Costs") up to the amount of $200,000,
which shall be paid by certified cheque or wire transfer to the Seller
to satisfy the Transaction Costs as follows:
(i) $90,000 for Fasken Xxxxxxxxx XxXxxxxx LLP for the legal fees and
disbursements incurred by the Dumex Entities in connection with
this Transaction;
(ii) $85,000 for the costs and expenses of the Interim Receiver in its
capacity as the Interim Receiver of the Dumex Entities (including
the fees and disbursements of a Trustee in Bankruptcy, if
appointed, and the fees and expenses of their respective legal
counsel); and
(iii) $25,000 to the Dumex Entities for the costs of obtaining an
independent valuation of the Purchased Assets in support of the
Approval and Vesting Order;
12
provided, however that if the Transaction Costs exceed $200,000, they
shall be borne by the Buyer to the extent of two-thirds and, as
provided for in the Operations Agreement, to the extent of one-third
by the Bank; provided further that the Seller provides written notice
to both Buyer and the Bank prior to incurrence of any Transaction
Costs in excess of $220,000.
(b) as to the sum of $4,200,000, the Seller shall direct the Buyer to and
the Buyer shall assume $4,200,000 of the indebtedness of the Dumex
Entities to the Bank pursuant to the Offer of Finance;
(c) as to the RoyNat Priority Loan, the amount necessary to satisfy RoyNat
in respect of the RoyNat Priority Loan;
(d) the Buyer shall assume the balance of the Assumed Liabilities as
further provided on Schedule A; and
(e) the Buyer shall pay or satisfy in full all Priority Claims (excluding
the RoyNat Priority Loan and accrued vacation pay to employees of any
of the Dumex Entities to be employed by the Buyer).
2.5 Taxes
(a) All federal and provincial sales taxes or other Transfer Taxes (as
hereinafter defined) payable in connection with the conveyance and
transfer of the right, title and interest, if any, of the Seller and
the Dumex Entities in and to the Purchased Assets to the Buyer shall
be borne by the Buyer and the Buyer undertakes to pay such taxes
forthwith upon notification of such by the Seller.
(b) The Buyer will at the Closing Time pay directly to the appropriate
taxing authority all applicable federal and provincial sales and
transfer taxes exigible in connection with the Transaction (the
"Transfer Taxes"). The Buyer will deliver to the Seller, at the
Closing, evidence to confirm the Buyer's payment of all of the
foregoing, in form and substance reasonably acceptable to the Seller
and its counsel in all respects. Notwithstanding the foregoing, the
Buyer may provide the Seller with suitable exemption or exemptions
from any tax or registrations fees, including without limiting the
generality of the foregoing, any purchase exemption certificates with
respect to the Inventory held for resale or for incorporation of goods
for the purpose of tax exigible under the Ontario Retail Sales Tax Act
and all similar provincial legislation for any other province in which
any of the Inventory may be situate on the Closing Date which
exemption certificates, if in form and substance acceptable to the
Seller and its counsel, acting reasonably, will be accepted by the
Seller in lieu of the Buyer's obligations insofar as such tax is
concerned. The Buyer's shall and hereby does indemnify and hold the
Seller harmless in respect of any Transfer Taxes, penalties, interest
which may be assessed against the Seller as a result of the sale of
the Purchased Assets and the failure of the Buyer to pay all of the
Transfer Taxes payable in connection with the Transactions, whether
arising from re-assessment or otherwise. The foregoing indemnification
obligation shall survive the Closing.
(c) The Seller (on behalf of the Dumex Entities) and the Buyer shall
jointly elect at Closing under subsection 167(1) of Part IX of the
Excise Tax Act (Canada) and any provincial legislation imposing a
similar value added or multi-staged tax, that no tax be payable with
respect to the sale and purchase of the Purchased Assets
13
pursuant to this Agreement. The Seller and the Buyer shall make such
election in the prescribed form containing prescribed information
pursuant to the Excise Tax Act (Canada) and any provincial legislation
imposing a similar value added or multi-staged tax, the Buyer and the
Seller shall jointly complete the appropriate election forms in
respect of such election and the Buyer shall file the joint election
in compliance with the requirements of the Excise Tax Act (Canada) and
any provincial legislation imposing a similar value added or
multi-staged tax. The Buyer shall and hereby does indemnify and save
harmless the Seller from and against any and all GST, value added tax,
any other tax, penalties, interests, costs and any other amounts that
may be assessed against the Seller as a result of or in connection
with the Buyer's failure to qualify or comply with the provisions of
this election. The foregoing indemnification obligation shall survive
the Closing.
(d) The Buyer declares that it is acquiring all or substantially all of
the property that can be reasonably regarded as being necessary for it
to carry on the Business and that the Business is a "commercial
activity" for the purposes of the Excise Tax Act (Canada).
(e) If reasonably requested by the Buyer, the Seller shall jointly execute
with the Buyer an election under Section 22 of the Income Tax Act with
respect to the sale of the Accounts Receivable and shall designate
therein the portion of the Purchase Price allocated to the Accounts
Receivable as the consideration paid by the Buyer for the Accounts
Receivable. The Seller and the Buyer shall file such elections
forthwith after the execution thereof (and, in any event, with their
respective tax returns for the taxation year in which the Transaction
contemplated by this Agreement occurs).
2.6 Assumption of Liabilities
Except for the Assumed Liabilities or as otherwise expressly provided
herein, the Buyer shall not assume and shall not be responsible for the
liabilities, debts or obligations, if any, of the Seller or any of the Dumex
Entities, whether present or future, absolute or contingent and whether or not
relating to the Business, including those liabilities with respect to notice of
termination, severance and other obligations to employees of the Business, for
federal, provincial and local income taxes, employment taxes and property taxes,
expenses or costs arising out of or relating to this Agreement, the negotiation
hereof of or the consummation of the Transaction, arising out of or relating to
any pension plan, profit sharing plan, deferred compensation plan, bonus plan,
stock option or purchase plan, or any other employee benefit plan.
2.7 Offer of Employment
Save and except as herein provided, the Buyer shall not be under any
obligation to offer employment to any persons who are employees of any of the
Dumex Entities. The Seller shall provide the Buyer with a list of all of the
employees of the Dumex Entities setting out their names, seniority, job
classifications, salaries and benefits, within one Business Day of the date of
the execution and delivery hereof. The Buyer shall give the Dumex Entities a
list of any employees of the of the Dumex Entities to whom the Buyer intends to
make an offer of
14
employment and the Buyer covenants and agrees to make offers of employment to
such employees on or before the date of the Appointment Order and the Approval
and Vesting Order. Such offers of employment shall be on terms and at rates
similar to the current terms of employment. The Dumex Entities agree to
terminate the temporary and permanent employment of all other employees who are
not designated to be offered employment, at the Seller's sole expense, no later
than the first Business Day following the date of the Appointment Order and the
Approval and Vesting Order.
2.8 Place of Closing
The Closing shall take place at the Closing Time at the offices of Fasken
Xxxxxxxxx XxXxxxxx LLP, 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx Xxxxxxxx
Xxxx Xxxxx, Xxxxxxx, Xxxxxxx, or at such other place as may be agreed upon by
the Seller and the Buyer.
2.9 Seller's Actions at Closing
At Closing, the Seller shall:
(a) execute and deliver to the Buyer the Interim Receiver's Certificate;
(b) deliver to the Buyer a certified copy of the Appointment Order and the
Approval and Vesting Order;
(c) deliver to the Buyer all instruments of conveyance, bills of sale,
assignments and other documents reasonably necessary to effectively
convey, assign and transfer right, title and interest in the Purchased
Assets to the Buyer, all in form and substance satisfactory to counsel
to the Buyer and counsel to the Seller acting reasonably;
(d) subject to Section 2.1 of this Agreement, deliver possession of the
Purchased Assets to the Buyer;
(e) execute and deliver to the Buyer a certificate signed by the Dumex
Entities and a certificate signed by the Interim Receiver certifying
that their respective representations and warranties herein given or
given in the Adoption Agreement, as the case may be, are true and
correct at the Closing Time;
(f) execute and deliver to the Buyer a certificate signed by the Dumex
Entities and a certificate signed by the Interim Receiver certifying
that their respective closing conditions in favour of the Buyer have
been satisfied or waived; and
(g) execute and deliver, or cause to be executed and delivered, to the
Buyer, all other documents contemplated by this Agreement to
effectively consummate the Transaction.
15
2.10 Buyer's Actions at Closing
At Closing the Buyer shall:
(a) pay to the Seller the balance of the Purchase Price and the taxes, if
any, required to be paid pursuant to Section 2.5 and to provide
evidence to the Seller of the payments of such taxes;
(b) deliver the documentation and certificates contemplated in Section
2.5;
(c) assume the Assumed Liabilities;
(d) execute and deliver to the Seller a certificate certifying that the
representations and warranties of the Buyer herein given are true and
correct at the Closing Time;
(e) execute and deliver to the Seller a certificate certifying that all
closing conditions in favour of the Buyer have been satisfied or
waived; and
(f) execute and deliver, or cause to be executed and delivered, to the
Seller, all other documents contemplated by this Agreement to
effectively consummate the Transaction.
2.11 Adoption by the Interim Receiver
Each of the Parties hereto acknowledges that following the execution and
delivery of this Agreement, that the Bank shall make application to the Court
for the appointment of X. Xxxxxx & Partners Inc., or such Person as is otherwise
agreed upon by the Parties, as the Interim Receiver and each of the Parties
hereto shall, if required, consent to such appointment. The Parties further
acknowledge and agree that following such appointment, the Interim Receiver
shall have the power to sell and convey the Purchased Assets and, subject to
Court approval, will, by separate agreement, adopt and complete the transactions
provided for in this Agreement (the "Adoption Agreement"), which Adoption
Agreement shall be approved by the Court.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Dumex Entities
Each of the Dumex Entities represents and warrants to the Buyer as follows
and acknowledges that the Buyer is relying upon such representations and
warranties in entering into this Agreement:
3.1.1 Corporate Matters
(a) Each of the Dumex Entities is a corporation duly incorporated and
validly subsisting under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to enter into
this Agreement and all other documents
16
contemplated herein to which it is or will be a party, to perform its
obligations hereunder and to carry out the Transaction. None of the
Dumex Entities has received notice of any orders by a court of
competent jurisdiction enjoining the Seller from completing the
transactions herein contemplated, nor have any of the Dumex Entities
received notice of any threat to appeal the Appointment Order or the
Approval and Vesting Order when issued.
(b) Each of the Dumex Entities has all necessary power and authority to
observe and perform its covenants and obligations under the Agreement
and the Closing Documents to which it is a party.
(c) This Agreement has been, and each Closing Document to which any Dumex
Entity is a party will on Closing be, executed and delivered by such
Dumex Entity.
(d) The Dumex Entities are not and will not be at the Closing Time
non-residents of Canada within the meaning of the Income Tax Act
(Canada) and their registration numbers pursuant to the Excise Tax Act
(Canada) are: (i) Dumex Medical Inc. - N/A; (ii) Dumex Medical
Surgical Products Limited - 101511285RT; (iii) Dumex Quebec Inc. -
101511293RT; and (iv) 1013172 Ontario Limited - 894771161RT.
(e) The Dumex Entities have no knowledge, actual or constructive, with
respect to the existence of any Priority Claims other than accrued
vacation pay of approximately $121,000, source withholding which is
current to the date hereof and provincial sales tax.
3.1.2 Absence of Conflicting Agreements
None of the execution and delivery of, or the observance and performance by
any of Dumex Entities of any covenant or obligation under, this Agreement or any
Closing Document to which it is a party, or the Closing contravenes or results
in or will contravene or result in a violation of or a default under or in the
acceleration of any obligation under the provisions of any other agreement to
which any of the Dumex Entities is a party or by which any of the Dumex Entities
is bound or affected.
3.1.3 No Encumbrances
From June 20, 2002, the Seller, and from the date of granting of the
Appointment Order, the Interim Receiver, has done no act to encumber the
Purchased Assets nor has it granted to any person other than the Buyer any
option, warrant, privilege or right, or any right capable of becoming any of the
foregoing (whether legal, equitable, contractual or otherwise) for the purchase
from the Seller of any of the Purchased Assets.
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3.2 Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller as follows and acknowledges
that the Seller is relying upon such representations and warranties in entering
into this Agreement:
3.2.1 Corporate Matters
(a) The Buyer is a corporation duly incorporated, organized and validly
existing under the laws of its jurisdiction of incorporation. No
proceedings have been taken or authorized by the Buyer or, to the best
of the Buyer's knowledge, by any other Person, with respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of the
Buyer.
(b) The Buyer has all necessary power and authority to execute and
deliver, and to observe and perform its covenants and obligations
under, the Agreement and the Closing Documents to which it is a party.
The Buyer has taken all corporate action necessary to authorize the
execution and delivery of, and the observance and performance of its
covenants and obligations under, the Agreement and the Closing
Documents to which it is a party.
(c) This Agreement has been, and each Closing Document to which the Buyer
is a party will on Closing be, duly executed and delivered by the
Buyer, and this Agreement constitutes, and each Closing Document to
which the Buyer is a party will on Closing constitute, a valid and
binding obligation of the Buyer.
(d) The Buyer shall obtain a registration number pursuant to the Excise
Tax Act (Canada) on or before the Closing Date.
3.3 Interpretation
Each representation and warranty made by a Party in this Agreement shall be
treated as a separate representation and warranty in respect of each statement
made and the interpretation of any statement made shall not be restricted by
reference to or inference from any other statement made in a representation and
warranty of such Party.
3.4 Commission
Each Party represents and warrants to each other Party that such other
Party will not be liable for any brokerage commission, finder's fee or other
similar payment in connection with the transactions contemplated hereby because
of any action taken by, or agreement or understanding reached by, that Party.
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3.5 Survival of Representations and Warranties
Except as expressly set forth herein, all representations, warranties,
statements, covenants and agreements made by the Parties in this Agreement or
any Closing Document shall terminate on the Closing.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions of Closing
The Buyer and the Seller shall be obliged to complete the Closing only if
each of the conditions precedent set out in this Section 4.1 have been satisfied
in full at or before the Closing Time:
(a) Litigation
No Order that prohibits or restricts the Closing or proceeding with respect
thereto shall have been commenced or threatened by any Governmental
Authority or other Person. Neither of the Parties, nor any of their
respective directors, officers, employees or agents, shall be a defendant
or third party to or threatened with any litigation or proceedings before
any court or Governmental Authority which, in the opinion of the Buyer or
the Seller, acting reasonably, could prevent or restrict that Party from
performing any of its obligations in this Agreement or any Closing
Document.
(b) Receipt of Closing Documentation
All documentation relating to the sale and purchase of the Purchased
Assets, including an assumption agreement pursuant to which the Assumed
Liabilities are assumed by the Buyer and such other Closing Documents
relating to the due authorization and completion of the sale and purchase,
and all actions and proceedings taken on or prior to the Closing in
connection with the performance by the Buyer and the Seller of their
respective obligations under this Agreement, shall be satisfactory to the
Buyer and the Seller, and their respective counsel, as applicable. Each of
the Buyer and the Seller shall have received copies of the Closing
Documents and all such documentation or other evidence as it may reasonably
request in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate proceedings in
connection therewith in form (as to certification and otherwise) and
substance satisfactory to each of the Buyer, the Seller and their
respective counsel.
(c) Orders
The Appointment Order and the Approval and Vesting Order shall have been
obtained by July 15, 2002. The right to appeal or seek leave to appeal from
the Approval and Vesting Order shall have expired with all Appeal
Proceedings, if any, having been dismissed, quashed or permanently stayed
without further right of appeal or to seek leave of appeal.
19
(d) Consents, Authorizations and Registrations
All consents, approvals, Orders and authorizations of any Person or
Governmental Authority (or registrations, declarations, filings or
recordings with any of them), required for the Closing (other than routine
post-closing notifications or filings), shall have been obtained or made on
or before the Closing Time.
(e) Appointment Order
X. Xxxxxx & Partners Inc., or such Person as is otherwise agreed upon by
the Parties, shall have been appointed as Interim Receiver pursuant to the
Appointment Order. The right to appeal or seek leave to appeal from the
Appointment Order shall have expired with all Appeal Proceedings, if any,
having been dismissed, quashed or permanently stayed without further right
of appeal or to seek leave of appeal.
(f) Offer of Finance
The Bank, Derma, the Buyer, and the Guarantor shall have executed and
delivered the Offer of Finance by 5:00 p.m. (Toronto time) on July 8, 2002
(unless otherwise agreed to be extended).
(g) Operations Agreement
The Bank, the Dumex Entities, the Guarantor and Derma shall have entered
into the Operations Agreement by 5:00 p.m. (Toronto time) on July 8, 2002
(unless otherwise agreed to be extended) and there shall have been no
material breach thereof by any party thereto.
4.2 Conditions of Closing for Buyer
The obligations of the Buyer to complete the purchase of the Purchased
Assets pursuant to this Agreement shall be subject to the satisfaction of each
of the following conditions precedent as or prior to the Closing Time, each of
which is for the exclusive benefit of the Buyer and each of which may be waived
by it, in whole or in part, by writing. If any condition is not satisfied or
waived by the Buyer as at the Closing Time, the Buyer may, in its sole
discretion, terminate this Agreement.
(a) at the Closing Time, all of the representations and warranties of the
Seller made in or pursuant to this Agreement shall be true and correct
as if made at and as of the Closing Time (regardless of the date as of
which the information in this Agreement or in any schedule or other
document made pursuant hereto is given), except to the extent that
such representations and warranties may be affected by events or
transactions expressly permitted by this Agreement or except as such
representations or warranties may be affected by the appeal of any
court order referred to herein. At the Closing Time, the Seller shall
have observed or performed in all respects all of the obligations,
covenants and agreements which it must perform at or before the
Closing Time;
20
(b) there shall have been no material adverse change in the Business,
assets or financial condition of the Dumex Entities to Closing,
including damage, destruction or loss;
(c) Buyer's due diligence must be completed by Buyer to its satisfaction,
in its reasonable discretion, by expiry of the Due Diligence Period;
(d) arrangements for the continued employment by Buyer of those certain
personnel of the Dumex Entities, satisfactory to Buyer in its sole
discretion, shall have been obtained pursuant to Section 2.7 hereof on
or before the date of the Appointment Order and the Approval and
Vesting Order;
(e) Buyer shall have assumed and/or entered into new Leases on terms and
conditions satisfactory to Buyer in its sole discretion with respect
to the Leased Premises as determined by Buyer;
(f) Derma shall be satisfied, in its sole discretion, prior to the expiry
of the Due Diligence Period, that it will receive from the Dumex
Entities and/or their auditors audited financial statements of the
Dumex Entities sufficient to satisfy Rule 305 of Regulation S-X
adopted pursuant to the Securities Exchange Act of 1934;
(g) prior to expiry of the Due Diligence Period, Xxxxxxx & Xxxxxxx, a
Division of Ethicon, shall have consented to the assignment to, and
assumption by, Buyer of that certain Supply Agreement between Dumex
and Xxxxxxx & Xxxxxxx dated as of September 27, 2001, and such
agreement and consent to assignment and assumption shall be in full
force and effect on the Closing Date notwithstanding the purchase of
the Purchased Assets by Buyer;
(h) Buyer shall have received an opinion of reputable counsel based in
Toronto, Canada opining as to the Transaction and the conveyance of
title to the Purchased Assets to Buyer pursuant to the Approval and
Vesting Order, free and clear of any Encumbrances, save and except for
the Permitted Encumbrances and Priority Claims, in addition to
covering other customary issues related to the Transaction;
(i) the Schedules to this Agreement shall have been delivered by the Dumex
Entities to the Buyer on or before 5 p.m. (Toronto time) on June 28,
2002 save and except Schedule D and all of the Schedules shall be
updated to the Closing Date and delivered by the Seller to the Buyer
prior to the Closing Date, in each case in form and substance
satisfactory to Buyer in its sole discretion; and
(j) the Dumex Entities shall have executed and delivered to the Interim
Receiver assignments in bankruptcy to be held in escrow pending the
filing thereof by the Interim Receiver at the reasonable election of
the Buyer on the Business Day immediately preceding the Closing Date.
21
4.3 Conditions of Closing for the Seller
The obligations of the Seller to complete the sale of the Purchased Assets
pursuant to this Agreement shall be subject to the satisfaction of each of the
following conditions precedent as or prior to the Closing Time, each of which is
for the exclusive benefit of the Seller and each of which may be waived by it,
in whole or in part, by writing. If any condition is not satisfied or waived by
the Seller as at the Closing Time, the Seller may, in its sole discretion,
terminate this Agreement.
(a) at the Closing Time, all of the representations and warranties of the
Buyer made in or pursuant to this Agreement shall be true and correct
as if made at and as of the Closing Time (regardless of the date as of
which the information in this Agreement or in any schedule or other
document made pursuant hereto is given), except to the extent that
such representations and warranties may be affected by events or
transactions expressly permitted by this Agreement or except as such
representations or warranties may be affected by the appeal of any
court order referred to herein. At the Closing Time, the Buyer shall
have observed or performed in all respects all of the obligations,
covenants and agreements which it must perform at or before the
Closing Time;
(b) the Purchased Assets shall not have been removed from the control of
the Seller by any means or process; and
(c) the Dumex Entities shall have executed and delivered to the Interim
Receiver assignments in bankruptcy to be held in escrow pending the
filing thereof by the Interim Receiver at the reasonable election of
the Bank on the Business Day immediately preceding the Closing Date.
4.4 Waiver
Any Party may waive, by notice to the other Parties, any condition set
forth in this Article 4 which is for its benefit. No waiver by a Party of any
condition, in whole or in part, shall operate as a waiver of any other
condition.
ARTICLE 5
GENERAL
5.1 Break-Up Fee
Provided that this Agreement has been negotiated, executed and delivered
and all the conditions in favour of the Buyer have been waived or satisfied, the
Dumex Entities shall pay Derma a fee in the amount of $100,000, in the event
that any of the Dumex Entities fails or neglects to satisfy any of the terms and
conditions of the Agreement or otherwise fails to complete the transactions
herein provided, to partially offset Buyer's costs and expenses associated with
the transactions contemplated by this Agreement if, within 365 days of the date
hereof, all or substantially all of the Purchased Assets are sold to any third
party other than the Buyer. The Dumex Entities acknowledge that this fee is not
a penalty but compensation for and
22
a reasonable estimate of the costs and expenses incurred by the Buyer.
5.2 No-Shop
In consideration for the First Deposit as well as the cost, expense and
management time being utilized by the Buyer to pursue the Transaction, the
Seller agrees that until the earlier of (i) the failure by the Buyer, to waive
and/or confirm the fulfillment of the conditions precedent to Closing in its
favour as set out in Article 4 by expiry of the Due Diligence Period or such
later date as may be contemplated by such condition precedent or (ii) the
Closing, Seller shall not offer for sale, sell or transfer the Purchased Assets
to any party other than the Buyer or otherwise assign or encumber any of its
rights in the Purchased Assets unless this Agreement is terminated by the
Parties as provided for herein.
5.3 Change of Name
On or before the Closing Date, each of the Dumex Entities shall discontinue
all further use of the name "Dumex" and "Dumex Medical", and all variations of
any of them, each of the Dumex Entities shall change its name to a numbered
company or otherwise so as to comply with this covenant.
5.4 Post-Closing
Immediately subsequent to Closing, the Seller shall file with the Court
such certificates as may be necessary to render the Approval and Vesting Order
effective in accordance with its terms, and deliver to the Buyer evidence of
such filing in a form satisfactory to the Buyer, acting reasonably.
ARTICLE 6
GENERAL
6.1 Expenses
Except as otherwise set forth herein with respect to the Transaction Costs,
each Party shall pay all expenses it incurs in authorizing, preparing, executing
and performing this Agreement and the transactions contemplated hereunder,
whether or not the Closing occurs, including all fees and expenses of its legal
counsel, bankers, investment bankers, brokers, accountants or other
representatives or consultants.
6.2 Time
Time is of the essence of each provision of this Agreement.
23
6.3 Notices
(a) Method of Delivery. Any notice, demand or other communication (in this
Section, a "notice") required or permitted to be given or made
hereunder shall be in writing and shall be sufficiently given or made
if:
(i) delivered in person during normal business hours on a Business
Day to the relevant party at the applicable address set forth
below;
(ii) sent by prepaid first class mail; or
(iii) sent by any electronic means of sending messages, including
facsimile transmission, which produces a paper record
("Transmission") during normal business hours on a Business Day
with charges prepaid and confirmed by prepaid first class mail;
in the case of a notice to the any of Dumex Entities, addressed to it
at:
Dumex Medical Inc.
000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X0X0 Xxxxxx
Attention: Xxxxxxx Xxxxxxx
Fax No.: 000-000-0000
and in the case of a notice to the Buyer, addressed to it at:
4087755 Canada Inc.
c/o Derma Sciences, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
(b) Deemed Delivery. Each notice sent in accordance with this Section
shall be deemed to have been received:
(i) in the case of personal delivery, if delivered before 5:00 p.m.,
on the day it was delivered; otherwise, on the first Business Day
thereafter;
(ii) in the case of mailing, on the third Business Day after it was
mailed (excluding the day of mailing and each Business Day during
which there existed any general interruption of postal services
due to strike, lockout or other cause); or
(iii) in the case of facsimile transmission, on the same day that it
was sent if the machine from which it was sent receives the
answer back code of the
24
party to whom it was sent before 5:00 p.m. (recipient's time) on
such day; otherwise on the first Business Day thereafter.
Any Party may change its address for notice by giving notice to the
other.
6.4 Public Announcements
No Party shall make any public statement or issue any press release
concerning the transactions contemplated by this Agreement except as may be
necessary, in the opinion of counsel to the Party making such disclosure, to
comply with the requirements of Applicable Laws or in connection with the
obtaining of Orders necessary for the performance of this Agreement. If any such
public statement or release is so required, the Party making such disclosure
shall consult with the other Parties prior to making such statement or release,
and the Parties shall use all reasonable efforts, acting in good faith, to agree
upon a text for such statement or release which is satisfactory to all Parties.
6.5 Assignment
(a) No Party may assign any rights or benefits under this Agreement to any
Person;
(b) each Party agrees to perform its obligations under this Agreement
itself, and not to arrange in any way for any other Person to perform
those obligations; and
(c) no assignment of benefits or arrangement for substituted performance
by one Party shall be of any effect against the other Party except to
the extent that other Party has consented to it in writing.
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors (including any successor by reason of amalgamation
or statutory arrangement of any Party) and permitted assigns.
6.6 Further Assurances
Each Party shall do such acts and shall execute such further documents,
conveyances, deeds, assignments, transfers and the like, and will cause the
doing of such acts and will cause the execution of such further documents as are
within its power as any other Party may in writing at any time and from time to
time reasonably request be done and or executed, in order to give full effect to
the provisions of this Agreement and each Closing Document.
6.7 Remedies Cumulative
The rights and remedies of the Parties under this Agreement are cumulative
and in addition to and not in substitution for any rights or remedies provided
by law. Any single or partial exercise by any Party hereto of any right or
remedy for default or breach of any term, covenant or condition of this
Agreement does not waive, alter, affect or prejudice any other right or remedy
to which such Party may be lawfully entitled for the same default or breach.
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6.8 Counterparts
This Agreement may be executed in any number of counterparts. Each executed
counterpart shall be deemed to be an original. All executed counterparts taken
together shall constitute one agreement.
6.9 Facsimile Execution
To evidence the fact that it has executed this Agreement, a Party may send
a copy of its executed counterpart to all other Parties by facsimile
transmission. That Party shall be deemed to have executed this Agreement on the
date it sent such facsimile transmission. In such event, such Party shall
forthwith deliver to the other Party the counterpart of this Agreement executed
by such Party.
ARTICLE 7
TERMINATION AND EXPENSES
7.1 Termination of Agreement by the Buyer
In addition to the other rights of termination set out herein, the Buyer
shall be entitled to terminate this Agreement if on the Closing Date, one or
more of the conditions to Closing contained in Sections 4.1 and 4.2 has not been
satisfied or waived in the manner provided for in Section 4.2.
7.2 Termination of Agreement by the Seller
In addition to the other rights of termination set out herein, the Seller
shall be entitled to terminate this Agreement if on the Closing Date, one or
more of the conditions to Closing contained in Section 4.1 and 4.3 has not been
satisfied or waived in the manner provided for in Section 4.3.
7.3 Effect of Termination
In the event of a termination of this Agreement as provided in this Article
7, this Agreement shall forthwith become of no further force or effect and
neither Party shall have any other obligation to the other except as otherwise
provided in this Section 7.3.
(a) If this Agreement is terminated or the Closing otherwise fails to
occur or because of the occurrence of a Termination Event or for any
reason other than a breach by the Buyer of its obligations under this
Agreement, then the Buyer shall be entitled its sole and exclusive
remedy to the return of the Second Deposit and the Third Deposit
within three Business Days, together with all accrued interest
thereon; provided, that if the Closing fails to occur because of a
Termination Event, the Buyer shall be limited to the return of the
Second Deposit and the Third Deposit as its sole and exclusive remedy.
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(b) If this Agreement is terminated or the Closing otherwise fails to
occur as a result of the failure of the Buyer to satisfy its
obligations under this Agreement, then the Dumex Entities as their
sole and exclusive remedy shall be entitled to retain the Deposit,
together with all accrued interest thereon; provided that if the
Closing fails to occur because of a breach or default hereunder by the
Buyer, the Dumex Entities shall be limited to the Deposit as their
sole and exclusive remedy.
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TO WITNESS their agreement, the Parties have duly executed this Agreement.
4087755 CANADA INC.
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
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DUMEX MEDICAL INC.
By:
--------------------------------------------
Name:
Title:
DUMEX MEDICAL SURGICAL PRODUCTS LIMITED
By:
--------------------------------------------
Name:
Title:
1013172 ONTARIO LIMITED
By:
--------------------------------------------
Name:
Title:
DUMEX QUEBEC INC.
By:
--------------------------------------------
Name:
Title:
29
SCHEDULE B
RECEIVER'S CERTIFICATE
Commercial Court File No.:
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF the Interim Receivership of the Assets of
Dumex Medical Inc., Dumex Medical Surgical Products Limited, 1013172 Ontario
Limited and Dumex Quebec Inc.
AND IN THE MATTER OF Section 47(1) of the
Bankruptcy And Insolvency Act, R.S.C. 1985 c.B-3, as amended
INTERIM receiver's certificate
WHEREAS, pursuant to the Order of the Superior Court of Justice -
Commercial List dated ?, 2002, *** was appointed Interim Receiver of all of the
property, assets and undertaking of Dumex Medical Inc., Dumex Medical Surgical
Products Limited, 1013172 Ontario Limited and Dumex Quebec Inc. (collectively,
the "Company");
AND WHEREAS in its capacity as Court-Appointed Interim Receiver of the
Company, *** was authorized to nunc pro tunc enter into an Asset Purchase
Agreement dated ___________, 2002 (the "Agreement") with 4087755 Canada Inc.
(the "Purchaser");
THE UNDERSIGNED HEREBY CERTIFIES as follows:
1. The Purchaser has paid, and the undersigned has received, the full purchase
price payable pursuant to the Agreement; and
2. The Purchaser has completed, complied with and satisfied all of the terms
and conditions to be completed, complied with and satisfied by it under the
Agreement for the purposes of Closing (as defined in the Agreement).
MADE at Toronto this day of ?, 2002.
*** solely in its Capacity as Receiver of the property,
assets and undertaking of Dumex Medical Inc., Dumex Medical
Surgical Products Limited, 1013172 Onatrio Limited and Dumex
Quebec Inc.
Per:__________________________
