CANADIAN SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement, dated as of November 14, 2003 (the
"Agreement"), is entered into by and between Medinex Systems, Inc., a Delaware
corporation ("Parent"), Maxus (Nova Scotia) Company, a Nova Scotia Unlimited
Liability Company, ("NovaScotiaco"), Maxus Holdings Inc., a corporation
incorporated under the laws of the Province of Ontario ("Exchangeco"), 901133
Alberta Ltd. ("Maxus"), a corporation incorporated under the laws of the
Province of Alberta and Medallion Capital Corporation ("Agent"), as attorney and
agent for the shareholders of Maxus listed on Schedule A (the "Maxus
Shareholders").
RECITALS
WHEREAS, the Boards of Directors of Parent and Maxus have each
determined that it is advisable and in the best interests of their respective
shareholders for Parent to acquire control of Maxus through an exchange of all
of the issued and outstanding common shares of Maxus (the "Maxus Shares") for
shares in Parent or Exchangeco upon the terms and conditions set forth herein
(the "Acquisition");
AND WHEREAS, pursuant to the Acquisition, by means of the various
transactions described herein, each outstanding Maxus Share shall be exchanged
for: (a) in the case of those Maxus Shareholders who are taxable Canadian
persons, at their election, either (i) one (1) exchangeable share (an
"Exchangeable Share") of Exchangeco or (ii) one (1) share of the common stock of
Parent, $0.001 par value per share (a "Parent Common Share"); or (b) in the case
of all other Maxus Shareholders, one (1) Parent Common Share;
AND WHEREAS, pursuant to the terms of the Exchangeable Shares, the
Support Agreement and the Voting and Exchange Agency Agreement (each as defined
herein) by and between Parent, Exchangeco and the agent for holders of
Exchangeable Shares, the Exchangeable Shares shall be exchangeable by the
holders for shares of Parent Common Shares on a one-for-one basis at any time on
or before a date ten years after the Effective Time (as defined herein);
AND WHEREAS, the parties intend that the Acquisition shall also
constitute a tax deferred transfer in accordance with the applicable provisions
of the Income Tax Act (Canada) to certain shareholders of Maxus (the "Group B
Shareholders") that are subject to taxation in Canada who elect to receive
Exchangeable Shares;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
AGREEMENT
1. Interpretation.
1.1 Definitions
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1:
"Acquisition" -- as defined in the recitals to this Agreement.
"Acquisition Shares" -- the Parent Common Shares issuable upon exchange
of the Exchangeable Shares and issued directly to holders of Maxus
Shares pursuant to the Share Exchange.
"Applicable Contracts" -- any Contracts (a) under which a party has or
may acquire any rights, (b) under which a party has or may become
subject to any obligation or liability, or (c) by which a party or any
of the assets owned or used by it is or may become bound.
"Balance Sheet" -- as defined in Section 3.4 of this Agreement.
"Best Efforts" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to attempt to
cause such result to be achieved as expeditiously as possible;
provided, however, that an obligation to use Best Efforts under this
Agreement does not require the Person subject to that obligation to
take actions that would result in a materially adverse change in the
benefits to such Person of this Agreement and the Transactions.
"Breach" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if
there is or has been any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach or failure.
"Canadian Securities Laws" -- the securities laws of each of the
provinces of Canada in which Maxus Shareholders are resident.
"Closing" -- as defined in Section 2.2 of this Agreement.
"Closing Date" -- the date and time as of which the Closing actually
takes place.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any approval, consent, license, permit,
waiver, or other authorization by or under the authority of any
Governmental Body or pursuant to any Legal Requirement or Contract).
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"Contract" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied)
that is legally binding.
"$" and "Dollars"-- United States dollars, except as otherwise
expressly indicated.
"Effective Time" -- as defined in Section 2.2 of this Agreement.
"Employee" -- any current employee, officer, or director of either of
Maxus.
"Encumbrance" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of
any other attribute of ownership.
"Exchangeco" -- as defined in the first paragraph of this Agreement.
"Exchangeable Shares" -- as defined in the recitals to this Agreement.
"GAAP" -- generally accepted accounting principles, applied on a
consistent basis in Canada or the United States, as the case may be.
"Governmental Body" -- any:
(a) nation, province, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, provincial, state, local, municipal, foreign, or
other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"Group A Shareholder" -- those Shareholders listed in Schedule B
hereto, being U.S. and Canadian tax exempt Shareholders.
"Group B Shareholder" -- those Shareholders listed in Schedule C
hereto, being Canadian taxable Shareholders.
"Intellectual Property Assets" -- as defined in Section 3.15(a) of this
Agreement.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of
such fact or other matter.
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A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving
as a director, officer, partner, executor, or trustee of such Person
(or in any similar capacity) has, or at any time had, "Knowledge" of
such fact or other matter.
"Legal Requirement" -- any federal, provincial, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
"Material Adverse Effect" -- (a) with respect to a material adverse
effect on the businesses, assets, operations, results of operations or
financial condition of Maxus and its Subsidiaries, taken as a whole, as
compared to their respective unaudited financial statements as at and
for the period ended September 30, 2003, (b) with respect to the
Parent, a material adverse effect on the businesses, assets,
operations, results of operations or financial condition of the Parent
and its subsidiaries, taken as a whole, as compared to the Parent's
unaudited financial statements as at and for the period ended September
30, 2003, and (c) with respect to any other Person (other than Maxus or
the Parent), a material adverse effect on the businesses, assets,
operations, results of operations or financial condition of such Person
and its subsidiaries, taken as a whole; provided that any adverse
effects arising from or relating to the following matters (individually
and in the aggregate) shall be excluded in determining whether such a
material adverse effect has occurred: (i) general economic conditions
or conditions (including conditions in financial markets) generally
prevailing in the industry or market segment in which the corporate
entity and its subsidiaries conduct their respective businesses, (ii)
the announcement or pendency of the Transactions or the closing or
pendency of any publicly announced acquisitions or mergers by Parent of
or with another company as of the date of this Agreement; and (iii) the
taking by any party hereto of any action (or omission by any party
hereto to take any action) at the request of or with the permission of
the other parties to this Agreement.
"Maxus Shareholders" - As defined in the first paragraph of this
Agreement.
"NovaScotiaco" -- as defined in the first paragraph of this Agreement.
"Options" -- all outstanding options, warrants or other rights to
purchase Maxus Shares granted by Maxus.
"Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict against Maxus, Parent or any Subsidiary thereof
entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal
operations of such Person; and
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(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of such
Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter or
similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (c) any amendment to any of
the foregoing.
"Parent" -- as defined in the first paragraph of this Agreement.
"Parent Common Shares" -- as defined in the recitals to this Agreement.
"Parent Preferred Shares" -- as defined in Section5.3 of this
Agreement.
"Parent Group" - Parent, NovaScotiaco, and Exchangeco
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization,
labour union, or other entity or Governmental Body.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental Body or arbitrator.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial
advisors.
"Securities Act" -- collectively, the United States Securities Act of
1933 and the United States Securities Exchange Act of 1934, as amended,
or any successor law, and regulations and rules issued pursuant to
those Acts or any successor law.
"Share Exchange" -- as defined in Section 2.1(b) of this Agreement.
"Subsidiary" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation's or other
Person's board of directors or similar governing body, or otherwise
having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests
having such power only upon the happening of a contingency that has not
occurred) are held by the Owner or one or more of its "Subsidiaries".
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"Support Agreement" -- the Exchangeable Share Support Agreement, as
defined in Section 9.3 of this Agreement.
"Tax" or "Taxes" -- means (i) any and all federal, provincial, state,
local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts;
(ii) any liability for the payment of any amounts of the type described
in clause (i) as a result of being or ceasing to be a member of an
affiliated, consolidated, combined or unitary group for any period
(including, without limitation, any liability under Treas. Reg. Section
1.1502-6 or any comparable provision of foreign, state or local law);
and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other Person or as a result of any
obligations under any agreements or arrangements with any other Person
with respect to such amounts and including any liability for taxes of a
predecessor entity.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted
to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with
any Legal Requirement relating to any Tax.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally
or in writing) that would lead a prudent Person to conclude that such a
claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
"Transactions" -- all of the transactions contemplated by this
Agreement, including:
(a) the transactions described in Section 2.1 and the Parent
Group's exercise of control over Maxus;
(b) the execution, delivery, and performance of the Support
Agreement, and the Voting and Exchange Agency Agreement; and
(c) the performance by the Parent Group, Maxus and the Maxus
Shareholders of their respective covenants and obligations
under this Agreement.
(d) "U.S. Person" -- as defined in Section 4.4 of this Agreement.
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"Voting and Exchange Agency Agreement" -- as defined in Section 9.3 of
this Agreement.
"Voting Trust Agreement" - the Voting Trust Agreement made effective
the 14th day of November 2003, among Maxus, the Agent and the Maxus
Shareholders.
1.2 Schedules
The following schedules and exhibits form part of this Agreement:
Schedule A - Holders of Maxus Shares
Schedule B - Group A Shareholders - U.S. and Canadian tax
exempt Shareholders
Schedule C - Group B Shareholders - Canadian taxable
Shareholders
Schedule D - Exchangeable Share Support Agreement
Schedule E - Voting and Exchange Agency Agreement
Exhibit 3.2 - Consents
Exhibit 3.7 - Liabilities
Exhibit 3.12 - Legal proceedings
Exhibit 5.15 - Intellectual Properties
Exhibit 5.21 - Subsidiaries
Exhibit 11.8 - President's Certificate
Exhibit 11.10 - Board Representation
2. The Transactions
2.1 Actions at Closing
(a) Tender of Maxus Shares. At the Closing, each Group A
Shareholder shall, pursuant to the terms of this Agreement,
sell to NovaScotiaco all of the Maxus Shares held by such
Group A Shareholder. Each Group B Shareholder shall, pursuant
to the terms of this Agreement, sell to Exchangeco all of the
Maxus Shares held by such Group B Shareholder.
(b) Share Exchange. In consideration of the transfers described in
paragraph (a) above, (i) Exchangeco shall issue to each Group
B Shareholder of Maxus one Exchangeable Share for each Maxus
Class A Share lawfully tendered by such Group B Shareholder,
and 9,557,640 Exchangeable Shares for all 100 Class C Shares
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of Maxus and (ii) NovaScotiaco shall transfer to each Group A
Shareholder one Parent Common Share for each Maxus Class A
Share lawfully tendered by such Group A Shareholder (the
"Share Exchange"); provided, however, that NovaScotiaco and
Exchangeco shall be entitled to withhold that number (rounded
up to the nearest whole share) of Exchangeable Shares or
Parent Common Shares, as the case may be, equal to, but not in
excess of (other than due to rounding), the amount of any
withholding obligations of NovaScotiaco, Exchangeco or Parent
under any Tax applicable to the Share Exchange.
(c) Related Agreements. The following agreements shall be entered
into by the following parties hereto:
(i) Parent, NovaScotiaco and Exchangeco shall enter into
the Exchangeable Share Support Agreement in
substantially the form attached hereto as Schedule D;
and
(ii) Parent, Exchangeco and Agent, as the Attorney for the
holders of Exchangeable Shares shall enter into a
Voting and Exchange Agency Agreement in substantially
the form attached hereto as Schedule E.
2.2 Closing
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Article 12 hereof, and
subject to the satisfaction or waiver of the conditions set forth in Articles 10
and 11 hereof, the closing of the Transactions (the "Closing") will take place
as promptly as practicable after satisfaction or waiver of the conditions set
forth in Articles 10 and 11 hereof, at the offices of Xxxxxxx Xxxxx XXX, XXX
Xxxxx, Xxxxxx Trust Tower, 000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX, X0X 0X0,
unless another date, time or place is agreed to in writing by the parties hereto
(such time, the "Effective Time"). At the Closing, the parties hereto shall
deliver the documents contemplated hereby together with such other customary
documents as may be reasonably requested by the parties.
2.3 Accounting Consequences
It is intended by the parties hereto that the Transactions shall
qualify for accounting treatment as a purchase under U.S. GAAP.
2.4 Tax Treatment
It is intended that the Transactions shall generally constitute (i) a
taxable exchange for United States federal income tax purposes (not qualifying
under Sections 368 or 351 of the United States Internal Revenue Code of 1986, as
amended) to Group A Shareholders or who are otherwise subject to taxation in the
United States on the sale or exchange of Maxus Shares and (ii) a tax deferred
reorganization for Canadian federal income tax purposes for owners of Maxus
Shares who are residents of Canada for Canadian federal income tax purposes who
receive Exchangeable Shares as a consequence of the Acquisition.
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3. Representations and Warranties of Maxus
Maxus represents and warrants to Parent as follows in this Article 3.
3.1 Organization and Good Standing
(a) Schedule A contains a complete and accurate list of each
registered holder of Maxus Shares, the number of Maxus Shares
held by each and the residence or principal place of business
of each holder.
(b) Maxus and each of its subsidiaries is a corporation duly
incorporated and validly existing, and in good standing under
the laws of the Province of Alberta , with all requisite
corporate power and authority to conduct its business as it is
now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all their
obligations under its Applicable Contracts.
(c) Maxus has made available or delivered to Parent a copy of its
Organizational Documents, as currently in effect.
3.2 Authority; No Conflict
(a) This Agreement has been duly authorized and validly executed
and delivered by Maxus and constitutes the legal, valid, and
binding obligation of Maxus, enforceable against Maxus in
accordance with its terms. Maxus has all necessary corporate
power and authority to execute and deliver this Agreement and
to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of the obligations of Maxus and
the Maxus Shareholders in connection with the Transactions
will, directly or indirectly (with or without notice or lapse
of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents
of Maxus, or (B) any resolution adopted by the board
of directors or the Maxus Shareholders;
(ii) contravene, conflict with, or result in a violation
or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any of the
Applicable Contracts; or
(iii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets
owned or used by Maxus.
(c) Except as set out in Exhibit 3.2 Maxus will not be required to
give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement
or the consummation or performance of any of its obligations
in connection with the Transactions.
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3.3 Capitalization
The authorized equity securities of Maxus consist of an unlimited
number of Class A Shares, Class B Shares and Class C Shares, of which 5,442,360
Class A Shares and 100 Class C Shares are issued and outstanding (the "Maxus
Shares"). No legend or other reference to any purported Encumbrance appears upon
any certificate representing Maxus Shares. All of the outstanding Maxus Shares
have been duly authorized and validly issued and are fully paid and
non-assessable. There are no Options or other Contracts to which Maxus is a
party that relates to the issuance, sale, or transfer of any equity securities
or other securities of Maxus. None of the outstanding equity securities or other
securities of Maxus have been issued in violation of the Securities Act, the
Canadian Securities Laws or any other Legal Requirement. Maxus does not own, or
has any Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.
3.4 Financial Statements
Maxus has or will deliver to Parent (a) an unaudited consolidated
balance sheet of Maxus as at September 30, 2003 and (b) an audited consolidated
balance sheet as at November 30, 2002, (collectively, the "Balance Sheets") and
the related unaudited consolidated statements of operations and deficit for the
periods then ended. Such financial statements and notes fairly present the
financial condition and the results of operations, and cash flow of Maxus as at
the respective date of and for the periods referred to in such financial
statements, all in accordance with Canadian GAAP.
3.5 Title to Properties; Encumbrances
Maxus owns all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own, including all
of the properties and assets reflected in its Balance Sheets (except for assets
held under capitalized leases disclosed or not required to be disclosed and
personal property sold since the date of the Balance Sheets, in the Ordinary
Course of Business), and all of the properties and assets purchased or otherwise
acquired by it since the date of the Balance Sheets (except for personal
property acquired and sold since the date of the Balance Sheets in the Ordinary
Course of Business). All material properties and assets reflected in the Balance
Sheets are free and clear of all Encumbrances except, with respect to all such
properties and assets, mortgages or security interests shown on the Balance
Sheets as securing specified liabilities or obligations, with respect to which
no default (or event that, with notice or lapse of time or both, would
constitute a default) exists.
3.6 Accounts Receivable
All accounts receivable of Maxus that are reflected on the accounting
records of Maxus as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
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3.7 No Undisclosed Liabilities
Except as set forth in the Balance Sheets and Exhibit 3.7, Maxus has no
material liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheets and current liabilities incurred in the
Ordinary Course of Business since the date thereof.
3.8 Tax Returns and Audits
(a) Maxus has timely filed all federal, state, provincial, local
and foreign returns, estimates, declarations, information
statements and reports ("Returns") relating to Taxes required
to be filed by it with any Tax authority, and such Returns are
true and correct and have been completed in accordance with
applicable law.
(b) Maxus (A) has paid or accrued all Taxes it is required to pay
or accrue and (B) has withheld from each payment made to its
past or present employees, officers, directors and independent
contractors, creditors, shareholders or other third parties
all Taxes and other deductions required to be withheld and
have, within the time required by law, paid such withheld
amounts to the proper governmental authorities.
(c) Maxus has no liability for any unpaid Taxes which have not
been accrued for or reserved on its Balance Sheets in
accordance with Canadian gaap, whether asserted or unasserted,
contingent or otherwise, other than any liability for unpaid
Taxes that may have accrued since the date of the Balance
Sheets in connection with the operation of the business of
Maxus in the ordinary course.
(d) Maxus has provided or will provide to Parent copies of all
federal, provincial and state income, provincial goods and
services and all state sales and use Tax Returns for Maxus
that have been requested by Parent.
3.9 No Material Adverse Change.
Since the date of the Balance Sheets, there has not been any material
adverse change in the business, operations, properties, prospects, assets, or
condition of Maxus, and no event has occurred or circumstance exists that is
reasonably likely to result in such a material adverse change.
3.10 Employees
(a) There are no former Employees of Maxus to which Maxus has a
continuing obligation under any pension or retirement plan.
(b) Maxus is not currently party to, and since their inception
Maxus have never been party to, any collective bargaining
agreements or other labour Contracts covering any of their
Employees. Since the inception of Maxus there has not been,
there is not presently pending or existing, and, to Maxus'
Knowledge, there is not Threatened, any strike, slowdown,
picketing, work stoppage, or employee grievance process. To
the Knowledge of Maxus, there is no employee who has any plans
to terminate his or her employment with Maxus.
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3.11 Compliance with Legal Requirements
Maxus is, and at all times since its inception has been, in full
compliance with each Legal Requirement, including privacy laws, that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets.
3.12 Legal Proceedings; Orders
(a) Except as set out in Exhibit 3.12 there is no pending
Proceeding that:
(i) has been commenced by or against Maxus;
(ii) otherwise relates to the business of, or any of the
assets owned or used by Maxus; or
(iii) challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise
interfering with, any of the Transactions;
(b) Except as set out in Exhibit 3.12 to the Knowledge of Maxus,
(1) no such Proceeding has been Threatened by or against
Maxus, and (2) no event has occurred or circumstance exists
that may give rise to or serve as a basis for the commencement
of any such Proceeding by or against Maxus or any Maxus
Shareholder; and
(c) there is no Order to which Maxus, or any of the assets owned
or used by of Maxus, are subject.
3.13 Contracts; No Defaults
Each Applicable Contract is in full force and effect and is valid and
enforceable against or by the applicable Company in accordance with its terms.
3.14 Insurance
(a) Maxus has delivered or will deliver to Parent:
(i) true and complete copies of all policies of insurance
to which Maxus is a party or under which Maxus, or
any director of Maxus, is or has been covered at any
time within the two years preceding the date of this
Agreement;
(ii) Maxus has not received (A) any refusal of coverage or
any notice that a defense will be afforded with
reservation of rights, or (B) any notice of
cancellation or any other indication that any
insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any
policy is not willing or able to perform its
obligations thereunder.
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(iii) Maxus has paid all premiums due and has otherwise
performed all of its obligations under each policy to
which it is a party or that provides coverage to
Maxus or any director thereof.
(iv) Maxus has given notice to the insurer of all claims
that may be insured thereby.
3.15 Intellectual Property
(a) Intellectual Property Assets-- The term "Intellectual Property
Assets" with respect to Maxus means:
(i) Maxus' name, and all fictional business names,
trading names, registered and unregistered
trademarks, service marks, and applications
(collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively,
"Patents");
(iii) all copyrights in both published works and
unpublished works (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, software, technical
information, data, process technology, plans,
drawings, and blue prints (collectively, "Trade
Secrets").
(b) Know-How Necessary for the Business. The Intellectual Property
Assets of Maxus are all those necessary for the operation of
Maxus' businesses as they are currently conducted. Maxus is
the owner of all right, title, and interest in and to or a
licensee of, each of its Intellectual Property Assets, free
and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the
right to use without payment to a third party all of the
Intellectual Property Assets.
(c) Patents. There are no patents held by Maxus.
(d) Trade Secrets.
(i) Maxus has taken all reasonable precautions to protect
the secrecy, confidentiality, and value of its Trade
Secrets.
(ii) Maxus has good title and an absolute (but not
necessarily exclusive) right to use its Trade
Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to the Knowledge of
Maxus, have not been used, divulged, or appropriated
either for the benefit of any Person or to the
detriment of Maxus. No Trade Secrets is subject to
any adverse claim or has been challenged or
Threatened in any way.
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3.16 Disclosure
No representation or warranty of Maxus in this Agreement omits to state
a material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
4. Representations and Warranties of the Maxus Shareholders
The Agent, as agent for and on behalf of the Maxus Shareholders
pursuant to the Voting Trust Agreement, represents and warrants to Parent
severally and not jointly and only insofar as such representations and
warranties apply to such Maxus Shareholder (and, in the case of the Agent's
representations and warranties, the other Maxus Shareholders), as follows:
4.1 Organization and Good Standing
(a) Each Maxus Shareholder is the sole record and beneficial owner
of the number of Maxus Shares set forth next to his, her or
its name on Schedule A, and such Maxus Shares are not and will
not at any time prior to or at the Closing be subject to any
lien or to any rights of first refusal of any kind. Each Maxus
Shareholder has good and valid title to, and has the sole
right to transfer such Maxus Shares. The Maxus Shares listed
on Schedule A constitute all of the Maxus Shares owned,
beneficially or of record, by the Maxus Shareholder. There are
no options, warrants, calls, rights, commitments or agreements
of any character, written or oral, to which a Maxus
Shareholder is a party or by which he, she or it is bound
obligating such Maxus Shareholder to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any Maxus Shares or obligating such
Maxus Shareholder to grant or enter into any such option,
warrant, call, right, commitment or agreement and there will
be no such agreements at any time prior to or at the Closing.
(b) For each Maxus Shareholder that is a corporation or
unincorporated entity, such Maxus Shareholder is duly
incorporated or formed and validly existing under the laws of
its jurisdiction of incorporation or formation.
4.2 Authority; No Conflict
(a) This Agreement has been duly authorized and validly executed
and delivered on behalf of each of the Maxus Shareholders by
the Agent pursuant to the Voting Trust Agreement, and
constitutes the legal, valid, and binding obligation of each
of the Maxus Shareholders, enforceable against each of the
Maxus Shareholders in accordance with its terms. Each of the
Maxus Shareholders has all necessary power, authority, and
capacity to execute and deliver this Agreement and to perform
its obligations under this Agreement.
14
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of the obligations of the Maxus
Shareholders in connection with the Transactions will,
directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents
of any Maxus Shareholder, or (B) any resolution
adopted by the board of directors or the stockholders
of any Maxus Shareholder;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the
right to challenge any of the Transactions or to
exercise any remedy or obtain any relief under, any
Legal Requirement or any Order to which any Maxus
Shareholder or any of the assets owned or used by any
Maxus Shareholder, may be subject; or
(iii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets
owned or used by any Maxus Shareholder.
(c) No Maxus Shareholder is or will be required to give any notice
to or obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the
consummation or performance of any of its obligations in
connection with the Transactions.
4.3 Acknowledgment of Restrictions
Each Maxus Shareholder further understands that the issuance of Parent
Common Shares or Exchangeable Shares to it will not be qualified by prospectus
under Canadian provincial securities legislation and that such shares will be
subject to resale restrictions under applicable Canadian provincial and United
States federal and state securities laws.
4.4 Non-U.S. Person
Each Group B Shareholder is not a "U.S. Person" as that term is defined
in Regulation S promulgated under the Securities Act and is not acquiring the
Exchangeable Shares or the Parent Common Shares issued pursuant to the Share
Exchange for the account or benefit of a U.S. Person. Under Regulation S, with
certain exceptions, "U.S. Person" means: (i) any natural person resident in the
U.S.; (ii) any partnership or corporation organized or incorporated under the
laws of the U.S.; (iii) any estate of which any executor or administrator is a
U.S. person; (iv) any trust of which any trustee is a U.S. person; (v) any
agency or branch of a foreign entity located in the U.S.; (vi) any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the U.S.; and (viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign jurisdiction; and
(B) formed by a U.S. Person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated and owned by accredited investors (as defined in Rule 501(a) under
the Securities Act) who are not natural persons, estates or trusts.
15
5. Representations and Warranties of Parent
Parent warrants and represents to Maxus and the Maxus Shareholders as
follows (it being acknowledged that Maxus and the Maxus Shareholders are
entering into this Agreement in material reliance upon each of the following
representations and warranties, and that the truth and accuracy of each, as
evidenced by the execution of this Agreement by a duly authorized officer of
Parent, constitutes a condition precedent to the obligations of Maxus and the
Maxus Shareholders hereunder).
5.1 Organization and Good Standing
Parent is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. NovaScotiaco is an unlimited
liability company duly organized, validly existing and in good standing under
the laws of the Province of Nova Scotia. Exchangeco is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario. Each member of the Parent Group has full corporate power and
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use.
5.2 Authority No Conflict
This Agreement has been duly authorized, executed and delivered by and
constitutes the legal, valid, and binding obligation of each member of the
Parent Group, enforceable against each of them in accordance with its terms.
Upon the execution and delivery by the Parent Group of the Voting and Exchange
Agency Agreement and the Support Agreement, each of such agreements executed by
such member of the Parent Group will constitute the legal, valid, and binding
obligations of such member of the Parent Group, enforceable against such member
of the Parent Group in accordance with its respective terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, (ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies. Each member of the Parent Group
has the absolute and unrestricted right, power, and authority to execute and
deliver this Agreement, the Voting and Exchange Agency Agreement and the Support
Agreement and to perform its obligations under this Agreement, the Voting and
Exchange Agency Agreement and the Support Agreement.
(a) Neither the execution and delivery of this Agreement, the
Voting and Exchange Agency Agreement, or the Support Agreement
by Parent nor the consummation or performance of any of the
Transactions by the Parent Group will directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents
of any member of the Parent Group, or (B) any
resolution adopted by the board of directors or the
stockholders of any member of the Parent Group; or
(ii) any Contract to which any member of the Parent Group
is a party or by which any member of the Parent Group
may be bound.
16
(b) Except for the approval of Parent's board of directors, Parent
will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement,
the Voting and Exchange Agency Agreement and the Support
Agreement or the consummation or performance of any of the
Transactions.
5.3 Capitalization
The authorized capital stock of Parent consists of 50,000,000 Parent
Common Shares $0.001 par value per share. Immediately after Closing
approximately 21,000,000 Parent Common Shares will be outstanding, including
Exchangeable Shares of Exchangeco. No Parent Common Shares are held by Parent in
its treasury. All outstanding Parent Common Shares will be at Closing validly
issued, fully paid, non-assessable and free of preemptive rights. The Parent
Common Shares and the Exchangeable Shares, when issued and delivered in
accordance with the terms of this Agreement and the Support Agreement (in the
case of the Parent Common Shares issuable in respect of the Exchangeable
Shares), will have been duly authorized and validly issued, fully paid and
non-assessable. The issuance of the Exchangeable Shares and the Acquisition
Shares will have been duly authorized and validly issued, fully- paid and
non-assessable, and will be exempt from the prospectus and registration
requirements of the Canadian Securities Laws, in each case without qualification
with or approval of or the obtaining of any further order, ruling or consent
from any Governmental Body or regulatory authority under Canadian federal or
provincial laws.
5.4 Certain Proceedings
There is no pending Proceeding that has been commenced against any
member of the Parent Group or that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Transactions. To Parent's Knowledge, no such Proceeding has been Threatened.
5.5 No Material Adverse Change
Since September 30, 2003, there has not been any material adverse
change in the business, operations, properties, prospects, assets or condition
of the Parent, and no event has occurred or circumstance exists that is
reasonably likely to result in such a material adverse change.
5.6 Bankruptcy Plan
Parent is in compliance with its plan of bankruptcy in all material
respects, and is subject to its obligation to redeem certain share lots under 10
presented and payable at the rate of $0.05 per share.
5.7 Financial Statements and No Material Changes
Parent has provided copies of its audited balance sheets, statement of
expense and statements of cash flows as of December 31, 2002, and the unaudited
balance sheets, statements of expense and statement of cash flows as of
September 30, 2003 (the "Parent Financial Statements"). The Parent Financial
17
Statements were carefully prepared from the books and records of Parent, and
contain the footnotes which are required in audited financial statements,
present fairly the financial position, assets and liabilities of Parent and the
results of its operations, for the respective periods indicated and reflect all
necessary accruals, all in conformity with GAAP applied on a consistent basis.
The Parent Financial Statements contain all adjustments (consisting of only
normal recurring accruals) required to be made by GAAP, subject to normal
year-end adjustments. Since September 30, 2003, there has been (a) no material
adverse change in the assets or liabilities, or in the business or condition,
financial or otherwise, or in the results of operations or prospects, of Parent
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or other public
force or otherwise and (b) no material adverse change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations or prospects, of Parent and to the best knowledge,
information and belief of Parent, no fact or condition exists or is contemplated
or threatened which might cause such a change in the future.
5.8 Books and Records
The minute books of Parent, all the contents of which have been
previously made available to Maxus and its representatives, contain accurate
records of all meetings of, and action taken by (including action taken by
written consent) the shareholders and its Board of Directors. Parent does not
have any of its respective records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of Parent.
5.9 Leases
Parent does not lease any properties.
5.10 Material Contracts
Parent is not bound by:
(a) any agreement, contract or commitment relating to the
employment of any person by Parent, or any bonus, deferred
compensation, pension, profit sharing, employee option,
employee stock purchase, retirement or other employee benefit
plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its shares;
(c) any loan or advance to, or investment in, any Person or any
agreement, contract or commitment relating to the making of
any such loan, advance or investment;
18
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the
ordinary course of business);
(e) any management service, consulting or any other similar type
contract;
(f) any agreement, contract or commitment limiting the freedom of
Parent to engage in any line of business or to compete with
any Person;
(g) any agreement, contract or commitment not entered into in the
ordinary course of business which involves $5,000 or more and
is not cancelable without penalty or premium within 30 days;
or
(h) any agreement, contract or commitment which might reasonably
be expected to have a potential adverse impact on the business
or operations of Parent; or
(i) any agreement, contract or commitment not reflected in the
Parent Financial Statement under which Parent is obligated to
make cash payments of, or deliver products or render services
with a value greater than $5,000, or receive cash payments of,
or receive products or services with a value greater than
$5,000, and any other agreement, contract or commitment which
is material to the conduct of the business of Parent.
5.11 Restrictive Documents
Except for requirements by federal and state securities laws, Parent is
not subject to, or a party to, any charter, by-law, mortgage, lien, lease,
license, permit, agreement, contract, instrument, law, rule, ordinance,
regulation, order, judgment or decree, or any other restriction of any kind or
character, which could materially adversely affect the business practices,
operations or condition of Parent or any of its assets or property ("Parent's
Property"), or which would prevent consummation of the transactions contemplated
by this Agreement or the continued operation of "Parent's Business" after the
date hereof or the Closing on substantially the same basis as heretofore
operated or which would restrict the ability of Parent to conduct business in
any area.
5.12 Taxes
Parent has filed or caused to be filed, within the times and within the
manner prescribed by law, all federal, state, local and foreign tax returns and
tax reports which are required to be filed by, or with respect to, Parent. Such
returns and reports reflect accurately all liability for taxes of Parent for the
periods covered thereby. All federal, state, local and foreign income, profits,
franchise, employment, sales, use, occupancy, excise and other taxes and
assessments, stock and transfer taxes (including interest and penalties) payable
by, or due from, Parent, has been fully paid and fully provided for in the books
and Parent Financial Statements. No examination of any tax return of Parent is
currently in progress. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any tax return of Parent.
19
5.13 Liabilities
Parent on a consolidated basis has no outstanding claims, liabilities
or indebtedness, contingent or otherwise, which are not properly reflected in
the Parent Financial Statements in a manner consistently with past practice,
other than liabilities incurred subsequent to September 30, 2003 in the ordinary
course of business not exceeding $5,000 in the aggregate; the reserves reflected
in the Parent Financial Statements are adequate, appropriate and reasonable.
Parent is not in default in respect of the terms or conditions of any
indebtedness.
5.14 Insurance
Parent does not maintain any insurance policies.
5.15 Intellectual Properties
The operation of the business of Parent requires no rights under
Intellectual Property other than rights under Intellectual Property listed on
Exhibit 5.15 attached hereto. Since inception of Parent, the business of Parent
has not made use of Intellectual Property rights other than rights listed on
Exhibit 5.15. Parent owns all right, title and interest in the Intellectual
Property listed on Exhibit 5.15. No claim adverse to the interests of Parent in
the Intellectual Property has been made in litigation. To best knowledge,
information and belief of Parent, no such claim has been threatened or asserted,
no basis exists for any such claim, and no Person has infringed or otherwise
violated the rights of Parent in any of the Intellectual Property. No litigation
is pending wherein Parent is accused of infringing or otherwise violating the
Intellectual Property right of another, or of breaching a contract conveying
rights under Intellectual Property. To the best knowledge, information and
belief of Parent, no such claim has been asserted or threatened against Parent,
nor are there any facts that would give rise to such a claim.
5.16 Compliance with Laws and SEC Filings
Parent is not in violation of any applicable order, judgment,
injunction, award or decree, related to, arising out of or affecting Parent's
Business or properties, the violation of which would have a material adverse
effect on the business assets or prospects of Parent. Parent is not in violation
of any federal, state, local or foreign law, ordinance, regulation or any other
requirement of any governmental or regulatory body, court or arbitrator
(including, without limitation, laws relating to the environment and OSHA and
the Americans with Disabilities Act). Parent does not require any Permit to
conduct its business. Parent is in compliance with and has timely made all
filings required by the Securities Act.
5.17 Employment Relations
Parent is in compliance with all federal, state or other applicable
laws, domestic or foreign, respecting employment and employment practices, terms
and conditions of employment and wages and hours, and has not and is not engaged
in any unfair labor practice. No unfair labor practice complaint against Parent
is currently pending before the National Labor Relations Board or similar
authority nor has such a complaint been pending in the last two years. There is
no labor strike, dispute, slowdown or stoppage actually pending or threatened
20
against or involving Parent nor has one existed during the last two years. There
is no grievance which might have an adverse effect upon Parent or the conduct of
Parent's Business. Parent is not a party to and has never been a party to any
union, collective bargaining agreement or similar agreement with respect to the
employees of Parent.
5.18 Employee Benefit Plans
Parent does not and has not maintained any Employee Welfare Plans or
Employee Pension Plan.
5.19 Environmental Laws and Regulations
Parent has not generated, transported or disposed of any hazardous
material since inception. Parent does not have hazardous materials at any site
or facility operated presently or at any previous time by Parent. Parent is in
compliance in all material respects with all applicable federal, state and local
laws and regulations relating to product registration, pollution control and
environmental contamination including, but not limited to, all laws and
regulations governing the generation, use, collection, discharge, or disposal of
hazardous materials and all laws and regulations with regard to record keeping,
notification and reporting requirements respecting hazardous materials. Parent
has not been alleged to be in violation of, and has not been subject to any
administrative or judicial proceeding pursuant to, such laws or regulations
either now or any time during the past three years. There are no facts or
circumstances which Parent reasonably expects could form the basis for the
assertion of any environmental claim against Parent relating to environmental
matters including, but not limited to, any environmental claim arising from past
or present environmental practices asserted under CERCLA and RCRA, or any other
federal, state or local environmental statute, which Parent believes might have
an adverse effect on the business, results of operations, financial condition or
prospects of Parent taken as a whole.
5.20 Certain Business Practices
No officer, director, employee, agent or other representative of
Parent, has directly or indirectly, within the past two years, given or agreed
to give any illegal, unethical or improper gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder Parent in connection with an actual or proposed
transaction.
5.21 Subsidiaries
As of the Closing, Parent shall have no subsidiaries or interest in any
corporation, partnership, joint venture or other entity other than as listed on
Exhibit 5.21.
5.22 Disclosure
Neither this Agreement, nor the Parent Financial Statements referred to
in Section 5.7 hereof, any schedule, exhibit or certificate attached hereto or
delivered in accordance with the terms hereof or any document or statement in
writing which has been supplied by or on behalf of Parent or by or on behalf of
any of Parent's directors or officers in connection with the transactions
21
contemplated by this Agreement contains any untrue statement of a material fact,
or omits any statement of a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact known to
Parent which could materially and adversely affect the business, prospects or
financial condition of Parent or its properties or assets, which has not been
set forth in this Agreement, the Parent Financial Statements referred to in
Section 5.7 hereof (including the footnotes thereto), any schedule, exhibit or
certificate attached hereto or delivered in accordance with the terms hereof or
any document or statement in writing which has been supplied by or on behalf of
the Maxus Shareholder or by or on behalf of any of Parent's directors or
officers in connection with the transactions contemplated by this Agreement.
6. Representations Of Exchangeco
Exchangeco hereby represents and warrants to Maxus and the Maxus
Shareholders as follows (it being acknowledged that Maxus and the Maxus
Shareholders are entering into this Agreement in material reliance upon each of
the following representations and warranties, and that the truth and accuracy of
each, as evidenced by the execution of this Agreement by a duly authorized
officer of Exchangeco, constitutes a condition precedent to the obligations of
Maxus and the Maxus Shareholders hereunder).
6.1 Existence and Good Standing
Exchangeco is a corporation duly organized, validly existing and in
good standing under the laws of Ontario. Exchangeco has the power to own or
lease its properties and assets and to carry on its business as now being
conducted. Exchangeco is not qualified to do business in any foreign
jurisdiction.
6.2 Capitalization
Exchangeco currently has outstanding 100 shares of common stock and no
shares of preferred stock. All such outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable. Except for the
Exchangeco Stock, there are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements,
commitments or arrangements of any character providing for the purchase,
subscription, issuance or sale of any shares of capital stock of Exchangeco,
other than the exchange of the Exchangeco Stock as contemplated by this
Agreement.
6.3 Approval of the Agreement
The Board of Directors of Exchangeco has authorized the execution and
delivery of this Agreement and has approved the transactions contemplated
hereby. The approval of the shareholders of Exchangeco shall not be required to
approve, authorize, or enter into the Agreement or the transaction contemplated
hereby.
6.4 Validity of Exchangeco Stock
The shares of Exchangeco Stock to be issued hereunder, when issued
shall have been duly authorized and validly issued and fully paid and
nonassessable.
22
7. Representations Of NovaScotiaco
NovaScotiaco hereby jointly and severally represents and warrants to
Maxus and the Maxus Shareholders as follows (it being acknowledged that Maxus
and the Maxus Shareholders are entering into this Agreement in material reliance
upon each of the following representations and warranties, and that the truth
and accuracy of each, as evidenced by the execution of this Agreement by a duly
authorized officer of NovaScotiaco, constitutes a condition precedent to the
obligations of Maxus and the Maxus Shareholders hereunder).
7.1 Existence and Good Standing
NovaScotiaco is a corporation duly organized, validly existing and in
good standing under the laws of Nova Scotia. NovaScotiaco has the power to own
or lease its properties and assets and to carry on its business as now being
conducted. NovaScotiaco is not qualified to do business in any foreign
jurisdiction.
7.2 Capitalization
NovaScotiaco currently has outstanding 100 shares of common stock and
no shares of preferred stock. All such outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. Except for
the NovaScotiaco Stock, there are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements, commitments or arrangements of any character providing for the
purchase, subscription, issuance or sale of any shares of capital stock of
NovaScotiaco, other than the exchange of the NovaScotiaco Stock as contemplated
by this Agreement.
7.3 Approval of the Agreement
The Board of Directors of NovaScotiaco has authorized the execution and
delivery of this Agreement and has approved the transactions contemplated
hereby. The approval of the shareholders of NovaScotiaco shall not be required
to approve, authorize, or enter into the Agreement or the transaction
contemplated hereby.
7.4 Validity of NovaScotiaco Stock
The shares of NovaScotiaco Stock to be issued hereunder, when issued
shall have been duly authorized and validly issued and fully paid and
nonassessable.
8. Covenants of Maxus
8.1 Access and Investigation
Maxus will (a) afford Parent and its Representatives full and free
access to Maxus personnel, properties, contracts, books and records, and other
documents and data, (b) furnish Parent and its Representatives with copies of
all such contracts, books and records, and other existing documents and data as
Parent may reasonably request, and (c) furnish Parent and its Representatives
with such additional financial, operating, and other data and information as
Parent may reasonably request.
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8.2 Operation of the Businesses of Maxus
Maxus will conduct the business of Maxus only in the Ordinary Course of
Business.
8.3 Negative Covenant
Except as otherwise expressly permitted by this Agreement, Maxus will
not, without the prior written consent of Parent, take any affirmative action,
or fail to take any reasonable action within its control, as a result of which
any of the changes or events referred to in Section 3.9 is likely to occur.
8.4 Required Approvals
Maxus will make all filings required by Legal Requirements to be made
by them in order to consummate the Transactions. Maxus will (a) cooperate with
Parent with respect to all filings that Parent elects to make or is required by
Legal Requirements to make in connection with the Transactions, and (b)
cooperate with Parent in obtaining any Consents that may be required.
8.5 Best Efforts
Maxus will use its Best Efforts to cause the conditions in Articles 10
and 11 to be satisfied as soon as reasonably practicable.
9. Covenants of Parent Group
9.1 Approvals of Governmental Bodies
As promptly as practicable after the date of this Agreement, Parent
will make all filings required by Legal Requirements to be made by it to
consummate the Transactions. Parent will (i) cooperate with Maxus with respect
to all filings Maxus is required by Legal Requirements to make in connection
with the Transactions, and (ii) cooperate with Maxus in obtaining any consents
that may be required.
9.2 Best Efforts
Parent will use its Best Efforts to cause the conditions in Articles 10
and 11 to be satisfied as soon as reasonably practicable.
9.3 Support Agreement and Voting and Exchange Agency Agreement
Prior to the Effective Time, Parent Group shall execute and deliver the
Exchangeable Share Support Agreement substantially in the form of Schedule D
(the "Support Agreement") and Parent and Exchangeco shall execute and deliver
the Voting and Exchange Agency Agreement substantially in the form of Schedule E
(the "Voting and Exchange Agency Agreement"). Parent agrees to issue a Special
Preferred Voting Share with the rights set out in the Voting and Exchange Agency
Agreement.
24
9.4 Canadian Securities Compliance
Parent shall use its Best Efforts to obtain all orders required from
the applicable Canadian securities commissions or similar regulatory authorities
to permit the issuance and first resale of (a) the Exchangeable Shares and
Parent Common Shares issued pursuant to the Transactions, and (b) the
Acquisition Shares (the "Canadian Securities Orders"), in each case without
qualification with or approval of or the filing of any document, including any
prospectus or similar document, or the taking of any proceeding with or the
obtaining of any further order, ruling or consent from, any Governmental Body or
regulatory authority under any Canadian federal, provincial or territorial
securities or other laws or pursuant to the rules and regulations of any
regulatory authority administering such laws, or the fulfillment of any other
legal requirement in any such jurisdiction (other than, with respect to such
resales, any restrictions on transfer by reason of a holder being a "control
person" of Parent, Exchangeco or NovaScotiaco for purposes of Canadian
provincial securities laws).
9.5 Canadian Approvals
Maxus and Parent each shall use Best Efforts to file all notices and
information (if any) required under (i) the Investment Canada Act (Canada) and
(ii) Part IX of the Competition Act (Canada).
10. Conditions Precedent to Parent's Obligation to Close
Parent's obligation to consummate the Transactions and to take the
other actions required to be taken by Parent at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Parent, in whole or in part):
10.1 Accuracy of Representations
All of the representations and warranties of Maxus in this Agreement
must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date.
10.2 Performance by Maxus.
All of the covenants and obligations that Maxus is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
10.3 No Proceedings.
Since the date of this Agreement, there must not have been commenced or
Threatened against Maxus or the Maxus Shareholders, or against any Person
affiliated with either of them, any Proceeding (a) involving any challenge to,
or seeking damages or other relief in connection with, any of the Transactions,
or (b) that is reasonably likely to have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the Transactions.
25
10.4 No Prohibition.
Neither the consummation nor the performance of any of the Transactions
will, directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material violation of,
or cause Parent or any Person affiliated with Parent to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order, or (b)
any Legal Requirement or Order that has been published, introduced, or otherwise
formally proposed by or before any Governmental Body.
11. Conditions Precedent to Maxus' and the Maxus Shareholders' Obligation
to Close
Maxus' and the Maxus Shareholders' obligation to consummate the
Transactions and to take the actions required to be taken by them at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Maxus and the Maxus
Shareholders, in whole or in part):
11.1 Accuracy of Representations
All of Parent's representations and warranties in this Agreement must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date.
11.2 Parent's Performance
All of the covenants and obligations that Parent is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must
have been performed and complied with in all material respects.
11.3 Consents
Parent and Maxus must have received all Consents necessary to complete
the Transactions in form and substance satisfactory to Maxus, the Shareholders
and their counsel.
11.4 Opinion
Maxus and the Maxus Shareholders shall have received an opinion dated
the Closing Date from counsel to Parent in form, content and scope satisfactory
to Maxus, the Maxus Shareholders and their counsel with respect to: the
incorporation and existence of Parent; the authorized and issued capital of
Parent; the due authorization , execution and delivery by Parent of this
Agreement, the Support Agreement and the Voting and Exchange Agency Agreement;
the validity of the issuance of the Parent Common Shares and the Exchangeable
Shares issuable pursuant to the Share Exchange; the due authorization of the
issuance of Parent Common Shares upon the exchange, redemption or retraction of
the Exchangeable Shares, the compliance with Parent's bankruptcy plan; and such
other matters as counsel to Maxus and the Maxus Shareholders may reasonably
request.
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11.5 Additional Documents
Parent must have caused executed copies of the Support Agreement and
the Voting and Exchange Agency Agreement to be delivered to Maxus and each of
such agreements shall be in full force and effect
11.6 No Proceedings
Since the date of this Agreement, there must not have been commenced or
Threatened against the Parent, or against any Person affiliated with the Parent,
any Proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Transactions, or (b) that is reasonably
likely to have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Transactions.
11.7 No Injunction
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the consummation of the Transactions, and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement
11.8 President's Certificate
Parent shall have delivered to the Maxus Shareholders a President's
certificate, attached hereto as Exhibit 11.8, with the following attached as
exhibits:
(a) copies of its Articles of Incorporation, including all
amendments thereto, certified by the Secretary of Parent,
Exchangeco or NovaScotiaco, as appropriate, and its Bylaws,
including all amendments thereto;
(b) copies of resolutions of its Board of Directors approving this
Agreement; and
(c) certificates from the appropriate authority to the effect that
Parent, Exchangeco, or NovaScotiaco as appropriate, is in good
standing in such jurisdiction and listing all charter
documents, including all amendments thereto, on file.
11.9 Procedures
All proceedings to be taken in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Maxus and its counsel, and
Maxus shall have received copies of all such documents and other evidences as
they or their counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
11.10 Board Representation
At Closing and pursuant to a written consent to action of the Board of
Directors of Parent in the form attached hereto as Exhibit 11.10, the Board of
Directors of Parent (a) shall appoint Xxxxxxxx Xxxxxxxx as a member of the Board
of Directors, and (b) all existing directors shall resign as officers and
directors of Parent.
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11.11 Resignation of Auditors
Parent shall have delivered a resignation letter from its auditors, to
be effective 10 days from the Closing Date, unless waived in writing by Maxus.
11.12 Shareholder List
Parent and Exchangeco shall deliver as soon as practicable a certified
shareholder list evidencing the effects of the issuance of the shares of Parent
Common Shares to the Maxus Shareholders.
11.13 Balance Sheet
Parent shall have used the cash reflected in Parent's September 30,
2003 Balance Sheet to pay all outstanding liabilities as of the Closing or shall
have received waivers from creditors agreeing to waive any debts owed. As of the
date of this Agreement, Parent and Exchangeco shall have no liabilities,
contingent or otherwise.
11.14 OTC Bulletin Board
Parent is and shall remain eligible for quotation on the OTC Bulletin
Board under the symbol MNXS.OB.
12. Termination
This Agreement may, by notice given prior to or at the Closing, be
terminated: by either Parent, on the one hand, or Maxus, on the other, if a
material Breach of any provision of this Agreement has been committed by the
other party and such Breach has not been waived.
13. General Provisions
13.1 Expenses and Liability
(a) Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and
performance of this Agreement and the Transactions, including
all fees and expenses of agents, representatives, counsel, and
accountants.
(b) In the event of termination of this Agreement pursuant to
Article 12, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising
from a Breach of this Agreement by another party.
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13.2 Public Announcements
Any public announcement or similar publicity with respect to this
Agreement or the Transactions will be issued with the approval of both Parent
and Maxus.
13.3 Confidentiality
Parent and Maxus will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Parent and Maxus to
maintain in confidence, any written information stamped "confidential" when
originally furnished by one party to another party in connection with this
Agreement or the Transactions, unless (a) such information is already known to
such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings. If the
Transactions are not consummated, each party will return or destroy as much of
such written information as the other party may reasonably request.
13.4 Notices
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Maxus: Maxus Technology Inc.
0000 - 00 Xx. X.X.
Xxxxxxx, XX X0X 0X0
Attention: Mr. Xxxxx Xxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Xxxxx LLP
Suite 3900, Canada Trust Tower
BCE Place
000 Xxx Xxxxxx, X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
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Parent or any member
of the Parent Group: XXXXXXX & XXXXXXX
000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
13.5 Further Assurances
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
13.6 Waiver
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
13.7 Entire Agreement and Modification
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
13.8 Assignments, Successors, and No Third-Party Rights
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
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13.9 Severability
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
13.10 Section Headings, Construction
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
13.11 Time of Essence
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
13.12 Governing Law
This Agreement will be governed in accordance with, and the parties
hereby attorn to, the laws of the Province of Ontario, Canada. The parties
unconditionally attorn to the courts of the Province of Ontario exclusively in
respect of any dispute of any kind relating to the terms of this Agreement.
13.13 Counterparts
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
MEDINEX SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
---------------------------------------
Title: President
--------------------------------------
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MAXUS (NOVA SCOTIA) COMPANY
By: /s/ Xxxxx Xxxx
-----------------------------------------
Name: Xxxxx Xxxx
---------------------------------------
Title: Secretary
--------------------------------------
MAXUS HOLDINGS INC.
By: /s/ X. Xxxxxx
-----------------------------------------
Name: X. Xxxxxx
---------------------------------------
Title: President
--------------------------------------
901133 ALBERTA LTD.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
---------------------------------------
Title: President
--------------------------------------
MEDALLION CAPITAL CORPORATION
By: /s/ X. Xxxxxx
-----------------------------------------
Name: X. Xxxxxx
---------------------------------------
Title: President
--------------------------------------
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