AMENDED AND RESTATED
AGREEMENT AND PLAN OF AMALGAMATION
AMONG
XXXXXX EQUIPMENT, INC.
AND
4274458 CANADA INC.
AND
PNEUTECH INC.
Dated as of February 28, 2005
TABLE OF CONTENTS
Section Page
ARTICLE I THE AMALGAMATION....................................................
1.1 The Amalgamation....................................................
ARTICLE II CLOSING AND TERMINATION............................................
2.1 Closing Date........................................................
2.2 Termination of Agreement............................................
2.3 Procedure Upon Termination..........................................
2.4 Effect of Termination...............................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................
3.1 Organization and Good Standing......................................
3.2 Authorization of Agreement..........................................
3.3 Capitalization......................................................
3.4 No Subsidiaries ....................................................
3.5 Corporate Records...................................................
3.6 Conflicts; Consents of Third Parties................................
3.7 Financial Statements................................................
3.8 No Undisclosed Liabilities..........................................
3.9 Absence of Certain Developments.....................................
3.10 Taxes...............................................................
3.11 Real Property.......................................................
3.12 Tangible Personal Property..........................................
3.13 Intangible Property.................................................
3.14 Material Contracts..................................................
3.15 Employee Benefits...................................................
3.16 Labor...............................................................
3.17 Litigation..........................................................
3.18 Compliance with Laws; Permits.......................................
3.19 Environmental Matters...............................................
3.20 Insurance...........................................................
3.21 Inventories; Receivables; Payables..................................
3.22 Related Party Transactions..........................................
3.23 Banks...............................................................
3.24 No Misrepresentation................................................
3.25 Financial Advisors..................................................
3.26 Patriot Act......
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER........................
4.1 Organization and Good Standing......................................
4.2 Authorization of Agreement..........................................
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4.3 Conflicts; Consents of Third Parties................................
4.4 Litigation..........................................................
4.5 Investment Intention................................................
4.6 Financial Advisors..................................................
4.6 Acquisition Shares..................................................
ARTICLE V COVENANTS...........................................................
5.1 Access to Information...............................................
5.2 Conduct of the Business Pending the Closing.........................
5.3 Consents............................................................
5.4 Other Actions.......................................................
5.5 No Solicitation.....................................................
5.6 Preservation of Records.............................................
5.7 Publicity...........................................................
5.8 Releases............................................................
5.9 Use of Name.........................................................
ARTICLE VI CONDITIONS TO CLOSING..............................................
6.1 Conditions Precedent to Obligations of Purchaser....................
6.2 Conditions Precedent to Obligations of the Company..................
ARTICLE VII DOCUMENTS TO BE DELIVERED.........................................
7.1 Documents to be Delivered by the Company............................
7.2 Documents to be Delivered by the Purchaser..........................
ARTICLE VII INDEMNIFICATION...................................................
8.1 Indemnification.....................................................
8.2 Limitations on Indemnification for Breaches of Representations
and Warranties...................................................
8.3 Indemnification Procedures..........................................
ARTICLE IX MISCELLANEOUS......................................................
9.1 Payment of Sales, Use or Similar Taxes..............................
9.2 Survival of Representations and Warranties..........................
9.3 Expenses............................................................
9.4 Specific Performance................................................
9.5 Further Assurances..................................................
9.6 Submission to Jurisdiction; Consent to Service of Process...........
9.7 Table of Contents and Headings......................................
9.8 Notices.............................................................
9.9 Severability........................................................
9.10 Binding Effect; Assignment..........................................
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THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE
TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE 1933 ACT) PURSUANT TO REGULATION S UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). NONE
OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN
EACH CASE ONLY IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
ACCORDANCE WITH THE 1933 ACT."
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AMENDED AND RESTATED AGREEMENT AND PLAN OF AMALGAMATION
This is an AMENDED AND RESTATED AGREEMENT AND PLAN OF
AMALGAMATION, dated as of February 28, 2005, amends and restates the Agreement
and Plan of Amalgamation dated as of December 22, 2004 (the "Original
Agreement"), among Xxxxxx Equipment, Inc., a corporation existing under the laws
of Delaware (the "Purchaser"), 4274458 Canada, Inc., a corporation formed under
the laws of Canada ("Acquisition"), and Pneutech Inc., a corporation formed
under the laws of Canada (the "Company") (the "Agreement").
W I T N E S S E T H:
WHEREAS, Purchaser, Acquisition and the Company are parties to
the Original Agreement;
WHEREAS, the parties wish to amend the number of shares of
Purchaser common stock to be delivered to the Company's shareholders and certain
provisions related to the amalgamation, as well as to modify certain
representations and warranties;
WHEREAS, the respective Boards of Directors of Purchaser,
Acquisition and the Company deem it advisable and in the best interests of the
parties that Acquisition amalgamate with and into the Company (the
"Amalgamation"), pursuant to the terms of this Agreement and the applicable
provisions of the Canada Business Corporations Act;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties hereby agree
that this Agreement shall supercede and replace in its entirety the Original
Agreement and this Agreement shall constitute for all purposes the entire
understanding of the agreement among the parties hereto with respect to the
subject matter hereof, and the parties further agree as follows:
ARTICLE I
THE AMALGAMATION
1.1 The Amalgamation. At closing of the transaction
contemplated hereby (the "Closing"), Acquisition and the Company shall
amalgamate pursuant to the terms of this Agreement and Plan of Amalgamation and
the Articles of Amalgamation attached hereto as Schedule 1.1 and shall continue
as an amalgamated company (the "Amalgamated Company").
1.2 Effect of the Amalgamation. As of the date of the
Amalgamation as set forth in the Certificate of Amalgamation:
(i) the amalgamation of the Company and Acquisition and their
continuance as one corporation under the terms and
conditions prescribed in this Agreement shall become
effective;
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(ii) the property of each of the Company and Acquisition shall
continue to be the property of the Amalgamated Company;
(iii) the Amalgamated Company shall continue to be liable for the
obligations of each of the Company and Acquisition;
(iv) any existing cause of action, claim or liability to
prosecution with respect to either or both of the Company and
Acquisition shall be unaffected;
(v) any civil, criminal or administrative action or proceeding
pending by or against the Company or Acquisition may be
continued to be prosecuted by or against the Amalgamated
Company;
(vi) any conviction against or ruling, order or judgment in favour
of or against the Company or Acquisition may be enforced by
or against the Amalgamated Company; and
(vii) the articles of amalgamation of the Amalgamated Company are
deemed to be the articles of incorporation of the Amalgamated
Company and the Certificate of Amalgamation is deemed to be
the Certificate of Incorporation of the Amalgamated Company.
1.3 Certificate of Amalgamation; Bylaws; Directors and
Officers.
(i) Name. - The name of the Amalgamated Company shall be PNEUTECH INC.
(ii) Restriction on business activities of the Amalgamated Company. - There
shall be no restriction or limit on the business activity which the
Amalgamated Company is authorized to carry on.
(iii) Registered office. - The place in Canada where the registered office is to
be situated is in the city of Mississauga, Province of Ontario, and the
registered office of the Amalgamated Company shall be located at 000,
Xxxxxxxx Xxxxxxxxx, Xxxx #0, in the City of Mississauga, in the Province
xx Xxxxxxx, X0X 0X0.
(iv) Authorized capital. - The authorized capital of the Amalgamated Company
shall consist of an unlimited number of Common Shares and 1,000 Preference
Shares.
(v) Features of shares in the capital stock of the Amalgamated Company. - The
rights, privileges, restrictions and conditions attaching to the shares of
the Amalgamated Company are set forth in Schedule "2004-1" attached
hereto.
(vi) Restrictions on transfers. - The restrictions on shares transfers are set
forth in Schedule "2004-2" attached hereto.
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(vii) Number of directors. - The number of directors of the Amalgamated Company
shall be a minimum of [1] and a maximum of [11], the precise number to be
determined from time to time by resolution of the board of directors of
the Amalgamated Company, and until the precise number is so determined,
such number shall be deemed to be [4].
(viii) Directors. - The first directors of the Amalgamated Company, shall be the
persons whose names, addresses and occupations appear below :
Name Residence Address Occupation
---- ----------------- ----------
Xxxxxxxx X. Xxxx 0000 Xxxxxxxx Xxxx Xxxxx Xxxxxxxxxxx
Xxxxxxxxxxx (Xxxxxxx)
X0X 0X0
Xxxxx Xxxxx 0000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx Businessman
Xxxxx X. Xxxxx Businessman
The first directors of the Amalgamated Company shall hold office until the first
annual meeting of the shareholders of the Amalgamated Company or until their
successors are duly elected or appointed.
(ix) Fiscal year. - The fiscal year end of the Amalgamated Company shall be
October 31st, in each year.
(x) Special Provisions. - The special provisions (Other provisions) are set
forth in Schedule "2004-3" attached hereto.
(xi) By-laws. - The by-laws of the Amalgamated Company shall be identical to
those of the Company. A copy of the proposed by-laws are attached hereto
as Schedule "1.3".
1.4 Conversion of Securities. At the Effective Time, by
virtue of the Amalgamation and without any action on the part of Acquisition or
the Company, each share of capital stock of the Company ("Company Shares") that
is issued and outstanding at the Effective Time shall automatically be cancelled
and extinguished and converted, without any action on the part of the holder
thereof, into the right to receive at the time and in the amounts described in
this Agreement an amount of common shares of the Purchaser equal to 1,082,639
divided by the number of Company Shares outstanding immediately prior to Closing
(the "Acquisition Shares"). All such Company Shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the Acquisition Shares paid in consideration therefor upon the surrender of such
certificate in accordance with this Agreement.
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1.5 Adherence with Applicable Securities Laws. The Company
shareholders acknowledge that they are acquiring the Acquisition Shares for
investment purposes and will not offer, sell or otherwise transfer, pledge or
hypothecate any of the Acquisition Shares issued to them (other than pursuant to
an effective Registration Statement under the Securities Act of 1933, as
amended) directly or indirectly unless:
(i) the sale is to the Purchaser;
(ii) the sale is made pursuant to the exemption from
registration under the Securities Act of 1933,as amended, provided by Rule 144
thereunder; or
(iii) the Acquisition Shares are sold in a transaction that
does not require registration under the Securities Act of 1933, as amended, or
any applicable United States state laws and regulations governing the offer and
sale of securities, and the vendor has furnished to the Purchaser an opinion of
counsel to that effect or such other written opinion as may be reasonably
required by the Purchaser.
1.6 The Company represents and warrants that it is not a
reporting issuer or otherwise required to make filings under applicable Canadian
securities laws.
1.7 The Company acknowledges that the certificates
representing the Acquisition Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN EFFECT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT IS
THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE II
CLOSING AND TERMINATION
2.1 Closing Date.
Subject to the satisfaction of the conditions set forth
in Sections 7.1 and 7.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the Closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof shall take place at the offices of Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (or at such other place as the parties may designate in writing) on
February 7, 2005, or on such other date as the Company and the Purchaser may
designate in writing. The date on which the Closing shall be held is referred to
in this Agreement as the "Closing Date".
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2.2 Termination of Agreement.
This Agreement may be terminated prior to the Closing as
follows:
(a) At the election of any party on or after February 4,
2005, if the Closing shall not have occurred by the close of business on such
date, provided that the terminating party is not in default of any of its
obligations hereunder;
(b) by mutual written consent of the parties; or
(c) by any party if there shall be in effect a final
nonappealable order of a governmental body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence).
2.3 Procedure Upon Termination.
In the event of termination and abandonment by the
Purchaser or the Company, or both, pursuant to Section 2.2 hereof, written
notice thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the Amalgamation hereunder shall be abandoned,
without further action by the Purchaser or the Company. If this Agreement is
terminated as provided herein each party shall redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same.
2.4 Effect of Termination.
In the event that this Agreement is validly terminated
as provided herein, then each of the parties shall be relieved of their duties
and obligations arising under this Agreement after the date of such termination
and such termination shall be without liability to the Purchaser, the Company or
Acquisition; provided, however, that the obligations of the parties set forth in
Section 8 hereof shall survive any such termination and shall be enforceable
hereunder; provided, further, however, that nothing in this Section 2.4 shall
relieve the Purchaser, Acquisition or the Company of any liability for a breach
of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS OF THE COMPANY
3156176 Canada Inc. and Xxxx Xxxx, hereby jointly and
severally represent and warrant to the Purchaser that:
3.1 Organization and Good Standing.
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The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation as
set forth above and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
The Company is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified would not have a
material adverse effect on the business, assets or financial condition of
Company and any subsidiaries taken as a whole ("Material Adverse Effect").
3.2 Authorization of Agreement.
The Company has all requisite power, authority and legal
capacity to execute and deliver this Agreement, and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by the Company in connection with the consummation of the transactions
contemplated by this Agreement (together with this Agreement, the "Company
Documents"), and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and each of the Company Documents will be at or prior
to the Closing, duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Company
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.3 Capitalization.
(a) The authorized capital stock of the Company consists
of an unlimited number of Common shares (the "Common Shares"), an unlimited
number of Preference shares (the "Preference Shares"), an unlimited number of
Special shares (the "Special Shares") and an unlimited number of Class "A"
Preferred shares (the "Class "A" Preferred Shares"). As of the date hereof,
there are 21,011.80 Common Shares, 929 Preference Shares, 530,000 Special
Shares, 250 Class "A" Preferred Shares and 9,440.08 Warrants for Common Shares
issued and outstanding. All of the issued and outstanding shares of capital
stock were duly authorized for issuance and are validly issued, fully paid and
non-assessable.
(b) Except as set forth on Schedule 3.3, there is no
existing option, warrant, call, right, commitment or other agreement of any
character to which the Company is a party requiring, and there are no securities
of the Company outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of the Company. Except as set forth on
Schedule 3.3, the Company is not a party to any voting trust or other voting
agreement with respect to any of the shares of capital stock or to any agreement
relating to the issuance, sale, redemption, transfer or other disposition of the
capital stock of the Company.
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3.4 Subsidiaries. Schedule 3.4 hereto sets forth the name
of each subsidiary of the Company (each a "Subsidiary"), and, with respect
to each Subsidiary, the jurisdiction in which it is incorporated or organized,
the jurisdictions, if any, in which it is qualified to do business, the number
of shares of its authorized capital stock, the number and class of shares
thereof duly issued and outstanding, the names of all stockholders or other
equity owners and the number of shares of stock owned by each stockholder or the
amount of equity owned by each equity owner. The outstanding shares of capital
stock or equity interests of each Subsidiary are validly issued, fully paid and
non-assessable, and all such shares or other equity interests represented as
being owned by Company are owned by it free and clear of any and all liens,
hypothecs, security interests, pledges, encumbrances, charges, agreements or
claims of any kind whatsoever, except as set forth in Schedule 4.4 hereto. No
shares of capital stock are held by any Subsidiary as treasury stock. There is
no existing option, warrant, call, commitment or agreement to which any
Subsidiary is a party requiring, and there are no convertible securities of any
Subsidiary outstanding which upon conversion would require, the issuance of any
additional shares of capital stock or other equity interests of any Subsidiary
or other securities convertible into shares of capital stock or other equity
interests of any Subsidiary or other equity security of any Subsidiary. Each
Subsidiary is a duly organized and validly existing corporation or other entity
in good standing under the laws of the jurisdiction of its reorganization and is
duly qualified to do business and is in good standing under the laws of (i) each
jurisdiction in which it owns or leases real property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its assets
requires such qualification, except where a failure to be so qualified would not
have a Material Adverse Effect on the business, assets or financial condition of
Company and its Subsidiaries taken as a whole. Each Subsidiary has all requisite
corporate power and authority to own its properties and carry on its business as
presently conducted.
3.5 Corporate Records.
(a) The Company has delivered to the Purchaser true,
correct and complete copies of the certificates of incorporation (each certified
by the appropriate official of the applicable jurisdiction of organization) and
by-laws (each certified by the secretary, assistant secretary or other
appropriate officer) or comparable organizational documents of the Company and
each of its Subsidiaries.
(b) The minute books of the Company and each Subsidiary
previously made available to the Purchaser contain complete and accurate records
of all meetings and accurately reflect all other corporate action of the
stockholders and board of directors (including committees thereof) of the
Company and its Subsidiaries. The stock certificate books and stock transfer
ledgers of the Company and its Subsidiaries previously made available to the
Purchaser are true, correct and complete.
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3.6 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by the Company of
this Agreement and the Company Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Company with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the certificate of incorporation or by-laws or comparable
organizational documents of the Company or any Subsidiary; (ii) conflict with,
violate, result in the breach or termination of, or constitute a default under
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which the Company or any Subsidiary is a party or by which any of
them or any of their respective properties or assets is bound; (iii) violate any
statute, rule, regulation, order or decree of any governmental body or authority
by which the Company or any Subsidiary is bound; or (iv) result in the creation
of any lien, charge or encumbrance or any kind or nature ("Lien") upon the
properties or assets of the Company or any Subsidiary except, in case of clauses
(ii), (iii) and (iv), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person,
entity or governmental body is required on the part of the Company or any
Subsidiary in connection with the execution and delivery of this Agreement or
the Company Documents, or the compliance by the Company as the case may be, with
any of the provisions hereof or thereof.
3.7 Financial Statements.
The Company has delivered to the Purchaser copies of (i) the
audited consolidated balance sheet of the Company and its Subsidiaries as at
October 31, 2003 and October 31, 2004, and the related consolidated statements
of income and of cash flows of the Company and its Subsidiaries for the five
years then ended (such statements, including the related notes and schedules
thereto, are referred to herein as the "Financial Statements"). Each of the
Financial Statements is complete and correct in all material respects, has been
prepared in accordance with Canadian generally accepted accounting principles
("GAAP") (subject to normal year-end adjustments in the case of the unaudited
statements) and in conformity with the practices consistently applied by the
Company without modification of the accounting principles used in the
preparation thereof and presents fairly the financial position, results of
operations and cash flows of the Company and its Subsidiaries as at the dates
and for the periods indicated.
For the purposes hereof, the balance sheet of the Company and
its Subsidiaries as at October 31, 2004 is referred to as the "Balance Sheet"
and October 31, 2004 is referred to as the "Balance Sheet Date".
3.8 No Undisclosed Liabilities.
Neither the Company nor any Subsidiary has any indebtedness,
obligations or liabilities of any kind (whether accrued, absolute, contingent or
otherwise, and whether due or to become due) that would have been required to be
reflected in, reserved against or otherwise described on the Balance Sheet or in
the notes thereto in accordance with GAAP which was not fully reflected in,
reserved against or otherwise described in the Balance Sheet or the notes
thereto or was not incurred in the ordinary course of business consistent with
past practice since the Balance Sheet Date.
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3.9 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on Schedule 3.9, since the
Balance Sheet Date:
(i) there has not been any Material Adverse Change nor has
there occurred any event which is reasonably likely to result in a Material
Adverse Change;
(ii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and assets of
the Company or any Subsidiary having a replacement cost of more than $25,000 for
any single loss or $50,000 for all such losses;
(iii) there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares of
capital stock of the Company or any repurchase, redemption or other acquisition
by the Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interest in, the Company or any
Subsidiary;
(iv) neither the Company nor any Subsidiary has awarded or
paid any bonuses to employees of the Company or any Subsidiary with respect to
the fiscal year ended October 31, 2004, except to the extent accrued on the
Balance Sheet or entered into any employment, deferred compensation, severance
or similar agreement (nor amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of the Company's or any
Subsidiary's directors, officers, employees, agents or representatives or agreed
to increase the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees, agents or
representatives (other than normal increases in the ordinary course of business
consistent with past practice and that in the aggregate have not resulted in a
material increase in the benefits or compensation expense of the Company and its
Subsidiaries taken as a whole);
(v) there has not been any change by the Company or any
Subsidiary in accounting or tax reporting principles, methods or policies;
(vi) neither the Company nor any Subsidiary has entered into
any transaction or Contract or conducted its business other than in the ordinary
course consistent with past practice;
(vii) neither the Company nor any Subsidiary has failed to
promptly pay and discharge current liabilities except where disputed in good
faith by appropriate proceedings;
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(viii) neither the Company nor any Subsidiary has made any
loans, advances or capital contributions to, or investments in, any person or
paid any fees or expenses to any affiliate;
(ix) neither the Company nor any Subsidiary has mortgaged,
pledged, hypothecated or subjected to any lien or security interest any of its
assets, or acquired any assets or sold, assigned, transferred, conveyed, leased
or otherwise disposed of any assets of the Company or any Subsidiary, except for
assets acquired or sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the ordinary course of business consistent with past practice;
(x) neither the Company nor any Subsidiary has discharged or
satisfied any lien, hypothec or security interest or paid any obligation or
liability (fixed or contingent), except in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be material
to the Company and its Subsidiaries taken as a whole;
(xi) neither the Company nor any Subsidiary has canceled or
compromised any debt or claim or amended, canceled, terminated, relinquished,
waived or released any Contract or right except in the ordinary course of
business consistent with past practice and which, in the aggregate, would not be
material to the Company and its Subsidiaries taken as a whole;
(xii) neither the Company nor any Subsidiary has made or
committed to make any capital expenditures or capital additions or betterments
in excess of $20,000 individually or $40,000 in the aggregate;
(xiii) neither the Company nor any Subsidiary has instituted
or settled any material legal proceeding; and
(xiv) the Company has not agreed to do anything set forth in
this Section 3.9.
3.10 Taxes.
(a) Except as set forth on Schedule 3.10, (A) all material tax
returns required to be filed by or on behalf of the Company have been properly
prepared and duly and timely filed with the appropriate taxing authorities in
all jurisdictions in which such tax returns are required to be filed (after
giving effect to any valid extensions of time in which to make such filings),
and all such tax returns were true, complete and correct in all material
respects; (B) all amounts shown on such tax returns (including interest and
penalties) as due from the Company have been fully and timely paid, and adequate
reserves or accruals for taxes have been provided in the Balance Sheet with
respect to any period for which tax returns have not yet been filed or for which
taxes are not yet due and owing; and (C) the Company has not executed or filed
with any taxing authority any agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of taxes (including, but not limited to, any applicable statute of
limitation), and no power of attorney with respect to any tax matter is
currently in force.
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(b) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and has duly and timely withheld from employee salaries, wages and
other compensation and has paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
(c) Purchaser has received complete copies of (A) all material
income or franchise other returns of the Company relating to the taxable periods
since January 1, 1998, and (B) any audit report issued within the last three
years relating to any material Taxes due from or with respect to the Company its
income, assets or operations. All income and other tax returns filed by or on
behalf of the Company for the taxable years ended on the respective dates set
forth on Schedule 3.10 have been examined by the relevant taxing authority or
the statute of limitations with respect to such tax returns has expired.
(d) Schedule 3.10 lists all material types of taxes paid and
material types of tax returns filed by or on behalf of the Company. Except as
set forth on Schedule 3.10, no claim has been made by a taxing authority in a
jurisdiction where the Company does not file tax returns such that it is or may
be subject to taxation by that jurisdiction.
(e) Except as set forth on Schedule 3.10, all deficiencies
asserted or assessments made as a result of any examinations by any taxing
authority of the tax returns of or covering or including the Company have been
fully paid, and there are no other audits or investigations by any taxing
authority in progress, nor has the Company received any notice from any taxing
authority that it intends to conduct such an audit or investigation. No issue
has been raised by a federal, state, local or foreign taxing authority in any
current or prior examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed deficiency for
any subsequent taxable period.
(f) There are no liens or prior claims as a result of any
unpaid taxes upon any of the assets of the Company.
3.11 Real Property.
(a) Schedule 3.11(a) sets forth a complete list of all real
property and interests in real property leased by the Company and its
Subsidiaries (individually, a "Real Property Lease" and the real properties
specified in such leases being referred to herein individually as a "Company
Property" and collectively as the "Company Properties") as lessee or lessor.
Company Property constitutes all interests in real property currently used or
currently held for use in connection with the business of the Company and its
Subsidiaries and which are necessary for the continued operation of the business
of the Company and its Subsidiaries as the business is currently conducted. The
Company and its Subsidiaries have a valid and enforceable leasehold interest
under each of the Real Property Leases, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and neither the Company nor any Subsidiary has
received any written notice of any default or event that with notice or lapse of
time, or both, would constitute a default by the Company or any Subsidiary under
any of the Real Property Leases. All of the Company Property, buildings,
fixtures and improvements thereon owned or leased by the Company and its
Subsidiaries are in good operating condition and repair (subject to normal wear
and tear). The Company has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications or supplements, if any, thereto.
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(b) The Company and its Subsidiaries have all material
certificates of occupancy and permits of any governmental body necessary or
useful for the current use and operation of each Company Property, and the
Company and its Subsidiaries have fully complied with all material conditions of
the permits applicable to them. No default or violation, or event that with the
lapse of time or giving of notice or both would become a default or violation,
has occurred in the due observance of any permit.
3.12 Tangible Personal Property.
(a) Schedule 3.12(a) sets forth all leases of personal
property ("Personal Property Leases") involving annual payments in excess of
$25,000 relating to personal property used in the business of the Company or any
of its Subsidiaries or to which the Company or any of its Subsidiaries is a
party or by which the properties or assets of the Company or any of its
Subsidiaries is bound. The Company delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Personal Property Leases,
together with all amendments, modifications or supplements thereto.
(b) The Company and each of its Subsidiaries have a valid
leasehold interest under each of the Personal Property Leases under which it is
a lessee, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity), and there
is no default under any Personal Property Lease by the Company or any of its
Subsidiaries or, to the best knowledge of the Company, by any other party
thereto, and no event has occurred that with the lapse of time or the giving of
notice or both would constitute a default thereunder.
(c) The Company and its Subsidiaries have good and marketable
title to all of the items of tangible personal property reflected in the Balance
Sheet (except as sold or disposed of subsequent to the date thereof in the
ordinary course of business consistent with past practice), free and clear of
any and all Liens, other than as set forth on Schedule 3.12. All such items of
tangible personal property which, individually or in the aggregate, are material
to the operation of the business of the Company and its Subsidiaries are in good
condition and in a state of good maintenance and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.
(d) All of the items of tangible personal property used by the
Company and its Subsidiaries under the Personal Property Leases are in good
condition and repair (ordinary wear and tear excepted) and are suitable for the
purposes used.
3.13 Intangible Property.
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Schedule 3.13 contains a complete and correct list of each
patent, trademark, trade name, service xxxx and copyright owned or used by
Company and/or its Subsidiaries as well as all registrations thereof and pending
applications therefor, and each license or other agreement relating thereto.
Except as set forth on Schedule 3.13, each of the foregoing is owned by the
party shown on such Schedule as owning the same, free and clear of all
mortgages, claims, liens, security interests, hypothecs, charges and
encumbrances and is in good standing and not the subject of any challenge. There
have been no claims made neither the Company nor any Subsidiary has received any
notice or otherwise knows or has reason to believe that any of the foregoing is
invalid or conflicts with the asserted rights of others. The Company and each of
its Subsidiaries possesses all patents, patent licenses, trade names,
trademarks, service marks, brand marks, brand names, copyrights, know-how,
formulate and other proprietary and trade rights necessary for the conduct of
its business as now conducted, not subject to any restrictions and without any
known conflict with the rights of others and neither the Company nor any of its
Subsidiaries has forfeited or otherwise relinquished any such patent, patent
license, trade name, trademark, service xxxx, brand xxxx, brand name, copyright,
know-how, formulate or other proprietary right necessary for the conduct of its
business as conducted on the date hereof.
3.14 Material Contracts.
Schedule 3.14 sets forth all of the following contracts,
agreements, commitments ("Contracts") to which the Company or any of its
Subsidiaries is a party or by which it is bound (collectively, the "Material
Contracts"): (i) Contracts with any current officer or director of the Company
or any of its Subsidiaries; (ii) Contracts with any labor union or association
representing any employee of the Company or any of its Subsidiaries; (iii)
Contracts pursuant to which any party is required to purchase or sell a stated
portion of its requirements or output from or to another party; (iv) Contracts
for the sale of any of the assets of the Company or any of its Subsidiaries
other than in the ordinary course of business or for the grant to any person of
any preferential rights to purchase any of its assets; (v) joint venture
agreements; (vi) material Contracts containing covenants of the Company or any
of its Subsidiaries not to compete in any line of business or with any person in
any geographical area or covenants of any other person not to compete with the
Company or any of its Subsidiaries in any line of business or in any
geographical area; (vii) Contracts relating to the acquisition by the Company or
any of its Subsidiaries of any operating business or the capital stock of any
other person; (viii) Contracts relating to the borrowing of money; or (ix) any
other Contracts, other than Real Property Leases, which involve the expenditure
of more than $50,000 in the aggregate or $25,000 annually or require performance
by any party more than one year from the date hereof. There have been made
available to the Purchaser, its affiliates and their representatives true and
complete copies of all of the Material Contracts. Except as set forth on
Schedule 3.14, all of the Material Contracts and other agreements are in full
force and effect and are the legal, valid and binding obligation of the Company
and/or its Subsidiaries, enforceable against them in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set forth
on Schedule 3.14, neither the Company nor any Subsidiary is in default in any
material respect under any Material Contracts, nor, to the knowledge of the
Company, is any other party to any Material Contract in default thereunder in
any material respect.
15
3.15 Employee Benefits.
(a) Schedule 3.15(a) sets forth a complete and correct list of
(i) all employee benefit plans, and any other pension plans or employee benefit
arrangements, programs or payroll practices (including, without limitation,
severance pay, vacation pay, company awards, salary continuation for disability,
sick leave, retirement, deferred compensation, bonus or other incentive
compensation, stock purchase arrangements or policies, hospitalization, medical
insurance, life insurance and scholarship programs) maintained by the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributes or is obligated to contribute thereunder with respect to employees
of the Company ("Employee Benefit Plans") and (ii) all employee pension plans
maintained by the Company or any of its Subsidiaries or any trade or business
(whether or not incorporated) which are under control, or which are treated as a
single employer, with Company ("Pension Plans").
(b) All contributions and premiums required by law or by the
terms of any Employee Benefit Plan or Pension Plan have been timely made
(without regard to any waivers granted with respect thereto) to any funds or
trusts established thereunder or in connection therewith, and no accumulated
funding deficiencies exist in any of such plans.
(c) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans and Pension Plans
(as applicable), have been delivered to the Purchaser (A) any plans and related
trust documents, and all amendments thereto, and (B) the most recent financial
statements and actuarial valuations for the past three years of any such plans.
3.16 Labor.
(a) Except as set forth on Schedule 3.16(a), neither the
Company nor any of its Subsidiaries is party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Company or any of its Subsidiaries. The
Company has delivered or otherwise made available to the Purchaser true, correct
and complete copies of the labor or collective bargaining agreements listed on
Schedule 3.16(a), together with all amendments, modifications or supplements
thereto.
(b) Except as set forth on Schedule 3.16(b), no employees of
the Company or any of its Subsidiaries are represented by any labor
organization. No labor organization or group of employees of the Company or any
of its Subsidiaries has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the best knowledge of the Company, threatened to be
brought or filed. There is no organizing activity involving the Company or any
of its Subsidiaries pending or, threatened by any labor organization or group of
employees of the Company or any of its Subsidiaries.
16
(c) There are no (i) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (ii) material grievances or other labor disputes
pending or threatened against or involving the Company or any of its
Subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the best knowledge of the Company, threatened by or on
behalf of any employee or group of employees of the Company.
3.17 Litigation.
Except as set forth in Schedule 3.17, there is no suit,
action, proceeding, investigation, claim or order pending or, to the knowledge
of the Company, overtly threatened against the Company or any of its
Subsidiaries (or to the knowledge of the Company, pending or threatened, against
any of the officers, directors or key employees of the Company or any of its
Subsidiaries with respect to their business activities on behalf of the
Company), or to which the Company or any of its Subsidiaries is otherwise a
party, which, if adversely determined, would have a Material Adverse Effect,
before any court, or before any governmental department, commission, board,
agency, or instrumentality; nor to the knowledge of the Company is there any
reasonable basis for any such action, proceeding, or investigation. Neither the
Company nor any Subsidiary is subject to any judgment, order or decree of any
court or governmental agency except to the extent the same are not reasonably
likely to have a Material Adverse Effect and neither the Company nor any
Subsidiary is engaged in any legal action to recover monies due it or for
damages sustained by it.
3.18 Compliance with Laws; Permits.
(a) The Company and each of its Subsidiaries is in compliance
with all laws applicable to the Company and its Subsidiaries or to the conduct
of the business or operations of the Company and its Subsidiaries or the use of
their respective properties (including any leased properties) and assets, except
for such non-compliances as would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each of its Subsidiaries has all
governmental permits and approvals from state, federal or local authorities
which are required for the Company and each of its Subsidiaries to operate its
business, except for those the absence of which would not, individually or in
the aggregate, have a Material Adverse Effect.
3.19 Environmental Matters.
Except as set forth on Schedule 3.19 hereto:
(a) the operations of the Company and each of its Subsidiaries
are in compliance with all applicable laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any governmental entity which
prohibit, regulate or control any hazardous material or any hazardous material
activity ("Environmental Laws") and all permits issued pursuant to Environmental
Laws or otherwise;
(b) the Company and each of its Subsidiaries has obtained all
permits required under all applicable Environmental Laws necessary to operate
its business;
17
(c) neither the Company nor any of its Subsidiaries is not the
subject of any outstanding written order or Contract with any governmental
authority or person respecting Environmental Laws or any violation or potential
violations thereof;
(d) neither the Company nor any of its Subsidiaries has
received any written communication alleging either or both that the Company or
any of its Subsidiaries may be in violation of any Environmental Law, or any
permit issued pursuant to Environmental Law, or may have any liability under any
Environmental Law;
3.20 Insurance.
Schedule 3.20 sets forth a complete and accurate list of all
policies of insurance of any kind or nature covering the Company or any of its
Subsidiaries or any of their respective employees, properties or assets,
including, without limitation, policies of life, disability, fire, theft,
workers compensation, employee fidelity and other casualty and liability
insurance. All such policies are in full force and effect, and, to the Company's
knowledge, neither the Company nor any of its Subsidiaries is in default of any
provision thereof, except for such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
3.21 Inventories; Receivables; Payables.
(a) The inventories of the Company and its Subsidiaries are in
good and marketable condition, and are saleable in the ordinary course of
business. Adequate reserves have been reflected in the Balance Sheet for
obsolete or otherwise unusable inventory, which reserves were calculated in a
manner consistent with past practice consistently applied.
(b) All accounts receivable of the Company and its
Subsidiaries have arisen from bona fide transactions in the ordinary course of
business consistent with past practice. All accounts receivable of the Company
and its Subsidiaries reflected on the Balance Sheet are good and collectible at
the aggregate recorded amounts thereof, net of any applicable reserve for
returns or doubtful accounts reflected thereon, which reserves are adequate and
were calculated in a manner consistent with past practice consistently applied.
All accounts receivable arising after the Balance Sheet Date are good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts, which reserves are adequate and were
calculated in a manner consistent with past practice consistently applied.
(c) All accounts payable of the Company and its Subsidiaries
reflected in the Balance Sheet or arising after the date thereof are the result
of bona fide transactions in the ordinary course of business and have been paid
or are not yet due and payable.
3.22 Related Party Transactions.
Except as set forth on Schedule 3.22, no shareholder of the
Company nor any of their respective affiliates has borrowed any moneys from or
has outstanding any indebtedness or other similar obligations to the Company or
any Subsidiary. Except as set forth in Schedule 3.22, neither the Company, any
Subsidiary of the Company, any affiliate of the Company nor any officer or
employee of any of them (i) owns any direct or indirect interest of any kind in,
or controls or is a director, officer, employee or partner of, or consultant to,
or lender to or borrower from or has the right to participate in the profits of,
any person or party which is (A) a competitor, supplier, customer, landlord,
tenant, creditor or debtor of the Company or any of its Subsidiaries, (B)
engaged in a business related to the business of the Company or any of its
Subsidiaries, or (C) a participant in any transaction to which the Company or
any of its Subsidiaries is a party or (ii) is a party to any Contract with the
Company or any of its Subsidiaries.
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3.23 Banks.
Schedule 3.23 contains a complete and correct list of the
names and locations of all banks in which Company or any Subsidiary has accounts
or safe deposit boxes and the names of all persons authorized to draw thereon or
to have access thereto. Except as set forth on Schedule 4.25, no person holds a
power of attorney to act on behalf of the Company or any Subsidiary.
3.24 No Misrepresentation.
No representation or warranty contained in this Agreement or
in any schedule hereto or in any certificate or other instrument furnished by
the Company to the Purchaser pursuant to the terms hereof, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
3.25 Financial Advisors.
Except as set forth on Schedule 3.25, no person has acted,
directly or indirectly, as a broker, finder or financial advisor for the Company
in connection with the transactions contemplated by this Agreement and no Person
is entitled to any fee or commission or like payment in respect thereof.
19
3.26 Patriot Act.
The Company certifies that, to the best of the Company's
knowledge, the Company has not been designated, and is not owned or controlled,
by a "suspected terrorist" as defined in Executive Order 13224. The Company
hereby acknowledges that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities. In furtherance of those
efforts, the Company hereby represent, warrant and agree that: (i) none of the
cash or property owned by the Company has been or shall be derived from, or
related to, any activity that is deemed criminal under United States law; and
(ii) no contribution or payment by the Company has, and this Agreement will not,
cause the Company or the Purchaser to be in violation of the United States Bank
Secrecy Act, the United States International Money Laundering Control Act of
1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001.
3.27 Investment Representations
(a) The shareholders of the Company are located outside and
not residents of the United States;
(b) The shareholders of the Company are not aware of any
advertisement of any of the shares be issued hereunder;
(c) The shareholders of the Company will not acquire the
shares as a result of, and will not itself engage in, any "directed selling
efforts" (as defined in Regulation S under the 0000 Xxx) in the United States in
respect of the shares which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of the shares;
provided, however, that the shareholders may sell or otherwise dispose of the
shares pursuant to registration of the shares pursuant to the 1933 Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;
(d) The shareholders agree that the Company will refuse to
register any transfer of the shares not made in accordance with the provisions
of Regulation S, pursuant to an effective registration statement under the 1933
Act or pursuant to an available exemption from the registration requirements of
the 1933 Act and in accordance with applicable state and provincial securities
laws; and
(e) The shareholders understand and agree that offers and
sales of any of the shares, prior to the expiration of a period of one year
after the date of transfer of the shares (the "Distribution Compliance Period"),
shall only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions of the 1933 Act or an exemption therefrom and in each case only in
accordance with all applicable securities laws;
20
(f) The shareholders understand and agree not to engage in any
hedging transactions involving the new Shares, prior to the end of the
Distribution Compliance Period unless such transactions are in compliance with
the provisions of the 1933 Act;
(g) The shareholders hereby acknowledge that that upon the
issuance thereof, and until such time as the same is no longer required under
the applicable securities laws and regulations, the certificates representing
any of the shares will bear a legend in substantially the following form:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). ACCORDINGLY, NONE OF
THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
WITH THE 0000 XXX."
(h) The shareholders hereby acknowledge and agree to the
Company making a notation on its records or giving instructions to the registrar
and transfer agent of the Company in order to implement the restrictions on
transfer set forth and described herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Company, as follows:
4.1 Organization and Good Standing.
The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authorization of Agreement.
The Purchaser has full corporate power and authority to
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
the Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the "Purchaser Documents"), and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by the Purchaser of this Agreement and each Purchaser Document have
been duly authorized by all necessary corporate action on behalf of the
Purchaser. This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly executed and delivered by the Purchaser and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
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4.3 Conflicts; Consents of Third Parties.
(a) Neither of the execution and delivery by the Purchaser of
this Agreement and of the Purchaser Documents, nor the compliance by the
Purchaser with any of the provisions hereof or thereof will (i) conflict with,
or result in the breach of, any provision of the certificate of incorporation or
by-laws of the Purchaser, (ii) conflict with, violate, result in the breach of,
or constitute a default under any note, bond, mortgage, indenture, hypothec,
security agreement,license, agreement or other obligation to which the Purchaser
is a party or by which the Purchaser or its properties or assets are bound or
(iii) violate any statute, rule, regulation, order or decree of any governmental
body or authority by which the Purchaser is bound, except, in the case of
clauses (ii) and (iii), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, results of operations, prospects, conditions (financial or
otherwise) of the Purchaser and its subsidiaries, taken as a whole.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of the Purchaser in connection with
the execution and delivery of this Agreement or the Purchaser Documents or the
compliance by Purchaser with any of the provisions hereof or thereof.
4.4 Litigation.
There are no Legal Proceedings pending or, to the best
knowledge of the Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of the Purchaser to enter into this Agreement or consummate
the transactions contemplated hereby.
4.5 Investment Intention.
The Purchaser is acquiring the Company Shares for its own
account, for investment purposes only and not with a view to the distribution
(as such term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act") thereof. Purchaser understands that the Shares have not
been registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.
4.6 Financial Advisors.
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No Person has acted, directly or indirectly, as a broker,
finder or financial advisor for the Purchaser in connection with the
transactions contemplated by this Agreement and no person is entitled to any fee
or commission or like payment in respect thereof.
4.7 Acquisition Shares.
The Acquisition Shares when delivered to the holders of
Company Shares pursuant to the Amalgamation shall be validly issued and
outstanding as fully paid and non-assessable shares and the Acquisition Shares
shall be transferable upon the books of the Purchaser, in all cases subject to
the provisions and restrictions of all applicable securities laws.
ARTICLE V
COVENANTS
5.1 Access to Information.
The Company agrees that, prior to the Closing Date, the
Purchaser shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Company
and its Subsidiaries and such examination of the books, records and financial
condition of the Company and its Subsidiaries as it reasonably requests and to
make extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Company shall cooperate, and shall cause the
Company and its Subsidiaries to cooperate, fully therein. No investigation by
the Purchaser prior to or after the date of this Agreement shall diminish or
obviate any of the representations, warranties, covenants or agreements of the
Company contained in this Agreement or the Company Documents. In order that the
Purchaser may have full opportunity to make such physical, business, accounting
and legal review, examination or investigation as it may reasonably request of
the affairs of the Company and its Subsidiaries, the Company shall cause the
officers, employees, consultants, agents, accountants, attorneys and other
representatives of the Company and its Subsidiaries to cooperate fully with such
representatives in connection with such review and examination.
5.2 Conduct of the Business Pending the Closing.
(a) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of the Purchaser, the Company and
its Subsidiaries shall:
(i) conduct the respective businesses of the Company
and its Subsidiaries only in the ordinary course consistent with past practice;
(ii) use its best efforts to (A) preserve its present
business operations, organization (including, without limitation, management and
the sales force) and goodwill of the Company and its Subsidiaries and (B)
preserve its present relationship with Persons having business dealings with the
Company and its Subsidiaries;
23
(iii) maintain (A) all of the assets and properties of
the Company and its Subsidiaries in their current condition, ordinary wear and
tear excepted and (B) insurance upon all of the properties and assets of the
Company and its Subsidiaries in such amounts and of such kinds com-parable to
that in effect on the date of this Agreement;
(iv) (A) maintain the books, accounts and records of the
Company and its Subsidiaries in the ordinary course of business consistent with
past practices, (B) continue to collect accounts receivable and pay accounts
payable utilizing normal procedures and without discounting or accelerating
payment of such accounts, and (C) comply with all contractual and other
obligations applicable to the operation of the Company and its Subsidiaries; and
(v) comply in all material respects with applicable
Laws.
(b) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of the Purchaser, the Company and
its Subsidiaries shall not:
(i) declare, set aside, make or pay any dividend or
other distribution in respect of the capital stock of the Company or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries;
(ii) transfer, issue, sell or dispose of any shares of
capital stock or other securities of the Company or any of its Subsidiaries or
grant options, warrants, calls or other rights to purchase or otherwise acquire
shares of the capital stock or other securities of the Company or any of its
Subsidiaries;
(iii) effect any recapitalization, reclassification,
stock split or like change in the capitalization of the Company or any of its
Subsidiaries;
(iv) amend the certificate of incorporation or by-laws
of the Company or any of its Subsidiaries;
(v) (A) materially increase the annual level of
compensation of any employee of the Company or any of its Subsidiaries, (B)
increase the annual level of compensation payable or to become payable by the
Company or any of its Subsidiaries to any of their respective executive
officers, (C) grant any unusual or extraordinary bonus, benefit or other direct
or indirect compensation to any employee, director or consultant, other than in
the ordinary course consistent with past practice and in such amounts as are
fully reserved against in the Financial Statements, (D) increase the coverage or
benefits available under any (or create any new) severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan or arrangement made to, for, or with any of the
directors, officers, employees, agents or representatives of the Company or any
of its Subsidiaries or otherwise modify or amend or terminate any such plan or
arrangement or (E) enter into any employment, deferred compensation, severance,
consulting, non-competition or similar agreement (or amend any such agreement)
to which the Company or any of its Subsidiaries is a party or involving a
director, officer or employee of the Company or any of its Subsidiaries in his
or her capacity as a director, officer or employee of the Company or any of its
Subsidiaries;
24
(vi) except for trade payables and for indebtedness for
borrowed money incurred in the ordinary course of business and consistent with
past practice, borrow monies for any reason or draw down on any line of credit
or debt obligation, or become the guarantor, surety, endorser or otherwise
liable for any debt, obligation or liability (contingent or otherwise) of any
other Person;
(vii) subject to any lien, security interest or hypothec
(except for liens, security interests or hypothecs that do not materially impair
the use of the property subject thereto in their respective businesses as
presently conducted), any of the properties or assets (whether tangible or
intangible) of the Company or any of its Subsidiaries;
(viii) acquire any material properties or assets or
sell, assign, transfer, convey, lease or otherwise dispose of any of the
material properties or assets (except for fair consideration in the ordinary
course of business consistent with past practice) of the Company and its
Subsidiaries except as previously consented to by the Purchaser;
(ix) cancel or compromise any debt or claim or waive or
release any material right of the Company or any of its Subsidiaries except in
the ordinary course of business consistent with past practice;
(x) enter into any commitment for capital expenditures
out of the ordinary course;
(xi) permit the Company or any of its Subsidiaries to
enter into any transaction or to make or enter into any Contract which by reason
of its size or otherwise is not in the ordinary course of business consistent
with past practice;
(xii) permit the Company or any of its Subsidiaries to
enter into or agree to enter into any amalgamation or consolidation with, any
corporation or other entity, and not engage in any new business or invest in,
make a loan, advance or capital contribution to, or otherwise acquire the
securities of any other person;
(xiii) except for transfers of cash pursuant to normal
cash management practices, permit the Company or any of its Subsidiaries to make
any investments in or loans to, or pay any fees or expenses to, or enter into or
modify any contract with, any affiliate of the Company; or
(xiv) agree to do anything prohibited by this Section
5.2 or anything which would make any of the representations and warranties of
the Company in this Agreement or the Company Documents untrue or incorrect in
any material respect as of any time through and including the Effective Time.
5.3 Consents.
25
The Company shall use its best efforts, and the Purchaser
shall cooperate with the Company, to obtain at the earliest practicable date all
consents and approvals required to consummate the transactions contemplated by
this Agreement, including, without limitation, the consents and approvals
referred to in Section 3.6(b) hereof; provided, however, that neither the
Company nor the Purchaser shall be obligated to pay any consideration therefor
to any third party from whom consent or approval is requested.
5.4 Other Actions.
Each of the Company and the Purchaser shall use its best
efforts to (i) take all actions necessary or appropriate to consummate the
transactions contemplated by this Agreement and (ii) cause the fulfillment at
the earliest practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this Agreement.
5.5 No Solicitation.
Neither the Company nor any of the Company's directors,
officers, employees, representatives or agents (collectively, the
"Representatives") will, directly or indirectly, (i) discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the proposed
surviving, merged, amalgamated, acquiring or acquired corporation, any
transaction involving a merger, consolidation, business combination, purchase or
disposition of any amount of the assets or capital stock or other equity
interest in the Company or any of its Subsidiaries other than the transactions
contemplated by this Agreement (an "Acquisition Transaction"), (ii) facilitate,
encourage, solicit or initiate discussions, negotiations or submissions of
proposals or offers in respect of an Acquisition Transaction, (iii) furnish or
cause to be furnished, to any Person, any information concerning the business,
operations, properties or assets of the Company or any of its Subsidiaries in
connection with an Acquisition Transaction, or (iv) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. The Company will
inform the Purchaser in writing immediately following the receipt by the Company
or any Representative of any proposal or inquiry in respect of any Acquisition
Transaction.
5.6 Preservation of Records.
The Company and the Purchaser agree that each of them shall
preserve and keep the records held by it relating to the business of the Company
and its Subsidiaries for a period of three years from the Closing Date and shall
make such records and personnel available to the other as may be reasonably
required by such party in connection with, among other things, any insurance
claims by, legal proceedings against or governmental investigations of the
Company or the Purchaser or any of their affiliates or in order to enable the
Company or the Purchaser to comply with their respective obligations under this
Agreement and each other agreement, document or instrument contemplated hereby
or thereby.
5.7 Publicity.
26
Neither the Company nor the Purchaser shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of the Purchaser or the Company, disclosure is
otherwise required by applicable law or by the applicable rules of any stock
exchange on which the Purchaser lists securities, provided that, to the extent
required by applicable law, the party intending to make such release shall use
its best efforts consistent with such applicable law to consult with the other
party with respect to the text thereof.
5.8 Use of Name.
The Company hereby agrees that upon the consummation of the
transactions contemplated hereby, the Purchaser and the Company shall have the
sole right to the use of the name "Pneutech Inc."
5.9 Board of Directors.
The Board of Directors of the Company from and after the
Closing Date shall consist of Xxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxx and
Xxxxx Xxxxx.
5.10 Purchase of Preference and Special Shares.
Concurrently with the Closing of the Amalgamation, the Company
shall purchase from 3156176 Canada Inc. (i) 929 preference shares of the Company
for an aggregate purchase price of CD$100,000, and (ii) 530,000 special shares
for an aggregate purchase price of CD$530,000.
5.11 Agreement with RoyNat Capital.
Prior to the Closing Date, the Company will enter into a
definitive agreement with RoyNat Capital, Inc., pursuant to which the Company's
obligations will be restructured in a manner satisfactory to both RoyNat
Capital, Inc. and the Company (the "RoyNat Agreement").
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions Precedent to Obligations of Purchaser.
The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or prior to the
Closing Date, of each of the following conditions (any or all of which may be
waived by the Purchaser in whole or in part to the extent permitted by
applicable law):
(a) all representations and warranties of the Company
contained herein shall be true and correct as of the date hereof;
27
(b) all representations and warranties of the Company
contained herein qualified as to materiality shall be true and correct, and the
representations and warranties of the Company contained herein not qualified as
to materiality shall be true and correct in all material respects, at and as of
the Closing Date with the same effect as though those representations and
warranties had been made again at and as of that time;
(c) the Company shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by them on or prior to the Closing Date;
(d) the Purchaser shall have been furnished with certificates
(dated the Closing Date and in form and substance reasonably satisfactory to the
Purchaser) executed by the Company certifying as to the fulfillment of the
conditions specified in Sections 6.1(a), 6.1(b) and 6.1(c) hereof;
(e) there shall not have been or occurred any Material Adverse
Change;
(f) the Company shall have obtained all consents and waivers
referred to in Section 3.6 hereof, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement and
the Company Documents;
(g) no legal proceedings shall have been instituted or
threatened or claim or demand made against the Company or any of its
Subsidiaries, or the Purchaser seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;
(h) the Purchaser shall have received the written resignations
of each director of the Company, other than Xxxxxxxx Xxxx;
(i) the Purchaser shall have received the written consent of
Laurus Master Fund, Ltd. to Purchaser entering into this Agreement and the
RoyNat Agreement and the terms and conditions thereof; and
(j) the Purchaser shall have received all schedules required
to be delivered pursuant to the terms of this Agreement and the information
contained therein shall be satisfactory to the Purchaser in all respects.
6.2 Conditions Precedent to Obligations of the Company.
The obligations of the Company to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by the Company in whole or in part to the extent permitted by
applicable law):
28
(a) all representations and warranties of the Purchaser
contained herein shall be true and correct as of the date hereof;
(b) all representations and warranties of the Purchaser
contained herein qualified as to materiality shall be true and correct, and all
representations and warranties of the Purchaser contained herein not qualified
as to materiality shall be true and correct in all material respects, at and as
of the Closing Date with the same effect as though those representations and
warranties had been made again at and as of that date;
(c) the Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Purchaser on or prior to the Closing Date;
(d) the Company shall have been furnished with certificates
(dated the Closing Date and in form and substance reasonably satisfactory to the
Company) executed by the Chief Executive Officer and Chief Financial Officer of
the Purchaser certifying as to the fulfillment of the conditions specified in
Sections 6.2(a), 6.2(b) and 6.2(c); and
(e) no legal proceedings shall have been instituted or
threatened or claim or demand made against the Company or any of its
Subsidiaries, or the Purchaser seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby.
ARTICLE VII
DOCUMENTS TO BE DELIVERED
7.1 Documents to be Delivered by the Company.
At the Closing, the Company shall deliver, or cause to be
delivered, to the Purchaser the following:
(a) the certificates referred to in Section 6.1(d) hereof;
(b) copies of all consents and waivers referred to in Section
6.1(f) hereof;
(c) written resignations of each of the directors of the
Company, other than Xxxxxxxx Xxxx;
(d) such other documents as the Purchaser shall reasonably
request.
7.2 Documents to be Delivered by the Purchaser.
At the Closing, the Purchaser shall deliver to the Company the
following:
29
(a) the Acquisition Shares;
(b) the certificates referred to in Section 6.2(d) hereof;
(c) the payments to be made to 3156176 Canada Inc.; and
(d) such other documents as the Company shall reasonably
request.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Subject to Section 8.2 hereof, 3156176 Canada Inc. and
Xxxx Xxxx hereby agrees to jointly and severally indemnify and hold the
Purchaser, the Company, and their respective directors, officers, employees,
affiliates, agents, successors and assigns (collectively, the "Purchaser
Indemnified Parties") harmless from and against:
(i) any and all liabilities of the Company or any of its
Subsidiaries of every kind, nature and description, absolute or contingent,
existing as against the Company or any of its Subsidiaries prior to and
including the Closing Date or thereafter coming into being or arising by reason
of any state of facts existing, or any transaction entered into, on or prior to
the Closing Date, except to the extent that the same have been fully provided
for in the Balance Sheet or disclosed in the notes thereto or were incurred in
the ordinary course of business between the Balance Sheet date and the Closing
Date;
(ii) subject to Section 8.3, any and all losses,
liabilities, obligations, damages, costs and expenses based upon, attributable
to or resulting from the failure of any representation or warranty of the
Company set forth in Section 3 hereof, or any representation or warranty
contained in any certificate delivered by or on behalf of the Company pursuant
to this Agreement, to be true and correct in all respects as of the date made;
(iii) any and all losses, liabilities, obligations,
damages, costs and expenses based upon, attributable to or resulting from the
breach of any covenant or other agreement on the part of the Company under this
Agreement;
(iv) any and all notices, actions, suits, proceedings,
claims, demands, assessments, judgments, costs, penalties and expenses,
including attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all losses, liabilities,
obligations, damages, costs and expenses with respect to which indemnification
is provided hereunder (collectively, "Losses").
(b) Subject to Section 8.2, Purchaser hereby agrees to
indemnify and hold the shareholders of the Company and their respective
Affiliates, agents, successors and assigns (collectively, the "Company
Indemnified Parties") harmless from and against:
30
(i) subject to Section 8.3, any and all Losses based
upon, attributable to or resulting from the failure of any representation or
warranty of the Purchaser set forth in Section 4 hereof, or any representation
or warranty contained in any certificate delivered by or on behalf of the
Purchaser pursuant to this Agreement, to be true and correct as of the date
made;
(ii) any and all Losses based upon, attributable to or
resulting from the breach of any covenant or other agreement on the part of the
Purchaser under this Agreement or arising from the ownership or operation of the
Company from and after the Closing Date; and
(iii) any and all Expenses incident to the foregoing.
8.2 Limitations on Indemnification for Breaches of
Representations and Warranties.
An indemnifying party shall not have any liability under
Section 8.1(a)(ii) or Section 8.1(b)(i) hereof unless the aggregate amount of
Losses and Expenses to the indemnified parties finally determined to arise
thereunder based upon, attributable to or resulting from the failure of any
representation or warranty to be true and correct, other than the
representations and warranties set forth in Sections 3.7 or 3.10 hereof, exceeds
$15,000 (the "Basket") and, in such event, the indemnifying party shall be
required to pay the entire amount of such Losses and Expenses in excess of
$15,000 (the "Deductible").
8.3 Indemnification Procedures.
(a) In the event that any Legal Proceedings shall be
instituted or that any claim or demand ("Claim") shall be asserted by any Person
in respect of which payment may be sought under Section 8.1 hereof (regardless
of the Basket or the Deductible referred to above), the indemnified party shall
reasonably and promptly cause written notice of the assertion of any Claim of
which it has knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its sole
option and expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder. If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Losses indemnified against hereunder, it shall within five (5) days (or sooner,
if the nature of the Claim so requires) notify the indemnified party of its
intent to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder, fails to notify the indemnified party of its
election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Claim. If the
indemnified party defends any Claim, then the indemnifying party shall reimburse
the indemnified party for the Expenses of defending such Claim upon submission
of periodic bills. If the indemnifying party shall assume the defense of any
Claim, the indemnified party may participate, at his or its own expense, in the
defense of such Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if, (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified party and
the indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required to pay
for more than one such counsel for all indemnified parties in connection with
any Claim. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such Claim.
32
(b) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the indemnifying party pursuant to this Agreement
with respect to such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party by wire transfer of
immediately available funds within 10 business days after the date of such
notice.
(c) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
ARTICLE IX
MISCELLANEOUS
9.1 Payment of Sales, Use or Similar Taxes.
All sales, goods and services, use, transfer, intangible,
recordation, documentary stamp or similar taxes or charges, of any nature
whatsoever, applicable to, or resulting from, the transactions contemplated by
this Agreement shall be borne by the Company.
9.2 Survival of Representations and Warranties.
The parties hereto hereby agree that the representations and
warranties contained in this Agreement or in any certificate, document or
instrument delivered in connection herewith, shall survive the execution and
delivery of this Agreement, and the Closing hereunder, regardless of any
investigation made by the parties hereto; provided, however, that any claims or
actions with respect thereto (other than claims for indemnifications with
respect to the representation and warranties contained in Sections 4.7 and 4.11
which shall survive for periods coterminous with any applicable statutes of
limitation) shall terminate unless within twenty-four (24) months after the
Closing Date written notice of such claims is given to the Company or such
actions are commenced.
32
9.3 Expenses.
Except as otherwise provided in this Agreement, the Company
and the Purchaser shall each bear its own expenses incurred in connection with
the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby, it being understood that in no
event shall the Company bear any of such costs and expenses.
9.4 Specific Performance.
The Company acknowledges and agrees that the breach of this
Agreement would cause irreparable damage to the Purchaser and that the Purchaser
will not have an adequate remedy at law. Therefore, the obligations of the
Company under this Agreement, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.
9.5 Further Assurances.
The Company and the Purchaser each agrees to execute and
deliver such other documents or agreements and to take such other action as may
be reasonably necessary or desirable for the implementation of this Agreement
and the consummation of the transactions contemplated hereby.
9.6 Submission to Jurisdiction; Consent to Service of
Process.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or provincial court located within the
Province of Ontario, Canada over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party hereby
irrevocably agrees that all claims in respect of such dispute or any suit,
action proceeding related thereto may be heard and determined in such courts.
The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or proceeding by
the mailing of a copy thereof in accordance with the provisions of Section 9.10.
9.7 Entire Agreement; Amendments and Waivers.
33
This Agreement (including the schedules and exhibits hereto)
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
No action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein.
9.9 Table of Contents and Headings.
The table of contents and section headings of this Agreement
are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
9.10 Notices.
All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally or
mailed by certified mail, return receipt requested, to the parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
(a) Purchaser:
Xxxxxx Equipment, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx, Chairman
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to:
Xxxxxx X. Xxxx, Esq.
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
(b) Company:
34
Pneutech Inc.
000 Xxxxxxxx Xxxx, Xxxx 0
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to:
Me Jacques Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx
000, boul. Xxxxxx-Xxxxxxxx
Bureau 000
Xxxxxxxxx (Xx) Xxxxxx, X0X 0X0
Phone: (000)-000-0000
Fax: (000)-000-0000
9.11 Severability.
If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
9.12 Binding Effect; Assignment.
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and permitted assigns. Nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement except as provided
below. No assignment of this Agreement or of any rights or obligations hereunder
may be made by either the Company or the Purchaser (by operation of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void; provided,
however, that the Purchaser may assign this Agreement and any or all rights or
obligations hereunder (including, without limitation, the Purchaser's rights to
purchase the Shares and the Purchaser's rights to seek indemnification
hereunder) to any Affiliate of the Purchaser. Upon any such permitted
assignment, the references in this Agreement to the Purchaser shall also apply
to any such assignee unless the context otherwise requires.
[INTENTIONALLY BLANK]
35
XXXXXX EQUIPMENT, INC.
By: /s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx,
Chairman
4274458 CANADA, INC.
By: /s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx,
Chairman
PNEUTECH INC.
By: /s/ XXXXXXXX XXXX
-----------------
Xxxxxxxx Xxxx,
President
3156176 CANADA INC.
By: /s/ XXXXXXXX XXXX
-----------------
Xxxxxxxx Xxxx,
President
/s/ XXXX XXXX
-------------
Xxxx Xxxx
36
