EXHIBIT 2.1
[EXECUTION COPY]
STOCK PURCHASE AGREEMENT
Dated as of September 2, 2005
Among
RAND ACQUISITION CORPORATION,
LL ACQUISITION CORP.,
and
THE STOCKHOLDERS OF LOWER LAKES TOWING LTD.
TABLE OF CONTENTS
Page
ARTICLE I. CLOSING; SALE AND PURCHASE..........................................1
1.1 The Closing........................................................1
1.2 Sale and Purchase of the Purchase Shares...........................1
1.3 Delivery of Purchase Price and Stock Certificates..................2
1.4 Purchase Price Adjustment..........................................2
1.5 Section 116 Certificate............................................4
1.6 Credit Obligations.................................................5
1.7 Shareholder Approval...............................................6
1.8 Actions Simultaneous...............................................7
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS WITH RESPECT
TO THE PURCHASE SHARES.............................................7
2.1 Authority; Execution and Delivery; Enforceability..................7
2.2 NonContravention...................................................8
2.3 Title to Purchase Shares...........................................8
2.4 [Intentionally Omitted]............................................8
2.5 Litigation and Claims..............................................8
2.6 No Finder..........................................................9
2.7 Residency of Sellers...............................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS WITH RESPECT
TO THE COMPANY AND SUBSIDIARIES...................................9
3.1 Organization; Good Standing........................................9
3.2 Subsidiaries; Equity Interests.....................................9
3.3 NonContravention..................................................10
3.4 Corporate Documents...............................................10
3.5 Capitalization; Options...........................................10
3.6 Consents and Approvals............................................11
3.7 Title to Assets...................................................11
3.8 Real Property.....................................................12
3.9 Employment and Labor Related Agreements and Actions...............13
3.10 Contracts.........................................................17
3.11 Intellectual Property.............................................19
3.12 Insurance.........................................................20
3.13 Books and Records.................................................21
3.14 Financial Statements; Liabilities.................................21
3.15 Tax Matters.......................................................22
3.16 Absence of Certain Changes and Events.............................25
3.17 Litigation and Claims.............................................26
3.18 Governmental Permits; Compliance with Laws........................26
3.19 Environmental Matters.............................................27
3.20 Employee Plans....................................................28
3.21 Maritime Matters..................................................33
3.22 No Finder.........................................................34
3.23 Certain Business Practices........................................34
3.24 Accounts Receivable...............................................34
3.25 Major Customers...................................................34
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3.26 Affiliate Transactions............................................35
3.27 Sufficiency of Assets.............................................35
3.28 Bank Accounts.....................................................35
3.29 Disclosure........................................................35
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND RAND..............35
4.1 Organization; Good Standing.......................................35
4.2 Authority; Execution and Delivery; Enforceability.................35
4.3 NonContravention..................................................36
4.4 Consents and Approvals............................................36
4.5 Litigation and Claims.............................................36
4.6 No Finder.........................................................36
4.7 Disclosure........................................................36
ARTICLE V. ACTION PRIOR TO THE CLOSING DATE...................................37
5.1 Conduct of Business...............................................37
5.2 No Breach of Representations and Warranties; Notification
of Certain Matters................................................41
5.3 Access............................................................41
5.4 Standstill........................................................41
5.5 Notice of Litigation..............................................42
5.6 Fulfillment of Conditions to Rand's and Purchaser's
Obligations and to GR Holdings' Obligations Under the
Redemption Agreement..............................................42
5.7 Fulfillment of Conditions to Sellers' Obligations.................42
5.8 Governmental Consents.............................................42
5.9 Third Party Consents..............................................43
5.10 Publicity.........................................................43
5.11 Transfer of Certain Assets........................................43
5.12 Financing.........................................................43
5.13 Conversion of Convertible Notes...................................44
5.14 Consolidated Financial Statements.................................44
ARTICLE VI. OTHER AGREEMENTS OF THE PARTIES...................................44
6.1 Cooperation in Litigation.........................................44
6.2 Confidentiality...................................................44
6.3 Tax Matters.......................................................45
6.4 Additional Tax Covenants of the Sellers...........................47
6.5 Access............................................................48
6.6 Further Assurances................................................48
6.7 Indemnification...................................................48
6.8 Redemption Agreement..............................................48
6.9 Reorganization....................................................49
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF RAND AND PURCHASER........49
7.1 Representations and Warranties....................................49
7.2 Performance.......................................................49
7.3 No Material Adverse Effect........................................49
7.4 Certificates......................................................49
7.5 No Injunction.....................................................50
7.6 Governmental Approvals............................................50
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7.7 Third Party Consents..............................................50
7.8 Escrow Agreement..................................................51
7.9 Employment Agreement..............................................51
7.10 Stock Certificates................................................51
7.11 Good Standing.....................................................51
7.12 Releases..........................................................51
7.13 Liens.............................................................51
7.14 [Intentionally Omitted]...........................................51
7.15 Change in the Law.................................................51
7.16 Legal Opinions....................................................51
7.17 Section 116 Escrow Agreement......................................51
7.18 Bonus Program Participant Agreement...............................51
7.19 [Intentionally Omitted]...........................................51
7.20 Financing.........................................................52
7.21 Redemption........................................................52
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS..............52
8.1 Representations and Warranties....................................52
8.2 Performance.......................................................52
8.3 Certificates......................................................52
8.4 No Injunction.....................................................52
8.5 Governmental Approvals............................................52
8.6 Third Party Consents..............................................53
8.7 Escrow Agreement..................................................53
8.8 Good Standing.....................................................53
8.9 [Intentionally Omitted]...........................................53
8.10 Legal Opinions....................................................53
8.11 Management Bonus Program..........................................53
ARTICLE IX. INDEMNIFICATION...................................................53
9.1 Survival..........................................................53
9.2 Indemnification by Sellers following Closing......................54
9.3 Indemnification by Purchaser and Rand following Closing...........54
9.4 Limitations on Indemnification....................................55
9.5 Interest..........................................................56
9.6 Tax Treatment of Indemnity Payments...............................56
9.7 Notice of Claims..................................................56
9.8 Third Party Claims................................................56
ARTICLE X. TERMINATION........................................................57
10.1 Termination.......................................................57
10.2 Termination Fee...................................................59
10.3 Effects of Termination............................................59
ARTICLE XI. MISCELLANEOUS.....................................................59
11.1 Expenses of the Transaction.......................................59
11.2 Notices...........................................................59
11.3 No Modification Except in Writing.................................60
11.4 Entire Agreement..................................................60
11.5 Severability......................................................61
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11.6 Assignment........................................................61
11.7 Governing Law; Jurisdiction.......................................61
11.8 Specific Performance..............................................61
11.9 Headings; References..............................................62
11.10 Interpretation....................................................62
11.11 Third Parties.....................................................62
11.12 Counterparts and Facsimile Signatures.............................62
11.13 Time of the Essence...............................................62
11.14 Currency..........................................................62
11.15 Sellers' Representative...........................................62
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APPENDICES
APPENDIX A. DEFINITIONS
APPENDIX B. SELLER DISCLOSURE SCHEDULE
APPENDIX C. PURCHASER DISCLOSURE SCHEDULE
EXHIBITS
ALLOCATION AMONG SELLERS EXHIBIT 1
EMPLOYMENT AGREEMENT EXHIBIT 2
ESCROW AGREEMENT EXHIBIT 3
RELEASE EXHIBIT 4
OPINION OF SELLERS' COUNSEL EXHIBIT 5
OPINION OF RAND'S AND PURCHASER'S COUNSEL EXHIBIT 6
SECTION 116 ESCROW AGREEMENT EXHIBIT 7
COMPANY INDEBTEDNESS EXHIBIT 8
SELLERS' ADDRESSES EXHIBIT 9
WORKING CAPITAL STATEMENT EXHIBIT 10
MANAGEMENT BONUS PROGRAM EXHIBIT 11
SELLERS SEVERAL LIABILITY ALLOCATION EXHIBIT 12
FINANCING COMMITMENTS EXHIBIT 13
BONUS PROGRAM PARTICIPANT AGREEMENT EXHIBIT 14
REDEMPTION AGREEMENT EXHIBIT 15
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement"), dated as of September 2, 2005,
among Rand Acquisition Corporation, a Delaware corporation ("Rand"), LL
Acquisition Corp., a corporation incorporated under the Canada Business
Corporations Act, ("Purchaser"), and the stockholders of Lower Lakes Towing
Ltd., a Canadian corporation (the "Company") listed on Exhibit 1 hereto (the
"Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers are the owners, or through the exercise of
Convertible Notes have the right to become the owners, of 23,568 shares of
common stock of the Company (the "Purchase Shares"), representing all of the
issued and outstanding shares of capital stock of the Company on a fully-diluted
basis;
WHEREAS, Purchaser desires to purchase and acquire from the Sellers, and
the Sellers desire to sell and transfer to Purchaser, the Purchase Shares on the
terms and subject to the conditions hereinafter set forth; and
WHEREAS, terms used in this Agreement and not otherwise defined in this
Agreement are defined in Appendix A hereto.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I.
CLOSING; SALE AND PURCHASE
1.1 The Closing. The closing (the "Closing") of the transactions contained
in this Article I shall take place at 10:00 A.M., Eastern Time, on the second
Business Day after all of the conditions contained in Articles VII and VIII have
been satisfied or waived (other than those conditions which will be satisfied at
the Closing Time), or at such other time or such other date as Purchaser and the
Sellers may agree, at the offices of Xxxxxx Xxxxxx Xxxxxxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx (hereinafter, such date is referred to as the
"Closing Date" and such time on the Closing Date is referred to as the "Closing
Time.")
1.2 Sale and Purchase of the Purchase Shares. Upon the terms and subject
to the conditions set forth herein, at the Closing, the Sellers agree to sell,
convey, transfer and assign the Purchase Shares to Purchaser free and clear of
all Liens, and deliver to Purchaser certificates representing the Purchase
Shares, duly endorsed in blank or accompanied by stock or other appropriate
powers in blank with all appropriate transfer stamps affixed thereto (the "Stock
Certificates"), and Purchaser agrees to purchase the Purchase Shares from the
Sellers for an aggregate cash purchase price of Fifty Three Million Seven
Hundred Thirty Thousand Dollars ($53,730,000) minus (i) the Payoff Amount and
(ii) the Redemption Price (such sum, the "Purchase Price"). The Purchase Price
shall be subject to adjustment in accordance with Section 1.4.
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1.3 Delivery of Purchase Price and Stock Certificates. Subject to
satisfaction or waiver by the relevant party of the relevant conditions to
Closing, at the Closing, (i) the Purchase Price, as adjusted by the amount by
which the Estimated Net Working Capital is greater or less than the Working
Capital Base Amount, less the Escrow Amount shall be paid by Purchaser to the
Sellers pursuant to the allocation set forth on Exhibit 1 by wire transfer of
immediately available funds to accounts designated in writing by the Sellers at
least two Business Days prior to the Closing, (ii) the Escrow Amount shall be
paid by Purchaser to the Escrow Agent by wire transfer of immediately available
funds to be held and disbursed by the Escrow Agent in accordance with the terms
of the Escrow Agreement, and (iii) the Stock Certificates shall be delivered by
the Sellers to Purchaser.
1.4 Purchase Price Adjustment. In accordance with the procedures set forth
in this Section 1.4, the Purchase Price shall be adjusted as follows:
(a) (i) No later than three (3) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Rand a balance sheet that shall set forth
the assets and liabilities of the Company and Subsidiaries on a consolidated
basis as of the close of business on a day that is not more than five (5)
Business Days immediately preceding the Closing Date (the "Estimated Closing
Date Balance Sheet"), and a statement (the "Estimated Statement") of the Net
Working Capital as of the date of the Estimated Closing Date Balance Sheet
derived in a manner consistent with the calculation of "Net Working Capital" on
Exhibit 10 (the "Estimated Net Working Capital"). As provided in Section 1.3,
the Purchase Price shall be adjusted at Closing by the amount by which the
Estimated Net Working Capital is greater or less than the Working Capital Base
Amount.
(ii) Within 90 days after the Closing Date, Rand shall prepare and
deliver to Sellers' Representative a balance sheet that shall set forth the
assets and liabilities of the Company and Subsidiaries on a consolidated basis
as of the close of business on the day immediately preceding the Closing Date
(the "Closing Date Balance Sheet"), and a statement (the "Closing Date
Statement") of the Net Working Capital as of the date of the Closing Date
Balance Sheet derived in a manner consistent with the calculation of "Net
Working Capital" on Exhibit 10 (the "Closing Date Net Working Capital").
(b) The term "Net Working Capital" means the Current Assets of the Company
and Subsidiaries minus the Current Liabilities of the Company and Subsidiaries,
as of the date of the Estimated Closing Date Balance Sheet or Closing Date
Balance Sheet, as applicable, used in preparation of the Estimated Statement or
Closing Date Statement, as applicable, as such items are reflected on the
Estimated Closing Date Balance Sheet or Closing Date Balance Sheet, as
applicable. Such Current Assets and Current Liabilities shall be determined in
accordance with GAAP, using the same accounting methods, policies, practices,
principles and procedures with consistent classifications, judgments and
estimation methodologies as were used in the determination of such items in
determining "Net Working Capital" on Exhibit 10 (the "Working Capital
Principles"), provided, however, for clarity (i) such Current Liabilities shall
not include the Payoff Amount or the Redemption Price, (ii) any currency
conversions in connection with determination of such amounts shall be done on
the basis of prevailing currency conversion rates as of the date of the
Estimated Closing Date Balance Sheet and (iii) to the extent not already
included as accruals on Exhibit 10, all amounts in respect of bonuses,
retirement plan contributions or other benefit plans for employees of the
Company and the Subsidiaries, to the extent not then actually paid, shall be
accrued and included as a Current Liability.
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(c) The Closing Date Balance Sheet and the Closing Date Statement shall
become final and binding upon the parties on the 45th day following delivery
thereof, unless Sellers' Representative gives written notice of its disagreement
with any amounts or calculations set forth on the Closing Date Balance Sheet and
the Closing Date Statement (a "Notice of Disagreement") to Rand prior to such
date and all amounts and calculations set forth on the Closing Date Balance
Sheet and the Closing Date Statement that are not the subject of a Notice of
Disagreement shall become final and binding on such date. Any Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. If a Notice of Disagreement is received by Rand in a timely manner,
then any amounts or calculations set forth on the Closing Date Balance Sheet and
the Closing Date Statement that are subject to any such Notice of Disagreement
shall become final and binding upon Sellers and Rand on the earlier of (A) the
date Sellers' Representative and Rand resolve in writing any differences they
have with such amounts or calculations and (B) the date any such disputed
amounts or calculations are finally resolved in accordance with Section 1.4(d)
below.
(d) During the 30-day period following the delivery of a Notice of
Disagreement, Sellers' Representative and Rand shall seek in good faith to
resolve any differences that they may have with respect to the matters specified
in the Notice of Disagreement. If, at the end of such 30-day period, such
differences have not been resolved, Sellers' Representative and Rand shall,
within the subsequent 30-day period, submit to an independent accounting firm
(the "Accounting Firm") for arbitration, in accordance with the standards set
forth in this Section 1.4, any and all matters that remain in dispute and were
properly included in the Notice of Disagreement, in the form of a written brief.
The Accounting Firm shall be a nationally recognized Canadian independent public
accounting firm as shall be agreed upon by the Sellers' Representative and Rand
in writing. Sellers' Representative and Rand shall use reasonable efforts to
cause the Accounting Firm to render a written decision resolving the matters
submitted on a timely basis to the Accounting Firm within 30 days of the receipt
of such submission. The scope of the disputes to be resolved by the Accounting
Firm shall be limited to whether the items in dispute were determined in
accordance with the standards set forth in this Section 1.4, and the Accounting
Firm is not to make any other determination, including any determination as to
whether the Working Capital Base Amount is correct. The Accounting Firm's
decision shall be based solely on written submissions made on a timely basis by
Sellers' Representative and Rand and their respective representatives and not by
independent review. The Accounting Firm shall address only those items in
dispute and may not assign a value greater than the greatest value for such item
claimed by either party or smaller than the smallest value for such item claimed
by either party. Judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The fees and expenses of the Accounting
Firm incurred pursuant to this Section 1.4 shall be borne by Rand and Sellers in
inverse proportion as they may prevail on matters resolved by the Accounting
Firm, which proportionate allocations shall also be determined by the Accounting
Firm at the time the determination of the Accounting Firm is rendered on the
merits of the matters submitted.
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(e) If the Closing Date Net Working Capital is greater than the Estimated
Net Working Capital, Rand shall, and if the Closing Date Net Working Capital is
less than the Estimated Net Working Capital, Sellers shall, within 10 Business
Days after each time at which any amounts set forth on the Closing Date
Statement become final and binding on the parties, make payment to the other
party by wire transfer in immediately available funds of the amount of such
difference, together with interest thereon at a rate equal to the rate of
interest from time to time announced publicly by Citibank, N.A., as its prime
rate (the "Prime Rate"), calculated on the basis of the actual number of days
elapsed divided by 360, from the Closing Date to the date of payment. Rand shall
pay any amount owed herein to Sellers pursuant to the allocation set forth on
Exhibit 1. Any amounts due to Rand under this Section 1.4 shall first be paid to
Rand from the Escrow Amount (pursuant to the terms of the Escrow Agreement) and,
upon depletion of the Escrow Amount, 67.5% from Sellers and 32.5% through
reduction of the Plan Account Balance until the Plan Account Balance has been
depleted, and then 100% from the Sellers.
(f) Following the Closing, Rand shall not permit the taking of any action
with respect to the accounting books and records of the Company or any
Subsidiary, or the items reflected thereon, on which Net Working Capital is to
be based that are not consistent with the Company's past practices unless such
new practices are required by GAAP or Law. During the 45 day period following
delivery of the Closing Date Balance Sheet, Rand shall afford, and shall cause
the Company and each Subsidiary to afford, to Sellers' Representative and any
accountants, counsel or financial advisers retained by Sellers' Representative
in connection with the determination of Closing Date Net Working Capital in
accordance with this Section 1.4 reasonable access during normal business hours
to all the properties, books, contracts, personnel and records of the Company
relevant to the determination of Closing Date Net Working Capital in accordance
with this Section 1.4.
1.5 Section 116 Certificate.
(a) If a certificate issued by the Minister of National Revenue under
subsection 116(2) of the Tax Act (such certificate, a "Section 116(2)
Certificate") in respect of the disposition of Purchase Shares by any Seller who
is a non-resident of Canada for purposes of the Tax Act (such shares, the
"Non-Resident Purchase Shares", and any such Seller, a "Non-Resident Seller"),
specifying a certificate limit in an amount which is not less than the Purchase
Price as determined prior to any adjustment under Section 1.4 allocable to such
Non-Resident Purchase Shares (the "Non-Resident Purchase Price"), is not
delivered to Purchaser on or before Closing, then Purchaser shall withhold from
the payment to be made to such Non-Resident Seller under Section 1.3 an amount
equal to 25% of the amount, if any, by which the Non-Resident Purchase Price
exceeds such certificate limit, if any (the "Withheld Amount"). The Withheld
Amount in respect of each Non-Resident Seller will be deposited by Purchaser in
an interest bearing account at Xxxxxx Xxxxxxx LLP (the "Section 116 Escrow
Agent"). Any interest or other income earned in respect of each Withheld Amount
(net of any applicable Taxes) will accrue for the benefit of the applicable
Non-Resident Seller.
(b) If, prior to the 29th day after the end of the month in which the
Closing occurs (the "Certificate Date"), a Non-Resident Seller delivers or
causes to be delivered to Purchaser:
(i) a Section 116(2) Certificate in respect of the disposition of
the Non-Resident Purchase Shares, then the Section 116 Escrow Agent will
promptly pay to the Non-Resident Seller the lesser of (1) the Withheld
Amount and (2) the Withheld Amount less 25% of the amount, if any, by
4
which the Non-Resident Purchase Price exceeds the certificate limit
specified in such Section 116(2) Certificate, together with any interest
or other income earned on the Withheld Amount to the date of that payment
(net of any applicable Taxes), and the Section 116 Escrow Agent will
promptly pay to the Receiver General for Canada 25% of the amount, if any,
by which the Non-Resident Purchase Price exceeds the certificate limit
specified in such Section 116(2) Certificate (and the amount so paid will
be credited to Purchaser as payment on account of the amount owing to the
Non-Resident Seller in respect of the Purchase Price); or
(ii) a certificate issued under subsection 116(4) of the Tax Act (a
"Section 116(4) Certificate") in respect of the disposition of the
Non-Resident Purchase Shares, then the Section 116 Escrow Agent will
promptly pay the Withheld Amount to the Non-Resident Seller, together with
any interest or other income earned on the Withheld Amount to the date of
that payment (net of any applicable Taxes).
(c) If Purchaser has withheld any amount payable to a Non-Resident Seller
under the provisions of this Section 1.5 and no Section 116(2) Certificate or
Section 116(4) Certificate has been delivered to the Purchaser by the
Non-Resident Seller in accordance with Section 1.5(b), then the Withheld Amount
in respect of such Non-Resident Seller will be remitted by the Section 116
Escrow Agent to the Receiver General for Canada as contemplated by Subsection
116(5) of the Tax Act on the 30th day after the end of the month in which
Closing occurs (the "Remittance Date"), and the amount so remitted will be
credited to Purchaser on account of the amount payable to the Non-Resident
Seller by the Purchaser in respect of the Purchase Price; provided, however,
that if the Canada Revenue Agency confirms in writing on or before the
Remittance Date that Purchaser may continue to hold the Withheld Amount until a
later date or event without adverse consequences to the Purchaser, then the
Section 116 Escrow Agent will continue to hold that amount on the terms and
conditions of this Section 1.5, and on the terms outlined in the confirmation
from the Canada Revenue Agency, if any, and the Certificate Date and the
Remittance Date will be deemed to have been extended until that later date or
event specified by the Canada Revenue Agency. Any interest or other income
earned in connection with the Withheld Amount from Closing to the Remittance
Date (net of any applicable Taxes) will be paid promptly by the Section 116
Escrow Agent to the Non-Resident Seller upon the release or remittance of the
Withheld Amount.
(d) If, following Closing, the Canada Revenue Agency indicates, in respect
of a particular Non-Resident Seller, that a Section 116(2) Certificate with a
certificate limit in an amount which is not less than the Non-Resident Purchase
Price or a Section 116(4) Certificate will be issued in respect of the
disposition of Non-Resident Purchase Shares upon the payment of an amount (the
"Tax Amount") that does not exceed the applicable Withheld Amount, then the
Section 116 Escrow Agent will remit the Tax Amount to the Receiver General for
Canada as payment of the Tax Amount (and the amount so remitted will be credited
to Purchaser as payment on account of the amount owing to the applicable
Non-Resident Seller in respect of the Purchase Price). Upon delivery of such
certificate, the Section 116 Escrow Agent shall release the Withheld Amount to
the applicable Non-Resident Seller (plus any interest or other income earned
thereon, net of any applicable Taxes), less the Tax Amount.
1.6 Credit Obligations. At the Closing, Rand shall cause, including
through capital contributions or loans to the Company and/or any Subsidiaries by
Purchaser or Rand, (i) an amount sufficient to pay and retire all Indebtedness
of the Company and each Subsidiary to the parties listed on Exhibit 8, in each
case to be paid in full in accordance with the prescribed terms thereof (the
"Payoff Amount") and (ii) $750,000 to be available to Grand River to satisfy the
Redemption Price.
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1.7 Shareholder Approval.
(a) Rand shall, within ten (10) days of its receipt of (x) all required
information for inclusion in the Proxy Statement (as hereinafter defined) from
the Company and the Subsidiaries and (y) the consent of Deloitte & Touche LLP
with respect to the inclusion in the Proxy Statement of the audited financial
statements of the Company and the Subsidiaries prepared by Deloitte & Touche
LLP, file with the Securities and Exchange Commission (the "SEC") a proxy
statement in preliminary form or such other form, statement or report as may be
required under the federal securities laws (such proxy statement or such other
form, and any amendments or supplements thereto (the "Proxy Statement"))
relating to a shareholders meeting (the "Shareholder Meeting") to be held by
Rand to obtain Shareholder Approval (as hereinafter defined). Rand shall duly
call, give notice of, convene and hold the Shareholder Meeting and solicit
proxies as promptly as reasonably practicable in accordance with applicable law
for the purpose of seeking Shareholder Approval. "Shareholder Approval" shall
mean (i) the affirmative vote of the holders of a majority of the shares of the
issued and outstanding voting stock of Rand in favor of the transactions
contemplated by this Agreement and (ii) the holders of less than 20% of the
common stock issued in Rand's initial public offering ("IPO Shares") shall have
exercised their conversion rights with respect to their shares of common stock
in connection with such vote, all in accordance with, and as required by, Rand's
Certificate of Incorporation.
(b) Rand agrees that the Proxy Statement will comply in all material
respects with all of the requirements of the Exchange Act and Rand will ensure
that the Proxy Statement will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation or
warranty is made by Rand with respect to information supplied in writing by the
Company or the Sellers expressly for inclusion in the Proxy Statement. Rand
shall promptly correct any information provided by it for use in the Proxy
Statement if and to the extent that such information becomes false or misleading
and shall take all steps necessary to cause the Proxy Statement as so corrected
to be filed with the SEC and disseminated to its shareholders, in each case as
and to the extent required by the Exchange Act. Rand shall give Sellers and
their counsel a reasonable opportunity (but no more than 5 Business Days) to
review and comment on the Proxy Statement, and any amendments or supplements
thereto, prior to the filing of any such documents with the SEC and Rand will
give due consideration to Sellers' comments. Rand will provide to Sellers and
their counsel any comments that Rand or its counsel may receive from the SEC or
its staff, whether written or oral, with respect to the Proxy Statement promptly
after receipt of any such comments. Rand will use its reasonable best efforts to
respond to any comments received from the SEC or its staff.
(c) Sellers will cause the Company to ensure that none of the information
regarding the Company or its Subsidiaries supplied by (or at the request or
direction of) Sellers, the Company or any Subsidiary expressly for inclusion in
the Proxy Statement (including any information included in the Seller Disclosure
Schedule and the Consolidated Financial Statements (as hereinafter defined))
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein in light of the circumstances under which they were made, not
6
misleading. If at any time prior to Closing, a change in such information which
would make the preceding sentence incorrect should be discovered by the Sellers,
the Sellers will promptly notify Rand of such change and promptly cause the
Company to amend any such information. Rand shall promptly correct any such
information in the Proxy Statement and shall take all steps necessary to cause
the Proxy Statement as so corrected to be filed with the SEC and disseminated to
its shareholders, in each case as and to the extent required by the Exchange
Act. The Sellers shall, and shall cause the Company and Subsidiaries to,
reasonably cooperate with Rand in its preparation of the Proxy Statement and the
filing of the Proxy Statement with the SEC.
(d) The Sellers will cause the Company and the Subsidiaries to use its
commercially reasonable efforts to obtain the auditors' consents to the
inclusion of the Consolidated Financial Statements in the Proxy Statement, and
to otherwise provide as soon as reasonably practicable any information about the
Company and the Subsidiaries required by the Exchange Act reasonably sufficient
to permit Rand to prepare and file the Proxy Statement.
(e) Rand acknowledges that prior to the Closing, Rand shall not publicly
disclose the Seller Disclosure Schedule as part of the Proxy Statement or
otherwise, subject to applicable law, and taking into account the
confidentiality measures available at law.
(f) Rand, through its board of directors, shall recommend to its
shareholders that they give the Shareholder Approval and, subject to applicable
Law and the exercise of its fiduciary duties (in the good faith judgment of its
board of directors based on the advice of independent legal counsel), shall not
withdraw or modify its recommendation. Rand shall use its reasonable best
efforts to obtain the Shareholder Approval.
1.8 Actions Simultaneous. For purposes of agreement of the parties hereto,
all actions to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed to have been taken and executed and
delivered simultaneously and no actions shall be deemed to have been taken nor
shall any documents be deemed to have been executed and delivered until all
actions have been taken and all documents have been executed and delivered.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS WITH RESPECT TO THE PURCHASE SHARES
Each Seller, severally but not jointly, hereby represents and warrants to
Purchaser and Rand as to such Seller and the Purchase Shares owned by such
Seller, and each such Seller acknowledges and confirms that Purchaser is relying
upon such representations and warranties in entering into this Agreement and
purchasing the Purchase Shares, as follows:
2.1 Authority; Execution and Delivery; Enforceability. Each Seller has
full power, authority and capacity to execute and deliver this Agreement and, to
the extent a party thereto, the Related Agreements, to perform such Seller's
respective obligations hereunder and under such Related Agreements and to
consummate the transactions contemplated hereby and by such Related Agreements.
Each of this Agreement and (when executed) the Related Agreements has been (or
will be) duly executed and delivered by such Seller (to the extent a party
7
thereto), and constitutes (or will, when executed, constitute) the legal, valid
and binding obligation of such Seller (to the extent a party thereto),
enforceable against such Seller in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium and other similar Laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
2.2 Non-Contravention. Except as set forth in the Seller Disclosure
Schedule, the execution and delivery of this Agreement and the Related
Agreements by such Seller (to the extent a party thereto) does not, and the
consummation of the transactions contemplated hereby and by such Related
Agreements and compliance with the terms hereof and of such Related Agreements,
will not (or would not with the giving of notice or the passage of time):
(a) constitute a default under or a violation or breach (with or without
notice) of, result in the acceleration of any obligation under, any provision of
any contract or other instrument to which such Seller is a party or result in
the termination or revocation of any authorization held by any Seller necessary
to the ownership of the Purchase Shares;
(b) violate any Order or any Law affecting such Seller;
(c) violate or contravene the terms or provisions of the articles or
certificate of incorporation or amalgamation, by-laws or similar formation or
organizational documents of any Seller which is not an individual;
(d) result in the creation of any Lien on such Seller's Purchase Shares;
or
(e) allow any other Person to exercise any rights under any of such
Seller's governing documents, shareholders agreements, bylaws or resolutions of
its board of directors or shareholders.
2.3 Title to Purchase Shares. Each Seller has (or upon exercise of its
conversion rights under a Convertible Note will have) good and valid title to
the Purchase Shares owned (or upon conversion of Convertible Notes to be owned)
by such Seller as set forth on the Seller Disclosure Schedule, free and clear of
all Liens, other than as set forth in the Seller Disclosure Schedule. Upon
completion of the transactions contemplated by this Agreement and the Related
Agreements, Purchaser will have legal and beneficial, good and valid title to
each of the Purchase Shares owned by such Seller, free and clear of all Liens,
other than as set forth in the Seller Disclosure Schedule. No Seller is bound by
any contract, agreement, arrangement, commitment or understanding (written or
oral) with, and has not granted any option or right currently in effect or which
would arise after the date hereof to, any Person other than Purchaser with
respect to the acquisition of any of such Seller's Purchase Shares.
2.4 [Intentionally Omitted].
2.5 Litigation and Claims. There is no Action pending or, to the Knowledge
of such Seller, threatened, against or affecting such Seller that could
reasonably be expected to affect (i) such Seller's ability to consummate the
transactions contemplated hereby or by the Related Agreements (to the extent a
party thereto) or (ii) Purchaser's title to the Purchase Shares acquired from
such Seller.
8
2.6 No Finder. Except as set forth in the Seller Disclosure Schedule, no
Seller nor any party acting on such Seller's behalf has paid or become obligated
to pay any fee or commission to any broker, finder or intermediary (other than
counsel) for or on account of the transactions contemplated hereby or by the
Related Agreements.
2.7 Residency of Sellers. The residency of each Seller as at Closing is
listed on Exhibit 9.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS WITH RESPECT TO THE
COMPANY AND SUBSIDIARIES
Each of the Sellers, jointly and severally, hereby represents and warrants
to Purchaser and Rand and each Seller acknowledges and confirms that Purchaser
is relying upon such representations and warranties in entering into this
Agreement and purchasing the Purchase Shares, as follows:
3.1 Organization; Good Standing. The Company is a corporation formed by
amalgamation and is duly organized, validly existing and in good standing under
the Laws of Canada. The Company has full corporate power and authority to
conduct all of the business and activities conducted by it, and to own or lease
and operate all of the assets owned or leased by it; and is duly licensed,
registered or qualified to do business and is in good standing as a foreign (or
extra-provincial) corporation in all jurisdictions in which the nature of the
business and activities conducted by it, and/or the character of the assets
owned or leased by it, makes such qualification or license necessary, each of
which jurisdictions is listed on the Seller Disclosure Schedule.
3.2 Subsidiaries; Equity Interests.
(a) The Seller Disclosure Schedule contains a complete list of each of the
Company's direct or indirect Subsidiaries. Each such Subsidiary is a corporation
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation, each of which is listed on the Seller Disclosure
Schedule. Each Subsidiary has full corporate power and authority to conduct all
of the business and activities conducted by it, and to own or lease and operate
all of the assets owned or leased by it; and is duly licensed or qualified to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of the business and activities conducted by it, and/or the
character of the assets owned or leased by it, makes such qualification or
license necessary, each of which jurisdictions is listed on the Seller
Disclosure Schedule.
(b) Except as set forth in the Seller Disclosure Schedule, neither the
Company nor any Subsidiary, directly or indirectly, owns any capital stock of or
other equity interests in any Person.
9
(c) The representations and warranties of Grand River set forth in Article
III of the Redemption Agreement are true and correct as if fully set forth
herein.
3.3 Non-Contravention. The execution and delivery of this Agreement and
the Related Agreements by the Sellers does not, and the consummation of the
transactions contemplated hereby and by such Related Agreements and compliance
with the terms hereof and of such Related Agreements, will not (or would not
with the giving of notice or the passage of time):
(a) except as set forth in the Seller Disclosure Schedule, constitute a
default under or a violation or breach (with or without notice) of, or result in
the acceleration of any obligation of the Company or any Subsidiary under, or
change in any right or obligation of, the Company, any Subsidiary or
counterparty under, any provision of any Contract to which the Company or any
Subsidiary is a party or result in the termination or revocation of any
authorization held by the Company or any Subsidiary or necessary to the
ownership of the Purchase Shares or the operation of the business of the Company
or any Subsidiary;
(b) violate any Order or any Law affecting the Company or any Subsidiary,
or the assets of the Company or any Subsidiary;
(c) violate or contravene the terms or provisions of the articles or
certificate of incorporation or amalgamation, by-laws or similar formation or
organizational documents of the Company or any Subsidiary; or
(d) result in the creation of any Lien on any of the assets of the Company
or any Subsidiary.
3.4 Corporate Documents. The Sellers have made available to Purchaser
complete and correct copies of the articles or certificate of incorporation or
amalgamation, as applicable, by-laws and other organizational documents and
stock transfer books of the Company and each Subsidiary. Except as set forth on
the Seller Disclosure Schedule, there are no unanimous shareholder agreements or
declarations affecting the Company or any Subsidiary. The Sellers have made
available to Purchaser copies of all minute books and all other existing records
of any meeting of the board of directors or other similar governing body (and
any committee thereof) or shareholders of the Company and each Subsidiary, which
minute books and records are complete and correct in all material respects.
3.5 Capitalization; Options. The Seller Disclosure Schedule sets forth for
the Company and each Subsidiary the amount of its authorized capital stock, the
amount of its outstanding capital stock and the shareholders of record in
respect of its outstanding capital stock. All the outstanding shares of capital
stock of the Company and each Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable, free and clear of all Liens, other
than pledges set forth in the Seller Disclosure Schedule, each of which will be
fully released as at the Closing. Except as set forth on the Seller Disclosure
Schedule, there are no outstanding subscriptions, warrants, options, contracts,
rights (preemptive or otherwise), calls, demands or commitments of any character
binding on the Company or any Subsidiary relating to any authorized and issued
or unissued shares of capital stock of the Company or any Subsidiary, or other
instruments binding on the Company or any Subsidiary convertible into or
10
exchangeable for such stock, or which obligate the Company or any Subsidiary to
seek authorization to issue additional shares of any class of stock, nor will
any be created by virtue of this Agreement or the Related Agreements or the
transactions contemplated hereby or by the Related Agreements. Upon conversion
of the Convertible Notes, the Purchase Shares will constitute all of the
outstanding shares of capital stock of the Company. The GR Shares constitute all
of the outstanding shares of capital stock of Grand River which are not owned by
the Company, and upon completion of the transactions under the Redemption
Agreement, the 10 common shares of Grand River owned by the Company will
constitute all of the issued and outstanding shares of capital stock of Grand
River. None of the Purchase Shares or the shares of capital stock of any
Subsidiary were (or, with respect to Purchase Shares to be issued upon
conversion of the Convertible Notes, will be) issued in violation of any
applicable Laws.
3.6 Consents and Approvals. Except as set forth in the Seller Disclosure
Schedule and the requirements under the Competition Act and Investment Canada
Act, no consent, approval, waiver, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Authority, and no
consent, approval, waiver or other similar authorization of any other Person
(including without limitation any Person who is a party to a Contract binding on
or affecting the Company or any Subsidiary or any Seller), is required to be
obtained by or on behalf of the Company or any Subsidiary or any Seller, as the
case may be, as a result of, or in connection with, or as a condition of the
lawful execution, delivery and performance of this Agreement or the Related
Agreements or the consummation of the transactions contemplated hereby and by
such Related Agreements.
3.7 Title to Assets.
(a) Except as set forth in the Seller Disclosure Schedule, the Company and
each Subsidiary has good and valid title to all of the properties and assets
(whether tangible or intangible) that it purports to own, free and clear of all
Liens (other than Permitted Liens), including, without limitation, all of the
tangible assets reflected on the balance sheets included in the Financial
Statements as of March 31, 2005, other than assets disposed of since such date
in the ordinary course of business consistent with past practice.
(b) Except as set forth in the Seller Disclosure Schedule, none of the
Sellers or any Restricted Persons (other than the Company and the Subsidiaries)
own any assets primarily used in or necessary to conduct the business of the
Company or its Subsidiaries.
(c) All of the tangible personal property of the Company and the
Subsidiaries (other than the Vessels, which are covered under Section 3.21 and
not this Section 3.7(c)) is in good working order and condition, reasonable wear
and tear excepted and is suitable for the use to which they are being put. All
of the leased personal property of the Company and its Subsidiaries is in the
condition reasonably required of such property by the terms of the lease
applicable thereto during the relevant term of the lease. None of such tangible
personal property is in need of maintenance or repairs, except as shown in the
Seller Disclosure Schedule and except for ordinary routine maintenance and
repairs consistent with past practice.
(d) Except as set forth in the Seller Disclosure Schedule, no Person has
any written or oral agreement, option, understanding or commitment, or any right
or privilege (whether at law, by contract or otherwise) capable of becoming such
for the purchase or other acquisition from the Company or the Subsidiaries of
any assets other than in the ordinary course.
11
3.8 Real Property.
(a) Neither the Company nor any of its Subsidiaries holds the fee or the
equity of redemption in, or any other power to control the disposition of, or
any beneficial or other ownership interest whatsoever in any real property.
(b) The Seller Disclosure Schedule lists all Real Property Leases, expiry
dates and base rental amounts. Complete and correct copies of each Real Property
Lease have been provided to Purchaser. Each Real Property Lease is in full force
and effect, has not been amended and is a legal, valid and binding agreement,
enforceable in accordance with its terms, of the Company or its Subsidiaries
and, to the Knowledge of Sellers, of each other Person that is a party thereto.
Neither the Company nor any Subsidiary has received written notice of any, and
to the knowledge of the Company there is no, default (or any condition or event
which, after notice or lapse of time or both, would constitute a default)
thereunder which remains uncured. Neither the Company nor any Subsidiary has
assigned or transferred all or any portion of its interests in the Real Property
Leases. Neither the Company nor any Subsidiary has subleased to any Person any
of the real property which is the subject of any Real Property Lease. There are
no disputes under any of the Real Property Leases in relation to the state of
repair of the premises demised or otherwise. Each Real Property Lease has not
been assigned or encumbered by the Company or any Subsidiary. There are no
letters or other documents signed by the Company or any of its Subsidiaries
under each Real Property Lease waiving or releasing any of the tenant's material
rights or making material accommodations of any kind.
(c) To Sellers' Knowledge, there is no proceeding pending or threatened
for the taking or condemnation of all or any portion of the premises demised
under the Real Property Leases. The Company and its Subsidiaries hold a valid
and existing leasehold interest under the Real Property Leases, free and clear
of any Liens (except Permitted Liens), except for real property Taxes, if any
affecting properties of which the premises demised under the Real Property
Leases form a part, not yet due and payable. There is no brokerage commission or
finder's fee due from the Company or any Subsidiary and unpaid with regard to
any of the Real Property Leases, or which will become due at any time in the
future with regard to any Real Property Lease.
(d) Except as set forth on the Seller Disclosure Schedule, the premises
demised under the Real Property Leases are adequate and sufficient for the
current operations of the Company's and Subsidiaries' business.
(e) Neither the Company nor any Subsidiary has received any written notice
that any portion of any of the security deposits under the Real Property Leases
has been applied or retained by the lessor or licensor or sublessor thereunder.
Neither the Company nor any Subsidiary has, in the last five years, with respect
to any Real Property Lease, (i) made, asserted or has any defense, set off or
counterclaim, (ii) claimed or is entitled to "free" rent, rent concessions,
rebates or rent abatements, or (iii) has questioned or disputed its share of any
additional rent or other charges required to be paid under such Real Property
Lease. Except as set forth in the Seller Disclosure Schedule, neither the
Company nor any Subsidiary has exercised any option granted to it under any such
12
Real Property Lease to (A) cancel or terminate such Real Property Lease or
lessen the term thereof, (B) renew or extend the term thereof or (C) take
additional space. There are no written or oral promises, understandings or
commitments between the Company or any Subsidiary, on the one hand, and each
other Person that is a party to such Real Property Lease, on the other hand,
other than those contained in such Real Property Lease.
(f) Neither the Company nor any Subsidiary has received written notice
that the premises demised under each of the Real Property Leases and the uses
presently made thereof (including the number of parking and loading spaces, if
applicable, provided on the premises) contravene any applicable Laws and, to the
Knowledge of the Sellers, there are no outstanding work orders, deficiency
notices, action request notices or other notifications of non-compliance or
contravention of the premises or any part thereof, and to the Knowledge of the
Sellers, there are no active municipal files in regard to any of the said
premises and the building and other improvements upon each of the said premises
have been constructed in accordance with permits issued by the local
municipality.
(g) To the Knowledge of the Sellers, the premises demised by each of the
Real Property Leases is fully serviced, including storm and sanitary sewers,
hydro, water, gas, telephone and paved roads, and each of the said premises has
free and unfettered access to and from said roads by existing entrances and
exits without requiring any permit therefor from any Governmental Authority.
(h) Except as set forth on the Seller Disclosure Schedule, none of the
Real Property Leases prohibits or requires a consent for a change in the voting
control of the tenant thereunder.
3.9 Employment and Labor Related Agreements and Actions
(a) The Seller Disclosure Schedule contains a complete and correct list,
as of the date hereof of the directors and the officers of the Company and each
Subsidiary.
(b) The Seller Disclosure Schedule contains a complete and correct list of
all employees of the Company and any Subsidiary, together with the employees'
titles, current wages, salaries, hourly or daily rate of pay, bonus entitlement,
date of hire, primary work location and all Contracts (other than common law
contracts in respect of Canadian Employees) currently in effect with current or
former employees, consultants, or independent contractors of the Company and
each Subsidiary, in each case which provides for payments in excess of $25,000
per annum or $100,000 in the aggregate.
(c) All employees of the Company or any Subsidiary whose primary work
location is in the United States are employees of the Subsidiaries ("US
Employees") and, except as set forth in the Seller Disclosure Schedule:
(i) none of the US Employees of the Company or any Subsidiary is
represented by a labor union or organization, no labor union or
organization is certified or recognized as a representative of any such
employees, and neither the Company, nor any Subsidiary, is a party to or
has any obligation under any collective bargaining agreement or other
labor union contract or side agreement with any labor union or
organization, or has any obligation to recognize or deal with any labor
union or organization, with respect to any US Employees, and there are no
such contracts or side agreements pertaining to or which determine the
terms or conditions of employment of any US Employee;
13
(ii) to the Knowledge of the Sellers, there are no pending or
threatened representation campaigns, elections or proceedings or questions
concerning union representation involving any US Employees;
(iii) to the Knowledge of the Sellers, there are no present
activities or efforts of any labor union or organization (or
representatives thereof) to organize any US Employees, nor any demands for
recognition or collective bargaining, nor any strikes, slowdowns or work
stoppages of any kind or, to the Knowledge of the Sellers threats thereof,
and no such activities, efforts, demands, strikes, slowdowns or work
stoppages have occurred since January 1, 2003;
(iv) neither the Company nor any Subsidiary has engaged in, admitted
committing or been held in any administrative or judicial proceeding to
have committed any unfair labor practice in respect of any US Employee
under the National Labor Relations Act, as amended, or any other
applicable Law, and there are no unfair labor practice charges or
complaints pending or, to the Knowledge of the Sellers, threatened,
against the Company or any Subsidiary in respect of such employees;
(v) there are no controversies, claims, demands or grievances
pending or, to the Knowledge of Sellers, threatened between the Company or
any Subsidiary and any US Employees or any actual or claimed
representative thereof;
(vi) the Company and each Subsidiary has at all times complied and
is in compliance with all applicable Laws respecting employment, wages,
hours, compensation, occupational health and safety, and payment and
withholding of Taxes in connection with employment of US Employees, and
neither the Company, nor any Subsidiary, is liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the
foregoing;
(vii) there are no claims, complaints or legal or administrative
proceedings pending or, to the Knowledge of the Sellers, threatened
against the Company or any Subsidiary before any federal, provincial,
state or municipal court or any other Governmental Authority involving or
relating to any past or present US Employees or applicants for employment
of the Company or any Subsidiary, or relating to any acts, omissions or
practices of the Company or any Subsidiary relating to discrimination,
harassment, wage payment, overtime and hours of work, workplace safety or
any other employment-related issues. Neither the Company nor any
Subsidiary is a party to or bound by any Order respecting the employment
or compensation of any US Employees or prospective employees of the
Company or any Subsidiary, other than garnishments of employee wages
obtained by third parties. There are no pending investigations or
abatement orders and no citations issued within the past 3 years by the
Occupational Safety and Health Administration or any other Governmental
Authority relating to the Company or any Subsidiary;
14
(viii) the Company and each Subsidiary has paid in full to all US
Employees, or accrued on its books, all wages, salaries, commissions,
bonuses, benefits and other compensation due to such employees or
otherwise arising under any policy, practice, agreement, plan, program,
statute or other applicable Law;
(ix) neither the Company nor any Subsidiary is closing, or since
January 1, 2003, has closed any Facility, effectuated any layoffs of
employees or implemented any early retirement, separation or window
program affecting US Employees, nor has the Company or any Subsidiary
planned or announced any such action or program for the future; and
(x) the Company and each Subsidiary is in compliance with its
obligations pursuant to WARN, and all other notification and bargaining
obligations arising under any collective bargaining agreement or Law.
(d) All employees of the Company or any Subsidiary whose primary work
location is in Canada are employees of the Company ("Canadian Employees"), and,
except as set forth in the Seller Disclosure Schedule:
(i) none of the Canadian Employees is represented by an employee
association, labor union or other organization; no employee association,
labor union or other organization has been certified or recognized as a
representative of any such Canadian Employees, and neither the Company nor
any Subsidiary is a party to or has any obligation under any collective
bargaining agreement or other contract or side agreement with any employee
association, labor union or organization, or has any obligation to
recognize or deal with any employee association, labor union or
organization, and there are no such contracts or side agreements
pertaining to or which determine the terms or conditions of employment of
any Canadian Employee;
(ii) to the Knowledge of the Sellers, there are no pending or
threatened representation campaigns, elections or proceedings concerning
an employee association or union representation involving any of the
Canadian Employees;
(iii) to the Knowledge of the Sellers, there are no present
activities or efforts of any employee association, labor union or
organization (or representatives thereof) to organize any of the Canadian
Employees, nor any demands for recognition or collective bargaining, nor
any strikes, slowdowns or work stoppages or, to the Knowledge of the
Sellers, threats thereof, and no such activities, efforts, demands,
strikes, slowdowns or work stoppages have occurred since January 1, 2003;
(iv) neither the Company, nor any Subsidiary, has engaged in,
admitted committing or been held in any administrative or judicial
proceeding to have committed any unfair labor practice in the past ten
years in respect of Canadian Employees under the Canada Labour Code, as
amended, or pursuant to any other applicable Law, and, to the Knowledge of
the Sellers, there are no unfair labor practice charges or complaints
pending or, threatened, against the Company or any Subsidiary in respect
of such employees;
15
(v) there are no Actions pending or, to the Knowledge of the
Sellers, threatened between the Company or any Subsidiary and any of the
Canadian Employees or any actual or claimed representative thereof;
(vi) the Company and each Subsidiary has at all times complied and
is in compliance with all applicable Laws respecting employment, wages,
hours, compensation, human rights, employment equity, pay equity, health
and safety, and payment and withholding of Taxes in connection with
employment, and neither the Company, nor any Subsidiary, is liable for any
arrears of wages or any taxes or penalties for failure to comply with any
of the foregoing;
(vii) there are no Actions pending or, to the Knowledge of the
Sellers, threatened against the Company or any Subsidiary before any
Governmental Authority involving or relating to any Canadian Employees or
applicants for employment of the Company or any Subsidiary, or relating to
any acts, omissions or practices of the Company or any Subsidiary relating
to discrimination, harassment, wage payment, overtime and hours of work,
workplace safety or any other employment-related issues;
(viii) neither the Company, nor any Subsidiary, is a party to or
bound by any Order of any kind respecting the employment or compensation
of any Canadian Employees or prospective Canadian Employees of the Company
or any Subsidiary, other than garnishments of wages obtained by third
parties;
(ix) there are no pending Actions or Orders and no Orders issued
within the past 6 years pursuant to any occupational health and safety or
other employment-related Laws by any Governmental Authority relating to
the Company or any Subsidiary;
(x) the Company and each Subsidiary has paid in full to all of the
Canadian Employees, or accrued on its books, all wages, salaries,
commissions, bonuses, benefits and other compensation due to such Canadian
Employees or otherwise arising under any policy, practice, agreement,
plan, program, statute or other applicable Law (but not including amounts
that would be paid in the event of any termination of any Canadian
Employee);
(xi) no Canadian Employee is on short-term disability leave,
long-term disability leave, any other sort of statutory leave, extended
leave of absence, or is receiving benefits pursuant to workplace safety
and insurance Laws;
(xii) there are no written employment contracts, consulting
agreements, independent contractor agreements or other legally binding
arrangements with any Canadian Employees, there are no contracts of
employment, consulting agreements, independent contractor agreements or
other legally binding arrangements entered into with any Canadian Employee
which are not terminable on the giving of reasonable notice in accordance
with applicable Laws, and none of the Canadian Employees have any
non-competition or non-solicitation or other restrictive covenant
agreements;
(xiii) there are no written employment manuals, policies, plans,
guides, handbooks or instruction booklets that set out any terms or
conditions of employment for any of the Canadian Employees; and
16
(xiv) all current assessments pursuant to any workplace safety and
insurance Laws in relation to the Company or any Subsidiary have been paid
or accrued, and neither the Company nor any Subsidiary have been subject
to any special or penalty assessment under any such legislation which has
not been paid. No critical fatal accidents have occurred since 2000, nor
have there been any increase in any assessments or surcharges since 2000
in respect of any Canadian Employees (other than periodic increases in
respect of New Experimental Experience Rating ("XXXX") assessments under
the Workplace Safety and Insurance Act (Ontario)).
3.10 Contracts.
(a) The Seller Disclosure Schedule contains a complete and correct list of
all Contracts that involve payments by, or to, the Company and/or any
Subsidiary, of more than $50,000 per annum or $100,000 in the aggregate and all
Contracts without regard to dollar amount, or such lower amount expressly set
forth, in the following categories:
(i) commitments or agreements for services for which a prepayment or
advance has been made to, or by, or on behalf of, the Company or any
Subsidiary in excess of $10,000 per commitment or agreement or $50,000 in
the aggregate;
(ii) partnership or joint venture Contracts or arrangements or any
other agreements involving a sharing of revenue or profits;
(iii) Contracts restricting the Company or any Subsidiary from
carrying on its business or activities, as the case may be, in its usual
and customary manner in any jurisdiction, including, without limitation,
restricting the Company or any Subsidiary from hiring or soliciting any
Person, or operating its assets at maximum capacity;
(iv) any non-competition agreements in favor of the Company or any
Subsidiary (other than employment or consulting agreements);
(v) except as set forth in clause (xi) below, each Contract between
the Company or any Subsidiary, on the one hand, and any Affiliate of the
Company or any Subsidiary, on the other hand;
(vi) any Contracts for the sale or other disposition by the Company
or any Subsidiary of any of its assets, or the acquisition by the Company
or any Subsidiary of any assets, in excess of $10,000 other than in the
ordinary course of business, consistent with past practice, and in no
event in excess of $50,000;
(vii) any Contracts relating to the leasing or chartering of any
material assets of the Company or any Subsidiary to or from any third
party;
(viii) any Contract that (a) limits or contains restrictions on the
ability of the Company or any Subsidiary to declare or pay dividends on,
or to make any other distribution in respect of or to issue or purchase,
redeem or otherwise acquire its capital stock, or to incur Indebtedness,
or to incur or suffer any Lien, to purchase or sell any of assets or
properties, to change the lines of business in which it participates or
engages or to engage in any Business Combination, or (b) require the
Company or any Subsidiary to maintain specified financial ratios or levels
of net worth or other indicia of financial condition;
17
(ix) any Contract relating to Indebtedness incurred or accrued by,
or credit provided to, the Company or any Subsidiary;
(x) any Contract of support, indemnification or assumption or any
similar commitment with respect to the obligations, liabilities (whether
accrued, absolute, contingent or otherwise) or indebtedness of any other
Person;
(xi) any letters of credit, any currency exchange, commodities or
other hedging arrangement or capitalized leases which will not be
satisfied at or prior to Closing;
(xii) each outstanding loan or advance made by the Company or any
Subsidiary to any director, officer, employee, stockholder or other
Affiliate of the Company or any Subsidiary (other than any intercompany
indebtedness reflected in the financial statements of the Company or any
Subsidiary and any business-related advances to employees made in the
ordinary course of business, consistent with past practice and in an
amount not in excess of $5,000 per employee or $50,000 in the aggregate);
and
(xiii) any Contract with any Restricted Person or any Contract made
out of the ordinary course of business and not consistent with past
practice.
(b) Except as set forth in the Seller Disclosure Schedule, the Company and
each Subsidiary has, with respect to all Contracts required to be listed in any
Schedule to this Agreement, delivered to the Purchaser all copies thereof which
are true, correct and complete as to all material terms and has performed all
obligations required to be performed by it, and is entitled to all benefits
under and is not in default under, any such Contract, and each such Contract is
in full force and effect, unamended, and, to the Knowledge of the Sellers, no
other party to any such Contract is in default in any material respect under any
such Contract. Except as set forth in the Seller Disclosure Schedule, no event
has occurred (including the performance of this Agreement) which, with the lapse
of time or the giving of notice or both, would constitute a default by the
Company or any Subsidiary, or, to the Knowledge of the Sellers, by any other
party to any such Contract. For purposes of this Section 3.10(b),
representations that are qualified by Knowledge with respect to another party's
compliance shall be deemed not to include the Knowledge qualifier if such other
party to the Contract is an Affiliate or GR Holdings or an Affiliate of GR
Holdings.
(c) Except as set forth in the Seller Disclosure Schedule, to the
Knowledge of the Sellers, the Company and each Subsidiary has, with respect to
all Contracts other than those required to be listed in any Schedule to this
Agreement, performed the obligations required to be performed by it, and is
entitled to all benefits under and is not in default under, any such Contract,
and to the Knowledge of the Sellers each such Contract is in full force and
effect, unamended, and, to the Knowledge of the Sellers, no other party to any
such Contract is in default in any material respect under any such Contract.
Except as set forth in the Seller Disclosure Schedule, to the Knowledge of the
Sellers no event has occurred (including the performance of this Agreement)
which, with the lapse of time or the giving of notice or both, would constitute
a default by the Company or any Subsidiary, or, to the Knowledge of the Sellers,
by any other party to any such Contract.
18
(d) Except as set forth in the Seller Disclosure Schedule, all Contracts
binding upon or affecting the Company or any Subsidiary have been entered into
on an arm's length basis (within the meaning of the Tax Act). Other than as set
forth in the Seller Disclosure Schedule, since March 31, 2005, there has been no
repayment, forgiveness or other release by or in respect of the Company or any
Subsidiary of debt owed by or to any Restricted Person.
3.11 Intellectual Property.
(a) For the purposes of this Agreement, "Intellectual Property Rights"
shall mean (i) all trademarks, service marks, trade dress, design marks, logos,
trade names, domain names, web-sites, brand names and corporate names, whether
registered or unregistered, active or inactive, together with all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (ii) all inventions and designs (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (iii) all artwork, photographs, advertising and
promotional materials and computer software and all copyright applications,
registrations and renewals in connection therewith, (iv) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information), and (v) all other rights in all
of the foregoing, including such rights as are provided by treaties, conventions
and common law; and (vi) all rights to pursue, recover and retain damages and
costs and attorneys' fees for past, present and future infringement of any of
the foregoing, in each instance owned or used by the Company or any Subsidiary.
Notwithstanding the foregoing, the definition of "Intellectual Property Rights"
shall exclude any "off the shelf" computer software.
(b) The Seller Disclosure Schedule sets forth a complete and correct list
of all: (i) subsisting registrations and applications for registration in the
name of the Company or any Subsidiary for trademarks, service marks, trade
names, corporate names, brand names, logos, domain names, patents and copyrights
included in the Intellectual Property Rights; (ii) material unregistered and/or
common law Intellectual Property Rights and (iii) pending Actions (including,
without limitation, those in Patent and Trademark Offices and courts) directly
related to any Intellectual Property Rights and material Actions threatened in
writing within the six years in respect of patents, and the three years in
respect of any other Intellectual Property Rights, in each case, prior to the
date of this Agreement (e.g., via cease-and-desist letters) directly relating to
any Intellectual Property Rights.
(c) The Company and/or a Subsidiary owns, beneficially owns and/or is
licensed or otherwise have the right to use, all Intellectual Property Rights
necessary to conduct, or material to, the businesses of the Company and the
Subsidiaries as they are currently conducted, in each case free and clear of all
Liens. All applications and registrations for Intellectual Property Rights as
set forth in the Seller Disclosure Schedule, are valid, subsisting, in full
force and effect; have not been assigned and have been properly maintained by
the filing of all necessary declarations and renewals. Except as disclosed in
the Seller Disclosure Schedule, and to the Knowledge of Sellers, there is no
Intellectual Property Right necessary to conduct or material to the businesses
19
of the Company or any Subsidiary as currently conducted whether used by the
Company or any Subsidiary or any Person authorized by any of the foregoing that
is not owned, or beneficially owned, by the Company or any Subsidiary or that
the Company or any such Subsidiary is not properly authorized to use. Except as
disclosed in the Seller Disclosure Schedule, the Company and/or a Subsidiary has
taken commercially reasonable actions to maintain and protect in all material
respects each material item of Intellectual Property Rights used by the Company
or any Subsidiary in the ordinary course of business.
(d) The continued operation of the business of the Company and its
Subsidiaries as presently conducted does not infringe, misappropriate or make
unauthorized use of any Intellectual Property Rights of third parties. Except as
disclosed in the Seller Disclosure Schedule, there are no Actions pending or
threatened in writing that allege that the use or exploitation of the
Intellectual Property Rights infringes, misappropriates or constitutes the
unauthorized use of any Intellectual Property Rights of third parties. To the
Knowledge of Sellers, and except as disclosed in the Seller Disclosure Schedule,
the Intellectual Property Rights are not being infringed by any Person. Except
as disclosed in the Seller Disclosure Schedule, there are no Actions pending for
which notice has been provided to any Seller, the Company or any Subsidiary, or
Actions threatened in writing, challenging the Company's or any Subsidiary's
ownership of, right to use, or the validity or enforceability or patentability
of any Intellectual Property Rights.
(e) Neither the Company nor any Subsidiary is in breach of or default, or
is alleged in any written notice which it has received, to be in breach of or
default under any Contract with respect to Intellectual Property Rights, nor has
an event or condition occurred (or been alleged by any other party in writing to
have occurred) which would constitute a breach or event of default on the part
of the Company or any Subsidiary or would provide a basis for a valid claim,
acceleration, additional fees or termination by any other party under any
Contract with respect to Intellectual Property Rights. Except as disclosed in
the Seller Disclosure Schedule, to the Knowledge of Sellers, no other party is
in breach of or default, in any material respect, under any Contract with
respect to Intellectual Property Rights, nor, to the Knowledge of Sellers, has
any event or condition occurred (or been alleged by any other party in writing
to have occurred) which would constitute a material breach or event of default
on the part of such other party under any such Contract. Except as disclosed in
the Seller Disclosure Schedule, no material waiver or deferral of enforcement of
the rights or benefits of the Company or any Subsidiary has been provided under
any Intellectual Property Rights Contract since January 1, 2002. Except as
disclosed in the Seller Disclosure Schedule, the consummation of the
transactions contemplated hereby and the Related Agreements shall not result in
the loss or impairment of the Company's or any Subsidiary's rights in the
Intellectual Property Rights.
(f) Neither the Company nor any Subsidiary has given to any Person an
indemnity in connection with any Intellectual Property Right, other than
indemnities that, individually or in the aggregate, would not reasonably be
expected to result in liability to the Company or any Subsidiary in excess of
$50,000, except as otherwise disclosed in the Seller Disclosure Schedule.
3.12 Insurance. All property and assets of the Company and the
Subsidiaries are insured against loss or damage in accordance with the interests
stated in the Seller Disclosure Schedule. The Seller Disclosure Schedule
contains a complete and correct list (together with their respective termination
dates) of all policies of fire, casualty, general liability, defamation,
20
personal injury, property damage, workers' compensation and all other forms of
insurance carried by the Company and each Subsidiary or pursuant to which the
Company or any Subsidiary is a named beneficiary or pursuant to which the
business or properties of the Company or any Subsidiary is insured, including
hull and machinery policies, war risks, oil pollution liability, charterer
liability, freight insurance and business interruption, complete and correct
copies of which have been provided to Purchaser. All of such policies and any
substantially equivalent replacement coverages are in full force and effect and
no written, or to the Knowledge of the Sellers, other notice of cancellation or
termination has been received with respect to such policies. The Company or the
applicable Subsidiary has notified such insurers of any claim which could
potentially exceed the applicable insurance policy deductible amount arising
since January 1, 2001 known to it which it believes is covered by any such
insurance policy and has provided Purchaser with a copy of such claim. The
Company is currently considering those new insurance arrangements listed on the
Seller Disclosure Schedule.
(a) Except as set forth in the Seller Disclosure Schedule, neither the
Company, any Subsidiary nor any Seller is a party to any Contract of any kind
pursuant to which the Company, any Subsidiary or any Seller receives payments
from an insurer or an insurance producer for purchasing insurance for the
Company and/or any Subsidiary.
(b) Except as set forth in the Seller Disclosure Schedules, the Company or
each applicable Subsidiary has notified the insurers of the Company and/or such
Subsidiary of all claims known to them or the Sellers which are believed to be
covered by insurance. All such claims have been filed on a timely basis with
insurers and pursued by cooperating with and responding to insurers' requests
for documentation and/or information. To the extent any claim has been denied by
insurers, information concerning such claim is set forth in the Seller
Disclosure Schedule.
(c) Except as set forth in the Seller Disclosure Schedule, there are no
pending or potential claims under insurance covering the Company and/or any
Subsidiary for which the Company and/or any Subsidiary are, or may be obligated
to pay, a deductible.
3.13 Books and Records. Subject to input from the Company's professional
advisors, all accounting and financial Books and Records have been properly and
accurately kept and are complete in all material respects. The Books and Records
are not recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon, or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not), which are not or will not be
available to the Company in the ordinary course of its business prior to and
after the Closing, subject to the general caveat that all computerized Books and
Records may be subject to electronic failure at any time.
3.14 Financial Statements; Liabilities.
(a) The Sellers have provided to Purchaser copies of the audited
non-consolidated balance sheets and statements of operations and cash flows of
the Company and the Subsidiaries for the fiscal years ended March 31, 2003, 2004
and 2005, together with the notes thereto and the opinions of Deloitte & Touche
LLP thereon (collectively, the "Financial Statements"). The Financial Statements
have been prepared from the books and records of the Company and its
21
Subsidiaries, and present fairly, in conformity with GAAP, the assets,
liabilities, income, losses, retained earnings, financial condition, results of
operations and cash flows of the Company and its Subsidiaries for the periods
and dates covered thereby.
(b) Except as set forth in the Seller Disclosure Schedule, neither the
Company nor any Subsidiary has any liabilities or obligations of any kind,
whether absolute, accrued, asserted or unasserted, except liabilities,
obligations and contingencies, that (i) are reflected on or accrued or reserved
against in the Financial Statements for the fiscal year ended March 31, 2005, or
reflected in any notes thereto, (ii) were incurred since March 31, 2005 in the
ordinary course of business or (iii) with respect to liabilities and obligations
of a type not required to be disclosed by GAAP in a consolidated balance sheet
of the Company and its Subsidiaries, or a balance sheet of Grand River, would
not reasonably be expected to have a Material Adverse Effect.
3.15 Tax Matters. Except as set forth in the Seller Disclosure Schedule:
(a) Neither the Company nor any Subsidiary is, or has been at any time
during the period for which any Tax adjustment could be made, a member of any
consolidated, combined, unitary or similar group with respect to any Taxes.
(b) The Company and each Subsidiary has prepared and filed all Tax Returns
within the prescribed period with the appropriate Tax Authority in accordance
with applicable Laws. The Company and each Subsidiary has reported all income
and all other amounts and information required by applicable Law to be reported
on each such Tax Return. Each such Tax Return is true, correct and complete in
all material respects.
(c) The Sellers have made available to Purchaser complete and correct
copies of (i) all income and franchise Tax Returns filed by the Company and each
Subsidiary for the last three taxable years, and (ii) all Tax examination
reports for US Taxes and statements of deficiencies assessed with respect to the
Company and each of the Subsidiaries for the last five taxable years.
(d) The Company and each Subsidiary has paid, on a timely basis, all Taxes
and installments of Taxes, which are required to be paid to any Tax Authority
pursuant to applicable Law. No deficiency with respect to the payment of any
Taxes or Tax installments has been asserted against the Company and its
Subsidiaries by any Tax Authority. Since March 31, 2005, none of the Company or
its Subsidiaries has (i) incurred any liability for Taxes, (ii) engaged in any
transaction or event which would result in any liability for Taxes, or (iii)
realized any income or gain for tax purposes, other than, in each case, in the
ordinary course. Adequate provision has been made in the books and records for
all Taxes payable for all taxable periods ending on or before the Closing Date,
and where no taxable period ends or is deemed to end on or immediately prior to
the Closing Date, for all Taxes in respect of any time or event prior to the
Closing Date.
(e) The Company and each Subsidiary has duly and timely withheld and
collected all Taxes required by applicable Law to be withheld or collected by it
and has duly and timely remitted to the appropriate Tax Authority all such Taxes
as and when required by applicable Law.
(f) There are no Liens for any Taxes (other than Taxes not yet due and
payable) on the assets of the Company or any Subsidiary.
22
(g) There are no proceedings, investigations or audits pending or, to the
Knowledge of Sellers, threatened against or affecting the Company or any of its
Subsidiaries in respect of any Taxes. There are no matters under discussion,
audit or appeal by the Company or any Subsidiary with any Tax Authority relating
to Taxes. All Canadian federal and provincial income Tax Returns of the Company
and each Canadian Subsidiary for the tax periods up to and including March 31,
2004 have been assessed by the relevant Tax Authority.
(h) Neither the Company nor any Subsidiary has requested, entered into any
agreement or other arrangement, or executed any waiver providing for, any
extension of time within which (i) to file any Tax Return, (ii) it is required
to pay or remit any Taxes or amounts on account of Taxes, or (iii) any Tax
Authority may assess or collect Taxes.
(i) There is not, and will not be as of the Closing, any written agreement
or consent made with any Tax Authority with respect to Taxes affecting the
Company or any Subsidiary.
(j) Neither the Company nor any Subsidiary has assets that constitute
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code, and none of such assets is subject to a lease,
safe-harbor lease, or other arrangement as a result of which the purported owner
is not treated as the owner for United States federal income Tax purposes.
(k) Neither the Company nor any Subsidiary has entered into any agreement
with, or provided any undertaking to, any Person pursuant to which it has
assumed liability, or can otherwise be obligated, for the payment of Taxes (or
an amount based on the Taxes) owing by such Person.
(l) The Company is not a non-resident of Canada for purposes of the Tax
Act. The Company has, at all relevant times, been and is a taxable Canadian
corporation within the meaning of subsection 89(1) of the Tax Act. The Company
has never been required to file any Tax Return with, and has never been liable
to pay any Taxes to, any Tax Authority outside Canada. No request to file a Tax
Return or for the payment of Tax has ever been made of the Company or any
Subsidiary by a Tax Authority in a jurisdiction where it does not presently file
Tax Returns.
(m) Neither the Company nor any Subsidiary has claimed any reserve for Tax
purposes, if as a result of such claim any amount could be included in its or
the Purchaser's income for a taxation year ending after the Closing. The Company
has not made any payment, nor is it obligated to make any payment, and is not a
party to any agreement under which it could be obligated to make any payment,
that may not be deductible by virtue of section 67 of the Tax Act, other than in
the ordinary course of business.
(n) Neither the Company nor any Subsidiary has made a material Tax
election pursuant to any Law (i) for any taxable year commencing after 2000 or
(ii) that has any effect on the Taxes of the Company or any Subsidiary for any
taxable year ending after the Closing. The Company has not entered into
agreements contemplated by section 191.3 of the Tax Act.
(o) Since April 1, 2000, no Person (other than the Purchaser) has acquired
or had the right to acquire control of the Company or any of its Subsidiaries
for purposes of Section 111 of the Tax Act or Section 382 of the Code.
23
(p) There is no, and prior to the Closing there will not be, any
transaction, election, or failure to take any action or make any election prior
to the Closing that would restrict or limit use (for the benefit of Purchaser)
of the Company's and each Subsidiary's net losses as at the Closing in a
taxation year ending after the Closing and the application (for the benefit of
Sellers) of any such losses to taxation years ending on or prior to the Closing,
other than any limits or restrictions caused by any act, omission or failure of
the Purchaser under applicable Laws, including Section 111 of the Tax Act.
(q) None of sections 78, 80, 80.01, 80.02, 80.03 and 80.04 of the Tax Act,
or any equivalent provision of the Laws of any other jurisdiction, have applied
or will apply to the Company at any time on or before the Closing Date.
(r) Neither the Company nor any Subsidiary has acquired property from a
non-arm's length Person, within the meaning of the Tax Act, for consideration,
the value of which is less than the fair market value of the property,
including, but not limited to, in circumstances which could subject it to a
liability under section 160 of the Tax Act. The value of the consideration paid
or received by the Company or its Subsidiaries for the acquisition, sale or
transfer of property (including intangibles) or the provision of services
(including financial transactions) from or to each other or to any other non
arm's length Person is equal to the estimated fair market value of such property
acquired, transferred or sold or services purchased or provided. The Company and
each Subsidiary has not received any requirement pursuant to section 224 of the
Tax Act which remains unsatisfied in any respect.
(s) No circumstances exist and no transaction or event or series of
transactions or events has occurred which has resulted or could result in a
liability for Tax to the Company, either before, on or after Closing, under
section 17 of the Tax Act. Paragraph 214(3)(a) of the Tax Act has not applied as
a result of any transaction or event involving the Company. For all transactions
between the Company and any Person that is a non-resident of Canada for purposes
of the Tax Act with whom it was not dealing at arm's length during a taxation
year commencing after 1998 and ending on or before the Closing Date and to which
subsection 247(3) of the Tax Act could apply, the Company and each Subsidiary
has made or obtained records or documents that meet the requirements of
paragraphs 247(4)(a) to (c) of the Tax Act.
(t) Neither the Company nor any Subsidiary has undergone a change in
accounting method that currently requires, or will require, an adjustment to
taxable income under Section 481 of the Code for any period following the
Closing Date.
(u) Neither the Company nor any Subsidiary is or has been a "United States
real property holding company" within the meaning of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(v) The Company is duly registered under Part IX of the Excise Tax Act
(Canada) with respect to the goods and services tax and the registration number
is 138054291.
(w) The Company has, as of the date hereof, and will have, as of the
Closing Date, (before giving effect to the transactions contemplated hereby to
occur on the Closing Date but taking into account the application of
non-capital/net operating losses to Pre-Closing Tax Periods pursuant to Section
6.3(b)) at least Cdn$11,000,000 of non-capital/net operating losses available to
be applied by the Company in tax periods beginning after the Closing Date, on
the assumption that none of the restrictions in subsection 111(5) of the Tax Act
will apply to the acquisition of control of the Company by Purchaser under this
Agreement.
24
3.16 Absence of Certain Changes and Events. Since March 31, 2005, except
as set forth in the Seller Disclosure Schedule, the Company and each Subsidiary
has conducted its business in the ordinary course thereof consistent with past
practice and from such date, with respect to the Company or each Subsidiary, as
the case may be, there has not been any:
(a) change in the business, assets, liabilities, results of operations or
financial condition of the Company or any Subsidiary, or any event, condition or
contingency (either individually or taken together) affecting the Company or any
Subsidiary directly that constitutes a Material Adverse Effect;
(b) (A) incurrence, payment or discharge of any liability or obligation
(absolute, accrued, contingent or otherwise), (B) sale or transfer of any
property, or (C) acquisition or sale, lease, grant of interest in, or other
disposition of, any assets or businesses, in each of clauses (A), (B) and (C),
other than in the ordinary course of business, consistent with past practice;
(c) (A) guarantee or any other assumption of the obligations of any
Person, or (B) making of any Indebtedness or advance to any Person (other than
business-related advances to employees in the ordinary course of business,
consistent with past practice and in an amount not in excess of $5,000 per
employee or $25,000 in the aggregate);
(d) settlement or compromise of any Action if the amount of such
settlement will not be paid in full prior to the Closing or which settlement or
compromise would reasonably be expected to have a continuing adverse impact on
the business of the Company or any Subsidiary after the Closing;
(e) Tax election or change in a Tax election or the filing for any change
of any method of accounting with any relevant Tax Authority, except as required
by any change in Law;
(f) change in any method of accounting applied in the preparation of the
Financial Statements, other than a change which is required by reason of a
concurrent change in Law or GAAP;
(g) (A) adoption of or amendment to any benefit plan or bonus, profit
sharing, deferred compensation, incentive, stock option or stock purchase plan,
program or commitment, paid time off for sickness or other plan, program or
arrangement for the benefit of its employees, consultants or directors, or (B)
grant of any increase (other than increases required under any Contract entered
into before March 31, 2005 and annual or periodic increases in the ordinary
course of business, consistent with past practice) in the compensation of its
employees, officers or directors (including any such increase pursuant to any
bonus, profit sharing or other compensation or incentive plan, program or
commitment);
(h) material change, termination or modification in any of the Contracts
listed in the Seller Disclosure Schedule pursuant to Section 3.10, nor has the
Company or any Subsidiary entered into any Contract which, had such Contract
been entered into prior to the date hereof, would have been required to have
been listed in the Seller Disclosure Schedule pursuant to Section 3.10, except,
in each case, in the ordinary and regular course of its business and in no event
calling for annual payments by, or to, the Company or any Subsidiary in excess
of $10,000;
25
(i) issuance or sale by the Company or any Subsidiary of any capital stock
of the Company or any Subsidiary, or any security convertible into or
exchangeable for, or any right exercisable to acquire, any shares of such
capital stock;
(j) declaration, distribution or the setting aside for distribution of any
property (including cash), or directly or indirectly, the redemption, purchase
or other acquisition of any shares of capital stock;
(k) amendment, termination or waiver of any rights of value to the Company
or any Subsidiaries greater than $10,000;
(l) any extraordinary loss, damage or destruction, whether or not covered
by insurance;
(m) written off as uncollectible, any Accounts Receivable or any portion
thereof in amounts exceeding $25,000 in each instance, or $100,000 in the
aggregate;
(n) increase in the Company's or any Subsidiary's reserves for contingent
liabilities;
(o) making of any forward purchase commitment in excess of the
requirements of the Company and its Subsidiaries for normal operating purposes
or at prices higher than the current market prices; or
(p) agreement, whether in writing or otherwise, to take any action
described in this Section 3.16.
3.17 Litigation and Claims. Except as set forth in the Seller Disclosure
Schedule, there is no Action pending or, to the Knowledge of the Sellers,
threatened or contemplated, against or affecting the Company or any Subsidiary
or any property or assets used by them, or the Purchase Shares, and there is no
Action pending or, to the Knowledge of the Sellers, threatened or contemplated,
against the Company or any Subsidiary affecting the propriety or validity of the
transactions contemplated hereby or by the Related Agreements. Except as set
forth in the Seller Disclosure Schedule, neither the Company nor any Subsidiary
is subject to or in default under or with respect to any Order.
3.18 Governmental Permits; Compliance with Laws.
(a) The Company and each Subsidiary owns, holds or possesses all
Governmental Permits which are necessary to entitle it to own or lease, operate
and use its assets and to carry on and conduct its business substantially as
currently conducted.
(b) The Seller Disclosure Schedule sets forth a complete and correct list
and brief description of each Governmental Permit owned, held or possessed by
the Company or any Subsidiary. Each Governmental Permit is valid, subsisting and
in good standing. All Governmental Permits are renewable by their terms or in
the ordinary course of business without the need for the Company or any
Subsidiary to comply with any special rules or procedures, agree to any
materially different terms or conditions, or pay any amounts other than routine
26
filing fees. Except as set forth in the Seller Disclosure Schedule, (i) the
Company and each Subsidiary has fulfilled and performed in all respects its
obligations under each of the Governmental Permits which it owns, holds or
possesses, and (ii) no written notice (or, to the Knowledge of Sellers, no
threat) of cancellation, of default or of any dispute concerning any
Governmental Permit, or of any event, condition or state of facts described in
the preceding clause, has been received by the Sellers, the Company or any
Subsidiary.
(c) The Company and each Subsidiary have conducted their respective
businesses and operations is in compliance, and are currently in compliance, in
all material respects with all Laws which are applicable to its respective
business.
3.19 Environmental Matters. Except as set forth in the Seller Disclosure
Schedule:
(a) The Company and each Subsidiary, and the assets of the Company and
each Subsidiary (including real property) are and at all times have been in
compliance in all material respects with its obligations under applicable
Environmental Laws;
(b) Neither the Company nor any Subsidiary has caused or permitted a
release of a Hazardous Substance to the Environment at any of the Facilities;
(c) There are no Environmental Conditions present at, on, or under, any
Facility as a result of activities of the Company or any Subsidiary or any of
their employees or agents or the Vessels, or as a result of activities of any
other Person, in each case in amounts exceeding the levels permitted by
applicable Environmental Law or under circumstances that would reasonably be
expected to result in liability under or relating to Environmental Law;
(d) Neither the Company nor any Subsidiary has disposed of, arranged for
the disposal of, released, threatened to release, or transported any Hazardous
Substances in violation of any applicable Environmental Law or in a manner that
would reasonably be expected to result in liability under or relating to
Environmental Law;
(e) Neither the Company nor any Subsidiary is subject to any Actions, is
subject to any Order or has received any notice or other communication from any
Governmental Authority or the current or prior owner or operator of any of the
Facilities or any other Person, in each case with respect to any actual or
potential violation or failure to comply with any Environmental Law or of any
actual or threatened obligation or liability under any Environmental Law, or
regarding any Hazardous Substances; and to the Knowledge of the Sellers, neither
the Company nor any Subsidiary is threatened with any such Action, Order, notice
or communication;
(f) Neither the Company nor any Subsidiary has been charged with or
convicted of an offence for non-compliance with any Environmental Laws;
(g) No unbudgeted works or additional expenditure of the Company or any
Subsidiary is required or planned in relation to the business of the Company or
any Subsidiary or any of the Facilities to ensure compliance of the Company or
any Subsidiary or any of the Facilities with any Environmental Law or
Governmental Permit;
27
(h) The Company and Subsidiaries have complied in all material respects
with the provisions of (a) the Transportation of Dangerous Goods Act, 1992
(Canada) in handling, offering for transport, transporting or importing any
Hazardous Substances which are "dangerous goods" under that Act, (b) Title 49 of
the Code of Federal Regulations of the United States, and (c) any applicable
Laws regarding invasive species, including without limitation Title 33, Part 151
of the Code of Federal Regulations of the United States and any other applicable
Laws or regulations governing the release or discharge of ballast water;
(i) All contractual arrangements with recognized oil response companies
required to be maintained by the Company or any Subsidiary are in full force and
effect;
(j) Neither the Company nor any Subsidiary has specifically contractually
assumed any liability or obligation under or relating to Environmental Laws or
Hazardous Substances; and
(k) There are no Environmental Reports prepared since June 2000 in the
custody or control of the Company or any Subsidiary relating to the Facilities,
business of the Company or any Subsidiary or activities of the Company or any
Subsidiary that have not been made available to Purchaser.
3.20 Employee Plans
(a) U.S. Employee Plans
(i) Except as set forth in the Seller Disclosure Schedule, none of
the Company, any Subsidiary, the Sellers nor any other Person which
together with the Company, the Subsidiaries or any of the Sellers
constitutes a member of the Company's, the Subsidiaries' or such Seller's
"controlled group" or "affiliated service group" (within the meaning of
Sections 4001(a)(14) and/or (b) of ERISA and/or Sections 414(b), (c), (m)
or (o) of the Code (each such group or groups and each member thereof
hereinafter referred to individually and collectively as the "Group")) has
at any time adopted or maintained, has any liability or is a fiduciary
with respect to or has any present or future obligation to contribute to
or make payment under (i) any employee benefit plan (as defined in Section
3(3) of ERISA) which is subject to ERISA, or (ii) any other material
benefit plan, program, contract or arrangement of any kind whatsoever
(whether for the benefit of present, former, retired or future employees,
consultants or independent contractors of the Group, or for the benefit of
any other Person or Persons) including, without limitation, plans,
programs, contracts or arrangements with respect to pension, retirement,
profit sharing, deferred compensation, thrift, savings, stock ownership,
stock bonus, restricted stock, health, dental, medical, life,
hospitalization, disability, relocation, child care, educational
assistance, stock purchase, stock option, incentive, bonus, sabbatical
leave, vacation, severance, cafeteria, pre-tax premium, flexible spending
or other contribution, benefit or payment of any kind, and plans,
programs, contracts or arrangements providing for contributions, benefits
or payments in the event of a change of ownership or control in whole or
in part of the Group, other than any such benefit plan, program, contract
or arrangement maintained outside the United States primarily for the
benefit of Canadian Employees (hereinafter individually and collective
called the "Canadian Plans"), (all such employee benefit plans and other
benefit plans, programs, contracts or arrangements, whether written or
oral, hereinafter individually and collectively called the "U.S. Employee
Benefit Plans"). No member of the Group has any obligation other than as
required by applicable Law, to amend any U.S. Employee Benefit Plan so as
to increase benefits thereunder or otherwise or to establish any new
benefit plan, program, contract or arrangement.
28
(ii) No U.S. Employee Benefit Plan is subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 or 413(c) of the Code.
(iii) Any and all amounts which any member of the Group is required
to pay, deduct or remit, as contributions or otherwise, with respect to
the U.S. Employee Benefit Plans, have been timely paid, deducted or
remitted.
(iv) Each of the U.S. Employee Benefit Plans (other than any
Multiemployer Plans and any welfare plans (within the meaning of Section
3(1) of ERISA) maintained by a labor union (such welfare plans and
Multiemployer Plans that are U.S. Employee Benefit Plans hereinafter
individually and collectively called "Union Plans")) sponsored or
maintained by the Company or any Subsidiary, to which the Company or any
Subsidiary has any current or future obligation to contribute or under
which any employee of the Company or any such Subsidiary (and/or any
dependent or beneficiary of such employee) is covered or entitled to
benefits by reason of employment with the Company or any such Subsidiary
(such U.S. Employee Benefit Plans hereinafter individually and
collectively called "US Plans") and, to the Knowledge of the Sellers, each
of the Union Plans, has been established, maintained, operated and
administered in all material respects in accordance with its terms and all
applicable Law. Each of the US Plans which is intended to be "qualified"
within the meaning of Sections 401(a) and 501(a) of the Code (a "Qualified
Plan") has been determined by the Internal Revenue Service to be so
qualified and nothing has occurred since the issuance of such
determination to adversely affect such qualified status. There are no
pending, threatened or anticipated Actions, suits, claims, trials,
demands, investigations, arbitrations or proceedings (other than routine
claims for benefits) involving any of the US Plans, or, to the Knowledge
of the Sellers, any of the Union Plans with respect to or affecting the
Company or any Subsidiary or any current or former employee of the Company
or any Subsidiary. There have been no nonexempt "prohibited transactions"
within the meaning of Section 406 of ERISA or Section 4975 of the Code
with respect to any of the U.S. Employee Benefit Plans.
(v) No member of the Group has any withdrawal liability with respect
to a "multiemployer plan" within the meaning of Section 3(37) of ERISA
(each such plan hereinafter a "Multiemployer Plan") under Title IV of
ERISA. No member of the Group is a party to, or participates in, or has
any liability or contingent liability with respect to any Multiemployer
Plan.
(vi) A complete and correct copy of each of the US Plans and
governing documents thereof, and all amendments thereto, whether currently
effective or to become effective at a later date, and all contracts and
agreements relating thereto, or to the funding thereof (including, without
limitation, all trust agreements, insurance contracts, investment
management agreements, subscription and participation agreements,
administration and recordkeeping agreements) have been provided to
Purchaser. In the case of any US Plan that is not in written form, an
accurate and complete description of such US Plan has been provided to
29
Purchaser. With respect to each US Plan, Purchaser has been provided with
a complete and correct copy of each of (i) the three most recent annual
reports (Form 5500 series), including any schedules thereto and audit
reports, (ii) the most recent summary plan description (including
summaries of material modification), and a copy of any other material or
documents distributed to any US Employee, participant or any beneficiary
in connection with any US Plan, and (iii) the most recent Internal Revenue
Service determination letter and/or ruling.
(vii) The Seller Disclosure Schedule lists termination rights and
notice requirements under each US Plan. There have been no material
changes in the financial condition of the respective US Plans (or other
information provided hereunder) from that stated in each US Plan's most
recent of such annual reports.
(viii) Except as set forth on the Seller Disclosure Schedule, no US
Plan provides benefits including, without limitation, death or medical
benefits (whether or not insured), with respect to any employees, former
employees or directors of the Company or any Subsidiary beyond their
retirement or other termination of service, other than (i) coverage
mandated by applicable Law or (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3(2)
of ERISA.
(ix) Except as set forth in the Seller Disclosure Schedules, neither
the execution and delivery by the Sellers of this Agreement or the Related
Agreements nor the consummation by the Sellers of the transactions
contemplated hereby or by the Related Agreements shall (either alone or
upon the occurrence of additional events or acts) (x) require any the
Company or any Subsidiary to make any payment to, or obtain any consent or
waiver from, any officer, director, employee, consultant or agent of any
member of the Group (other than the Sellers) or (y) accelerate vesting or
payment of any benefits or any payments, increase the amount or value of
any benefit or payment or result in the payment of or obligation to pay
any "excess parachute payment" (within the meaning of Section 280G of the
Code).
(x) The Seller Disclosure Schedule separately identifies each
Canadian Plan as well as each severance or other post termination
arrangement applicable to Canadian Employees.
(xi) All nonqualified deferred compensation plans (within the
meaning of Section 409A(d) of the Code) maintained by the Company or any
Subsidiary or with respect to which the Company or any Subsidiary has any
liability, contingent or otherwise, that is subject to Section 409A of the
Code has, at all times since January 1, 2005, been maintained and
administered in accordance with the Section 409A of the Code.
(xii) The bonus plan underlying the arrangements described under
"Other" in item 3.20(A)(I) of the Seller Disclosure Schedule shall have
been terminated as of the Closing Date without any obligation of the
Company or any Subsidiary continuing thereunder.
30
(xiii) Neither the Company nor any Subsidiary has any liability with
respect to retirement or welfare benefits for any US Employee who is not
covered by a collective bargaining agreement with respect to which the
Company or a Subsidiary is a party (a "Non-Union Employee"), other than
with respect to contributions made to the Union Plans (the annual amount
of which has been provided to Purchaser) to provide coverage thereunder
(the "Non-Union Contributions"). Any coverage of a Non-Union Employee by a
Union Plan is being provided to such Non-Union Employee in accordance with
applicable Law. The Company may unilaterally terminate, without penalty
and with no more than 15 days' notice, any arrangement under which any
Union Plan covers any Non-Union Employee and, prior to any such
termination, each such Union Plan will continue to provide such coverage
so long as the Company or a Subsidiary continues to make Non-Union
Contributions.
(b) Canadian Employee Plans
(i) The Seller Disclosure Schedule identifies all retirement,
pension, supplemental pension, savings, retirement savings, retiring
allowance, bonus, profit sharing, stock purchase, stock option, phantom
stock, share appreciation rights, deferred compensation, severance or
termination pay, change of control, life insurance, medical, hospital,
dental care, vision care, drug, sick leave, short term or long term
disability, salary continuation, unemployment benefits, incentive or other
employee benefit plan, program, arrangement, policy or practice whether
written or oral, formal or informal, funded or unfunded, registered or
unregistered, insured or self-insured that is maintained or otherwise
contributed to, or required to be contributed to, by or on behalf of the
Company or any Subsidiary for the benefit of current or former employees,
directors, officers, shareholders, independent contractors or agents of
the Company or any Subsidiary who are located in Canada (collectively the
"Canadian Employee Benefit Plans") other than government sponsored
pension, employment insurance, workers compensation and health insurance
plans.
(ii) Neither the Company nor any Subsidiary maintains or otherwise
contributes to, nor are the Company or any Subsidiary required to
contribute to, any registered pension plan, by or on behalf of the Company
or any Subsidiary, for the benefit of current or former employees,
directors, officers, shareholders, independent contractors or agents of
the Company or any Subsidiary who are located in Canada.
(iii) Each Canadian Employee Benefit Plan has been maintained,
administered and invested in compliance with its terms and with the
requirements prescribed by applicable Law and is in good standing in
respect of such applicable Law and each Canadian Employee Benefit Plan
that is required to be registered under applicable legislation is duly
registered with the relevant Governmental Authority.
(iv) All contributions or premiums required to be paid, deducted or
remitted and all obligations required to be performed by the Company or
any Subsidiary pursuant to the terms of any Canadian Employee Benefit Plan
or by applicable Law or otherwise, have been paid, deducted, remitted or
performed in a timely fashion and there are no outstanding defaults or
violations with regard to same.
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(v) There are no Actions pending or, to the Knowledge of the
Sellers, threatened with respect to the Canadian Employee Benefit Plans
(other than routine claims for benefits) and no circumstances or event has
occurred that could result in an Action.
(vi) There has been no judgment, order or award with respect to any
of the Canadian Employee Benefit Plans.
(vii) To the extent required by applicable law and pursuant to GAAP,
the liabilities of the Company or any Subsidiary under any Canadian
Employee Benefit Plan are properly accrued and reflected in the Financial
Statements.
(viii) The Company has delivered the following documents to the
Purchaser:
(A) true and complete copies of all the text of the Canadian
Employee Benefit Plans (where no text exists, a summary has been
provided) and any related trust agreements, insurance contracts or
other documents governing those plans, all as amended to the date
hereof;
(B) a copy of all materials or documents distributed to new or
existing members of the Canadian Employee Benefit Plans during the
last three years;
(C) the most recent accounting and certified financial
statement of each Canadian Employee Benefit Plan for which such
statement is made;
(D) the most recent annual information returns filed with
regulatory authorities in respect of each Canadian Employee Benefit
Plan for which such filing is required;
and no fact, condition or circumstances has occurred since the date of
those documents which would materially affect the information contained
herein.
(ix) To the Knowledge of the Sellers, no event has occurred and
there has been no failure to act on the part of either the Company or any
Subsidiary that could subject either the Company or any Subsidiary or any
of the Canadian Employee Benefit Plans or any successor plan to the
imposition of any tax, penalty, penalty tax or other liability, whether by
way of indemnity or otherwise.
(x) No promises or commitments have been made by the Company or any
Subsidiary to amend any of the Canadian Employee Benefit Plans, to provide
increased benefits thereunder or to establish any new benefit plan, except
as required by applicable Laws or as disclosed in the Seller Disclosure
Schedule.
(xi) The transactions contemplated in this Agreement shall not,
alone or upon the occurrence of any additional or subsequent event, result
in any payment, severance or otherwise, acceleration, vesting, increase in
benefits or acceleration of any funding obligation under any of the
Canadian Employee Benefit Plans with respect to any employees or former
employees of the Company or any Subsidiary.
32
(xii) No employees or former employees of the Company or any
Subsidiary are entitled to post-retirement benefits.
(xiii) None of the Canadian Employee Benefit Plans require or permit
retroactive increases or assessments in premiums or payments.
(xiv) Neither the Company nor any Subsidiary contribute or are
required to contribute to any multi-employer pension or benefit plan. None
of the Canadian Employee Benefit Plans are multi-employer pension or
benefit plans.
3.21 Maritime Matters.
(a) Vessels. The Seller Disclosure Schedule lists all Vessels owned,
chartered or operated by the Company and each Subsidiary, setting forth, for
each Vessel, its (i) name, (ii) owner, (iii) the arrangements (including
intercompany arrangements) pursuant to which such Vessel is chartered or
operated by the Company (iv) official number and call sign, (v) flag, (vi)
deadweight tonnage, (vii) Vessel type, (viii) class description, (ix)
classification society, (x) shipyard and year in which the Vessel was
constructed, (xi) date of the Vessel's last special survey, (xii) date of the
Vessel's last dry-docking and (xiii) the scheduled date of the Vessel's next
dry-docking for purposes of the next scheduled special survey; and Sellers shall
provide, at Closing, such information for vessels, if any, acquired, chartered
or operated in the period between the date hereof and Closing.
(b) The owner of each Vessel has good marketable title, free and clear of
Liens and indemnified from all Actions, including any claim other than Permitted
Liens, and other than any claims, interests or demands listed in the Seller
Disclosure Schedule, and that all permits, certificates and licenses required
for the ownership, operation and chartering of the Vessels are in full force and
effect.
(c) Except as set forth on the Seller Disclosure Schedule, the Vessels are
in good working order and, consistent with their respective ages, are without
material defect or inherent vice in condition, design, operation or fitness as
necessary to fulfill the ongoing requirements of the Company and its
Subsidiaries when operated in a manner not inconsistent with industry practices
for similar freshwater shipping fleets and for the uses currently engaged.
(d) Each Vessel is properly documented and has been operated and equipped
in accordance with and continues to comply with all applicable Laws in force at
the date of this Agreement in so far as they apply to the Vessels.
(e) There has been no change to the certification, classification or
insurance coverage (other than the proposed change to insurance arrangements of
which the Company has advised Rand) of the Vessels since the information
pertaining to same has been furnished to Rand.
(f) Except as set forth on the Seller Disclosure Schedule, each Vessel
fully complies with all requirements of its present class and Classification
Society set forth on the Seller Disclosure Schedule with all continuous or
progressive survey cycles up to date.
33
(g) Except as set forth on the Seller Disclosure Schedule, there is no
Action pending or, to the Knowledge of the Sellers, threatened against the
Company, its Subsidiaries or any of the Vessels with respect to or arising out
of the ownership, use, or operation of the Vessels.
(h) To the Knowledge of the Sellers, all facts relating specifically to
the Vessels (but not including any facts generally affecting the industries or
segments in which the Company or the Subsidiaries operate) which could
materially affect the value of the Vessels or their operations and which would
be likely to affect the decision of an intending buyer of the Vessels have been
disclosed to Rand or Purchaser in writing.
3.22 No Finder. Neither the Company nor any Subsidiary or any party acting
on their behalf, has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary (other than fees or commissions which shall
be paid in full by the Sellers prior to the Closing) for or on account of the
transactions contemplated hereby or by the Related Agreements.
3.23 Certain Business Practices. No director, officer, member, agent,
representative or employee of the Company or any Subsidiary (in their capacities
as such) has: (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended or the
Corruption of Foreign Public Officials Act (Canada); or (iii) made any other
unlawful payment.
3.24 Accounts Receivable. Except to the extent of the amount of the
reserve for doubtful accounts reflected in the balance sheets included in the
Financial Statements or as set forth on the Seller Disclosure Schedule, all
Accounts Receivable of the Company and each Subsidiary reflected therein and all
Accounts Receivable that have arisen since March 31, 2005 (except Accounts
Receivable that have been collected since such date) are valid and enforceable
claims, constitute bona fide Accounts Receivable resulting from the sale of
goods and services in the ordinary course of business and are fully collectable
in a manner consistent with past practice. The Accounts Receivable are subject
to no valid defense, offsets, returns, allowances or credits of any kind, except
returns or credits which are in the ordinary course of the Company's and the
Subsidiaries' business except to the extent of the amount of the reserve for
doubtful accounts reflected in the balance sheets included in the Financial
Statements or as set forth on the Seller Disclosure Schedule.
3.25 Major Customers. The Seller Disclosure Schedule lists, by dollar
volume paid for the year ended March 31, 2005, the 10 largest customers of the
Company and Subsidiaries, taken as a whole, (collectively, the "Major
Customers"). The relationships of Company and Subsidiaries with the Major
Customers are reasonable commercial working relationships and: (i) all amounts
owing from the Major Customers, if not in dispute, have been paid in accordance
with their respective terms; (ii) none of the Major Customers within the last
twelve months has threatened to cancel, or otherwise terminate, the relationship
of such Major Customer with the Company or any Subsidiary; and (iii) none of the
Major Customers during the last twelve months has decreased materially, or
threatened to decrease or limit materially, its relationship with the Company or
any Subsidiary or, to Sellers' Knowledge, intends to decrease or limit
materially its relationship with the Company or any Subsidiary. Neither the
Company nor any Subsidiary has received any written or oral notice or has any
other knowledge regarding the insolvency of any major customer.
34
3.26 Affiliate Transactions. Except as disclosed on the Seller Disclosure
Schedule, no Affiliate of the Company, any Subsidiary, any Seller or any
officer, director, partner, member, consultant or employee of thereof, is a
party to any transaction with the Company or any Subsidiary, including any
Contract or arrangement providing for the furnishing of services (other than in
their capacity as shareholder, officer, director, partner, member, consultant or
employee) to or by, providing for rental of real property or other assets or
rights or privileges to or from, or otherwise requiring payments to or from the
Company, any Subsidiary or any Affiliate thereof.
3.27 Sufficiency of Assets. The property and assets owned and leased by
each of the Company and each Subsidiary include all material rights, assets and
property necessary for the conduct of the business of the Company and each of
the Subsidiaries after the Closing, substantially in the same manner as it was
conducted prior to the Closing. Neither the Company nor any Subsidiary owns or
possesses any property, rights or other assets which are not owned or possessed
solely for the purpose of conducting the respective business of each entity as
it is now being conducted.
3.28 Bank Accounts. The Seller Disclosure Schedule sets forth a complete
list of (i) all bank accounts, savings deposits, money-market accounts,
certificates of deposit, safety deposit boxes, and similar investment accounts
with banks or other financial institutions maintained by or on behalf of the
Company or any Subsidiary showing the depository bank or institution address,
appropriate bank contact personnel, account number and names of signatories, and
(ii) the names of all Persons holding powers of attorney from the Company or any
Subsidiary; true, correct and complete copies of all powers of attorney granted
by the Company or any Subsidiary have been provided to Purchaser.
3.29 Disclosure. No representation or warranty by Sellers in this
Agreement and no statement contained in any document or other writing furnished
or to be furnished to Purchaser pursuant to the provisions hereof, when
considered with all other such documents or writings, contain or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statements made herein or therein
not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND RAND
Purchaser and Rand represent and warrant, jointly and severally, to each
Seller as follows:
4.1 Organization; Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the federal laws of
Canada. Rand is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
4.2 Authority; Execution and Delivery; Enforceability. Purchaser and Rand
each have full corporate power and authority to execute and deliver this
Agreement and the Related Agreements (to the extent a party thereto), to perform
their respective obligations hereunder and under the Related Agreements (to the
extent a party thereto) and to consummate the transactions contemplated hereby
and by the Related Agreements (to the extent a party thereto). Other than
obtaining Shareholder Approval, all corporate acts and other proceedings
35
required to be taken by Rand and Purchaser to authorize the execution, delivery
and performance of this Agreement and the Related Agreements to which Rand or
Purchaser is a party have been duly and properly taken. Each of this Agreement
and (when executed) the Related Agreements to which Rand or Purchaser is a party
has been (or will be) duly executed and delivered by Rand and Purchaser, and
constitutes (or will, when executed, constitute) the legal, valid and binding
obligation of Rand and Purchaser, enforceable against Rand and Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium and other similar Laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
4.3 Non-Contravention. The execution and delivery of this Agreement and
the Related Agreements by Rand and Purchaser (to the extent a party thereto)
does not, and the consummation of the transactions contemplated hereby and such
Related Agreements and compliance with the terms hereof and of such Related
Agreements, will not (or would not with the giving of notice or the passage of
time):
(a) constitute a violation or breach of the articles or certificate of
incorporation or the amalgamation or the by-laws of Rand or Purchaser,
respectively;
(b) constitute a default under or a violation or breach of, or result in
the acceleration of any obligation under, any provision of any material contract
or other instrument to which Rand or Purchaser is a party or by which any of the
assets of Rand or Purchaser is bound; or
(c) assuming the consents described in Section 4.4 have been received,
violate any Order or any Law affecting Rand or Purchaser, or their respective
assets.
4.4 Consents and Approvals. Except as set forth in the Purchaser
Disclosure Schedule, no consent, approval, waiver, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person (other than Shareholder Approval) is required to be
obtained by or on behalf of Rand or Purchaser in connection with, or as a
condition of the lawful execution, delivery and performance of this Agreement or
the Related Agreements to which Rand or Purchaser is a party or the consummation
of the transactions contemplated hereby and by such Related Agreements.
4.5 Litigation and Claims. There is no Action pending or, to the knowledge
of Rand or Purchaser, threatened, against or affecting Rand or Purchaser with
respect to the propriety or validity of the transactions contemplated hereby or
by the Related Agreements to which Rand or Purchaser is a party.
4.6 No Finder. Neither Rand nor Purchaser, nor any party acting on their
behalf, has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated hereby
or by the Related Agreements.
4.7 Disclosure. No representation or warranty by Rand or Purchaser in this
Agreement and no statement contained in any document or other writing furnished
or to be furnished to Sellers pursuant to the provisions hereof, when considered
with all others such documents or writings, contain or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary in order to make the statements made herein or therein not misleading.
36
ARTICLE V.
ACTION PRIOR TO THE CLOSING DATE
From and after the execution of this Agreement until the Closing Time (or
earlier termination of this Agreement in accordance with Section 10.1):
5.1 Conduct of Business.
(a) Each Seller shall cause the Company and each Subsidiary to (i)
continue to conduct the business of the Company and each Subsidiary in the
ordinary course thereof and use its commercially reasonable efforts to maintain
its business in substantially the same manner as heretofore, carry on its
business practices in substantially the same manner as heretofore and keep their
books of account, records and files in a manner consistent with past practice
subject to changes in requirements under GAAP or applicable Law, (ii) use its
commercially reasonable efforts to preserve the organization of the Company and
each Subsidiary intact, to retain the services of the employees of the Company
and each Subsidiary and to preserve the goodwill of the suppliers and customers
of the Company and each Subsidiary and others having business relations with the
Company and each Subsidiary, (iii) pay and perform all of the debts, obligations
and liabilities of the Company and each Subsidiary in a manner consistent with
past practice, and maintain and manage working capital of the Company and
Subsidiaries, in each case consistent with past practice; (iv) maintain all
material assets in a manner consistent with past practices and not take any
action adverse to the preservation of such material assets, (v) fully satisfy
all obligations, on a timely basis, under each employee benefit plan (as defined
in Section 3(3) of ERISA) or under each Canadian Employee Benefit Plans,
including, without limitation, all contribution obligations, and to administer,
operate and maintain each such employee benefit plan in accordance with its
terms and all applicable Laws, including with respect to any Qualified Plan, the
qualification requirements of the Code; (vi) conduct the business of the Company
and each Subsidiary in such a manner that, on the Closing Date, subject to
circumstances which may occur in the interim period from the date hereof which
are beyond the control of the Company and each Subsidiary, the representations
and warranties of Sellers contained in this Agreement shall be true, correct and
complete as if such representations and warranties were made on and as of such
date; (vii) on a periodic basis (as reasonably determined by Rand) report to
Rand concerning material matters relating to the business of the Company and
each of the Subsidiaries; (viii) comply in all material respects with all Laws
applicable to the Company and each Subsidiary; (ix) insure and to keep fully
37
insured all properties, including the Vessels, but in no event to a lesser
extent than existed prior to the execution of this Agreement; (x) comply
strictly and in all respects with the requirements of Environmental Laws and use
its reasonable best efforts to notify Rand as soon as reasonably possible in the
event of any release or discovery of any Hazardous Substance or contaminant at,
upon, under, over or within its property or any contiguous real property or any
real property to which a contaminant could reasonably be anticipated to be
released or in the event of an oil spill in the marine environment or of a
situation necessitating the taking of measures to avoid oil pollution damage in
the marine environment, promptly notify Rand of the same and forward to Rand
copies of all Orders, notices, permits, applications or other communications and
reports, provided such matters are not subject to legal privilege, in connection
with any release or the presence of any contaminant or any matters relating to
Environmental Laws as they affect the real property leased, used or occupied by
the Company or any Subsidiary or of any oil spill or threat of oil spill for any
of the Vessels; (xi) warrant and defend the title to and possession of the
Vessels and every part thereof (except leased equipment), free and clear of all
claims and demands of all other persons whomsoever; (xii) at all times to
maintain and preserve or cause to be maintained and preserved the Vessels, their
equipment and machinery in their current operating condition, subject to the
remediation, repairs and improvements currently required or planned as set forth
on Schedule 3.21(c); (xiii) if legal proceedings are filed against the Vessels
or if any of the Vessels is otherwise attached, levied upon, taken into custody
or by any proceeding arrested or detained by an court or tribunal or by any
Governmental Authority or other authority, to promptly notify Rand thereof by
telecopier in accordance with Section 11.2 and to take such steps as are
commercially reasonable with a view to enabling such Vessel to be released from
arrest or detention as quickly as possible (and in any event, such release to be
effected prior to the Closing Date) and to promptly notify Rand thereof in the
manner aforesaid; (xiv) in the event of the Vessel being requisitioned by the
Canadian or United States government or seized or requisitioned by any subject
government, to forthwith notify Rand by telecopier in accordance with Section
11.2; (xv) keep the Vessels free and clear from all claims, demands, actions or
proceedings (other than Permitted Liens); and (xvii) repair or cause to be
repaired, to the satisfaction of the American Bureau of Shipping and Transport
Canada, the damages to the M/V Mississagi incurred in the August 9, 2005 Welland
Canal incident, such repairs to be completed promptly, and, in any event, no
later than the Closing Time.
(b) Notwithstanding Section 5.1(a) hereof, each Seller shall cause the
Company and each Subsidiary to not, unless otherwise expressly contemplated by
this Agreement or as disclosed in the Seller Disclosure Schedule, without the
prior written consent of Rand which shall not be unreasonably withheld:
(i) make any material change in the businesses or the operations of
the Company or any Subsidiary;
(ii) other than in the ordinary course of business consistent with
past practice, (A) incur, pay or discharge any liability or obligation
(absolute, accrued, contingent or otherwise), (B) sell or transfer any
property, or (C) acquire or sell, lease, grant an interest in or dispose
of any assets or businesses, in each case in (A), (B) and (C ), for or
with respect to liabilities, obligations, properties, assets or businesses
valued at no more than $50,000 individually or $100,000 in the aggregate;
(iii) (A) guarantee or assume any other obligation of any Person, or
(B) make any loan or advance to any Person (other than in the ordinary
course of business, consistent with past practice and business-related
advances to employees in an amount not to exceed $5,000 per employee or
$25,000 in the aggregate);
(iv) waive any right of value owed to, cancel any debt owed to, or
claims held by, the Company or any Subsidiary, except in the ordinary
course of business consistent with past practice;
38
(v) settle or compromise any Action, which amount of such settlement
or compromise is not paid in full prior to the Closing or which settlement
or compromise would have a continuing adverse impact on the business of
the Company or any Subsidiary after the Closing;
(vi) make any Tax election or change a Tax election or file for any
change in any material respect of any method of accounting with the
relevant Tax Authority, except as required by any change in Law;
(vii) make any change in the methods of accounting or accounting
principles applied in the preparation of the financial statements of the
Company or any Subsidiary other than a change which is required by reason
of a concurrent change in Law or GAAP;
(viii) (A) adopt, terminate, amend in any material respect (except
as required by this Agreement or applicable Law), fund or secure any
benefit plan or bonus, profit sharing, deferred compensation, incentive,
stock option or stock purchase plan, program or commitment, paid time off
for sickness or other plan, program or arrangement for the benefit of its
employees, consultants or directors, (B) grant any general increase (other
than increases required under a Contract) in the compensation of its
employees (including any such increase pursuant to any bonus, profit
sharing or other compensation or incentive plan, program or commitment) or
any increase (other than increases required under a Contract) in the
compensation payable or to become payable to any officer or director, or
(C) completely or partially withdraw (within the meaning of Section 4201
of ERISA) from any Multiemployer Plan;
(ix) amend or modify any Contract listed in the Seller Disclosure
Schedule pursuant to Section 3.10, or enter into any Contract which, had
such Contract been entered into prior to the date hereof, would have been
required to have been listed in the Seller Disclosure Schedule pursuant to
Section 3.10, except in the ordinary course of business and in no event
calling for annual payments, if a new Contract, or an increase in annual
payments, if an amendment or modification, by, or to, the Company or any
Subsidiary in excess of $50,000 or payments in excess of $100,000 in the
aggregate, other than any amendments and modifications pursuant to grace
periods customary in the industry;
(x) enter into, amend or modify any collective bargaining
agreements;
(xi) authorize, undertake, or enter into any commitment with respect
to, capital expenditure projects individually in excess of $50,000 or in
the aggregate in excess of $100,000 except for winter work and capital
expenditures within contemplated budgeted amounts for such items provided
to Purchaser;
(xii) amend the articles or certificates of incorporation, as
applicable, or by-laws or other governing documents of the Company or any
Subsidiary;
(xiii) issue, deliver, or agree (actually or contingently) to issue
or deliver (whether pursuant to any option or otherwise), or grant or
modify any option, warrant or other right to purchase or otherwise
acquire, any shares of the capital stock of the Company or any Subsidiary,
or any security convertible into or exchangeable for, any shares of such
capital stock, or issue or agree to issue any bonds, notes, or other
securities;
39
(xiv) split, combine or reclassify any shares of the capital stock
of the Company or any Subsidiary, retire, redeem or otherwise acquire any
shares of the capital stock of the Company or any Subsidiary, or declare,
set aside or make any distributions of property in respect of the capital
stock of the Company or any Subsidiary, or agree to do any of the
foregoing;
(xv) fail to maintain in force, or make any change in (except in the
ordinary course of business), the insurance coverage contemplated by
Section 3.12 (or substantially equivalent replacement coverage) as being
maintained by the Company or any Subsidiary;
(xvi) issue any communication to employees of the Company or any
Subsidiary with respect to compensation, benefits or employment
continuation or opportunity following the Closing, except as required by
Law;
(xvii) enter into any partnership or joint venture agreement or
arrangement or any similar agreement or arrangement;
(xviii) enter into any Contract which would require a consent
thereunder with respect to the consummation of the transactions
contemplated hereby or by any Related Agreement;
(xix) change the registry of the Vessels and not do or suffer to be
done any acts or things whereby the said registry of the Vessels may be
forfeited or imperiled;
(xx) other than Permitted Liens, grant, create, assume or suffer to
exist any Lien affecting any of their properties, assets, including the
Vessels, or not to assign or hypothecate or attempt to hypothecate any
freight or hire monies and any insurance policies or insurance claims;
(xxi) abandon the Vessels or permit any of the Vessels to be
abandoned in a foreign port;
(xxii) allow nor permit, during the voyage, that any of the Vessels
make any unlawful deviation and that nothing, at any time, be done or
omitted whereby any insurance would become void or voidable in whole or in
part;
(xxiii) enter into a voluntary recognition agreement or other
Contract with, or otherwise voluntarily recognize, any employee
association, labor union or other similar organization in any of the
Canadian employees;
(xxiv) in the event the Company is certified by an employee
association, labor union or other similar organization, pursuant to the
Canada Labour Code, or any other applicable Law, the Company shall not
engage in any discussions, negotiations, or bargaining in respect of a
collective agreement or other Contract or side agreement without informing
Rand and Purchaser in advance and providing Rand and Purchaser with an
opportunity to participate in the discussions, negotiations or bargaining;
or
40
(xxv) agree, whether in writing or otherwise, to do any of the
foregoing (other than, in the case of subsection (xiv) above, pursuant to
the Redemption Agreement).
5.2 No Breach of Representations and Warranties; Notification of Certain
Matters. The Sellers, on the one hand, or Purchaser and Rand, on the other hand,
will, in the event of, and promptly after the occurrence of, or promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event or condition which would result in the inability of any condition
contained in Articles VII or VIII to be satisfied or would otherwise prevent it
from consummating the transactions contemplated hereby or by any Related
Agreement, give detailed written notice thereof to the Sellers or Purchaser, as
the case may be, and each of the Sellers or Purchaser, as the case may be, shall
use its reasonable best efforts to prevent or promptly to remedy such event,
condition or breach. None of the disclosures pursuant to this Section 5.2 or
investigations enabled or performed pursuant to Section 5.3 will be deemed to
qualify, modify, or amend or supplement the representations, warranties or
covenants of any party.
5.3 Access. Subject to the terms of the Confidentiality Agreement and on
reasonable notice, the Sellers shall afford Rand's and Purchaser's employees,
auditors, legal counsel and other authorized representatives and advisors, as
well as representatives of Rand's and Purchaser's financing sources, all
reasonable opportunity and access during normal business hours to inspect,
investigate and audit the assets, liabilities, Contracts, Books and Records,
operations and business of the Company and each Subsidiary and to interview the
officers of the Company and each Subsidiary and such other employees as the
parties reasonably agree . Subject to prior discussion with the Sellers and
reasonable agreement by the parties on the meeting parameters, the Sellers shall
also permit Rand to meet with the customers and other business partners of the
Company and each Subsidiary to discuss the business conducted between the
Company and each Subsidiary and such customers and business partners. At the
request of Rand, the Sellers shall execute or cause to be executed, such
consents, authorizations and directions as may be necessary to enable Rand and
its representatives to obtain access to all files and records maintained by
Governmental Authorities in respect of the Purchase Shares, the Company, the
Subsidiaries and their respective businesses, provided that Rand shall not, and
shall not attempt, to access such files and records without prior written notice
to Sellers and with participation by Sellers as Sellers may reasonably
determine.
5.4 Standstill. From and after the date hereof unless and until this
Agreement shall have been terminated in accordance with its terms, Sellers
hereby agree and shall cause the Company and its Subsidiaries, and their
respective directors, officers, Affiliates, employees, attorneys, accountants,
representatives, consultants and other agents (collectively, "Representatives")
to agree: (i) to immediately cease any existing discussions or negotiations with
any Person conducted heretofore, directly or indirectly, with respect to any
Business Combination involving or with respect to the Company or any Subsidiary;
(ii) not to directly or indirectly solicit, initiate, encourage or facilitate
the submission of proposals or offers from any Person other than Rand or
Purchaser or their Affiliates relating to any Business Combination involving or
with respect to the Company or any Subsidiary, or (iii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish any
information to any Person other than Rand or Purchaser or their Representatives
in connection with, any proposed or actual Business Combination by any Person
other than Rand or Purchaser or their Affiliates. Sellers shall immediately
notify Rand regarding any contact with any other Person regarding any proposed
Business Combination.
41
5.5 Notice of Litigation. Promptly after obtaining Knowledge of the
commencement of or the threatened occurrence of any Action against or with
respect to the Company, any Subsidiary or the Purchase Shares, the Sellers
shall, subject to legal privilege (provided that all details which can be shared
without violating or jeopardizing privilege will be shared), give detailed
written notice thereof to Rand.
5.6 Fulfillment of Conditions to Rand's and Purchaser's Obligations and to
GR Holdings' Obligations Under the Redemption Agreement. Each Seller agrees, and
agrees to cause the Company and each Subsidiary, to use commercially reasonable
efforts to fulfill the conditions contained in Article VII hereof and Article
VII of the Redemption Agreement.
5.7 Fulfillment of Conditions to Sellers' Obligations. Rand and Purchaser
each agree to use commercially reasonable efforts to fulfill the conditions
contained in Article VIII.
5.8 Governmental Consents.
(a) Each of Rand, Purchaser and the Sellers shall, and the Sellers shall
cause the Company and each Subsidiary to, as promptly as practicable following
the execution and delivery of this Agreement make all filings, notices,
petitions, statements, registrations, submissions of information, application or
submission of other documents required by any Governmental Authority in
connection with the transactions contemplated hereby and by the Related
Agreements. Each party will cause all documents that it is responsible for
filing with any Governmental Authority under this Section 5.8 to comply in all
material respects with all applicable Laws. Each such party shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of such filings or submissions. Each
such party shall keep the other apprised of the status of any communications
with, and any inquiries or requests for additional information from, any
Governmental Authority and shall comply promptly with any such inquiry or
request. Each such party shall use its reasonable best efforts to obtain any
clearance required under applicable Law for the consummation of the transactions
contemplated hereby and by the Related Agreements. Filing fees attributable to
the filings made pursuant to this Section 5.8 shall be borne equally by
Purchaser, on the one hand, and Sellers on the other hand.
(b) Without limiting the generality of the foregoing, each of Rand,
Purchaser and the Sellers shall (i) make any filings under the Investment Canada
Act, the Competition Act, or any other applicable antitrust law, required of it
or any of its Affiliates in connection with this Agreement and the transactions
contemplated hereby and by the Related Agreements as soon as practicable; (ii)
comply at the earliest practicable date and after consultation with the other
parties with any request for additional information or documentary material
received by it from the responsible Minister under the Investment Canada Act,
the Commissioner of Competition or any other antitrust agency, as applicable;
(iii) cooperate with one another in connection with any filings or other
submission aimed at resolving any investigation or other inquiry concerning the
transactions contemplated hereby and by the Related Agreements initiated by the
responsible Minister under the Investment Canada Act, the Commissioner of
42
Competition, or any other antitrust agency, including providing each other with
copies of any notifications, filings, applications and/or other submissions in
draft form for the other party to confirm that information contained within is
consistent and accurate; and (iv) use commercially reasonable efforts to cause
any applicable waiting periods under the Investment Canada Act, the Competition
Act, or any other applicable antitrust law to terminate or expire at the
earliest possible date and to obtain any necessary approvals of the transactions
contemplated hereby and by the Related Agreements from the responsible Minister
under the Investment Canada Act, the Commissioner of Competition, or any other
antitrust agency. Notwithstanding any other term or provision of this Agreement,
Purchaser and the Sellers (collectively) shall each pay one-half of any filing
fee under the Competition Act.
5.9 Third Party Consents. The Sellers shall, and shall cause the Company
and each Subsidiary to, use their respective commercially reasonable efforts
(without the obligation to make payment other than obligations when and as
required under existing Contracts) to obtain all consents, approvals, waivers
and similar authorizations from third parties (other than Governmental
Authorities) which are required by the terms of any Contract or otherwise to be
obtained in connection with the transactions contemplated hereby, including
those identified on the Seller Disclosure Schedule in respect of Section 3.6.
The Sellers shall not be in breach of the covenant contained in this Section 5.9
as a result of the failure of Sellers to obtain any consent, approval, waiver or
similar authorization required by this Section 5.9 if Rand and Purchaser
determine, in their sole discretion, to consummate the transactions contemplated
by this Agreement notwithstanding such failure. Rand and Purchaser shall use
their respective commercially reasonable efforts to cooperate in obtaining any
such consents, so long as neither Rand nor Purchaser is required to make any
payments with respect thereto.
5.10 Publicity. No public release or announcement concerning the
transactions contemplated hereby or by the Related Agreements shall be issued by
any party without the prior consent of the other party (which consent shall not
be unreasonably withheld or delayed), except as such release or announcement may
be required by Law or the rules or regulations of any United States or foreign
securities exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance and shall make a reasonable
effort to take into account such comments.
5.11 Transfer of Certain Assets. To the extent any of the Sellers (or any
of their Affiliates, other than the Company or any Subsidiary) own any assets
used in or necessary to conduct the Company's (or any Subsidiary's) business,
such Seller, effective as of the Closing Time, shall (i) sell, assign, deliver
and transfer to Purchaser or the Company or the relevant Subsidiary all such
assets, and (ii) use its best efforts to cause such Affiliate to enter into an
agreement with Purchaser to sell, assign, deliver and transfer to Purchaser or
the Company or the relevant Subsidiary all of such assets, in each case for no
additional consideration.
5.12 Financing. At all times until Closing, Rand shall use its best
efforts to (i) complete the financing under the Financing Commitments; or (ii)
if the Financing Commitments are not able to be completed, secure commitments
for, and complete, alternative financing on terms substantially similar to, and
without substantially greater cost to Rand in the form of fees or other payments
than the costs contemplated by, the Financing Commitments. Rand shall keep
Sellers' Representative informed at all times as to the status of all ongoing
financing matters. For the avoidance of doubt, "best efforts" as used in this
Section shall not include commencing or threatening to commence any Action
against any other Person.
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5.13 Conversion of Convertible Notes. At or prior to the Closing Time,
those Sellers holding Convertible Notes shall fully exercise their rights to
convert all such notes into shares of common stock of the Company. Upon the
exercise of such rights (and the issuance of all shares of common stock issuable
upon such exercise), all such notes shall be deemed repaid in full and
cancelled, and the Company and each Subsidiary shall be deemed entirely released
and discharged from any and all debts, duties or obligations thereunder.
5.14 Consolidated Financial Statements. Prior to the Closing, Sellers
shall provide to Purchaser copies of the audited consolidated balance sheets and
statements of operations and cash flows of the Company and the Subsidiaries for
the fiscal years ended March 31, 2003, 2004 and 2005, together with the notes
thereto and the opinions of Deloitte & Touche LLP thereon (collectively, the
"Consolidated Financial Statements"). The Consolidated Financial Statements will
be prepared from the books and records of the Company and its Subsidiaries, and
will present fairly the assets, liabilities, income, losses, retained earnings,
financial condition, results of operations and cash flows of the Company and its
Subsidiaries for the periods and dates covered thereby, in conformity with
United States generally accepted accounting principles (consistently applied),
the Exchange Act and the rules and regulations of the SEC.
ARTICLE VI.
OTHER AGREEMENTS OF THE PARTIES
6.1 Cooperation in Litigation. Prior to the third anniversary of the
Closing Date, the Sellers shall provide to Rand and Purchaser (at Rand's sole
reasonable cost and expense) such cooperation as may reasonably be requested in
connection with the defense of any litigation relating to the Company or any
Subsidiary whether existing on the Closing Date or arising thereafter out of, or
relating to, an occurrence or event happening before the Closing Date, provided,
that such cooperation is limited to matters of which Sellers have Knowledge.
6.2 Confidentiality.
Each Seller agrees that, subject to any requirement of Law, such Seller
will keep all Confidential Information confidential. Each Seller agrees that it
will not, without the prior written consent of Rand, disclose any Confidential
Information to any Person, other than such disclosures that may be required to
senior management of the Company or to the Company's or any Subsidiary's
accountants or legal advisors. Each Seller agrees that Rand shall be entitled to
seek equitable relief, including injunction and specific performance, in the
event of any breach of the provisions of this Section 6.2. Such remedies shall
not be deemed to be the exclusive remedies for a breach of this Section 6.2 by
any Seller but shall be in addition to all other remedies available at Law or
equity. It is further understood and agreed that failure or delay by Rand in
exercising any right, power or privilege under this Section 6.2 shall not
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege under
this Agreement. Each Seller hereby waives any requirement that Rand post a bond
in connection with any claim for equitable relief.
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6.3 Tax Matters.
(a) The Sellers shall prepare or cause to be prepared in consultation with
Purchaser and file or cause to be filed in a timely manner all Tax Returns for
the Company and Subsidiaries for all periods ending on or prior to the Closing
Date ("Pre-Closing Tax Periods") which are due prior to the Closing Date. Any
such Tax Returns filed between the date hereof and the Closing Date for any
Pre-Closing Tax Period shall be prepared, and each item thereon treated, in a
manner consistent with past practices (including, without limitation, prior Tax
elections and accounting methods or conventions made or utilized by the Company
and Subsidiaries), except as required by applicable Law. The Sellers shall
submit such Tax Returns to the Purchaser for review and comment at least 30 days
prior to filing.
(b) Rand and Purchaser shall prepare or cause to be prepared in
consultation with the Sellers and file or cause to be filed in a timely manner
all Tax Returns for the Company and Subsidiaries for all periods beginning
before and ending after the Closing Date ("Straddle Periods") and for all
Pre-Closing Tax Periods which are due after the Closing Date. All such Tax
Returns shall be prepared and filed (i) in a manner that is consistent with past
practices (including, without limitation, prior Tax elections and accounting
methods or conventions made or utilized by the Company and Subsidiaries, except
as required by applicable Law) and (ii) with application, to the maximum extent
available, of net operating losses in respect of any Pre-Closing Tax Periods.
Rand and Purchaser shall submit such Tax Returns to the Sellers' Representative
for review and comment at least 30 days prior to filing. However, if the
Sellers' Representative disputes any item on such Tax Return, it shall promptly
notify Rand of such disputed item (or items) and the basis for its objection.
The parties shall act in good faith to resolve any such dispute prior to the
date on which the Tax Return is required to be filed. If the parties cannot
resolve any disputed item, the item in question shall be resolved by an
independent accounting firm mutually acceptable to the Sellers and Rand. The
fees and expenses of such accounting firm shall be borne equally by the Sellers
and Rand. All disputes must be resolved prior to the date on which the Tax
Return is required to be filed and the parties shall resolve all disputes (in
the manner described herein) and the Company or the applicable Subsidiary shall
sign and file the Tax Return on or before the last day on which such Tax Return
is required to be filed.
(c) The Sellers shall pay or cause to be paid when due and payable all
Taxes of each of the Company and each Subsidiary, to the extent allocable for
any Pre-Closing Tax Period and any pre-Closing portion of a Straddle Period in
excess of the amounts specifically accrued on the Closing Date Balance Sheet and
included in the computation of Closing Date Net Working Capital for purposes of
adjusting the Purchase Price pursuant to Section 1.4, and Rand and Purchaser
shall so pay or cause to be paid such Taxes for any Tax periods commencing on or
after the Closing Date and any post-Closing portion of a Straddle Period.
(d) Rand, Purchaser and the Sellers agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Company and each Subsidiary
(including, without limitation, access to books and records, employees,
contractors and representatives) as is reasonably necessary for the filing of
all Tax Returns, the making of any election related to Taxes as contemplated in
this Section 6.3, the preparation for and conduct of any audit by any Tax
Authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax Return. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
45
other determinations by Tax Authorities at the sole cost of the requesting
party. If reasonably requested by Rand or Purchaser, the Sellers' Representative
shall make himself available on a basis mutually convenient to both parties to
provide explanations of any documents or information provided hereunder. Rand,
Purchaser and the Sellers shall retain all books and records with respect to
Taxes pertaining to the Company and each Subsidiary in their respective
possession (which shall include, in the case of Rand and Purchaser, books and
records in the possession of the Company and each Subsidiary) until the later of
(i) the expiration of the statute of limitations of the Tax periods to which
such Tax Returns and other documents relate, without regard to extensions except
to the extent notified by the other party in writing of such extensions for the
respective Tax periods prior to such expirations, and (ii) six years following
the due date (without extension) for such Tax Returns. At the end of such
period, each party shall provide the others with at least ten days' prior
written notice before destroying any such books and records, during which period
the parties receiving such notice can elect to take possession, at their own
expense, of such books and records. Rand, Purchaser and the Sellers shall
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Company and each Subsidiary. Any information
provided or obtained under this Section 6.3 shall be kept confidential except as
may be otherwise necessary in connection with the filing of Tax Returns or in
conducting an audit or other proceeding.
(e) For purpose of allocating Tax between the pre- and post-Closing
portion of a Straddle Period, the Tax liabilities of the Company and each
Subsidiary shall be determined as follows: (i) the amount of any Tax based on or
measured by income or receipts of the Company and each Subsidiary shall be
apportioned between the pre-Closing period and the post-Closing period based on
an interim closing of the books as of the close of the business on the Closing
Date, and (ii) the amount of any other Taxes of the Company and each Subsidiary
shall be apportioned to the pre-Closing period by multiplying the amount of such
Taxes for the entire period by a fraction, the numerator of which is the number
of days in such period ending on the Closing Date and the denominator of which
is the number of days in the entire period.
(f) All applicable transfer Taxes, sales and/or use Taxes, real property
transfer or excise Taxes, recording, deed, stamp and other similar Taxes, fees
and duties under applicable Law incurred in connection with the transfer of the
Purchase Shares shall be borne equally by the Purchaser, on one hand, and the
Sellers, on the other hand. The Sellers, Rand and Purchaser agree to jointly
prepare or cause to be prepared and file or cause to be filed in a timely
manner, all Tax Returns required to be filed with respect to such Taxes.
(g) For all Tax purposes, Rand, Purchaser and the Sellers agree that they
will report the transactions contemplated by this Agreement in a manner
consistent with the terms of this Agreement, and all parties agree to file their
Tax Returns accordingly.
(h) The Company will not (and will not be required to) include any amount
in computing its income for purposes of the Tax Act as a result of the purchase
for cancellation by the Company of 3,925 Common Shares from P&B Ships Limited,
the repayment by P&B Ships Limited to the Company of a promissory note in the
amount of $2,700,000, dated June 11, 1999, (subsequently reduced to the amount
of $2,603,416 on April 3, 2000) and all related and ancillary transactions. In
46
addition, in the preparation of its financial statements for the taxation year
ending on the Closing Date, the Company will not recognize any goodwill or
contributed surplus on its balance sheet in accordance with GAAP as a result of
the transactions described in this Section 6.3(h).
6.4 Additional Tax Covenants of the Sellers.
(a) Each Seller acknowledges that it understands and agrees that the
Purchaser, at its own discretion, may make a ss.338 election under the Code.
(b) Each Seller acknowledges that it understands that the intention of the
Purchaser, following the acquisition by the Purchaser of the Company, is to
amalgamate with the Company in a manner such that the cost to the entity formed
on the amalgamation of the shares of Lower Lakes Transportation Limited will be
determined in accordance with subsection 87(11) of the Tax Act, including an
addition to that cost determined under paragraphs 87(11)(b) and 88(1)(d) of the
Tax Act.
(c) To assist in ensuring that the interests in the shares referred to
above do not constitute "ineligible property" within the meaning of paragraph
88(1)(c) of the Tax Act, each Seller represents and covenants that, except as
otherwise provided for or required in this Agreement or any Related Agreement:
(i) the Seller and any Restricted Person will not, without the prior
written consent of Rand, as part of the Series, acquire any shares of the
capital stock of Rand, any debt of Rand, or any other security of Rand or
its affiliates or any Substituted Property;
(ii) the Seller and any Restricted Person will not own, after the
Closing, any shares of the capital stock of Rand, any debt of Rand, or any
other security of Rand or its affiliates or any Substituted Property that
was acquired prior to such time as part of the Series;
(iii) the Seller will use all reasonable efforts to ensure that any
corporation, partnership or trust in which such Seller or any Restricted
Person is, at any time during the course of the Series and after the
Closing, a "specified shareholder" (for purposes of subparagraph
88(1)(c)(vi) of the Tax Act), and any corporation, partnership or trust in
which such Seller or any Restricted Person would be, at any time during
the course of the Series and after the Closing, a "specified shareholder"
(for purposes of subparagraph 88(1)(c)(vi) of the Tax Act) if all the
shares, partnership interests and trust interests of such corporation,
partnership or trust, respectively, then owned by Sellers or any
Restricted Person who acquired such shares or interests as part of the
Series that were owned at that time by such Seller or any Restricted
Person, will not, without the prior written consent of Rand, as part of
the Series, acquire after the Closing any shares of the capital stock of
Rand, any debt of Rand or any other security of Rand or its affiliates or
any Substituted Property;
(d) In addition to the representations and covenants given above, each
Seller represents and covenants that, for purposes of the Tax Act, it deals at
arm's length with (i) each of the other Sellers, and (ii) each Shareholder of
P&B Shipping Ltd. (except if such Seller is also a shareholder of P&B Shipping
Ltd.).
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6.5 Access. From and after the Closing Date, Rand and Purchaser shall and
shall cause the Company and each Subsidiary to afford to the Sellers and their
agents reasonable access to their properties, books, records, employees and
auditors (during normal business hours and upon reasonable prior written notice)
to the extent necessary to permit the Sellers to determine any matter relating
to their rights and obligations hereunder or to any period ending on or before
the Closing Date; provided, that any such access by the Sellers or their agents
shall not unreasonably interfere with the conduct of the business of Rand,
Purchaser, the Company or any Subsidiary.
6.6 Further Assurances. From and after the Closing Date, each party shall,
at any time and from time to time, make, execute and deliver, or cause to be
made, executed and delivered, for no additional consideration but at the cost
and expense of the requesting party (excluding any internal costs incurred, such
as having any of the following reviewed by counsel) such assignments, deeds,
drafts, checks, stock certificates, returns, filings and other instruments,
agreements, consents and assurances and take or cause to be taken all such
actions as the other party or its counsel may reasonably request for the
effectual consummation and confirmation of this Agreement and the Related
Agreements and the transactions contemplated hereby and by the Related
Agreements.
6.7 Indemnification. Purchaser agrees to cause the Company and its
Subsidiaries (a) except as required by applicable Law, not to change, for three
years after the Closing Time, the provisions of its certificate of incorporation
and bylaws relating to indemnification of each present or former director of the
Company and any Subsidiary in a manner that adversely affects the rights of such
director to indemnification thereunder, and (b) to perform its obligations
thereunder, or exercise any discretionary authority thereunder, to the fullest
extent permitted by Law to provide such director with all rights to
indemnification available thereunder. Notwithstanding the foregoing, nothing
herein shall constitute a waiver of, or otherwise operation to adversely affect,
the existing rights of any director of the Company and its Subsidiaries under
the certificate of incorporation or bylaws of the Company and any Subsidiary in
effect on the date hereof.
6.8 Redemption Agreement. Notwithstanding anything to the contrary
contained in Article VI of the Redemption Agreement, Sellers, on behalf of Grand
River, agree that Rand shall have the sole and exclusive right to waive on
behalf of Grand River, in Rand's sole discretion, any and all of the conditions
specified in Article VI of the Redemption Agreement other than the conditions
specified in Sections 6.4 and 6.6 thereof (which shall not be waived by Rand or
Grand River), provided, however, that Sellers shall not be liable pursuant to
Section 9.2(b)(i) for any Damages arising as a result of the failure of any such
condition to be satisfied to the extent that Rand so determines to waive any
such condition. Sellers further agree that Rand shall be permitted (but not
obligated) to seek to perform, and perform, any and all of Grand River's
obligations under the Redemption Agreement, in the name of Grand River or
otherwise, to the same effect as if the performance of such obligations was by
Grand River. Without limiting the foregoing, on the Closing Date, and after the
Closing Time, Rand, as the holder of the Purchased Shares, shall have the right
to cause the direction of the Company and Grand River with respect to the
obligations of Grand River under the Redemption Agreement. Sellers agree to
cause Grand River to perform its obligations under the Redemption Agreement
prior to the closing of the transactions contemplated thereby, and to cause
Grand River not to terminate, or to agree to terminate, the Redemption Agreement
at any time prior to the termination of this Agreement.
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6.9 Reorganization. Rand and Purchaser agree to take such actions on the
Closing Date (immediately following the consummation of the transactions
contemplated hereby) as are necessary to cause all equity securities of Grand
River which are held by the Company to be transferred to and held by Rand or a
wholly owned US subsidiary of Rand.
ARTICLE VII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF RAND AND PURCHASER
The obligation of Rand and Purchaser to consummate the transactions
contemplated under this Agreement are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
Rand and Purchaser, in their sole discretion:
7.1 Representations and Warranties. The representations and warranties
contained in Articles II and III that are qualified as to materiality shall be
true and correct and those not so qualified shall be true and correct in all
material respects, as of the date of this Agreement and as of the Closing Date
as though made on the Closing Date, except to the extent such representations
and warranties expressly relate to a specified date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such specified date). Fulfillment as of the Closing Date
of the condition set forth in this subsection shall be deemed certified by each
Seller unless Purchaser shall have received written notice to the contrary from
Sellers' Representative on the Closing Date.
7.2 Performance. The Sellers shall each have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by any Seller prior to or at the Closing Time.
Fulfillment as of the Closing Date of the condition set forth in this subsection
shall be deemed certified by each Seller unless Purchaser shall have received
written notice to the contrary from Sellers' Representative on the Closing Date.
7.3 No Material Adverse Effect. Between the date of the execution of this
Agreement and the Closing Date, the Company and the Subsidiaries shall not have
suffered or experienced a Material Adverse Effect. Fulfillment as of the Closing
Date of the condition set forth in this subsection shall be deemed certified by
each Seller unless Purchaser shall have received written notice to the contrary
from Sellers' Representative on the Closing Date.
7.4 Certificates. Purchaser shall have received (a) evidence reasonably
satisfactory to it that this Agreement, the Related Agreements and all other
documents contemplated hereby and thereby, and all transactions hereby and
thereby contemplated, have been adopted and approved by each party hereto and
thereto other than Rand and Purchaser and (b) such other evidence with respect
to the fulfillment of the conditions set forth in Sections 7.1, 7.2 and 7.3 as
Purchaser may reasonably request.
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7.5 No Injunction. There shall not be pending, threatened or in effect any
injunction or restraining order issued by a court of competent jurisdiction in
an Action against (i) the consummation of the transactions contemplated hereby
or by any Related Agreement, or (ii) the right of the Company or any of the
Subsidiaries to operate their respective businesses after Closing on
substantially the same basis as currently operated.
7.6 Governmental Approvals.
(a) The parties hereto shall have received all approvals from any
applicable Governmental Authority necessary to consummate the transactions
contemplated hereby and by the Related Agreements.
(b) Investment Canada Act. Without limiting the generality of the
foregoing, with respect to the Investment Canada Act, Rand and Purchaser shall
have received notification from the responsible Minister under the Investment
Canada Act that it is satisfied or is deemed to be satisfied that the
transactions contemplated hereby and by the Related Agreements that are subject
to the provisions of the Investment Canada Act are likely to be of net benefit
to Canada; and any conditions sought by the Minister responsible under the
Investment Canada Act as a prerequisite for certifying the transactions
contemplated in this Agreement as likely to be of net benefit to Canada shall
have been obtained on terms and conditions reasonably satisfactory to Rand and
Purchaser.
(c) Competition Act. Without limiting the generality of the foregoing,
with respect to the Competition Act:
(i) Rand and Purchaser shall have obtained an advance ruling
certificate pursuant to Section 102 of the Competition Act; or
(ii) the waiting period prescribed by Section 123 of the Competition
Act shall have either expired or the Commissioner of Competition shall
have provided the parties with a waiver from complying with Part IX of the
Competition Act pursuant to subsection 113(c) of the Competition Act, and
the Commissioner of Competition or his authorized representative shall
have advised Rand and Purchaser in writing, on terms and in a form
satisfactory to Rand and Purchaser, that the Commissioner does not intend
to make an application under section 92 of the Competition Act with
respect the transactions contemplated hereby and by the Related
Agreements, and neither the Commissioner nor any of her representatives
shall have rescinded or amended such advice.
7.7 Third Party Consents. The Sellers shall have obtained and delivered to
Purchaser all written consents, approvals, waivers, notices or similar
authorizations required to be obtained or given by Sellers, the Company or any
Subsidiary in order to consummate the transactions contemplated hereby and by
the Related Agreements, including those identified on the Seller Disclosure
Schedule in respect of Section 3.6, all in form and substance reasonably
satisfactory to Purchaser.
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7.8 Escrow Agreement. The Sellers, Purchaser and XxXxxxxx Xxxxx Xxxxxxxxxx
LLP (as escrow agent) shall have entered into an Escrow Agreement, dated as of
the Closing Date, (the "Escrow Agreement") in the form attached hereto as
Exhibit 2.
7.9 Employment Agreement. Xxxxx Xxxxxxxx shall have executed an employment
agreement, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit 3 with such substantive terms omitted therein completed to the
satisfaction of Rand.
7.10 Stock Certificates. Purchaser shall have received the Stock
Certificates, together with evidence satisfactory to Purchaser that Purchaser
has been entered in the corporate records of each relevant entity as the holder
of record of the Purchase Shares.
7.11 Good Standing. Rand and Purchaser shall have received long-form good
standing certificates or certificates of compliance, where recognized (or the
equivalent thereto in the relevant jurisdiction) relating to the Company and
each Subsidiary, dated within five Business Days of the Closing Date, issued by
the appropriate official of the respective jurisdictions of incorporation or
organization, as the case may be, together with like certificates with respect
to each jurisdiction in which the Company or any Subsidiary carries on business
as listed in the Seller Disclosure Schedule in respect of Section 3.10.
7.12 Releases. Each Seller shall have executed and delivered to Purchaser
a release in substantially the form of Exhibit 4 (each, a "Release").
7.13 Liens. Evidence satisfactory to Purchaser of the release and
discharge of any Liens (other than Permitted Liens) specified in the Seller
Disclosure Schedule in respect of Section 3.7.
7.14 [Intentionally Omitted].
7.15 Change in the Law. Since the date of this Agreement, no Law, proposed
Law, any change in any Law or the interpretation or enforcement of any Law shall
have been introduced, enacted or announced, which prevents Purchaser from
completing the transactions contemplated in this Agreement or any of the Related
Agreements or which could reasonably be expected to result in a Material Adverse
Effect.
7.16 Legal Opinions. Rand and Purchaser shall have received signed
opinions from Sellers' legal counsel, dated as of the Closing Date and addressed
to Rand and Purchaser, substantially in the form attached hereto as Exhibit 5.
7.17 Section 116 Escrow Agreement. The Sellers, Purchaser and Xxxxxx
Xxxxxxx LLP (as escrow agent) shall have entered into the Section 116 Escrow
Agreement, dated as of the Closing Date, (the "Section 116 Escrow Agreement") in
the form attached hereto as Exhibit 7.
7.18 Bonus Program Participant Agreement. The agreement attached hereto as
Exhibit 14, shall have been executed and delivered to Rand by each signatory
thereto.
7.19 [Intentionally Omitted].
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7.20 Financing. Rand, Purchaser or the "Borrowers" under the Financing
Commitments (or if commitments for the alternative financing contemplated under
Section 5.12 shall have been obtained, the intended recipients of such
alternative financing under the terms of such alternative financing commitments)
shall have received the financing proceeds contemplated by the Financing
Commitments (or such alternative commitments).
7.21 Redemption. All conditions precedent to the obligations of Grand
River under the Redemption Agreement shall have been fully satisfied without
waiver (other than in accordance with Section 6.8), and the transactions
contemplated by the Redemption Agreement shall be capable of being consummated
immediately following the Closing.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to consummate the transactions contemplated
by this Agreement are subject to the fulfillment of each of the following
conditions, any or all of which may be waived in whole or in part by the
Sellers:
8.1 Representations and Warranties. The representations and warranties
contained in Article IV that are qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects, as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date, except to the extent such representations and
warranties expressly relate to a specified date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such specified date).
8.2 Performance. Rand and Purchaser shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by them prior to or at the Closing
Time.
8.3 Certificates. The Sellers shall have received (a) a certificate of an
executive officer of Purchaser, dated the Closing Date, certifying to the
fulfillment of the conditions specified in Sections 8.1 and 8.2; (b) a
certificate of the Secretary of each of Rand and Purchaser, dated the Closing
Date, setting forth the resolutions of the Boards of Directors of Rand and
Purchaser approving this Agreement, the Related Agreements to which Rand or
Purchaser is a party and all other documents contemplated hereby and thereby,
and authorizing the transactions hereby and thereby contemplated; and (c) such
other evidence with respect to the fulfillment of any of said conditions as the
Sellers may reasonably request.
8.4 No Injunction. There shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in an Action
against the consummation of the transactions contemplated hereby or by any
Related Agreement.
8.5 Governmental Approvals. The parties hereto shall have received all
approvals from any applicable Governmental Authority necessary to consummate the
transactions contemplated hereby and by the Related Agreements.
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8.6 Third Party Consents. Rand and Purchaser shall have obtained and
delivered to Sellers any written consents, approvals, waivers, notices or
similar authorizations required to be obtained or given by Rand or Purchaser in
order to consummate the transactions contemplated hereby and by the Related
Agreements, including those identified on the Purchaser Disclosure Schedule in
respect of Section 4.4, all in form and substance reasonably satisfactory to
Sellers.
8.7 Escrow Agreement. Purchaser, Sellers and XxXxxxxx Xxxxx Xxxxxxxxxx LLP
shall have entered into the Escrow Agreement.
8.8 Good Standing. Sellers shall have received long-form good standing
certificates, or certificates of compliance relating to Rand and Purchaser,
dated within five Business Days of the Closing Date, issued by the appropriate
official of their respective jurisdictions of incorporation or organization, as
the case may be.
8.9 [Intentionally Omitted]
8.10 Legal Opinions. Sellers shall have received a signed opinion from
Rand's and Purchaser's legal counsel, dated as of the Closing Date and addressed
to Sellers, substantially in the form attached hereto as Exhibit 6.
8.11 Management Bonus Program. Rand shall have adopted the Management
Bonus Program, in substantially the form of Exhibit 11 hereto.
ARTICLE IX.
INDEMNIFICATION
9.1 Survival
(a) All representations and warranties made herein (or in the certificates
to be delivered pursuant to Sections 7.4 or 8.3 hereof) by the parties to this
Agreement and their respective covenants and agreements to be performed pursuant
to the terms hereof, shall survive the Closing Time, provided, that, the
representations and warranties made herein (or in such certificates or deemed
certifications) by the parties shall terminate on the fifteen month anniversary
of the Closing Date, except that (i) the representations and warranties set
forth in Sections 2.6 (No Finder), Section 3.19 (Environmental Matters), 3.20
(Employee Plans) and 3.22 (No Finder) shall survive the Closing Time until the
expiration of the period ending thirty (30) days after the earlier of (x) the
applicable statute of limitations or (y) six years from the date hereof, (ii)
the representations and warranties set forth in Section 3.15 (Tax Matters) shall
survive the Closing Time until the expiration of the period ending thirty (30)
days after the applicable statute of limitations and (iii) the representations
and warranties set forth in Sections 2.1 (Authority; Execution and Delivery;
Enforceability), 2.3 (Title to Purchase Shares), 3.2(c) (Subsidiaries; Equity
Interests), 3.3 (Non Contravention) and 3.5 (Capitalization; Options) shall
survive the Closing Time indefinitely. Notwithstanding the foregoing, if written
notice of any matter setting forth in reasonable detail a claim for a breach of
any representation or warranty is given to Rand or Purchaser or the applicable
Sellers, as the case may be, in writing pursuant to this Agreement prior to the
end of the applicable survival period, any such representation or warranty that
would otherwise terminate shall be deemed to survive solely with respect to such
matter until such matter is resolved.
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(b) The parties are aware of the provisions of the Limitations Act
(Ontario) and have considered the matter of the survival of their respective
representations, warranties, covenants and indemnities in that context. Each of
the parties waives any limitation defense inconsistent with the survival
provisions of this Agreement. In addition, the obligation to answer for any
breach of a representation and warranty will commence when notice of the breach
is served upon the party making the representation or giving the warranty.
9.2 Indemnification by Sellers
(a) Each Seller, severally but not jointly, shall indemnify and hold
harmless any Purchaser Group Member from and against and shall pay to the
relevant Purchaser Group Member the amount of any and all Damages incurred by
such Purchaser Group Member arising directly or indirectly from or in connection
with any breach of any representation or warranty of such Seller contained in
Article II.
(b) Each Seller, severally but not jointly, shall indemnify and hold
harmless each Purchaser Group Member from and against any and all Damages
incurred by such Purchaser Group Member arising directly or indirectly from or
in connection with:
(i) any breach or failure of (x) the Sellers to perform any
covenants or other obligations of the Sellers contained in this Agreement
or any Related Agreement or (y) subject to Section 6.8, any party to the
Redemption Agreement to perform any of their respective covenants or other
obligations under the Redemption Agreement (provided, however, that
indemnification with respect to covenants or other obligations of Grand
River shall be limited to breaches or failures occurring prior to the
Closing);
(ii) any breach of any representation or warranty contained in
Article III;
(iii) the August 9, 2005 incident in the Welland Canal involving the
M/V Mississagi to the extent exceeding $50,000;
(iv) any breach of any representation or warranty contained in
Article II of the Redemption Agreement; and
(v) (a) GR Holdings' failure to have good and valid title to the
"Purchase Shares" (as defined in the Redemption Agreement), (b) the
existence of Liens on such Purchase Shares (other than as set forth in the
"Seller Disclosure Schedule", as defined in the Redemption Agreement) and
(c) Grand River's failure to have, upon completion of the transactions
contemplated by the Redemption Agreement, legal, beneficial, good and
valid title to such Purchase Shares, free and clear of all Liens.
9.3 Indemnification by Purchaser and Rand. Purchaser and Rand will jointly
and severally indemnify and hold harmless each Seller Group Member from and
against and shall pay to the relevant Seller Group Member the amount of any and
all Damages incurred by such Seller Group Member arising directly or indirectly
from or in connection with:
54
(a) any failure by Rand or Purchaser to perform any of the covenants or
other obligations of Rand or Purchaser contained in this Agreement or any
Related Agreement; and
(b) any breach of any representation or warranty of Rand or Purchaser
contained in this Agreement or any Related Agreement.
9.4 Limitations on Indemnification. Notwithstanding the other provisions
of this Article IX:
(a) No Purchaser Group Member shall be entitled to be indemnified pursuant
to Sections 9.2(a) or 9.2(b)(ii) unless and until the Damages incurred by
Purchaser Group Members shall exceed $50,000 per claim, or an aggregate of
$250,000 for all such claims (the "Threshold"), and upon exceeding such
per-claim or aggregate amount, the Purchaser Group Members shall be entitled to
be indemnified for all Damages (including all Damages below such amounts). The
maximum aggregate amount of indemnification pursuant to Section 9.2(b)(ii) that
may be received by Purchaser Group Members shall not exceed the sum of
$9,000,000 plus an amount equal to the Plan Account Balance (such sum, the
"Cap"); provided, however, that Purchaser Group Members shall be entitled to be
indemnified for all Damages on a dollar-for-dollar basis from the first dollar
of Damages, without regard to the per-claim or aggregate Threshold or the Cap,
incurred as a result of any breach of the representations and warranties set
forth in Sections 2.1, 2.3, 2.6, 3.1, 3.2(c) (to the extent that Damages under
3.2(c) arise in connection with the breach of any section of Article III of the
Redemption Agreement other than Sections 3.4 or 3.5 thereof), 3.3, 3.5 or 3.22;
and provided, further, however, that Purchaser Group Members shall be entitled
to be indemnified for all Damages on a dollar-for-dollar basis from the first
dollar of Damages, without regard to the per-claim or aggregate Threshold but
subject to the Cap, incurred as a result of any breach of the representations
and warranties set forth in Sections 3.2(c) (to the extent that Damages under
3.2(c) arise in connection with the breach of Sections 3.4 or 3.5 of the
Redemption Agreement), 3.15, 3.19 or 3.20; and provided, further, however, that
the Purchaser Group Members shall be indemnified for all Damages in excess of
$50,000, without regard to the per claim or aggregate Threshold or the Cap,
incurred by the Purchaser Group Members in connection with the August 9, 2005
incident in the Welland Canal involving the M/V Mississagi.
(b) Any amounts payable to any Purchaser Group Member pursuant to Section
9.2(b)(ii), subject to Section 9.4(a), shall be paid or otherwise satisfied
first from the Escrow Amount and, upon depletion of the Escrow Amount, 67.5%
from Sellers (subject to the maximum indemnification amounts for each Seller
specified in Exhibit 12 and in accordance with the percentages set forth
thereon) and 32.5% through reduction of the Plan Account Balance until the Plan
Account Balance has been depleted, and then 100% from Sellers (subject to the
maximum indemnification amounts for each Seller specified in Exhibit 12 and in
accordance with the percentages set forth thereon).
(c) The amount of any Damages for which indemnification is provided under
this Article IX shall be net of any insurance proceeds available under any
insurance policies as then in effect to an Indemnitee hereunder (or any
Affiliate thereof) in connection with the events or circumstances giving rise to
the indemnification, but only to the extent that the Indemnitee (or any
Affiliate) actually receives any such insurance proceeds (or any benefits
thereof). The Indemnitee (or such Affiliate) will use commercially reasonable
efforts to claim and recover under such insurance policies.
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(d) The parties acknowledge and agree that after the Closing, the
indemnification provisions contained in Sections 9.2 and 9.3 shall be the sole
and exclusive remedy for Damages arising out of or caused by the breach of any
of the representations, warranties, covenants or agreements of the parties
contained in this Agreement or in any certificate delivered in connection
herewith, except for any remedies that may be available under Section 6.2 or
with respect to claims arising out of fraud or willful misconduct.
(e) Notwithstanding anything to the contrary contained in this Agreement,
there shall be no recovery for Damages by any Purchaser Group Member, and such
Damages shall not be included in determining the Thresholds under this Section
9.4, to the extent such item has been paid by the Sellers in accordance with
Section 6.3 or accrued for on the Estimated Closing Date Balance Sheet and
included in the computation of Estimated Net Working Capital for purposes of
adjusting the Purchase Price pursuant to Section 1.4 (it being understood that
any Purchaser Group Member's right to indemnification for any such Damages in
excess of the accruals on the Company's books and records shall not be affected
by this Section 9.4(e)). In addition, no Purchaser Group Member shall be
entitled to indemnification in respect of a claim of breach of Section 3.3(a) to
the extent that the Indemnitor can establish by a final judgment of a court of
competent jurisdiction that Xxxxxxxx X. Xxxx had knowledge (assuming for these
purposes that Xxxxxxxx X. Xxxx shall have made reasonable inquiry with respect
to such matters of his legal, accounting and other representatives) on or before
the Closing Date of the facts, events or circumstances that caused such breach.
9.5 Interest. Any amount required to be paid pursuant to the indemnities
set forth in this Article IX shall bear interest at the Prime Rate accruing on a
daily basis from the date on which a demand for payment is made until payment in
full.
9.6 Tax Treatment of Indemnity Payments. It is the intention of the
parties to treat any indemnity payment made under this Agreement as an
adjustment to the Purchase Price for all federal, provincial, state, local and
foreign Tax purposes, and the parties agree to file their Tax Returns
accordingly.
9.7 Notice of Claims. Any Purchaser Group Member or Seller Group Member
seeking indemnification hereunder (an "Indemnitee") shall give to the party or
parties obligated to provide indemnification to such Indemnitee (an
"Indemnitor") a notice ("Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based.
9.8 Third Party Claims. In the case of any third party Action as to which
indemnification is sought by an Indemnitee, the Indemnitor shall have 10
Business Days after receipt of a Claim Notice to notify the Indemnitee that it
elects to conduct and control such Action. If the Indemnitor elects to conduct
and control such Action, the Indemnitor shall agree promptly to reimburse the
Indemnitee for the full amount of any Damages resulting from such Action, except
fees and expenses of counsel for the Indemnitee incurred after the assumption of
the conduct and control of such Action by the Indemnitor. If the Indemnitor does
56
not give the foregoing notice, or if the Indemnitor gives such notice but fails
to prosecute vigorously and diligently or settle such Action, the Indemnitee
shall have the right, at the sole expense of the Indemnitor, to defend, conduct,
control and settle such Action, and the Indemnitor shall cooperate with the
Indemnitee in connection therewith, provided, that (x) the Indemnitee shall
permit the Indemnitor to participate in such conduct or settlement through
counsel chosen by the Indemnitor, but the fees and expenses of such counsel
shall be borne by the Indemnitor, and (y) the Indemnitee may not compromise or
settle such Action without the consent of the Indemnitor (which consent will not
be unreasonably withheld or delayed), unless (i) the sole relief provided is
monetary Damages, and (ii) such settlement includes an unconditional release in
favor of the Indemnitor by the third-party claimant from all liability with
respect to such claim (other than liability for payment of any amounts in
connection with such settlement). If the Indemnitor gives the foregoing notice,
subject to the first and second sentences of this Section 9.8, the Indemnitor
shall have the right, at the sole expense of the Indemnitor, to defend, conduct,
control and settle such Action by all appropriate proceedings (which proceedings
will be vigorously and diligently prosecuted by the Indemnitor to a final
conclusion or settlement), with counsel reasonably acceptable to the Indemnitee,
and the Indemnitee shall cooperate with the Indemnitor in connection therewith,
provided, that (x) the Indemnitor shall permit the Indemnitee to participate in
such conduct or settlement through counsel chosen by the Indemnitee, but the
fees and expenses of such counsel shall be borne by the Indemnitee, and (y) the
Indemnitor may not compromise or settle any such Action without the consent of
the Indemnitee (which consent will not be unreasonably withheld or delayed)
unless (i) there is no finding or admission of any violation of Law by the
Indemnitee or any violation by the Indemnitee of the rights of any Person, (ii)
the sole relief provided is money Damages that are paid in full by the
Indemnitor, (iii) the Indemnitee shall have no liability with respect to any
compromise or settlement and (iv) such settlement includes an unconditional
release in favor of the Indemnitee by the third-party claimant from all
liability with respect to such claim. In the case of any third party Action as
to which indemnification is sought by the Indemnitee which involves a claim for
Damages other than solely for money Damages which could have a continuing effect
on the business of the Indemnitee, the Indemnitee and the Indemnitor shall
jointly control the conduct of such Action. The parties hereto shall use their
commercially reasonable efforts to minimize any Damages from claims by third
parties and shall act in good faith in responding to, defending against,
settling or otherwise dealing with such claims, notwithstanding any dispute as
to liability under this Article IX.
ARTICLE X.
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of Purchaser and the Sellers' Representative; or
57
(b) by Purchaser, if there has been (i) a material breach by any Seller of
the representations and warranties contained in this Agreement or (ii) a
material violation by any Seller of any covenant or agreement contained in this
Agreement, provided, that written notice of such violation or breach shall have
been given to such Seller, as applicable, and such violation or breach shall not
have been cured within ten days of receipt of such notice; or
(c) by the Sellers' Representative, if there has been (i) a material
breach by Purchaser or Rand of the representations and warranties contained in
this Agreement or (ii) a material violation by Purchaser or Rand of any covenant
or agreement contained in this Agreement, provided, that written notice of such
violation or breach shall have been given to Purchaser and such violation or
breach shall not have been cured within ten days of receipt of such notice; or
(d) by Purchaser, on the one hand, or the Sellers' Representative, on the
other hand, if the Closing shall not have occurred by January 15, 2006 (the
"Outside Termination Date") (unless the Closing shall have not occurred on or
before such date due to a material breach of the representations and warranties
or of a covenant by such party and/or the action or failure to act of the party
seeking to terminate this Agreement); or
(e) by the Sellers' Representative if the board of directors of Rand has
(A) withdrawn or modified, in any manner adverse to Sellers, the board's
recommendation required pursuant to Section 1.7(f) or (B) failed to issue to its
shareholders or, at any time reasonably requested by Sellers, reissue to its
shareholders the board's recommendation required pursuant to Section 1.7(f). No
such termination will be effective unless and until Sellers have received the
Termination Fee.
58
10.2 Termination Fee If, subsequent to termination by the Sellers'
Representative pursuant to Section 10.1(e), Rand or Purchaser consummates a
"Business Combination" (as defined in Rand's Certificate of Incorporation), Rand
shall pay to the Sellers' Representative for the account of all Sellers a
termination fee in the amount of $2,000,000 (the "Termination Fee") in full
satisfaction of any and all claims which any Seller may have against Purchaser,
Rand or their respective officers, directors, shareholders or Affiliates as a
result of or arising out of the termination of this Agreement.
10.3 Effects of Termination. In the event of a termination of this
Agreement pursuant to this Article X, other than as expressly provided in this
Article X, (i) all further obligations of the parties under this Agreement shall
terminate, (ii) no party shall have any right under or in connection with this
Agreement or the transactions contemplated hereby against any other party, and
(iii) each party shall bear its own costs and expenses; provided however that
the termination of this Agreement under this Article X shall not relieve any
party of liability for any material breach of this Agreement prior to the date
of termination, or constitute a waiver of any claim with respect thereto.
ARTICLE XI.
MISCELLANEOUS
11.1 Expenses of the Transaction. Each of the parties hereto agrees to pay
such party's own fees and expenses in connection with this Agreement and the
Related Agreements and the transactions contemplated hereby and by the Related
Agreements including, without limitation, legal and accounting fees and
expenses.
11.2 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered (i) when
delivered personally or by private courier, (ii) when actually delivered by
registered or, as applicable, certified mail, return receipt requested, or (iii)
when sent by facsimile transmission (provided, that it is confirmed by a means
specified in clause (i) or (ii)), addressed as follows:
59
If to Purchaser or Rand to:
Rand Acquisition Corporation
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxx, Chairman
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Rosenman LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to Sellers, to the addresses listed on Exhibit 9.
with copies to:
McMillan Xxxxx Xxxxxxxxxx XXX
XXX Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxxx Tower
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
11.3 No Modification Except in Writing. This Agreement shall not be
changed, modified, or amended except by a writing signed by the party to be
affected by such change, modification or amendment, and this Agreement may not
be discharged except by performance in accordance with its terms or by a writing
signed by the party to which performance is to be rendered.
11.4 Entire Agreement. This Agreement, together with the Schedules,
Appendices and Exhibits hereto, and the Related Agreements, sets forth the
entire agreement and understanding among the parties as to the subject matter
hereof and thereof and merges and supersedes all prior discussions, agreements
and understandings of every kind and nature among them with respect to such
subject matter.
60
11.5 Severability. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected unless the provision held invalid
shall substantially impair the benefits of the remaining portions of this
Agreement.
11.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. The Sellers shall not be
permitted to assign their respective rights, or delegate their respective
duties, under this Agreement without the prior written consent of Purchaser.
Rand and Purchaser shall not be permitted to assign their respective rights, or
delegate their respective duties, under this Agreement without the prior written
consent of Sellers' Representative.
11.7 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with,
the Laws of the State of New York applicable to contracts made and to be
performed wholly within said State, without giving effect to the conflict of
laws principles thereof.
(b) Each party to this Agreement irrevocably agrees that any Action
concerning or arising out of the interpretation, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in (i) the courts of the
State of New York located in New York County or (ii) the United States District
Court for the Southern District of New York.
(c) Each party and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
11.8 Specific Performance. The parties agree that if any of the provisions
of this Agreement were not performed by Purchaser or Rand, on the one hand, or
the Sellers, on the other hand, in accordance with their specific terms or were
otherwise breached by such parties, irreparable damage would occur, no adequate
remedy at Law would exist and damages would be difficult to determine, and that
the non-breaching party will be entitled to specific performance of the terms
hereof. The parties waive any requirement for the posting of a bond in
connection with any Action seeking specific performance; provided, however, that
nothing herein will affect the right of any of the parties to seek recovery
against any party hereto, at Law, in equity or otherwise, with respect to any
covenants, agreements or obligations to be performed by such party or parties
after the Closing Date.
61
11.9 Headings; References. The headings appearing in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope and intent of this Agreement or any of the
provisions hereof. Any reference in this Agreement (including in any Exhibit,
Appendix or Schedule hereto) to a "Section," "Article," or "Exhibit" shall mean
a Section, Article or Exhibit of or to this Agreement unless expressly stated
otherwise.
11.10 Interpretation. In this Agreement, (a) words used herein regardless
of the gender specifically used shall be deemed and construed to include any
other gender, masculine, feminine or neuter, as the context shall require, and
(b) all terms defined in the singular shall have the same meanings when used in
the plural and vice versa. Any statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such statute as from
time to time amended, modified or supplemented, including (in the case of
statutes) by succession of comparable successor statutes. References to a Person
are also its predecessors and permitted successors and assigns.
11.11 Third Parties. The provisions of this Agreement are solely for the
benefit of the parties hereto and shall not inure to the benefit of any third
party.
11.12 Counterparts and Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which taken together shall constitute a single agreement. The parties
hereto agree that this Agreement and any Related Agreement or document,
certificate or instrument ancillary thereto may be executed by facsimile
transmission and that the reproduction of signatures by facsimile or similar
device shall be treated as binding as if originals, and each party agrees and
undertakes to provide the other parties with a copy of such Agreement, document,
certificate or instrument bearing original signatures forthwith upon demand by
the other parties.
11.13 Time of the Essence. Time shall be of the essence of this Agreement.
11.14 Currency. Unless otherwise specified, all dollar amounts set forth
in this Agreement shall be in lawful currency of the United States.
11.15 Sellers' Representative. Each Seller hereby appoints Royal Bank of
Canada, through its operating division RBC Capital Partners, (the "Sellers'
Representative") as its duly appointed representative to act on behalf of such
Seller in the manner contemplated by this Agreement and any of the Related
Agreements, and any act, approval or consent of the Sellers' Representative
shall be deemed to be the act, approval or consent of such Seller and no Person,
including, without limitation, the Purchaser, Rand, the Company or any other
person dealing with the Sellers' Representative in the manner contemplated by
this Agreement or any Related Agreement, shall be required to enquire into the
authority of the Sellers' Representative as to such act, approval or consent, or
otherwise deal with an individual Seller with respect to any such matter. The
Sellers' Representative may be replaced by a successor representative only by
notice to the Purchaser and Rand signed by all of the Sellers.
[Signature page follows]
62
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the day and year first above written.
RAND ACQUISITION CORPORATION
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President
LL ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President
ROYAL BANK OF CANADA, through its operating division,
RBC CAPITAL PARTNERS
By: /s/ Xxxx Manastersky /s/ Xxxx Xxxxxxx
-------------------------------------------------
Name: Xxxx Manastersky Xxxx Xxxxxxx
Title: Managing Partner Vice President
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ X. X. Xxxxxx
-------------------------------------------------
Name: X. X. Xxxxxxx
Title: Central Manager
UNIVERSAL INSULATIONS HOLDINGS LIMITED
By: /s/ X. X. Xxxxxxx
-------------------------------------------------
Name: X. X. Xxxxxxx
Title: President
NORVEST MEZZANINE FUND LIMITED PARTNERSHIP
By: /s/ W. Xxxx Xxxxxxxx
-------------------------------------------------
Name: W. Xxxx Xxxxxxxx
Title: Managing Director
/s/ Xxxxx Xxxxxxxx
-----------------------------------------------------
XXXXX XXXXXXXX
/s/ Xxxx Xxxxx
-----------------------------------------------------
XXXX XXXXX
/s/ Xxxx Xxxx
-----------------------------------------------------
XXXX XXXX
/s/ Xxxxxx Xxxxxx
-----------------------------------------------------
XXXXXX XXXXXX
/s/ Xxx Xxxx
-----------------------------------------------------
XXX XXXX
APPENDIX A
DEFINITIONS
Definitions. The following terms when used in the Agreement shall have the
respective meanings ascribed to them below:
"Accounting Firm" has the meaning ascribed to such term in Section 1.4
(d).
"Accounts Receivable" means: (i) all trade accounts receivable and other
rights to payment from customers of the Company or any Subsidiary and the full
benefit of all security for such accounts or rights to payment, including all
trade accounts receivable representing amounts receivable in respect of goods
shipped or products sold or services rendered to customers of the Company or any
Subsidiary; (ii) all other accounts or notes receivable of the Company or any
Subsidiary and the full benefit of all security for such accounts or notes; and
(iii) any Action, remedy or other right related to any of the foregoing.
"Action" shall mean any action, suit, claim, litigation, proceeding,
arbitration, audit, investigation or hearing (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted or
heard by or before, any Governmental Authority.
"Affiliate" shall mean, with respect to a specified Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
common control with such specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning ascribed to such term in the Preamble hereto
and includes this Appendix A, the Seller Disclosure Schedule, the Purchaser
Disclosure Schedule and any other Appendices and Exhibits hereto.
"Books and Records" shall mean all books of account, tax returns and other
tax records, personnel records, historic documents relating to U.S. Employee
Benefit Plans and Canadian Employee Benefit Plans, sales and purchase records,
customer and supplier lists, referral sources, research and development reports
and records, production reports and records, equipment logs, operating guides
and manuals, business reports, plans and projections, and all other documents,
files, correspondence and other information of the Company or any of the
Subsidiaries (whether in written, electronic or other form).
"Business Combination" shall mean, with respect to any Person, any merger,
consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other ownership
interests of such Person, or any sale, dividend or other disposition of all or
substantially all of its assets and properties of such Person.
"Business Day" shall mean a day (other than a Saturday or Sunday), on
which commercial banks are open for business in Xxx Xxxx, Xxx Xxxx xxx Xxxxxxx,
Xxxxxxx.
"Canadian Employee Benefit Plans" has the meaning ascribed to such term in
Section 3.20(b)(i).
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"Canadian Employees" has the meaning ascribed to such term in Section
3.9(d).
"Canadian Plans" has the meaning ascribed to such term in Section
3.20(a)(i).
"Cap" has the meaning ascribed to such term in Section 9.4(a).
"Certificate Date" has the meaning ascribed to such term in Section
1.5(b).
"Claim Notice" has the meaning ascribed to such term in Section 9.7.
"Closing" has the meaning ascribed to such term in Section 1.1.
"Closing Date" has the meaning ascribed to such term in Section 1.1.
"Closing Date Balance Sheet" has the meaning ascribed to such term in
Section 1.4 (a)(ii).
"Closing Date Statement" has the meaning ascribed to such term in Section
1.4(a)(ii).
"Closing Time" has the meaning ascribed to such term in Section 1.1.
"Closing Date Net Working Capital" has the meaning ascribed to such term
in Section 1.4 (a)(ii).
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute thereto and all final or temporary
regulations promulgated thereunder and published.
"Company" has the meaning ascribed to such term in the Recitals hereto.
"Competition Act" means the Competition Act (Canada).
"Confidentiality Agreement" shall mean that certain confidentiality
agreement dated February 22, 2005 by Hyde Park Holdings LLC in favor of the
Company.
"Confidential Information" shall mean trade secrets, confidential or
proprietary information, knowledge, or know-how pertaining primarily to the
business of the Company or any Subsidiary, or any confidential or proprietary
information concerning any supplier or customer of the Company or any
Subsidiary, including, without limitation, customer lists, research and
development information and materials, inventions, formulas, methods,
techniques, processes, plans, product designs, procedures, contracts, financial
information and computer models. The term Confidential Information shall not
include (i) information that is generally available to the public or within the
shipping or freight industry, other than as a result of a disclosure by the
receiving party or its directors, officers, shareholders, partners, Affiliates,
employees, agents or advisors in violation of this Agreement; (ii) information
which, prior to disclosure to the receiving party by or on behalf of the
disclosing party, was already in the receiving party's possession on a
non-confidential basis; (iii) information that was developed without the use of
Confidential Information; (iv) information that becomes available to the
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receiving party on a non-confidential basis from a source other than the
Sellers, the Company or any Subsidiary or any of their advisors, agents or
Affiliates, provided, that such source is not known by the receiving party to be
bound by a confidentiality agreement with or other obligation of secrecy to the
Company or any Subsidiary or any other party; (v) information which is
reasonably necessary for the purpose of the disclosing party asserting its
rights in a dispute among the parties hereunder or under any Related Agreement;
or (vi) information reasonably related to any Tax Returns or similar matters
required to be prepared by the disclosing party or any of their representatives
and filed with any Governmental Authority, provided, that, with respect to
Confidential Information disclosed as a result of or in connection with clauses
(v) and (vi) herein, the disclosing party shall provide the non-disclosing party
with prompt written notice of such anticipated disclosure so that the
non-disclosing party may seek a protective order or other appropriate remedy in
connection with such disclosure, and if such protective order or other remedy is
not obtained, the disclosing party hereby agrees to furnish only that portion of
the Confidential Information which it is advised by counsel is legally required
and to exercise its reasonable efforts to obtain assurance that confidential
treatment will be accorded to the Confidential Information.
"Consolidated Financial Statements" has the meaning ascribed to such term
in Section 5.14.
"Contracts" shall mean all legally binding leases, including, without
limitation, Real Property Leases, licenses, contracts, agreements, indentures,
promissory notes, guarantees, arrangements, commitments and understandings of
any kind, whether written or oral, to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any of the assets of the
Company or any Subsidiary may be bound, and all rights arising under any of
them.
"Convertible Notes" shall mean those convertible non-interest bearing
promissory notes, due on March 28, 2011, issued to Citicorp North America Inc.,
convertible into shares of common stock of the Company at a conversion price of
CDN $599 per share, and currently held by certain Sellers.
"Current Assets" has the meaning ascribed to such term in Section 1.4 (b).
"Current Liabilities" has the meaning ascribed to such term in Section 1.4
(b).
"Damages" shall mean actual losses, obligations, liabilities, settlement
payments, awards, judgments, fines, penalties, damages, Taxes and reasonable
expenses and costs, including reasonable attorneys' and auditors' fees (and any
reasonable experts' fees) and court costs, whether or not involving a third
party claim but shall not include consequential, incidental or punitive damages
or damages for diminution is value or lost profits, other than to the extent
included in a judgment in favor of, and paid to, third parties.
"Environment" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.
"Environmental Condition" shall mean any condition with respect to the
Environment on or off any Facility caused by a release of Hazardous Substances
or violation of Environmental Laws, whether or not yet discovered, which could
or does result in any Damages to the Company, including, without limitation, any
condition resulting from the operation of the business of the Company or any
Subsidiary or the operation of the business of any subtenant or occupant of any
Facility.
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"Environmental Laws" shall mean all Laws relating to the pollution of or
protection of the Environment, from contamination by, or relating to injury to,
or the protection of, real or personal property or human health or the
Environment, including, without limitation, all valid and lawful requirements of
courts and other Governmental Authorities pertaining to reporting, licensing,
permitting, investigation, remediation and removal of, emissions, discharges,
releases or threatened releases of Hazardous Substances, chemical substances,
pesticides, petroleum or petroleum products, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, into the Environment, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, including,
without limitation, the Oil and Pollution Act of 1990, the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, the
Clean Air Act of 1990, the Canadian Environmental Protection Act, the Ontario
Environmental Protection Act, the Migratory Birds Convention Act (Canada) and
the Marine Liability Act (Canada).
"Environmental Report" shall mean any report, study, assessment, audit, or
other similar document that addresses any issue of actual or potential
noncompliance with, actual or potential liability under or cost arising out of,
or actual or potential impact on business in connection with, any Environmental
Law or any proposed or anticipated change in or addition to any Environmental
Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute thereto and all final or
temporary regulations promulgated thereunder.
"Escrow Agent" shall mean XxXxxxxx Xxxxx Xxxxxxxxxx LLP.
"Escrow Agreement" shall have the meaning ascribed to such term in Section
7.8.
"Escrow Amount" shall mean $2,000,000.
"Estimated Closing Date Balance Sheet" shall have the meaning ascribed to
such term in Section 1.4(a)(i).
"Estimated Net Working Capital" shall have the meaning ascribed to such
term in Section 1.4(a)(i).
"Estimated Statement" shall have the meaning ascribed to such term in
Section 1.4(a)(i).
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, or any successor law, and regulations and rules issued under that Act
or any successor law.
"Facility" shall mean any facility that is now or has heretofore been
owned, leased or used in connection with the business of the Company or any
Subsidiary.
"Financial Statements" has the meaning ascribed to such term in Section
3.14 (a).
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"Financing Commitments" shall mean the financing commitment letters
attached hereto as Exhibit 13.
"GAAP" shall mean Canadian generally accepted accounting principles,
consistently applied.
"Governmental Authority" shall mean any (i) federal, state, local,
provincial, territorial, municipal, foreign, or other government, (ii)
governmental or quasi-governmental authority of any nature or (iii) other body
(including privately constituted arbitral tribunals) exercising any statutory,
administrative, judicial, arbitrative, legislative, police, regulatory, or
taxing authority or power.
"Governmental Permits" shall mean all licenses, franchises, registrations,
permits, privileges, immunities, approvals and other authorizations from a
Governmental Authority.
"GR Holdings" means Grand River Holdings, Inc.
"GR Shares" means the 30 common shares of Grand River Navigation Company,
Inc. owned by GR Holdings.
"Grand River" means Grand River Navigation Company, Inc.
"Group" has the meaning ascribed to such term in Section 3.20(a)(i).
"Hazardous Substance" shall mean any substance whether solid, liquid or
gaseous in nature:
(i) the presence of which requires or may hereafter require
notification, investigation, or remediation under any Environmental Law;
(ii) which is or becomes defined as "toxic", a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future Environmental Laws;
(iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any Governmental Authority;
(iv) which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds and is or becomes regulated by
any Governmental Authority;
(v) which contains polychlorinated byphenyls (PCBs) or asbestos or
urea formaldehyde foam insulation; or
(vi) which contains or emits radioactive particles, waves or
materials, including radon gas.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, or (ii) evidenced by notes, bonds, debentures or similar
instruments, or (iii) for the deferred purchase price of products, goods or
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services (other than trade payables or accruals incurred in the ordinary course
of business), or (iv) under capital leases or (v) in the nature of guarantees of
any of the obligations described in clauses (i) through (iv) above of any other
Person.
"Indemnitee" has the meaning ascribed to such term in Section 9.7.
"Indemnitor" has the meaning ascribed to such term in Section 9.7.
"Intellectual Property Rights" has the meaning ascribed to such term in
Section 3.11(a).
"Investment Canada Act" means the Investment Canada Act (Canada).
"IPO Shares" has the meaning ascribed to such term in Section 1.7(a).
"Knowledge" shall mean, with respect to the Sellers, the actual knowledge
of Sellers and senior management of the Company and its Subsidiaries, or the
knowledge that would be expected to have been obtained upon due inquiry and
reasonable investigation by Xxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxx, Xxxxxxx
Xxxxxx and Xxxx Xxxxxx.
"Law" shall mean any constitution, law, treaty, compact, directive,
ordinance, principal of common law, permit, authorization, variance, regulation,
rule, or statute, including, without limitation, all federal, foreign, Canadian,
international, state, provincial, territorial and local laws related to Taxes,
ERISA, Hazardous Substances and the Environment, zoning and land use,
intellectual property, privacy, occupational safety and health, consumer
protection, product quality, safety, employment and labor matters.
"Liens" shall mean all mortgages, charges, pledges, liens, security
interests, conditional sale agreements, encumbrances and similar restrictions,
maritime liens, rights to detain and statutory rights of arrest.
"Major Customer" has the meaning ascribed to such term in Section 3.25.
"Management Bonus Program" means the "Rand Acquisition Corp. Management
Bonus Program" established on or before the Closing Date for specified senior
management of the Company and its Subsidiaries, in substantially the form of
Exhibit 11 hereto.
"Material Adverse Effect" shall mean any event, condition or contingency
that has had, or is reasonably likely to have, a material adverse effect on the
business, assets, liabilities, results of operations, prospects or financial
condition of the Company and Subsidiaries, taken as a whole, provide however,
that Material Adverse Effect shall not include any such effect or change
resulting from or arising in connection with (a) changes or conditions generally
affecting the industries or segments in which the Company operates; (b) changes
in general economic, market or political conditions; or (c) the announcement,
other disclosure or completion of the transactions contemplated by this
Agreement or any Related Agreement.
"Multiemployer Plan" has the meaning ascribed to such term in Section
3.20(a)(v).
"Net Working Capital" shall have the meaning ascribed to such term in
Section 1.4(b).
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"Non-Resident Purchase Price" has the meaning ascribed to such term in
Section 1.5(a).
"Non-Resident Purchase Shares" has the meaning ascribed to such term in
Section 1.5(a).
"Non-Resident Seller" has the meaning ascribed to such term in Section
1.5(a).
"Non-Union Contributions" has the meaning ascribed to such term in Section
3.20(a)(xiii).
"Non-Union Employee" has the meaning ascribed to such term in Section
3.20(a)(xiii).
"Notice of Disagreement" has the meaning ascribed to such term in Section
1.4(c).
"Order" shall mean any award, decision, injunction, decree, stipulation,
determination, writ, judgment, order, ruling, or verdict ordered, issued, made
or rendered by any court, administrative agency or other Governmental Authority.
"Outside Termination Date" has the meaning ascribed to such term in
Section 10.1(d).
"Payoff Amount" shall have the meaning ascribed to such term in Section
1.6.
"Permitted Liens" means (i) Liens for taxes or assessments or other
governmental charges not yet due and payable or which are being contested in
good faith by the Company or any Subsidiary; (ii) pledges or deposits of money
securing statutory obligations under workers compensation, employment insurance,
social security or public liability Laws or similar legislation; (iii) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which the Company or any Subsidiary is a
party as lessee made in the ordinary course of business; (iv) inchoate and
unperfected workers', mechanics' or similar liens arising in the ordinary course
of business, so long as such Liens attach only to equipment, fixtures, Vessels
and/or premises demised under the Real Property Leases; (v) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $250,000 at any time, so long as such Liens attach only
to inventory; (vi) deposits securing, or in lieu of, surety, appeal or customs
bonds in any proceedings to which Company or any Subsidiary is a party; (vii)
zoning restrictions, easements, licenses, or other restrictions on the use of
the premises demised under the Real Property Leases or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use, value, or marketability of such premises
demised under the Real Property Leases; (viii) Liens for wages claimed by
masters and seamen, claims for salvage expenses, claims for damage and masters
disbursements so long as such amounts owed are not past due; (ix) Liens for
dock, harbor and canal charges and claims in respect of pollution damage so long
as such amounts owed are not past due and (x) other maritime Liens so long as
the Indebtedness to which such Liens relate are not past due.
"Person" shall mean any individual, firm, unincorporated organization,
corporation (including any not-for-profit corporation), general or limited
partnership, limited liability company, cooperative marketing association, joint
venture, estate, trust, association or other entity as well as any syndicate or
group that would be deemed to be a person under Section 13(a)(3) of the Exchange
Act.
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"Plan Account Balance" shall have the meaning ascribed to such term in the
Management Bonus Program.
"Pre-Closing Tax Periods" has the meaning ascribed to such term in Section
6.3(a).
"Prime Rate" has the meaning ascribed to such term in Section 1.4(e).
"Proxy Statement" has the meaning ascribed to such term in Section 1.7(a).
"Purchase Price" has the meaning ascribed to such term in Section 1.2.
"Purchase Shares" has the meaning ascribed to such term in the Recitals
hereto.
"Purchaser" has the meaning ascribed to such term in the Preamble hereto.
"Purchaser Group Member" shall mean each of Purchaser, Rand and their
Affiliates (including, the Company and each Subsidiary as constituted after the
Closing) and their respective directors, officers, employees, agents and
attorneys and their respective successors and assigns.
"Qualified Plan" has the meaning ascribed to such term in Section
3.20(a)(iv).
"Rand" has the meaning ascribed to such term in the Preamble hereto.
"Real Property Leases" shall mean all leases, as amended, for real
property to which any the Company or any Subsidiary is a party or by which it is
bound.
"Redemption Agreement" shall mean the Redemption Agreement, dated as of
the date hereof, by and between Grand River and GR Holdings, in the form
attached hereto as Exhibit 15.
"Redemption Price" shall mean $750,000.
"Related Agreements" shall mean (i) the Escrow Agreement, the Redemption
Agreement and the Section 116 Escrow Agreement and (ii) those other agreements
and documents entered into or delivered between Purchaser, Rand and/or the
Sellers related to, ancillary to, or in connection with this Agreement or the
documents listed in clause (i) hereof.
"Release" shall have the meaning ascribed to such term in Section 7.12.
"Remittance Date" has the meaning ascribed to such term in Section 1.5(c).
"Representatives" shall have the meaning ascribed to such term in Section
5.4.
"Restricted Persons" shall mean, in respect of any Seller, any Person with
whom the Seller does not deal at arm's length (within the meaning of the Tax
Act).
"SEC" has the meaning ascribed to such term in Section 1.7(a).
"Section 116 Escrow Agreement" has the meaning ascribed to such term in
Section 7.17.
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"Section 116(2) Certificate" has the meaning ascribed to such term in
Section 1.5.
"Section 116(4) Certificate" has the meaning ascribed to such term in
Section 1.5.
"Seller Group Member" shall mean the Sellers and their respective
Affiliates and their respective directors, officers, employees, agents and
attorneys and their respective successors and assigns.
"Sellers" has the meaning ascribed to such term in the Preamble hereto.
"Seller Disclosure Schedule" shall mean that certain schedule attached
hereto as Appendix B qualifying the representations and warranties contained in
Articles II and III on a clause-by-clause basis in an appropriately
cross-referenced manner.
"Sellers' Representative" has the meaning ascribed to such term in Section
11.15.
"Series" shall mean the series of transactions or events that includes the
acquisition by Purchaser of the Purchase Shares.
"Set Off Rights Agreement" shall mean the Set Off Rights Agreement between
attached as Exhibit 10 to the Redemption Agreement.
"Shareholder Approval" has the meaning ascribed to such term in Section
1.7(a).
"Shareholder Meeting" has the meaning ascribed to such term in Section
1.7(a).
"Stock Certificates" has the meaning ascribed to such term in Section 1.2.
"Straddle Periods" has the meaning ascribed to such term in Section
6.3(b).
"Subsidiary" means any Person in which the Company directly or indirectly,
through another Person or otherwise, beneficially owns more than fifty percent
(50%) of either the equity or economic interest in, or the voting control of,
such Person. Notwithstanding the foregoing, Grand River shall be considered to
be a Subsidiary of the Company for the purposes of this Agreement and the
Related Agreements.
"Substituted Property" shall mean any property "acquired in substitution
for" any property of Lower Lakes Transportation Limited or Grand River, as such
term is defined for purposes of paragraph 88(1)(c.3) of the Tax Act, and shall
include without limitation, any property the fair market value of which is
wholly or partly attributable, or determinable primarily by reference, to the
shares of Lower Lakes Transportation Limited or Grand River or to any proceeds
from the disposition thereof immediately prior to Closing.
"Tax Act" shall mean the Income Tax Act (Canada).
"Tax Amount" has the meaning ascribed to such term in Section 1.5(d).
"Tax Authority" shall mean any foreign or domestic government, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
body or other authority exercising any taxing or Tax regulatory authority.
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"Tax Returns" shall mean all returns, reports, declarations, designations,
elections, notices, filings, forms, statements and other documents (whether in
written, electronic or other form) and any amendments, schedules, attachments,
supplements, appendices and exhibits thereto, which have been prepared or filed
or required to be prepared or filed in respect of Taxes.
"Taxes" includes any taxes, duties, assessments, imposts and levies
imposed by any Tax Authority and includes all interest, penalties, fines,
additions to tax or other additional amounts imposed by any Tax Authority
including those levied on, or measured by, or referred to as, income, gross
receipts, profits, capital, transfer, land transfer, sales, goods and services,
harmonized sales, use, value-added, excise, withholding, business, property,
occupancy, employer health, payroll, employment, health, social services,
education and social security taxes, all surtaxes, all customs duties and import
and export taxes, countervail and anti-dumping and all employment insurance,
health insurance and Canada, Quebec and other government pension plan and other
employer plan premiums, contributions or withholdings, excluding for greater
certainty any Taxes imposed on the Company or any Subsidiary on the Closing Date
resulting from actions taken on the Closing Date by the Purchaser (or the
Company or a Subsidiary at the request of the Purchaser) after the Closing Time.
"Termination Fee" has the meaning ascribed to such term in Section 10.2.
"Threshold" has the meaning ascribed to such term in Section 9.4(a).
"Union Plans" has the meaning ascribed to such term in Section
3.20(a)(iv).
"U.S. Employees" has the meaning ascribed to such term in Section 3.9(c).
"U.S. Employee Benefit Plans" has the meaning ascribed to such term in
Section 3.20(a)(i).
"US Plans" has the meaning ascribed to such term in Section 3.20(a)(iv).
"Vessels" shall mean all vessels owned, chartered or operated by the
Company and each Subsidiary, as the case may be, and listed in the Seller
Disclosure Schedule.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act of
1988, as amended.
"Withheld Amount" has the meaning ascribed to such term in Section 1.5(a).
"Working Capital Base Amount" shall mean $3,659,099.
"Working Capital Principles" has the meaning ascribed to such term in
Section 1.4 (b).
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