EXHIBIT 10.5
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT ("AGREEMENT") is made and entered into in
the City of Montreal, Quebec, Canada, on the 1st day of January, 2005.
BY: TECKN-O-LASER GLOBAL INC., a company incorporated under Part
1A of the Companies Act (Quebec) with its principal executive
offices at 0000-X Xxxxx Xxxxxx, Xxx-Xxxxx, Xxxxxxxx xx Xxxxxx,
X0X 0X0, herein represented by Xxxx Xxxxxxxx, its President,
duly authorized in virtue of a resolution of the Board of
directors dated January 1st, 2005;
(the "VENDOR")
AND: TECKNOLASER USA, INC., a U.S. company incorporated under the
laws of Delaware and with its principal offices at 0000-X
Xxxxx Xxxxxx, Xxx-Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0, herein
represented by Xxxx Xxxxxxxx, its President, duly authorized
in virtue of a resolution of the Board of directors dated
January 1st,. 2005;
("TOL USA" or the "ACQUIREE")
AND: ADSERO CORP., a Delaware corporation with its principal
executive offices at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx, Xxxxxx, X0X 0X0, herein represented by Xxxxxxx Xxxxx,
its CFO, duly authorized in virtue of a resolution of the
Board of directors dated January 1st, 2005;
("ADSERO" or the "ACQUIROR")
PREAMBLE
WHEREAS the Acquiror hereby wishes to acquire and the Vendor hereby
wishes to sell, subject to the terms hereof, 100% of its interests in the share
capital of TOL USA;
WHEREAS TOL USA is a wholly owned subsidiary of the Vendor;
WHEREAS the Vendor directly or beneficially owns all of the issued and
outstanding shares in the share capital of TOL USA;
-1-
WHEREAS, in consideration of the Purchase Price (as defined herein) and
subject to the terms and conditions hereof, the Acquiror hereby purchases and
the Vendor hereby sells all of the issued and outstanding shares in TOL USA.
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in this Agreement and not defined
above or elsewhere, are listed in alphabetical order and defined below (such
terms as well as any other terms defined elsewhere in this Agreement shall be
equally applicable to both the singular and plural forms of the terms defined):
All references to currencies in this Agreement shall be in U.S. dollars unless
stated otherwise.
"ACQUIREE SHARES" as the meaning provided in Section 2.1 hereof.
"ADSERO SEC REPORTS" means all required forms, reports, statements,
schedules and other documents filed with the SEC (including its most
recent annual and quarterly financial statements available as of the
date hereof).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition,
"control" when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
"AGREEMENT" means this Share Purchase Agreement and the Schedules
hereto.
"ASSETS" means, with respect to TOL USA, all of the assets, properties,
goodwill and rights of every kind and description, moveable and
immoveable, real and personal, tangible and intangible, wherever
situated and whether or not reflected in the Vendor's most recent
consolidated financial statements and to which TOL USA has good and
marketable title.
"BUSINESS" means with respect to TOL USA, its entire business and
operations.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
Province of Quebec generally are authorized or required by law or other
government actions to close.
-2-
"CHARTER DOCUMENTS" means TOL USA's certificate or articles of
incorporation or memorandum and articles of association, and any
amendments thereto.
"CLOSING" means the closing of the Transactions set forth herein held
on the date hereof at the offices of Xxxxxxxx Xxxxx in Montreal,
Quebec; the Closing shall be deemed completed only once all the
Transaction Documents have been executed and all acts and ancillary
documents contemplated in this Agreement shall have been completed to
the satisfaction of all Parties.
"CONTRACT" means any written or oral contract, agreement, letter of
intent, agreement in principle, lease, instrument or other commitment
that is binding on the Vendor or TOL USA or their respective properties
under applicable Law.
"COPYRIGHTS" means registered copyrights, copyright applications and
unregistered copyrights.
"COURT ORDER" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or
regulatory body or authority, or any arbitrator that is binding on the
Vendor or TOL USA or its property under applicable Law.
"DEFAULT" means (i) a breach, default or violation, (ii) the occurrence
of an event that with or without the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or
(iii) with respect to any Contract, the occurrence of an event that
with or without the passage of time or the giving of notice, or both,
would give rise to a right of termination, renegotiation or
acceleration or a right to receive damages or a payment of penalties.
"EFFECTIVE DATE" means January 1st, 2005 at 9:00 a.m.
"ENCUMBRANCES" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge
or encumbrance of any nature whatsoever on any property or property
interest.
"ENVIRONMENTAL CONDITION" means any condition or circumstance,
including the presence of Hazardous Substances which does or would (i)
require assessment, investigation, abatement, correction, removal or
remediation under U.S. Environmental Laws, as the case may be, (ii)
give rise to any civil or criminal Liability under U.S. Environmental
Laws, (iii) create or constitute a public or private nuisance or (iv)
constitute a violation of or non-compliance with U.S. Environmental
Laws.
"ENVIRONMENTAL PERMITS" includes all orders, permits, certificates,
approvals, consents, registrations and licences issued by any authority
of competent jurisdiction under U.S. Environmental Law, as the case may
be.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, municipal or
foreign or other government or governmental agency or body.
-3-
"HAZARDOUS SUBSTANCES" means any material, waste or substance
(including, without limitation, any product) that may or could pose a
hazard to the environment or human health or safety including, without
limitation, any contaminant, toxic substance, dangerous goods or
pollutant or any other substance which when released to the natural
environment is likely to cause, at some immediate or future time,
material harm or degradation to the natural environment or material
risk to human health as the whole is regulated under any laws or court
orders.
"INTELLECTUAL PROPERTY" means any Copyrights, Patents, Trademarks,
technology, licenses, trade secrets, computer software and other
intellectual property.
"KNOWLEDGE" of any Person means that which such Person actually knows
or, after diligent investigation commensurate with such Person's
position with another Person, should have known.
"LAW" means any statute, law, ordinance, regulation, order, rule,
common law principles or consent agreements of any Governmental
Authority, including, without limitation, those covering environmental,
energy, safety, health, transportation, bribery, record keeping,
zoning, anti-discrimination, antitrust, wage and hour, and price and
wage control matters.
"LEASED PREMISES" means all premises leased by TOL USA under the
Leases;
"LEASES" means the leases and the agreements to lease under which TOL
USA leases any real property, as listed in Schedule 3.23 attached
hereto;
"LIABILITY" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or
endorsement of the Acquiree.
"LITIGATION" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or
inquiry.
"MATERIAL ADVERSE EFFECT" means a fact or event which has had or is
reasonably likely to have a material adverse effect on the Assets,
Business, financial condition or results of operations of TOL USA, as
the case may be, as indicated by the context in which used, and when
used with respect to representations, warranties, conditions, covenants
or other provisions hereof means the individual effect of the situation
to which it relates and also the aggregate effect of all similar
situations unless the context indicates otherwise.
"PATENTS" means patents, patent applications, reissue patents, patents
of addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
-4-
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"PURCHASE PRICE" has the meaning provided in Section 2.2 hereof.
"REGULATION" means any federal, state, local or foreign rule or
regulation.
"SCHEDULE" means any Schedule attached to and forming part of this
Agreement.
"SECURITIES LAWS" means any applicable laws, statutes, regulations,
by-laws, guidelines, national instruments in force in any jurisdiction
of Canada or United States which are applicable to any Party hereof and
to the issuance of any security;
"SUBSIDIARY" means any corporation or other legal entity of which TOL
USA owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote
for the election of directors or other governing body of such
corporation or other entity.
"TAXES" means any and all federal, provincial, state, municipal, local
and foreign taxes, assessments and other governmental charges, duties,
impositions, levies and liabilities, including, without limitation,
taxes based upon gross receipts, assets, transfer taxes, income,
profits, sales, use and occupation, and value added, ad valorem,
transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business
license, occupation, business organization, stamp, environmental and
property taxes, together with all interest, penalties and additions
imposed with respect to such amounts.
"TAX RETURN" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents
(including all schedules, exhibits and other attachments thereto)
relating to and filed or required to be filed with a taxing authority
in connection with any Taxes (including, without limitation, estimated
Taxes).
"TRADEMARKS" means registered trademarks, registered service marks,
trademark and service xxxx applications and unregistered trademarks and
service marks.
"TRANSACTION DOCUMENTS" means this Agreement and the other agreements
described in Article II.
"TRANSACTIONS" means the transactions herein contemplated.
"U.S. ENVIRONMENTAL LAWS" means all applicable statutes, regulations,
ordinances, by-laws, codes and common law principles, and all
international treaties and agreements, now in existence in the United
States (whether federal, state or municipal) relating to the protection
and preservation of the environment, human health and safety or
Hazardous Substances.
-5-
SCHEDULES:
This Agreement incorporates the following schedules which the parties
acknowledge are an integral part hereof:
SCHEDULE 2.1 ISSUED AND OUTSTANDING SHARES OF ACQUIREE
SCHEDULE 3.7 TITLE TO ASSETS AND RELATED MATTERS
SCHEDULE 3.9.5 ENVIRONMENTAL PERMITS
SCHEDULE 3.9.6 HAZARDOUS SUBSTANCES
SCHEDULE 3.10.2 CAPITAL EXPENDITURES
SCHEDULE 3.11 LIST OF EMPLOYEES
SCHEDULE 3.14 EMPLOYEE POLICIES AND WORK-RELATED RULES
SCHEDULE 3.16.1 INTELLECTUAL PROPERTY
SCHEDULE 3.16.2 INTELLECTUAL PROPERTY ENCUMBRANCES
SCHEDULE 3.23 LEASES
ARTICLE II
PURCHASES, SALES AND
CANCELLATIONS OF SHARES, ISSUANCE OF
STOCK OPTIONS, AND RELATED
TRANSACTIONS
2.1 SALE AND PURCHASE OF SHARES OF ACQUIREE
Subject to the terms and conditions set forth in this Agreement, the
Vendor hereby, on the Effective Date, sells to the Acquiror 100% of all of the
issued and outstanding shares of TOL USA (the "ACQUIREE SHARES") all of which
are listed in Schedule 2.1 annexed hereto.
2.2 PURCHASE PRICE
The purchase price (the "PURCHASE PRICE") for the Acquiree Shares shall
be the aggregate amount of ONE THOUSAND U.S. DOLLARS (US$1,000).
2.3 PAYMENT OF PURCHASE PRICE
Payment of the Purchase Price shall be made by cheque delivered on Closing,
whereof quit.
2.4 CLOSING
2.4.1 PLACE AND CLOSING
The closing of the transaction shall take place on January
1st, 2005 and shall be held at the offices of Xxxxxxxx Xxxxx
in Montreal, Quebec.
-6-
2.4. 2 CLOSING DELIVERIES
2.4.2.1 DELIVERIES IN FAVOUR OF THE ACQUIROR
The obligation of the Acquiror to purchase the Acquiree Shares
shall be conditional upon receipt of the following on Closing:
a) Share certificates evidencing in the aggregate 100% of the
issued and outstanding Acquiree Shares in negotiable form,
duly endorsed in blank, or with stock transfer powers attached
thereto;
b) Certificate executed by the Chief Executive Officer of the
Vendor certifying that:
i. the representations and warranties of the
Vendor contained in this Agreement are true
and correct on and as of Closing;,
ii. each of the Vendor and TOL USA have
performed or complied in all material
respects with all agreements, conditions and
covenants required by this Agreement to be
performed or complied with by each of them
on or before Closing:
iii. there has been no Material Adverse Effect on
the business of TOL USA;
iv. all third party consents required to be
obtained for the consummation of the
Transactions, or the absence of which would
result in a Material Adverse Effect on the
Vendor or TOL USA, have been obtained; and
v. all required governmental approvals have
been obtained and any applicable waiting
periods, have expired.
c) All books and records of the Acquiree.
2.4.2.2 DELIVERIES IN FAVOUR OF THE VENDOR
The obligation of the Vendor to sell the issued and
outstanding securities of the Acquiree shall be conditional
upon receipt of the following on Closing:
a) Cash payment in the aggregate amount of US$1,000.00;
b) Certificate executed by the Chief Executive Officer
and Chief Financial Officer of Adsero certifying
that:
i) the representations and warranties of Adsero
contained in this Agreement are true and
correct on the date hereof (except to the
-7-
extent such representations and warranties speak as of an
earlier date) and are also true and correct on and as of
Closing;
ii) Adsero has performed or complied in all
material respects with all agreements,
conditions and covenants required by this
Agreement to be performed or complied with
it on or before Closing;
iii) all third party consents required to be
obtained for the consummation of the
Transactions, or the absence of which would
result in a Material Adverse Effect on
Adsero, have been obtained; and
iv) there has been no Material Adverse Effect on
the business of Adsero;
c) Any further closing documents required to be tendered
pursuant to the terms hereof.
On Closing or thereafter, the Parties shall duly execute,
acknowledge and deliver all such further assignments,
conveyances, instruments and documents, and shall take such
other action consistent with the terms of this Agreement to
carry out the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TOL USA AND OF VENDOR
Acquiree and the Vendor hereby solidarily represent and warrant to
Acquiror as follows, and confirm that Acquiror is relying upon the accuracy of
each of such representations and warranties in connection with the purchase of
the Acquiree Shares and the completion of the other Transactions hereunder:
3.1 CORPORATE AUTHORITY AND BINDING OBLIGATION
The Vendor and TOL USA are corporations duly organized, validly
existing and in good standing under the Laws under which they were incorporated.
The Acquiree is qualified to do business as a foreign corporation in any
jurisdiction where it is required to be so qualified, except where the failure
to so qualify would not have a Material Adverse Effect. The Charter Documents
and bylaws of TOL USA (all of which have been delivered or made available to
Acquiror) have been duly adopted and are current, correct and complete. The
Vendor and TOL USA have all necessary corporate power and authority to own,
lease and operate their Assets and to carry on their Business as they are now
being conducted. TOL USA has no Subsidiary.
3.2 AUTHORIZATION
-8-
Each of the Vendor and TOL USA has the requisite corporate power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by each of the Vendor and TOL USA has been duly
authorized by all necessary corporate action. The Vendor has the capacity to
execute and deliver the Transaction Documents to which it is a party and to
perform the Transactions to be performed by it. Each Transaction Document
executed and delivered by TOL USA and the Vendor as of the date hereof have been
duly executed and delivered by TOL USA and the Vendor and constitutes a valid
and binding obligation of TOL USA and the Vendor, enforceable against TOL USA
and the Vendor in accordance with its terms.
3.3 VALIDITY OF CONTEMPLATED TRANSACTIONS
Neither the execution and delivery by Acquiree or the Vendor of the
respective Transaction Documents to which it is or will be a party, nor the
performance of the Transactions to be performed by it, will require any filing,
consent or approval which has not already been obtained or constitute a Default
that would have a Material Adverse Effect on the Acquiree or result in a loss of
material benefit under, (a) to the Vendor's Knowledge, any Law or Court Order to
which Acquiree is subject, (b) the Charter Documents or bylaws of Acquiree, (c)
any other Contracts to which Acquiree is a party or by the Acquiree Assets may
be subject.
3.4 CAPITALIZATION AND STOCK OWNERSHIP
3.4.1 As at the date hereof, the only issued and outstanding shares
in the share capital of TOL USA are those described in
Schedule 2.1 attached hereto. There are no existing options,
warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) relating to the
acquisition, sale or transfer of any issued or unissued
capital stock or rights thereto or other securities of TOL
USA. All of the issued and outstanding shares in the share
capital of TOL USA are validly issued, fully paid and
non-assessable;
3.4.2 On the date hereof, the only issued and outstanding shares in
the share capital of TOL USA are the shares which are
beneficially owned by the Vendor.
3.5 ANNUAL AUDITED FINANCIAL STATEMENTS OF TOL USA
The annual audited financial statements of TOL USA as at May 3rd, 2003
and May 1st, 2004 (the "TOL USA Financial Statements"), delivered to Acquiror
fairly present the financial position of TOL USA as at the respective dates
thereof and the results of operations of TOL USA for the periods indicated. TOL
USA has no material contingent Liabilities except as otherwise set forth in the
TOL USA Financial Statements.
3.6 TAXES
TOL USA has i) filed (or, in the case of ax Returns not yet due, will
file) with the appropriate governmental agencies all Tax Returns required to be
filed on or before the Closing and all such Tax Returns filed were true, correct
and complete in all respects, and ii) has paid (or, in the case of Taxes not yet
due, will pay), all Taxes shown on such Tax Returns. TOL USA has
-9-
i) duly paid or caused to be paid all Taxes and all Taxes shown on Tax Returns
that are or were due, and ii) provided a sufficient reserve on its respective
balance sheets for the payment of all Taxes not yet due and payable. No
deficiency in respect of any Taxes which has been assessed against TOL USA
remains unpaid, and TOL USA has no Knowledge of any unassessed Tax deficiencies
or of any audits or investigations pending or threatened against TOL USA with
respect to any Taxes. TOL USA has not extended or waived the application of any
applicable statute of limitations of any jurisdiction regarding the assessment
or collection of any Tax or any Tax Return. There are no liens for Taxes upon
any assets of TOL USA except for liens for current Taxes not yet due. There are
no agreements, waivers or other arrangements providing for any extension of time
with respect to the filing of any tax return or other document or the payment of
any governmental charges by TOL USA or the period for any assessment or
reassessment of governmental charges.
3.7 TITLE TO ASSETS AND RELATED MATTERS
Except as disclosed in Schedule 3.7, TOL USA has good and marketable
title to its respective Assets, free from any Encumbrances. TOL USA owns all of
its Assets necessary or currently used in the operation of its Business.
3.8 IMMOVEABLE PROPERTY
TOL USA does not own any immoveable property.
3.9 LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS
3.9.1 There is no Litigation or Proceedings to the Vendor's
Knowledge, against TOL USA, its Assets or operations. To the
Vendor's Knowledge, TOL USA has been in compliance with all
applicable Laws, including applicable Securities Laws and U.S.
Environmental Laws except where the failure to be in
compliance would not have a Material Adverse Effect. There has
been no Default under any Laws applicable to TOL USA. There
has been no Default with respect to any Court Order applicable
to TOL USA. The Vendor or TOL USA have not received any
written notice and, to the Knowledge of the Vendor, no other
communication has been received to the effect that it is not
in compliance with any applicable Laws. The Vendor has no
reason to believe that any presently existing circumstances
are likely to result in violations of any applicable Laws.
3.9.2 There is no Environmental Condition at any property presently
or formerly owned or leased by TOL USA which is reasonably
likely to have a Material Adverse Effect.
3.9.3 TOL USA has all material consents, permits, franchises,
licenses, concessions, registrations, certificates of
occupancy, approvals and other authorizations of Governmental
Authorities (collectively, the "Governmental Permits")
required in connection with the operation of its Business, all
of which are in full force and effect. TOL USA has complied
with all of its Governmental Permits.
3.9.4 TOL USA, the operation of its Business, property and Assets
owned or used by it
-10-
and the use, maintenance and operation thereof have been and
are in compliance with all U.S. Environmental Laws. TOL USA
has complied with all reporting and monitoring requirements
under all U.S. Environmental Laws. TOL USA has not received
any notice of any non-compliance with any U.S. Environmental
Laws and has never been convicted of an offence for
non-compliance with any U.S. Environmental Laws or been fined
or otherwise sentenced or settled such prosecution short of
conviction.
3.9.5 TOL USA has obtained all Environmental Permits necessary to
conduct its Business and to own, use and operate its property
and Assets. All such Environmental Permits are listed in
Schedule 3.9.5 and complete and correct copies thereof have
been provided to the Acquiror.
3.9.6 Except as disclosed in Schedule 3.9.6, there are no Hazardous
Substances located on or in any of the property or assets
owned or used by TOL USA, and no release of any Hazardous
Substances has occurred on or from its property and Assets or
has resulted from the operation of its Business and the
conduct of all other activities of TOL USA. Except as
disclosed in Schedule 3.9.6, TOL USA has not used any of its
properties or Assets to produce, generate, store, handle,
transport or dispose of any Hazardous Substances and none of
the Leased Premises has been or is being used as a landfill or
waste disposal site.
3.9.7 Without limiting the generality of the foregoing, there are no
underground or surface storage tanks or urea formaldehyde foam
insulation, asbestos, polychlorinated biphenyls (PCBs) or
radioactive substances or similar substances located on or in
any of the properties or Assets owned, leased or used by TOL
USA. TOL USA is not, and there is no basis upon which TOL USA
could become, responsible for any clean-up or corrective
action under any U.S. Environmental Laws. TOL USA has never
conducted or caused to be conducted an environmental audit,
assessment or study of any of TOL USA's Assets.
3.9.8 To its knowledge and without further enquiry, there are no
pending or proposed changes to U.S. Environmental Laws which
would render illegal or restrict the manufacture or sale of
any products manufactured or sold or services provided by TOL
USA.
3.10 CONTRACTS AND COMMITMENTS
3.10.1 Each Contract to which TOL USA is a party i) is legal, valid,
binding and enforceable by it, except as otherwise limited by
bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the
remedy of specific performance or other equitable relief is
available only at the discretion of the court before which
enforcement is sought, and ii) TOL USA and to the Vendor's
Knowledge, TOL USA is not in Default under any such Contract
where such Default would have a Material Adverse Effect. TOL
USA is not subject to any Contract limiting its freedom to
compete in any line of business, or with any Person, or in any
geographic area or market.
-11-
3.10.2 Except as disclosed in Schedule 3.10.2, TOL USA is not
committed to make any capital expenditures, nor have any
capital expenditures been authorized by it since May 1st,
2004, except for capital expenditures made in the ordinary
course of the business.
3.11 EMPLOYEES
Schedule 3.11 attached hereto sets forth the name, job title, duration
of employment, vacation entitlement, employee benefit entitlement and rate of
remuneration (including bonus and commission entitlement) of each employee of
TOL USA. Schedule 3.11 also sets forth the name of all employees of TOL USA who
are now on disability, maternity or other authorized leave or who are receiving
workers' compensation or short-term or long-term disability benefits.
3.12 EMPLOYMENT AGREEMENTS
TOL USA is not a party to any written or oral employment, service or
consulting agreement relating to any one or more persons, except for oral
employment agreements which are of indefinite term and without any special
arrangements or commitments with respect to the continuation of employment or
payment of any particular amount upon termination of employment. TOL USA does
not have any employee who cannot be dismissed upon such period of notice as is
required by law in respect of a contract of employment for an indefinite term.
3.13 EMPLOYEE RELATIONS
3.13.1 TOL USA is not subject to any collective agreement with a
labour union representing TOL USA's employees.
3.13.2 There are no existing or, to the Knowledge of the Vendor,
threatened, labour strikes or labour disputes or grievances
affecting TOL USA.
3.13.3 TOL USA has complied with all laws, rules, regulations and
orders applicable to it relating to employment, including
those relating to wages, hours, collective bargaining,
occupational health and safety, workers' hazardous materials,
employment standards, pay equity and workers' compensation.
There are no outstanding charges or complaints against TOL USA
relating to unfair labour practices or discrimination or under
any legislation relating to employees. TOL USA has paid in
full all amounts owing under any legislation in the United
States as applicable to TOL USA, and the workers' compensation
claims experience of TOL USA would not permit a penalty
reassessment under such legislation.
3.14 BENEFITS PLANS
TOL USA does not have, and is not subject to any present or future obligation or
liability under, any pension plan, deferred compensation plan, retirement income
plan, stock option or stock purchase plan, profit sharing plan, bonus plan or
policy, employee group insurance plan, hospitalization plan, disability plan or
other employee benefit plan, program, policy or practice, formal or informal,
with respect to any of its employees. Schedule 3.14 lists the general policies,
procedures and work-related rules in effect with respect to employees of TOL
USA, whether written or oral,
-12-
including but not limited to policies regarding holidays, sick leave, vacation,
disability and death benefits, termination and severance pay, automobile
allowances and rights to company-provided automobiles and expense
reimbursements.
3.15 COMPENSATION
There is no compensation, remuneration, or payment of any nature whatsoever
payable to any director, officer, other senior executive or person of the Vendor
or TOL USA as a direct or indirect result of the Transactions herein
contemplated.
3.16 INTELLECTUAL PROPERTY
3.16.1 Schedule 3.16.1 attached hereto lists and contains a
description of:
(i) all patents, patent applications and registrations,
trade marks, trade xxxx applications and
registrations, copyrights, copyright applications and
registrations, trade names and industrial designs,
domestic or foreign, owned or used by TOL USA or
relating to the operation of its Business;
(ii) all trade secrets, know-how, inventions and other
intellectual property owned or used by TOL USA or
relating to its Business, and
(iii) all computer systems and application software,
including without limitation all documentation
relating thereto and the latest revisions of all
related object and source codes therefor, owned or
used by TOL USA or relating to its Business.
3.16.2 TOL USA has good and valid title to all of the Intellectual
Property, free and clear of any and all Encumbrances, except
in the case of any Intellectual Property licensed to TOL USA
as disclosed in Schedule 3.16.2. Complete and correct copies
of all agreements whereby any rights in any of the
Intellectual Property have been granted or licensed to TOL USA
have been provided to the Acquiror. No royalty or other fee is
required to be paid by TOL USA to any Person in respect of the
use of any of the Intellectual Property except as provided in
such agreements delivered to the Acquiror. TOL USA has
protected its rights in the Intellectual Property in the
manner and to the extent described in Schedule 3.16.2. Except
as indicated in Schedule 3.16.2, TOL USA has the exclusive
right to use all of the Intellectual Property and has not
granted any licence or other rights to any Person in respect
of the Intellectual Property. Complete and correct copies of
all agreements whereby any rights in any of the Intellectual
Property have been granted or licensed by TOL USA to any other
person have been provided to the Acquiror.
3.16.3 Except as disclosed in Schedule 3.16.2, there are no
restrictions on the ability of the TOL USA or any successor to
or assignee from TOL USA to use and exploit all rights in the
Intellectual Property given the nature of the Transactions
herein contemplated. All statements contained in all
applications for registration of the Intellectual Property
were true and correct as of the date of such applications.
Each of the trade marks and trade names included in the
Intellectual Property is in use.
-13-
None of the rights of TOL USA in the Intellectual Property
will be impaired or affected in any way by the transactions
contemplated by this Agreement.
3.16.4 The conduct of the Business and the use of the Intellectual
Property does not infringe, and TOL USA has not received any
notice, complaint, threat or claim alleging infringement of,
any patent, trade xxxx, trade name, copyright, industrial
design, trade secret or other Intellectual Property or
propriety right of any other person, and the conduct of the
Business does not include any activity which may constitute
passing off.
3.16.5 The computer systems, including hardware and software, are
free from viruses and other defects which would have a
Material Adverse Effect on the Business or Assets of TOL USA.
TOL USA has taken, and will continue to take, all steps and
implement all procedures necessary to ensure, so far as
reasonably possible, that such systems are free from viruses
and will remain so.
3.17 ABSENCE OF CERTAIN CHANGES
Since May 1, 2004, TOL USA has conducted its Business in the ordinary
course, and, as of the date hereof, there has not been:
(a) any Material Adverse Effect on its Business;
(b) any distribution or payment declared or made in
respect of TOL USA's capital stock by way of
dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become
payable to any current director or officer of TOL
USA;
(d) any sale, assignment or transfer of any Assets, or
any additions to or transactions involving any
Assets, other than those made in the ordinary course
of business;
(e) other than in the ordinary course of business, any
waiver or release of any material claim or right or
cancellation of any material debt held TOL USA;
(f) any change in practice with respect to Taxes, or any
election, change of any election, or revocation of
any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax
Liability;
(g) i) any creation, or assumption of, any leases,
long-term debt or any short-term debt for borrowed
money other than under existing notes payable, lines
of credit or other credit facility or in the ordinary
course of business ii) any assumption, granting of
guarantees, endorsements or otherwise becoming liable
or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person or
iii) any loans, advances or capital contributions to,
or investments in, any other Person;
-14-
or iv) any other material increase in Liabilities or
capital expenditures outside the ordinary course of
business.
(h) any material agreement, commitment or contract,
except agreements, commitments or contracts for the
purchase, sale or lease of goods or services in the
ordinary course of business;
(i) any authorization, recommendation, proposal or
announcement of an intention to authorize, recommend
or propose, or enter into any Contract with respect
to, any i) plan of liquidation or dissolution, ii)
acquisition of a material amount of assets or
securities, iii) disposition or Encumbrance of a
material amount of assets or securities, save and
except for the granting of securities, guarantees or
endorsements in favour of Barrington Bank in order to
guarantee the obligations of Teckn-O-Laser Company to
be contracted under a loan agreement to be entered
with Barrington Bank, iv) merger or consolidation or
v) material change in its capitalization;
(j) any change in accounting procedure or practice; or
(k) any agreement or promise by the Vendor or TOL USA to
i) do any of the foregoing or ii) do anything that
would likely result in any of the foregoing, save and
except for the granting of securities, guarantees or
endorsements in favour of Barrington Bank in order to
guarantee the obligations of Teckn-O-Laser Company to
be contracted under a loan agreement to be entered
with Barrington Bank..
3.18 CORPORATE RECORDS
In all material respects, the minute books of TOL USA contain accurate,
complete and current copies of all Charter Documents and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors and
stockholders.
3.19 OWNERSHIP OF SHARES
The Vendor is the registered and sole owner of the Acquiree Shares as
set forth on Schedule 2.1, and has sole management power over the disposition of
such Acquiree Shares. The Acquiree Shares are owned free and clear of any liens,
hypothecs, claims, Encumbrances, and charges. The Acquiree Shares have not been
sold, conveyed, encumbered, hypothecated or otherwise transferred by the Vendor.
The Vendor has the legal right to enter into and to consummate the Transactions
contemplated hereby and otherwise to carry out its obligations hereunder.
3.20 AGREEMENTS, OPTIONS, UNDERSTANDINGS
No Person has any agreement, option, understanding or commitment or any
right or privilege capable of becoming an agreement, option or commitment
relating to the transfer of any shares of the capital stock of TOL USA.
3.21 NO UNDISCLOSED OR CONTINGENT LIABILITIES
-15-
Except as set forth in the Financial Statements of TOL USA, there are
no material financial obligations or liabilities, including contingent
liabilities, or product related liabilities.
3.22 SHAREHOLDERS' AGREEMENTS
There are no shareholders' agreements, pooling agreements, voting
trusts or other similar agreements with respect to the ownership or voting of
any of the shares of TOL USA.
3.23 TRANSFER OF PURCHASED SHARES
The Vendor and TOL USA have taken all necessary steps and corporate
proceedings to be taken in order to permit the Acquiree Shares to be duly and
regularly transferred to the Acquiror.
3.24 LEASED PREMISES
Schedule 3.23 attached hereto describes all leases or agreements to
lease under which TOL USA leases any immoveable property. Complete and correct
copies of the Leases have been provided to the Acquiror. TOL USA is exclusively
entitled to all rights and benefits as lessee under the Leases and has not
sublet, assigned, licensed or otherwise conveyed any rights in the Leased
Premises or in the Leases to any other Person. The names of the other parties to
the Leases, the description of the Leased Premises, the term, rent and other
amounts payable under the Leases and all renewal options available under the
Leases are accurately described in Schedule 3.23. All rentals and other payments
and other obligations required to be paid and performed by TOL USA pursuant to
the Leases have been duly paid and performed. TOL USA is not in default of any
of its obligations under the Leases and, to the Knowledge of the Vendor, none of
the landlords or other parties to the Leases are in default of any of their
obligations under the Leases. The terms and conditions of the Leases will not be
affected by, nor will any of the Leases be in default as a result of, the
completion of the transactions contemplated hereunder. The use by TOL USA of the
Leased Premises is not in breach of any building, zoning or other statute,
by-law, ordinance, regulation, covenant, restriction or official plan where such
breach would have a Material Adverse Effect. TOL USA has adequate rights of
ingress to and egress from the Leased Premises for the operation of its Business
in the ordinary course.
3.25 INDEBTEDNESS
Except as disclosed in the Financial Statements of TOL USA, TOL USA has
no bonds, debentures, hypothecs, promissory notes or other indebtedness maturing
more than one year after the date of their original creation or issuance, and is
not under any obligation to create or issue any bonds, debentures, hypothecs,
promissory notes or other indebtedness maturing more than one year after the
date of their original creation or issuance.
3.26 OTHER AGREEMENTS
No Person has any agreement, option, undertaking or commitment or any
right capable of becoming an agreement, option or commitment relating to the
transfer of any shares of TOL USA or in connection with the change of control of
TOL USA other than as set forth in this Agreement.
-16-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Adsero hereby represents and warrants to the Vendor as follows, and
confirms that Vendor is relying upon the accuracy of each of such
representations and warranties in connection with the sale of the Acquiree
Shares and the completion of the other transactions hereunder.
4.1 CORPORATE AUTHORITY AND BINDING OBLIGATION
Adsero is a corporation duly organized, validly existing and in good
standing under the Laws under which it was incorporated. Adsero is qualified to
do business as a foreign corporation in all jurisdictions where it is required
to be so qualified, except where the failure to so qualify would not have a
Material Adverse Effect. The Charter Documents and by-laws of Adsero have been
duly adopted or ratified and are current, correct and complete. Adsero has all
necessary corporate powers and authority to own, lease and operate its assets
and to carry on its business as it is now being conducted.
4.2 AUTHORIZATION
Adsero has the requisite corporate powers and authority to execute and
deliver the Transaction Documents to which it is a party and to perform the
Transactions to be performed by it. Such execution, delivery and performance by
Adsero has been duly authorized by all necessary corporate and shareholder
action. Each Transaction Document executed and delivered by Adsero as of the
date hereof has been duly executed and delivered and constitutes a valid and
binding obligation of Adsero enforceable against Adsero, in accordance with its
terms.
4.3 LEGAL PROCEEDINGS; COMPLIANCE WITH LAWS;
Except as disclosed in the Adsero SEC Reports, there is no Litigation
or Proceedings against Adsero. Adsero is and has been in compliance with all
applicable Laws, except where the failure to be in compliance would not have a
Material Adverse Effect. There has been no Default under any Laws applicable to
Adsero. There has been no Default with respect to any Court Order applicable to
Adsero. Adsero has not received any written notice and no other communication
has been received to the effect that Adsero is not in compliance with any
applicable Laws.
4.4 FINDER'S FEES
No Person is or will be entitled to any commission, finder's fee or
other payment in connection with the Transactions based on arrangements made by
or on behalf of Adsero.
4.5. REQUIRED CONSENTS
-17-
Adsero has obtained from regulatory authorities and third parties, all
required consents and approvals necessary for consummation of the Transactions.
ARTICLE V
JOINT COVENANTS OF THE PARTIES
5.1 PUBLIC ANNOUNCEMENT
Acquiror and the Vendor shall collaborate in good faith to prepare the
press release which is to be filed as a result of the completion of the
Transactions, the substance of which shall be approved by all parties acting
reasonably.
5.2 COOPERATION
Upon the terms and subject to the conditions hereof, each of the
Parties shall use its commercially reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable to consummate as promptly as practicable the Transactions and shall
use its commercially reasonable efforts to obtain all required consents, and to
effect all necessary filings under applicable legislation. Without limiting the
generality of the foregoing, each Party shall use all commercially reasonable
efforts to take, or cause to be taken, all other actions and to do, or cause to
be done, all other things necessary, proper or advisable to fulfill the
conditions herein to the extent that the fulfillment thereof is within a Party's
control.
5.3 EXPENSES
Adsero shall pay all of the legal, accounting and other expenses
incurred by Adsero in connection with the Transactions. Acquiree and the Vendor
shall pay all of the legal, accounting and other expenses incurred by Acquiree
and the Vendor in connection with the Transactions.
5.4 ECONOMIC REVIEW
Adsero has completed its due diligence, including economic review of
the financial statements and financial condition of TOL USA. In connection
therewith, the Vendor declares having supplied Adsero with all relevant
information necessary to enable Adsero to make an informed determination as to
the financial condition of TOL USA and subject to the representations and
warranties herein made by Vendor and TOL USA, Adsero hereby declares itself
satisfied of its economic review.
ARTICLE VI
COVENANTS OF ACQUIREE AND VENDOR
6.1 OPERATION OF THE BUSINESS
-18-
Except as contemplated by this Agreement or as expressly agreed to in
writing by Acquiror and the Vendor, up to the Closing, TOL USA has conducted its
operations only in the ordinary course of business consistent with sound
financial, operational and regulatory practice, and has taken no action which
would have a Material Adverse Effect on its ability to consummate the
Transactions. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or related Schedules and as
otherwise disclosed to the Parties hereto, prior to Closing, TOL USA has not,
and Vendor has not caused or permitted TOL USA to:
(a) amend its Charter Documents or bylaws (or similar
organizational documents);
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or
deliver any shares of its capital stock or any other
securities;
(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock; or
purchase, redeem or otherwise acquire any of its securities or
modify any of the terms of any such securities;
(d) i) create, incur, assume or permit to exist any long-term debt
or any short-term debt for borrowed money other than under
existing notes payable, lines of credit or other credit
facilities or in the ordinary course of business; ii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the
obligations of any other save and except for the loan
agreement and related collateral agreements entered into with
Barrington Bank, or iii) make any loans, advances or capital
contributions to, or investments in, any other Person;
(e) i) increase in any manner the rate of compensation of any of
its directors or officers, or ii) enter into any employment,
consulting, severance, change in control or similar agreements
or arrangements with any of its directors, officers or
employees;
(f) save and except for the granting of securities, guarantees or
endorsements in favour of Barrington Bank in order to
guarantee the obligations of Teckn-O-Laser Company to be
contracted under a loan agreement to be entered with
Barrington Bank, enter into any material agreement, commitment
or contract, except agreements, commitments or contracts for
the purchase, sale or lease of goods or services in the
ordinary course of business;
(g) save and except for the granting of securities, guarantees or
endorsements in favour of Barrington Bank in order to
guarantee the obligations of Teckn-O-Laser Company to be
contracted under a loan agreement to be entered with
Barrington Bank, other than in the ordinary course of
business, authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into
any Contract with respect to, any i) plan of liquidation or
dissolution, ii) acquisition of a material amount of assets or
securities, iii) disposition or
-19-
Encumbrance of a material amount of assets or securities, iv)
merger or consolidation or v) material change in its
capitalization;
(h) change any material accounting or Tax procedure or practice;
(i) compromise, settle or otherwise modify any material claim or
litigation;
(j) permit any existing insurance policy insuring TOL USA's Assets
to terminate; or
(k) commit, promise or agree to do any of the foregoing, save and
except for the granting of securities, guarantees or
endorsements in favour of Barrington Bank in order to
guarantee the obligations of Teckn-O-Laser Company to be
contracted under a loan agreement to be entered with
Barrington Bank.
6.2 MAINTENANCE OF THE ASSETS
Since May 1, 2004, TOL USA has used its Assets consistent with past
practice, has not directly or indirectly, sold or encumbered all or any part of
its Assets, other than sales in the ordinary course of business or initiated or
participated in any discussions or negotiations or entered into any agreement to
do any of the foregoing, save and except for the granting of securities,
guarantees or endorsements in favour of Barrington Bank in order to guarantee
the obligations of Teckn-O-Laser Company to be contracted under a loan agreement
to be entered with Barrington Bank.
6.3 EMPLOYEES AND BUSINESS RELATIONS
Since May 1, 2004, TOL USA and since its incorporation, has used
commercially reasonable efforts to maintain its relations and goodwill with its
suppliers, customers, distributors and any others having business relations with
TOL USA.
6.4 CONSENTS
The Vendor and TOL USA have obtained, from regulatory authorities and
third parties, all required consents and approvals to the Transactions herein
contemplated. The Transactions herein contemplated and the resulting change of
control of TOL USA does not constitute a Default.
ARTICLE VII
INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All the provisions of this Agreement will survive the Closing
notwithstanding any investigation at any time made by or on behalf of any Party
hereto. The representations, warranties and covenants set forth in Articles III,
IV and VI, and in any certificate delivered in connection herewith with respect
to any of those representations, warranties and covenants will terminate and
expire on the date one (1) year after Closing except in the event of fraud or
-20-
intentional misrepresentation, in which case the survival period shall not be
limited. The expiration period with respect to tax matters, shall be the period
ending ninety (90) days after the date upon which the right of any taxation
authority to assess or reassess with respect to a claim for such taxes expires.
After a representation and warranty has terminated and expired, no
indemnification will or may be sought pursuant to this Article VII on the basis
of that representation and warranty by any Person who would have been entitled
pursuant to this Article VII to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that, in the case of each representation and warranty that will terminate and
expire as provided in this Section 7|.1, no claim presented in writing for
indemnification pursuant to this Article VII on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by that termination and expiration. The Parties agree that no indemnification
will be sought by any Party hereto under this Article VII where the amount of
indemnification sought would be less than $25,000.
7.2 INDEMNIFICATION OF VENDOR
Adsero, covenants and agrees that it will indemnify the Vendor against,
and hold the Vendor harmless from and in respect of, all losses, costs, expenses
and damage claims that arise from, are based on, arise out of, or are
attributable to i) any breach of the representations and warranties of Adsero or
in certificates delivered by Adsero in connection herewith; ii) the
nonfulfillment of any covenant or agreement on the part of Adsero under this
Agreement to be performed prior to or immediately after the Closing or iii) any
liability under the Securities Laws which arises out of or is based on (A) any
untrue statement or alleged untrue statement of a material fact relating to
Adsero which is provided to the Vendor in writing by Adsero or (B) any omission
or alleged omission to state therein a material fact relating to Adsero required
to be stated therein or necessary to make the statements therein not misleading,
and not provided to the Vendor by Adsero after a written request therefore.
7.3 INDEMNIFICATION OF ACQUIROR INDEMNIFIED PARTIES
The Vendor covenants and agrees that it will indemnify the Acquiror
against, and hold the Acquiror harmless from and in respect of, all losses,
costs, expenses and damage claims that arise from, are based on, arise out of,
or are attributable to i) any breach of the representations and warranties of
Acquiree or the Vendor or in certificates delivered by Acquiree or the Vendor in
connection herewith; ii) the nonfulfillment of any covenant or agreement on the
part of Acquiree or the Vendor under this Agreement to be performed prior to the
Closing or iii) any liability under any applicable Law which arises out of or is
based on (A) any untrue statement of a material fact relating to Acquiree or the
Vendor, which is provided to Acquiror or its counsel in writing by the Acquiree
or the Vendor or (B) any omission to state a material fact relating to Acquiree
or the Vendor, after a written request by Acquiror or its counsel.
7.4 CONDITIONS OF THIRD PARTY INDEMNIFICATION
(a) All claims for indemnification under this Agreement arising
from third-party claims shall be asserted and resolved as
follows in this Section 7.4.
(b) A Party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly i) notify the party from
whom indemnification is sought (the
-21-
"Indemnifying Party") of any third-party claim or claims
asserted against the Indemnified Party ("Third Party Claim")
that could give rise to a right of indemnification under this
Agreement and ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served
with respect to that claim (if any), an estimate of the amount
of damages attributable to the Third Party Claim to the extent
feasible (which estimate shall not be conclusive of the final
amount of such claim) and the basis for the Indemnified
Party's request for indemnification under this Agreement.
Except as set forth in Section 7.1, the failure to promptly
deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect
to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of
that claim. Within 15 days after receipt of any Claim Notice
(the "Election Period"), the Indemnifying Party shall notify
the Indemnified Party i) whether the Indemnifying Party
disputes its potential liability to the Indemnified Party
under this Article VII with respect to that Third Party Claim
and ii) if the Indemnifying Party does not dispute its
potential liability to the Indemnified Party with respect to
that Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against that Third
Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the
Indemnified Party within the Election Period that the
Indemnifying Party elects to assume the defense of the Third
Party Claim, then the Indemnifying Party shall have the right
to defend, at its sole cost and expense, that Third Party
Claim by all appropriate proceedings, which proceedings shall
be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying
Party in accordance with this Section 7.4(c) and the
Indemnified Party will furnish the Indemnifying Party with all
information in its possession, subject to a confidentiality
agreement, with respect to that Third Party Claim and
otherwise cooperate with the Indemnifying Party in the defense
of that Third Party Claim; provided, however, that the
Indemnifying Party shall not enter into any settlement with
respect to any Third Party Claim that i) purports to limit the
activities of, or otherwise restrict in any way, any
Indemnified Party or any Affiliate of any Indemnified Party,
ii) involves a guilty plea to any crime or iii) involves a
fine or penalty, whether or not paid by the Indemnifying
Party, without the prior consent of that Indemnified Party
(which consent may be withheld in the sole discretion of that
Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer
or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of
the Indemnifying Party. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to
this Section 7.4(c) and will bear its own costs and expenses
with respect to that participation; provided, however, that if
the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised
by counsel that there may be one or more
-22-
legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, then
the Indemnified Party may employ separate counsel at the
expense of the Indemnifying Party (provided that such expenses
are reasonable), and, on its written notification of that
employment, the Indemnifying Party shall not have the right to
assume or continue the defense of such action on behalf of the
Indemnified Party. If the Indemnifying Party i) within the
Election Period (A) disputes its potential liability to the
Indemnified Party under this Article VII, (B) elects not to
defend the Indemnified Party pursuant to Section 7.4(c) or (C)
fails to notify the Indemnified Party that the Indemnifying
Party elects to defend the Indemnified Party pursuant to
Section 7.4(c) or ii) elects to defend the Indemnified Party
pursuant to Section 7.4(c) but fails diligently and promptly
to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (provided that such
expenses are reasonable) (if the Indemnified Party is entitled
to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly
and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written
notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VI and if such dispute is
resolved in favor of the Indemnifying Party, the Indemnifying
Party shall not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section 7.4
or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all reasonable
costs and expenses of such litigation. The Indemnifying Party
may participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this Section
7.4(c), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
(d) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an
estimate of the amount of Losses attributable to that claim to
the extent feasible (which estimate shall not be conclusive of
the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the
Indemnified Party within 15 days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such
claim, the claim specified by the Indemnified Party in the
Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute
shall be resolved by proceedings in an appropriate court of
competent jurisdiction if the parties do not reach a
settlement of such dispute within 30 days after notice of a
dispute is given.
(e) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article VII relating to a Third Party Claim
shall be made within 30 days after the latest of
-23-
i) the settlement of that Third Party Claim, ii) the
expiration of the period for appeal of a final adjudication of
that Third Party Claim or iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement.
Payments of all amounts owing by an Indemnifying Party
pursuant to Section 7.4(e) shall be made within 30 days after
the later of i) the settlement of that claim ii) the
expiration of the period for appeal of a final adjudication of
the Indemnifying Party's liability to the Indemnified Party
under this Agreement.
7.5 REMEDIES NOT EXCLUSIVE.
The remedies provided in this Agreement shall not be exclusive of any
other rights or remedies available to one Party against the other Party.
ARTICLE VIII
GENERAL MATTERS
8.1 CONTENTS OF AGREEMENT
This Agreement, together with the other Transaction Documents, set
forth the entire understanding of the Parties hereto with respect to the
Transactions and supersede all prior agreements or understandings among the
Parties regarding those matters.
8.2 PARTIES INTEREST, ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Parties hereto. No Party hereto shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision
of this Agreement may be waived at any time by the Party entitled to the benefit
thereof by a written instrument duly executed by such Party. The Parties hereto
shall execute and deliver any and all documents and take any and all other
actions that may be deemed reasonably necessary by their respective counsel to
complete the Transactions. Nothing in this Agreement is intended or will be
construed to confer on any Person other than the Parties hereto any rights or
benefits hereunder.
8.3 INTERPRETATION
Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the part
the whole, (b) references to any gender include all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or," (d)
"including," "includes" or similar words has the inclusive meaning frequently
identified with the phrase "but not limited to" and (e) references to
"hereunder" or "herein" relate to this Agreement. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, and Schedule references are to
-24-
this Agreement unless otherwise specified. The Schedules referred to in this
Agreement will be deemed to be a part of this Agreement.
8.4 NOTICES
All notices that are required or permitted hereunder shall be in
writing and shall be sufficient if personally delivered or sent by a nationally
recognized overnight courier upon proof of delivery. Any notices shall be deemed
given upon receipt at the address set forth below, unless such address is
changed by notice to the other Party hereto:
If to Acquiror: ADSERO CORPORATION
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Maddever, President
And copy to: XXXXXXXX NANTEL ATTORNEYS
0000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
And copy to: GOTTBETTER & PARTNERS, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
X.X.X.
Attention: Xxxxx X. Xxxxxxxx
If to Vendor: TECKN-O-LASER GLOBAL INC.
0000-X Xxxxx Xxxxxx
Xxxxxx-Xxxxx, Xxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
And copy to: XXXXXXXX XXXXX ATTORNEYS
0 Xxxxx Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
If to Acquiree: TECKNOLASER USA, INC.
0000-X Xxxxx Xxxxxx
Xxxxxx-Xxxxx, Xxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
And copy to: XXXXXXXX XXXXX ATTORNEYS
0 Xxxxx Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
8.5 GOVERNING LAWS
-25-
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Quebec and the laws of Canada applicable therein.
The parties agree that the courts of the Province of Quebec shall have the
exclusive jurisdiction to determine all disputes and claims arising between the
parties.
8.6 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be binding as of the date first written above, and all of which
shall constitute one and the same instrument. Each such copy shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
8.7 WAIVERS
Compliance with the provisions of this Agreement may be waived only by
a written instrument specifically referring to this Agreement and signed by the
Party waiving compliance. No course of dealing, nor any failure or delay in
exercising any right, will be construed as a waiver, and no single or partial
exercise of a right will preclude any other or further exercise of that or any
other right.
8.8 MODIFICATION
No supplement, modification or amendment of this Agreement will be
binding unless made in a written instrument that is signed by each of the
Parties to this Agreement.
8.9 ENFORCEMENT OF AGREEMENT
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or equity.
8.10 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect.
8.11 FURTHER ASSURANCES
The Parties hereto agree to execute and deliver such further
instruments and documents as may reasonably be requested by another Party in
order to carry out fully the intent and accomplish the purposes of this Share
Purchase Agreement and the Transactions referred to herein.
-26-
8.12 LANGUAGE
The parties hereto have requested that the present agreement be drawn
in the English language. Les parties aux presentes ont requis que la presente
convention soit redigee en langue anglaise.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of
the day and year first written above.
VENDOR: TECKN-O-LASER GLOBAL INC.
/s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
ACQUIROR: ADSERO CORP.
/s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
ACQUIREE: TECHNOLASER USA, INC.
/s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
-27-
SCHEDULE 2.1
ISSUED AND OUTSTANDING SHARES OF ACQUIREE
100 common shares held by Teckn-O-Laser Global Inc.
-28-
SCHEDULE 3.7
TITLE TO ASSETS AND RELATED MATTERS
A security agreement dated November 14, 2003 granted by TOL USA in favour of the
National Bank of Canada, Natexport and Sodex to secure the credit facilities
granted by the National Bank of Canada, Natexport and Sodex to Teckn-O-Laser
Inc.
TOL USA granted a movable hypothec on the following properties, assets and
rights wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof : all personal and fixture property of every
kind and nature including without limitation all goods (including inventory,
equipment and any accessions thereto), instruments (including promissory notes),
documents, accounts (including health-care insurance receivables), chattel paper
(whether tangible or electronic), deposit accounts, letter-of-credit rights
(whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities and all other investment property, supporting obligations,
any other contract rights or rights to the payment of money, insurance claims
and proceeds, and all general intangibles (including all payment intangibles).
-29-
SCHEDULE 3.9.5
ENVIRONMENTAL PERMITS
NONE
-30-
SCHEDULE 3.9.6
HAZARDOUS SUBSTANCES
1. An hydrochloric acid container is held locked in a locker.
2. Properties or Assets to produce, generate, store, handle, transport or
dispose of any Hazardous Substances: None
-31-
SCHEDULE 3.10.2
CAPITAL EXPENDITURES
NONE
-32-
SCHEDULE 3.11
LIST OF EMPLOYEES
The complete list of employees of TOL USA is listed hereunder. There are no
written agreement signed by the employees.
Xxxxxxx Xxxx Xxxxxx administrative assistant 2004-02-03 24 960.00 Working 4.0
Xxxxxxx Xxxxxxx Shipping clerk 2004-09-20 22 880.00 Working 4.0
Xxxxx Xxxxx Packaging 2003-02-17 24 065.60 Working 4.0
Xxxxxxxxx Xxxxx Packaging 2004-10-05 23 379.20 Working 4.0
O'Xxxxxxx Xxxxxxx Warehouse supervisor 2003-01-29 45 000.00 Working 4.0
Pack Xxxx Packaging 2003-04-07 24 065.60 Working 4.0
-33-
SCHEDULE 3.14
EMPLOYEE POLICIES AND WORK-RELATED RULES
1. There is a general policies handbook which provides the rules
structuring the employees labour relations.
2. Holidays and vacations: an employee must complete an entire calendar
year as an employee of TOL USA to receive an holiday payment in the
following year. This policy is in force for every year passed as an
employee of TOL USA.
1 year but less than 4 years of continuous service: 2 weeks
4 years but less than 8 years of continuous service: 3 weeks
8 years but less than 4 years of continuous service: 4 weeks
3. Sick leave: More than one (1) year: 2 days
More than two (2) years: 3 days
More than three (3) years:4 days
More than four (4) years: 5 days
4. Disability: There is a short and long term disability program.
5. Severance pay: None
6. Automobile allowances: 0.35$/KM for travelling expenses incurred for
the benefit of the corporation.
7. Expenses reimbursement: With justification
8. Insurance: There is a group medical insurance paid by the employer for
one half (1/2) of the cost.
9. Death benefits: None
-34-
SCHEDULE 3.16.1
INTELLECTUAL PROPERTY
a) The list of all domain names used by TOL USA is attached herewith.
b) There are no patents, trade marks or copyrights registered in the name
of TOL USA.
The trade marks used by TOL USA are Tecknolaser, Evergreen and
Reflexion.
c) The description of the computer systems and application software is
attached herewith.
-35-
SCHEDULE 3.16.2
INTELLECTUAL PROPERTY ENCUMBRANCES
1. Encumbrances
None
2. Protection of Intellectual Property rights
None
3. Intellectual Property Licensing
None
4. Restrictions on the ability to use the Intellectual Property
None
-36-
SCHEDULE 3.23
LEASES
A lease between Teckn-O-Laser USA and Airport Logistics Center for a premise
located at Airport Logistics Center, Building "B", 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx Xxxxxxxxx, 00000. The term is sixty six (66) months commencing on July
1, 2002 and expiring on December 31, 2007 for a rent of 3 875.00 $ per month
until June 30, 2003 and a rent of 6 480.00 $ per month from July 1, 2003 until
the expiration date in addition to an estimated additional rent representing
common area maintenance, realty taxes and building insurances. An option to
renew the lease has been granted by the landlord for a term not less than five
(5) years.
-37-
