EXHIBIT 10.1
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT is entered into as of the 30 th day of
April, 2004 by and among TOTAL FIRST AID, INC., a Florida corporation ("TFA"),
Xxxx XxXxxxx (the "PRINCIPAL HOLDER") and those persons signatory hereto
(individually a Shareholder and collectively the "SHAREHOLDERS"), who are the
holders of all of the issued and outstanding shares of Progestic International
Inc.'s capital shares, a Canadian corporation ("PROGESTIC").
WHEREAS the parties wish to effect TFA's acquisition of Progestic,
through the purchase of all the issued and outstanding capital stock of
Progestic from the Shareholders, including the Principal Holder, on the terms
and conditions set forth below. Accordingly, in consideration of the covenants,
representations and warranties set forth herein, the parties, intending to be
legally bound, agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following
terms have the respective meanings set forth below:
"Adjudication" has the meaning set forth in Section 11.5.
"Affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
"Agreement" means this Share Purchase Agreement, including the
Schedules and Exhibits, as amended from time to time.
"Applicable Law" means, with respect to a referenced Person, any
legislation, regulation, rule or procedure passed, adopted, implemented or
amended by any Governmental Entity, or any notice of a decision, finding or
action by any Governmental Entity, in each case to the extent it has become
effective, binding on the Person, its assets or operations or applicable to the
subject matter or its performance of this Agreement, from and after the date
compliance therewith is mandated by the terms thereof.
"Board" means the board of directors of a referenced Person.
"Board Augmentation" has the meaning set forth in Section 9.10.
"Business Day" means a day other than Saturday, Sunday, or any other
day on which banks located in the State of Florida or the Province of Quebec are
authorised or obligated to close.
"Bylaws" means the bylaws or comparable organisational instrument of a
referenced Person, as amended and in effect on the date hereof.
"Capital Shares" means the authorised shares of capital stock of a
referenced Person having its right to participate in the distribution of
earnings and assets of that Person.
"Charter" means certificate or articles of incorporation or comparable
organisational instrument of a referenced Person, as amended and in effect on
the date hereof.
"Closing", "Closing Date" and "Closing Notice" have the respective
meanings set forth in Section 2.1.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"December 2004 Budget" means the operations budget of Progestic for the
period from May 1st, 2004 to December 31, 2004 prepared by Progestic management
as reproduced in Schedule 3.25.
"Derivative Securities" means any securities that are convertible into
or exchangeable for Capital Shares or any warrants, options or other rights to
subscribe for or purchase Capital Shares or any such convertible or exchangeable
securities.
"$" or dollars means Canadian denominated dollars.
"XXXXX" means the SEC's electronic data gathering and retrieval system.
"Encumbrances" has the meaning set forth in Section 3.13.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
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"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the regulations promulgated thereunder.
"GAAP" means generally accepted accounting, consistently applied
(except as reflected in the applicable notes to the financial statements
involved).
"GAAS" means generally accepted auditing standards.
"Governmental Entity" means any federal, state, local or foreign
governmental board, body, commission, authority, agency, court or other
administrative, judicial or legislative body.
"Intellectual Property Rights" means all legal, equitable or moral
intellectual property or proprietary rights or benefits, including copyrights
and materials in any media for which copyrights are held or asserted, moral
rights, trademarks, patent rights (including patent applications and
disclosures), rights of priority, mask and derivative work rights, know how and
trade secret rights.
"Indemnified Person" means a Person claiming indemnification under
Section 11.
"Indemnifying Person" means a Person against which a claim for
indemnification is asserted under Section 11.
"Knowledge," "Known to" or any similar phrase means, with respect to
any matter in question, that, with respect to the Principal Holder, a
Shareholder, a Progestic Executive Officer, or, with respect to TFA, a TFA
Executive Officer: (a) has actual knowledge of such fact or other matter, or (b)
could be expected to discover or otherwise become aware of such fact or other
matter in the course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or other matter.
"Liabilities" means judgements, penalties (including excise and similar
taxes), fines and amounts paid in settlement, including in each case any
interest assessments or other charges payable in connection therewith.
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"Litigation Expenses" means reasonable expenses incurred in connection
with a Proceeding, including attorneys' fees, retainers and disbursements, court
costs, experts' fees, travel expenses and printing costs.
"Material Adverse Effect" means any material and adverse effect on the
business, operations, properties, prospects or financial condition of a Person,
including without limitation (a) initiation or public announcement of a tender
or exchange offer for 50% or more of the Outstanding Capital Shares of TFA, (b)
initiation or public announcement of a transaction that will result in a change
of control of TFA, (c) commencement of proceedings for delisting TFA Common
Stock on its Principal Market, (d) institution of a Proceeding against a Person
before any Governmental Entity seeking damages in excess of $10,000 or remedies
that could materially adversely affect its operations and (e) initiation of a
Material Action by a Person without the consent of the other Person.
Notwithstanding the foregoing, the following shall not be a Material Adverse
Effect: (i) this Agreement or the transactions contemplated hereby or the public
announcement of this Agreement and the transactions contemplated hereby; (ii)
the economy or securities markets in general; or (iii) TFA's or Progestic's
industry in general and not in whole or in any part significantly related
specifically to TFA or Progestic, as applicable.
"Material Progestic Actions" have the meaning set forth in Section 3.7,
respectively.
"NASD" means the National Association of Securities Dealers, Inc.
"Outside Closing Date" means May 15th, 2004 or such later date as the
Parties may mutually determine in writing.
"Outstanding" means, at any date as of which the number of issued and
outstanding Capital Shares of any class is to be determined, all issued and
outstanding Capital Shares of that class then directly or indirectly owned or
held by or for the account of any Person other than the issuer thereof.
References in this Agreement to Outstanding Capital Shares shall not include
treasury shares.
"Party" means each of TFA, the Principal Holder, the Shareholders and
Progestic.
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"Person" means an individual, corporation, partnership, association,
limited liability company, trust or other entity or organisation, including a
government or political subdivision or an agency or instrumentality thereof.
"Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative or any appeal therein.
"Progestic" means Progestic International Inc., a Canadian corporation,
its successors and permitted assigns, and its subsidiary Progestic USA, Inc.
"Progestic Contracts" has the meaning set forth in Section 3.9.
"Progestic Credit Facilities" means the bank line of credit of
Progestic currently in existence under its existing terms and conditions.
"Progestic Financial Statements" means the audited financial statements
as of and for the two fiscal years ended September 30, 2003 and 2002 and for the
three months ended December 31, 2003, prepared in accordance with Canadian GAAP
and Canadian GAAS reproduced as Schedule 3.5.
"Progestic Plans" means the employee benefit plans identified on
Schedule 3.16.
"Progestic Property Rights" has the meaning set forth in Section 3.8.
"Progestic Representatives" has the meaning set forth in Section 6.2.
"Progestic Shares" means all of the Outstanding Capital Shares of
Progestic.
"Progestic Shares Sold" means those of the Progestic Shares registered
in the name of a Shareholder which are sold by such Shareholder
pursuant to this Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
between TFA, and the Shareholders in the form of Schedule 10.10, providing for
certain piggy-back registration rights for resale of the TFA Shares under the
Securities Act.
"SEC" means the United States Securities and Exchange Commission.
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"Securities Act" means the United States Securities Act of 1933, as
amended, and the regulations promulgated thereunder.
"Shareholder" means a shareholder of Progestic including the Principal
Holder.
"Spearhead Canada" means Spearhead Management Canada Limited.
"Spot Rate" means the best available spot rate for the US Dollar and
Canadian Dollar, at the National Bank of Canada.
"Termination Notice" has the meaning set forth in Section 12.4
"TFA" means Total First Aid, Inc., a Florida corporation, and its
successors and permitted assigns.
"TFA Common Stock" means TFA's common stock, par value $.01 per share,
now or hereafter Outstanding, or any Capital Shares of other securities of TFA
issuable in exchange, conversion or substitution therefor.
"TFA Designees" means the three individuals to be designated by TFA for
appointment as directors of Progestic on Closing and identified on Schedule
9.10.
"TFA Representatives" has the meaning set forth in Section 6.1.
"TFA Shares" means the newly issued common shares of TFA's Capital
Shares to be issued to the Shareholders pursuant to this Agreement.
"Third Person Proceeding" means any Proceeding first threatened or
initiated by a Person other than a Party or derivatively on behalf of a Party
after the Closing Date.
"Transfer Agent" means Florida Atlantic Stock Transfer, or any
successor transfer agent for TFA Common Stock.
1.2 Construction. Unless otherwise expressly provided herein,
all references to Sections, Schedules, Annexes or Exhibits refer to the
corresponding sections, schedules, annex or exhibits to this Agreement. The
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Schedules and Exhibits are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. All capitalised terms used in the
Schedules and Exhibits and not otherwise defined shall have the respective
meanings ascribed to them in this Agreement.
2. TERMS OF THE TRANSACTION
2.1 Closing Notice. On the date within two (2) Business Days
after delivery to Progestic of notice from TFA certifying its satisfaction of
the conditions set forth in Section 9, Progestic shall deliver a notice to TFA
(the "CLOSING NOTICE") certifying its satisfaction of the conditions set forth
in Section 10 and setting forth a date within two (2) Business Days after the
date of the Closing Notice (the "CLOSING DATE") on which the closing of the
acquisition of the Progestic Shares hereunder (the "CLOSING") shall be held.
2.2 Acquisition of the Progestic Shares. On the terms and
subject to the conditions of this Agreement, at the Closing Date each of the
Shareholders including the Principal Holder, shall transfer, assign, convey and
deliver to TFA all of Progestic Shares, free and clear of all liens, claims,
charges, restrictions, equities or encumbrances of any kind.
2.3 Consideration for Progestic Shares. In consideration for
the Progestic Shares, TFA shall issue and deliver to each Shareholder, including
the Principal Holder, at the Closing Date its pro-rata portion of (a)
CDN$500,000, in cash, payable at the Closing Date and (b) CDN$1,000,000, payable
in TFA Shares valued at US$0.85 per share, to be delivered at the Closing Date,
with the conversion rate to be determined based upon the "Spot Rate" for
Canadian dollars three business days prior to the Closing (the "PURCHASE
CONSIDERATION"), the whole in accordance with Schedule 2.3.
2.4 Adjustment to consideration. The parties acknowledge that
the Purchase consideration was negotiated and agreed upon by reference to the
unaudited financial statements of Progestic for the years ended September 30,
2003 and 2002, and the unaudited interim financial statements of Progestic as of
December 31, 2003. TFA has caused an audit of Progestic's financial statement to
be performed as of December 31, 2003 (the "NEW AUDIT"). Based on the New Audit,
the parties have decided not to adjust the Purchase consideration to be paid by
TFA.
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2.5 Closing Mechanics. At the Closing, (a) the Shareholders,
including the Principal Holder, shall deliver to TFA, certificates representing
the Progestic Shares, duly endorsed for transfer to TFA or accompanied by duly
executed stock powers therefore, free and clear of all liens, claims, charges,
restrictions, equities or encumbrances of any kind, and (b) TFA shall deliver to
the Shareholders certificates registered in the name of the Shareholders
representing the TFA Shares, bearing a legend reflecting their restricted status
under the Securities Act.
2.6 Other Closing Transactions. At the Closing, the following
transactions shall be consummated and deemed to occur simultaneously with the
issuance and sale of the TFA Shares in consideration for the Progestic Shares.
(a) Board Augmentation. The Board Augmentation shall
be implemented in accordance with Section 9.10.
(b) Consulting Agreement and Employment Agreements.
TFA shall entered into a consulting agreement with Principal Holder and TFA
shall cause Progestic to enter into employment agreements with Xxxxx Xxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxxxx Xxxxxxx, and Xxxxxx Xxxxxxx, in the event
that he is available to assume such duties, in the forms attached as Schedule
2.6(b).
(c) Releases. Each Shareholder shall give complete
and final releases to TFA, Spearhead Canada and Progestic with respect to any
amount payable to such Shareholder.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL HOLDER. The
Principal Holder, represents and warrants to TFA as set forth below, subject to
the exceptions set forth in the Schedules.
3.1 Organisation of Progestic. Progestic is a corporation duly
organised and existing in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate authority to own its properties
and to carry on its business as now being conducted. Progestic is duly licensed
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted or property owned by it makes licensure necessary,
except where failure to so qualify would have no Material Adverse Effect on
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Progestic. Progestic does not own all or any part of or control, directly or
indirectly, any other business, corporation, joint venture, partnership or
proprietorship, except as set forth on Schedule 3.23.
3.2 Capitalisation. As of the Closing Date, Progestic's
authorised Capital Shares consist solely of an unlimited number of Class A,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class I and Class
J shares of which only 680 Class A shares, 856 Class H shares, and 1,000 Class J
shares are Outstanding. Except as set forth herein or in Schedule 3.2, (a) no
Derivative Securities of Progestic are Outstanding, (b) no Person has any
agreement, right or commitment entitling it to acquire Derivative Securities
from Progestic and (c) there are no agreements or other instruments of any kind
to which Progestic or, to the Knowledge of the Principal Holder, any Person is a
party relating to the voting of the Progestic Shares, other than its Charter and
Bylaws. All of the Progestic Shares have been duly and validly authorised and
issued and are fully paid and non-assessable.
3.3 No Conflicts. The execution, delivery and performance of
this Agreement by the Principal Holder and the consummation by the Principal
Holder of the transactions contemplated hereby, including the sale and
assignment of the Progestic Shares, do not and will not result in a violation of
any Applicable Law, nor is Progestic or the conduct of its business otherwise in
violation of, conflict with or default under any of the foregoing, except for
any violations, conflicts, defaults or rights of termination, amendment,
acceleration or cancellation that would, individually or in the aggregate, have
no Material Adverse Effect on Progestic.
3.4 Consents. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions provided for herein
will result in the creation or imposition of any lien, claim, charge,
restriction, equity or encumbrance of any kind whatever upon or give to any
other Person any interest or right (including any right of termination or
cancellation) in or with respect to Progestic Contracts or the properties,
assets or operations of Progestic.
3.5 Financial Statements. The Progestic Financial Statements
have been provided to TFA. Subject to the assumptions and qualifications
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provided therein, the Progestic Financial Statements do not contain a
misstatement of a material fact or omit a fact necessary to make them not
materially misleading.
3.6 No Undisclosed Liabilities. To the Knowledge of the
Principal Holder, Progestic has no material liabilities or obligations not
reflected in the Progestic Financial Statements, other than those incurred in
the ordinary course of its business since the date of the most recent balance
sheet included in the Progestic Financial Statements and which, individually or
in the aggregate, do not or would not have a Material Adverse Effect on
Progestic.
3.7 No Material Adverse Change. Since the date of the most
recent balance sheet included in the Progestic Financial Statements, no event or
condition has occurred that could have a Material Adverse Effect on Progestic.
Except as set forth in Schedule 3.7, since the date of the most recent balance
sheet included in the Progestic Financial Statements, Progestic has not (a)
issued or repurchased any Capital Shares, except as in normal course of
business, issued any Derivative Securities or declared, set aside or paid any
dividend or distribution on its Outstanding Capital Shares, (b) incurred any
obligation (absolute or contingent) except current liabilities incurred in the
ordinary course of business and obligations under the contracts in effect as of
that date, (c) mortgaged, pledged or knowingly subjected to lien, charge or any
other encumbrance, any of its assets, tangible or intangible, (d) sold or
transferred any of its tangible or intangible assets, except to fund accounts
payable and otherwise in the ordinary course of business, (e) cancelled any
material debts or claims or waived any material right, (f) paid or discharged
any liabilities of any other Person, (g) sold, assigned or transferred any
trademarks, trade names, copyrights, licenses, royalty agreements, proprietary
registrations, know-how, trade secrets or other intangible assets, or granted
any licenses with respect to any of the foregoing, (h) suffered or incurred any
extraordinary expenses or losses, (i) paid or discharged any material obligation
or liability, absolute or contingent, other than current liabilities incurred
since December 31st, 2003 in the ordinary course of business, (j) made any
material change in the individual or aggregate compensation in any form payable
to any of its employees, directors or consultants, (k) entered into any material
transaction of any kind except in the ordinary course of business, or entered
into any transaction or agreement whatsoever with a Control Person of Progestic,
(l) made any material changes in their accounting principles or methods, or (m)
agreed in writing or, to the Knowledge of Progestic, orally to take any of the
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actions covered by this Section 3.3 (collectively, "MATERIAL PROGESTIC
ACTIONS").
3.8 Intellectual Property Rights. Schedule 3.8 sets forth a
list and description of all Intellectual Property Rights owned or licensed by
Progestic, used by Progestic prior to the date hereof or necessary for the
conduct of Progestic's business as presently conducted ("PROGESTIC PROPERTY
RIGHTS"). All of the Progestic Property Rights are valid and enforceable against
third parties. After the Closing Date, Progestic will continue to have the right
to use all the Progestic Property Rights for the conduct of Progestic's business
in the same manner, media, fields of use and territories as presently utilised.
Except as set forth on Schedule 3.8, Progestic owns, is licensed to use or
otherwise will have the right to use all of the Progestic Property Rights in the
ordinary course after the Closing Date. Except as indicated on Schedule 3.8,
Progestic owns the Progestic Property Rights outright or is licensed to use them
on an exclusive basis, in each case free and clear of all liens and
encumbrances, and no other Intellectual Property Rights are necessary for the
conduct of Progestic's business as currently conducted. To the Knowledge of
Progestic, the conduct of Progestic's business as presently conducted and the
use of the Progestic Property Rights and other assets following the Closing Date
does not and will not infringe on the Intellectual Property Rights of any other
Person. There is no pending or, to the Knowledge of Progestic, threatened
infringement claims against Progestic.
3.9 Contracts. Except as set forth on Schedule 3.9, Progestic
is not a Party to or is bound by any:
(a) employment, consulting agreement or similar
arrangement that has an aggregate future liability in excess of $10,000 and is
not terminable by Progestic by notice of not more than 30 days for a cost of
less than $10,000;
(b) employee collective bargaining contract with any
labour union;
(c) covenant not to compete or other covenant
restricting the operations of Progestic;
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(d) agreement or arrangement with any current or
former officer, director or employee of Progestic or any Affiliate of Progestic,
other than employment agreements covered by Section 3.9 (a);
(e) agreement or arrangement designed to shift risk
relating to currency, interest rate or other price fluctuations involving
notional amounts in excess of $10,000;
(f) lease or similar agreement with any Person under
which (i) Progestic is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any Person or (ii)
Progestic is a lessor or sublessor of, or makes available for use by any Person,
any tangible personal property owned or leased by Progestic, in each case which
has an aggregate future liability or receivable, as the case may be, in excess
of $10,000 and is not terminable at Progestic's election on less than one month
notice for a cost of less than $10,000;
(g) agreement or arrangement for the future purchase
or receipt of materials, supplies, equipment or services, which has an aggregate
future liability to Progestic in excess of $10,000 and is not terminable at
Progestic's election on less than one month notice for a cost of less than
$10,000;
(h) material license, option or other agreement or
arrangement relating in whole or in part to the Progestic Property Rights listed
on Schedule 3.9;
(i) agreement, instrument or arrangement under which
Progestic has borrowed any money from, or issued any note, bond, debenture or
other evidence of indebtedness to, any Person, which individually is in excess
of $10,000;
(j) agreement, instrument or arrangement under which
(i) any Person has directly or indirectly guaranteed indebtedness, liabilities
or obligations of Progestic or (ii) Progestic has directly or indirectly
guaranteed indebtedness, liabilities or obligations of any Person (in each case
other than endorsements for the purpose of collection in the ordinary course of
business), which individually is in excess of $10,000;
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(k) agreement, instrument or arrangement under which
Progestic has, directly or indirectly, made any advance, loan, extension of
credit or capital contribution to, or other investment in, any Person, which
individually is in excess of $10,000;
(l) agreement, instrument or arrangement providing
for indemnification of any Person against claims or liabilities relating to any
current or former business of Progestic or any predecessor of Progestic; or
(m) other agreement, instrument or arrangement to
which Progestic is a party or by or to which it or any of its assets or business
is bound or subject, having an aggregate future liability to any Person in
excess of $10,000 and is not terminable at Progestic's election upon less than
one month notice for a cost of less than $10,000.
3.10 Enforceability of Progestic Contracts. To the Knowledge
of Progestic, (a) all agreements, instruments and arrangements listed or
required to be listed in Schedule 3.9 (collectively, the "PROGESTIC CONTRACTS")
are valid, binding and in full force and effect and are enforceable by Progestic
in accordance with its terms, (b) Progestic has performed all its material
obligations to date under all Progestic Contracts to which it is a party or is
otherwise bound or subject, (c) Progestic is not (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect under the Progestic Contracts, (d) no other Person to any of the
Progestic Contracts has notified Progestic of the counterparty's belief that
Progestic is or is likely to become in breach or default in any material respect
thereunder or of the counterparty's intention to accelerate or modify in a
manner adverse to Progestic any obligations or rights thereunder and (e) no
other Person to any of the Progestic Contracts is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder.
3.11 Litigation and Other Proceedings. There are no
Proceedings pending or, to the Knowledge of Progestic, threatened against
Progestic and there are no judgements, orders, writs, injunctions, decrees or
awards issued by or, to the Knowledge of Progestic, requested by any
Governmental Entity against Progestic.
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3.12 Tax and Other Returns and Reports. All federal,
provincial and local tax returns, reports and statements required to be filed by
Progestic have been filed with the appropriate Governmental Entities in all
jurisdictions in which the returns, reports and statements are required to be
filed, and all such returns, reports and statements properly reflect the tax
liabilities of Progestic for the periods, properties or events covered thereby,
(b) all federal, provincial and local taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions have been
properly accrued or paid, (c) Progestic has not received any notice of
assessment or proposed assessment by any taxing authority in connection with any
of its tax returns, and there are no pending tax examinations of or tax claims
asserted against Progestic or any of its assets or properties, (d) there are no
tax liens on any of Progestic's assets, and (e) the Principal Holder has no
Knowledge of any basis for any additional assessment of any taxes on Progestic.
3.13 Title to Assets; Absence of Liens and Encumbrances.
Progestic owns or has a valid leasehold interest in all its material assets and
property reflected in the balance sheet included in the Progestic Financial
Statements, except assets and property disposed of after December 31st, 2003 in
the ordinary course of business and consistent with past practice. Except as set
forth on Schedule 3.13, none of such assets or properties is subject to any
material defects of title, mortgage, pledge, lien, security interest, lease,
charge, encumbrance, objection or joint ownership (collectively,
"ENCUMBRANCES"). Except as set forth on Schedule 3.13, the facilities,
machinery, furniture, office and other equipment of Progestic that are used in
its business are sufficient for the operations of Progestic as currently
conducted are in good operating condition and repair, subject only to the
ordinary wear and tear. Progestic is not in material default under the Progestic
Contracts governing any Encumbrances to which it or its properties and assets
are subject.
3.14 Compliance with Applicable Laws. Progestic is in
compliance in all material respects with all Applicable Laws affecting its
business or operations, including those relating to occupational health and
safety, Progestic has received no communication during the past two years from a
Governmental Entity alleging that Progestic has failed to comply in any material
respect with any Applicable Laws.
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3.15 Employee and Labour Matters. Progestic has made all
payments and performed all material acts, if any, required to be complied with
and has complied in all material respects with the applicable provisions, if
any, of all Applicable Laws affecting employee and labour matters. Each
terminated plan, if any, was terminated in accordance with Applicable Laws, and
any agreements relating thereto have been terminated without liability to
Progestic.
3.16 Benefit Plans. Progestic currently maintains the employee
benefit plans described on Schedule 3.16. Each listed plan (a) has been
administered and operated in accordance with Applicable Laws and (b) has
received all contributions required to be made thereunder by Progestic and any
predecessors. For each listed plan, Progestic has delivered to TFA copies of (i)
the plan document setting forth the terms and conditions of the plan, (ii) any
the trust agreement established under the plan, (iii) any investment or
insurance contracts under the trust, (iv) the latest determination letter or an
opinion from the applicable Governmental Entity about the qualified status of
the plan under Applicable Law and (v) any annual reports required by Applicable
Law for the last three completed plan years. Any contributions to health plans
required to be made by employees of Progestic has been paid in accordance the
policies therefor.
3.17 Insurance. Progestic maintain policies of fire and
casualty, liability and other forms of insurance in amounts, with deductibles
and against risks and losses that are, in the Progestic's judgement, reasonable
for the business and assets of Progestic. The insurance policies maintained by
Progestic are listed on Schedule 3.17. All listed policies are in full force and
effect, all premiums due and payable thereon have been paid, and no notice of
cancellation or termination has been received thereunder. The activities and
operations of Progestic have been conducted in a manner conforming in all
material respects to all applicable provisions of the listed insurance policies.
3.18 Transactions with Affiliates. Except as set forth on
Schedule 3.18 or as contemplated by Section 10.7, there is no transaction, and
no transaction is now proposed, to which Progestic was or is to be a party and
in which any of its officers, directors or shareholders or any of their
Affiliates had or has a direct or indirect material interest. Any such
transaction listed on Schedule 3.18 will terminate as of the Closing Date and
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neither Progestic nor TFA shall have any obligation thereunder following the
Closing.
3.19 Bank Accounts; Powers of Attorney; etc. Except as set
forth on Schedule 3.19, there are no (a) safe deposit boxes, bank accounts,
brokerage accounts or similar arrangements maintained by or for the account of
Progestic with any bank, financial institution or other Person or (b) any
outstanding powers of attorney or other authorisations issued by Progestic to
Progestic, any bank or financial institution or any other Person.
3.20 Fees. No Person acting on behalf of Progestic or any of
its Affiliates is entitled to any brokerage fees or commissions of any nature
directly or indirectly from Progestic in connection with any of the transactions
contemplated hereby.
3.21 Grants. Any filings made by Progestic under which it has
received or is entitled to receive government assistance or incentives have been
made in accordance, in all material respects, with all applicable legislation
and contain no misrepresentations of a material fact or omit to state any
material fact which could cause any material amount previously paid or
previously accrued on its accounts to be recovered or disallowed.
3.22 Minute Books. The minute books and corporate records of
Progestic have been maintained in accordance with Applicable Law and contain
true and complete records of all meetings and consents and resolutions in lieu
of meetings of its board of directors (and all committees thereof) and its
shareholders, and accurately and completely reflect, in all material respects,
all matters referred to therein, and all material transactions entered into by
Progestic. All resolutions contained in Progestic's minute books have been duly
adopted and all such meetings have been duly called and held. The share
certificate books and the registers of shareholders, directors and transfers of
Progestic are true and complete.
3.23 Subsidiaries. Progestic does not have and has never had
any equity or other interest in any Person, with the exception of its
wholly-owned subsidiary Progestic USA, Inc., a company which has no material
assets and liabilities and which currently has no activity.
3.24 Progestic's Assets. Schedule 3.24 sets forth a list and
description of Progestic's assets as of the Closing Date, and each of
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Progestic's assets is free from material defects, has been maintained in a
manner consistent with good business practices, and is in good operating
condition and repair (subject to normal wear and tear).
3.25 Disclosure. No representation or warranty of the
Principal Holder contained in this Agreement, and no statement or information
contained in any document, certificate or Schedule to this Agreement delivered
to TFA in connection herewith by Progestic, its Affiliates or any Person acting
on its or their behalf, including the December 2004 Budget, contains any untrue
statement of a material fact or omits to state any material fact necessary, in
light of the circumstances under which it was made, in order to make those
statements or information not misleading. There is no fact, condition or
circumstance which (i) materially adversely affects the prospects, or condition
of Progestic or (ii) relates to the Principal Holder or Progestic and which
might reasonably be expected to deter TFA from entering into this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each of the
Shareholders hereby represented by the Principal Holder pursuant to a valid
Powers of Attorney reproduced in Schedule 4A, severally and not jointly,
represents and warrants to TFA as set forth below.
4.1 Authority. The Shareholder has the requisite power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution, issuance and delivery of this Agreement, the transfer of the
Progestic Shares Sold to TFA and the consummation by the Shareholder of the
transactions contemplated hereby have been duly authorised by all necessary
action, and, except as contemplated by Section 5.5(b) no further consent or
authorisation is required by the Board of Progestic or from any other Person.
This Agreement has been duly executed and delivered by the Shareholder and
constitutes a valid and binding obligation enforceable against the Shareholder
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights and to other
equitable principles of general application.
4.2 Progestic Share Ownership. The Shareholder has good and
marketable title to the Progestic Shares Sold, free and clear of any liens,
claims, encumbrances, security interests, options, charges and restrictions of
any kind. Upon delivery to TFA of certificates representing the Progestic Shares
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Sold, TFA will acquire good and valid title thereto, free and clear of any
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind. Other than this Agreement, the Progestic Shares Sold
are not subject to any agreement, arrangement, commitment or understanding that
could impair TFA's rights thereto, including any restriction relating to the
voting, dividend rights or disposition of the Progestic Shares.
4.3 Investment Intent. The Shareholder is entering into this
Agreement for its own account and not with a view to any distribution of the TFA
Shares acquired by it, and it has no present arrangement to sell any of its TFA
Shares to or through any Person, provided that this representation shall not be
construed as an undertaking to hold any TFA Shares for any minimum or other
specific term, and the Shareholder reserves the right to dispose of its TFA
Shares at any time in accordance with Applicable Law.
4.4 Experience. The Shareholder has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the TFA Common Stock. The Shareholder acknowledges
that an investment in the TFA Common Stock is speculative and involves a high
degree of risk.
4.5 Intentionally deleted.
4.6 Intentionally deleted.
4.7 Access to Information. The Shareholder has received or had
access, to all documents, records and other information pertaining to its
investment in the TFA Common Stock that it has requested, including documents
filed by TFA under the Exchange Act, and has been given the opportunity, to meet
or have telephonic discussions with representatives of TFA, to ask questions of
them, to receive answers concerning the terms and conditions of this investment
and to obtain information that TFA possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
provided to the Shareholder.
4.8 Manner of Sale. At no time was the Shareholder presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising relating to TFA or any investment in the TFA Common Stock.
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4.9 No Conflicts. The execution, delivery and performance of
this Agreement by the Shareholder and the consummation by the Shareholder of the
transactions contemplated hereby, including the sale and assignment of the
Progestic Shares, do not and will not (a) result in a violation of the Charter
or Bylaws of Progestic, or (b) conflict with or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture, instrument or "lock-up"
arrangement or similar provision of any underwriting or similar agreement to
which the Shareholder is a party.
4.10 Consents. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions provided for herein
(a) requires the Shareholder or Progestic to obtain or make any consent,
authorisation, approval, registration or filing under any Applicable Law,
judgement or decree, (b) will cause any acceleration of maturity of any note,
instrument or other obligation to which any Shareholder is a party or by which
any of them is bound or with respect to which any of them is an obligor or
guarantor.
4.11 Release. The Shareholder has no claim of any nature
whatsoever against Progestic or its affiliates, including claims for the
reimbursement any advance, loan, extension of credit or capital contribution.
4.12 Residence. The Shareholder is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada).
5. REPRESENTATIONS AND WARRANTIES OF TFA. TFA represents and warrants
to the Shareholders and the Principal Holder as set forth below, subject to the
exceptions set forth in the Schedules.
5.1 Organisation of TFA. TFA is a corporation duly organised
and existing in good standing under the laws of the State of Florida and has all
requisite corporate authority to own its properties and to carry on its business
as now being conducted. TFA is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes qualification necessary,
except where failure to so qualify would have no Material Adverse Effect on TFA.
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5.2 Authority. TFA has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the TFA Shares. The execution, issuance and delivery of this Agreement,
the issuance of the TFA Shares and the consummation by TFA of the transactions
contemplated hereby have been duly authorised by all necessary corporate action,
and no further consent or authorisation is required by its Boards or its
shareholders. This Agreement and the other agreements delivered or to be
delivered by TFA have been or will be at Closing duly executed and delivered by
TFA and constitute valid and binding obligations of TFA, enforceable against it
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights and to other
equitable principles of general application.
5.3 Valid Issuance. Assuming the accuracy of the
representations and warranties of the Principal Holder in Section 3 and of the
Shareholders in Section 4, both at the date hereof and at the time of issuance,
the issuance and sale of the TFA Shares will be exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof or Regulation D
thereunder and, when delivered in accordance with the terms hereof, the TFA
Shares shall be duly and validly issued, fully paid and non-assessable. Neither
the issuance and sale of the TFA Shares pursuant to this Agreement nor TFA's
performance of its other obligations hereunder will (i) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the TFA
Shares or any of the assets of TFA or (ii) entitle the holders of Outstanding
Capital Shares to pre-emptive or other rights to subscribe to or acquire
additional Capital Shares or other securities of TFA. The Shareholders,
including Principal Holder, will not be subject to personal liability solely by
reason of their ownership or possession of the TFA Shares.
5.4 No Conflicts. The execution, delivery and performance of
this Agreement by TFA and the consummation by TFA of the transactions
contemplated hereby, including the issuance of the TFA Shares, do not and will
not (a) result in a violation of its Charter or Bylaws, (b) conflict with or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or "lock-up" arrangement or similar provision of any underwriting or
similar agreement to which TFA is a party, or (c) result in a violation of any
Applicable Law, nor is TFA or the conduct of its business otherwise in violation
of, conflict with or default under any of the foregoing, except for any
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violations, conflicts, defaults or rights of termination, amendment,
acceleration or cancellation that would, individually or in the aggregate, have
no Material Adverse Effect on TFA.
5.5 Consents. Assuming the accuracy of the representations and
warranties of the Principal Holder in Section 3 and the Shareholders in Section
4 both at the date hereof and on the Closing Date, TFA is not required by
Applicable Law to obtain any consent, authorisation or order of any Governmental
Entity or to make any filing or registration with any Governmental Entity in
connection with its execution, delivery or performance of its obligations under
this Agreement, other than the filing of (a) any notices that may be required
under state or provincial securities laws subsequent to the Closing, (b) the
receipt of an exempting order from the Autorite des marches financiers du Quebec
in respect of the issuance of TFA Shares in favour of certain Shareholders who
are resident of the Province of Quebec.
5.6 SEC Documents and Financial Statements. Except as
indicated on Schedule 5.6, TFA has filed on a timely basis all documents
required to be filed by it with the SEC since January 1, 2003 (all such
documents filed since January 1, 2003 and prior to the date hereof are referred
to as the "TFA SEC Documents"). Complete and correct copies of TFA SEC Documents
have been made available to the Shareholders, including by referring
Shareholders to the SEC's website xxx.xxx.xxx, where copies of all TFA SEC
Documents are available for inspection and printing. As of their respective
dates, or if amended as of the date of the last such amendment, the TFA SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and none of TFA SEC
Documents as of the date thereof contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Complete and accurate copies of the
audited consolidated balance sheet, consolidated statements of operations,
consolidated statements of stockholders' equity and consolidated statements of
cash flows (together with any supplementary information thereto) of TFA, all as
of and for the fiscal period ended December 31, 2003 (the "TFA FINANCIAL
STATEMENTS") have been made available to the Shareholders, including the
Principal Holder. The TFA Financial Statements fairly present, in all material
respects, the consolidated financial position of TFA, as of and for the
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respective dates thereof, and the consolidated results of its operations and its
consolidated cash flows for the respective periods then ended.
5.7 No Undisclosed Liabilities. TFA has no material
liabilities or obligations not reflected in the TFA Financial Statements, other
than those incurred in the ordinary course of TFA's business since the date of
the TFA Financial Statements and which, individually or in the aggregate, do not
or would not have a Material Adverse Effect on TFA.
5.8 No Material Adverse Change. Since the date of the TFA
Financial Statements, no event or condition has occurred that could have a
Material Adverse Effect on TFA.
5.9 Litigation and Other Proceedings. There are no Proceedings
pending or, to TFA's knowledge, threatened against TFA that might have a
Material Adverse Effect on TFA, and there are no judgements, orders, writs,
injunctions, decrees or awards issued by or, to TFA's knowledge, requested by
any Governmental Entity that might have a Material Adverse Effect on TFA.
5.10 Compliance with Applicable Laws. TFA is in compliance in
all material respects with all Applicable Laws affecting its business or
operations, and TFA has received no communication during the past two years from
a Governmental Entity alleging that it has failed to comply in any material
respect with any Applicable Laws.
5.11 Intentionally deleted.
5.12 Disclosure. No representation or warranty of TFA
contained in this Agreement, and no statement contained in any document,
certificate or Schedule to this Agreement delivered to the Shareholders in
connection herewith by TFA, its Affiliates or any Person acting on its or their
behalf contains any untrue statement of a material fact or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make those statements not misleading.
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6. DILIGENCE AND DISCLOSURE MATTERS.
6.1 TFA's Due Diligence Review. The Principal Holder shall
cause Progestic to make available for inspection and review by TFA and its
advisors and representatives (collectively, "TFA REPRESENTATIVES") copies of all
records of Progestic reasonably requested by them for conducting their due
diligence review in connection with the transactions contemplated by this
Agreement.
6.2 Progestic's Due Diligence Review. TFA shall make available
for inspection and review by Progestic and its advisors and representatives
(collectively, "PROGESTIC REPRESENTATIVES") copies of all records of TFA
reasonably requested by them for conducting their due diligence review in
connection with the transactions contemplated by this Agreement.
6.3 Supplemental Disclosure. Each Party shall have the
continuing obligation until the Closing to promptly supplement or amend its
Schedules to reflect any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Schedules, provided that no supplement or
amendment to the Schedules delivered more than five (5) business days after the
date of this Agreement shall have any effect for the purpose of determining the
satisfaction of the conditions set forth in Section 9 or Section 10.
6.4 Non-Disclosure. All confidential information received by a
Party with respect to the business of the other Party shall be treated in
accordance with the restrictions set forth in the confidentiality agreement
between TFA and Progestic, reproduced as Schedule 6.4.
6.5 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each Party shall use all reasonable efforts to cause the Closing
to occur by the Outside Closing Date.
6.6 Further Assurances. From time to time, as and when
requested by a Party, the other Parties shall execute and deliver, or cause to
be executed and delivered, all documents and instruments and shall take all
actions (subject to the other provisions of this Agreement) as the other Parties
may reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
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7. CONDUCT OF PROGESTIC BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing, unless otherwise approved in writing by TFA, the
Principal Holder and, to the extent set forth below, the Shareholders including
the Principal Shareholder, shall cause Progestic to conduct its business in
accordance with the provisions of this Section 7.
7.1 Corporate Existence. The Principal Holder shall cause
Progestic to take all steps necessary to preserve and continue its corporate
existence and franchises.
7.2 Conduct of Operations. The Principal Holder shall cause
Progestic to conduct its operations in the ordinary and usual courses of
business, as currently conducted, and shall not take or agree to take any
Material Progestic Actions as provided in this Agreement.
7.3 Preservation of Representations. The Principal Holder and
the Shareholders shall not take any action that (a) if taken on or before the
date hereof, would make any of their representations and warranties in Section 3
or Section 4 untrue or (b) would interfere with their ability to perform its
obligations under this Agreement.
7.4 Procuring Approvals. The Principal Holder shall use its
best efforts to cause Progestic to obtain all licenses, consents or other
approvals required to be obtained from any Person in connection with the
transactions contemplated by this Agreement.
7.5 Exclusivity. Between the date of this Agreement and the
earlier to occur of the Closing or the termination of this Agreement in
accordance with Section 12, the Principal Holder, no Shareholder nor any Person
acting on their behalf shall initiate, encourage, solicit or agree to any offer
from any Person other than TFA regarding any merger, sale of securities, sale of
assets or similar transaction involving Progestic or any transaction that could
be expected to impede, delay, interfere with, prevent or dilute the benefits to
TFA of the transactions contemplated hereby.
8. CONDUCT OF TFA BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing, unless otherwise approved in writing by Progestic, TFA
shall conduct its business in accordance with the provisions of this Section 8.
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8.1 Preservation of Representations. TFA shall not take any
action that (a) if taken on or before the date hereof, would make any of its
representations and warranties in Section 5 untrue or (b) would interfere with
its ability to perform its obligations under this Agreement.
8.2 Procuring Approvals. TFA shall use its best efforts to
obtain all licenses, consents or other approvals required to be obtained by it
from any Person in connection with the transactions contemplated by this
Agreement.
9. CONDITIONS PRECEDENT TO TFA'S OBLIGATIONS. The obligations of TFA
hereunder to issue the TFA Shares to the Shareholders at the Closing in exchange
of the purchase of Progestic Shares and to consummate the other transactions
contemplated by Section 2 are subject to the satisfaction of or waiver by TFA on
or before the Closing Date, of each of the conditions set forth in this Section
9.
9.1 Accuracy of the Principal Holder and the Shareholders'
Representation and Warranties. The representations and warranties of the
Principal Holder and the Shareholders herein 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 as of the Closing Date.
9.2 Performance by the Principal Holder and the Shareholders.
The Principal Holder and the Shareholders shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required hereunder to be performed, satisfied or complied with by them at or
prior to the Closing Date.
9.3 No Injunction. No Applicable Law shall prohibit the
Shareholders from consummating the transactions contemplated by this Agreement,
and no proceeding for that purpose shall have been commenced.
9.4 No Adverse Changes. Since the filing date of most recent
balance sheet of Progestic included in the Progestic Financial Statements, no
event or condition shall have occurred that had or would likely have a Material
Adverse Effect on Progestic.
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9.5 Consents Obtained. The Principal Holder and the
Shareholders shall have obtained any written consents of any Person whose
consent is required to consummate the transactions contemplated by this
Agreement.
9.6 Financial Statements. Progestic shall have delivered to
TFA its unaudited financial statements for its fiscal year ended March 31st,
2004, which shall be acceptable to TFA.
9.7 Liabilities. As of the Closing Date, Progestic shall have
no material liabilities other than those reflected on the Financial Statements
or incurred thereafter in the ordinary course of business, and, Progestic shall
not have drawn down against the existing Progestic Credit Facilities in excess
of draw down amount consistent with Progestic's practice during the six months
immediately preceding the Closing Date.
9.8 Progestic's material agreement. All material agreements to
which Progestic is a party on the date of this Agreement shall remain in full
force and effect following the Closing, and consummation this transaction shall
not entitle any person to terminate any material agreement to which Progestic is
a party as of the date of this Agreement.
9.9 Due Diligence. TFA shall be satisfied with the completion
of due diligence.
9.10 Board augmentation. Progestic shall have received the
resignation of all of the members of the Progestic Board other than the
Principal Holder, and one other Progestic executive acceptable to TFA, and
executed and effective as of the Closing Date, subject to the Closing hereunder,
increasing the size of the Progestic Board to five members and appointing three
of TFA's designees as directors of Progestic, as identified on Schedule 9.10.
9.11 Officer's Certificate. TFA shall have received a
Certificate in substantially the form of Schedule 9.11, executed by the chief
executive officer of Progestic as at the Closing Date.
9.12 Legal Opinion. TFA shall have received a legal opinion in
substantially the form of Schedule 9.12 from Progestic's legal counsel.
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9.13 Releases. The Principal Holder and, to the extent
applicable, each of the other Shareholders, shall have been released from any
personal obligation to repay the Progestic Credit Facilities.
9.14 Credit Facilities. TFA shall either maintain the existing
Progestic Credit Facilities or establish a new credit facility equal to or
greater than Progestic Credit Facilities prior to the Closing without any
personal guarantees of the Shareholders.
9.15 Exempting Orders. TFA shall have obtained all necessary
exempting orders from the Autorites des marches financiers du Quebec and the
Ontario Securities Commission in respect of the issuance of the TFA Shares in
favour of the Shareholders.
10. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS. The
obligations of the Shareholders to assign and transfer the Progestic Shares to
TFA at the Closing and to consummate the transactions contemplated by Section 2
are subject to the satisfaction or waiver by Progestic on or before the Closing
Date, of each of the conditions set forth in this Section 10. The Shareholders
may not rely on TFA's failure to satisfy any condition set forth in this Section
10 if the failure was caused by their own failure to act in good faith or to use
all reasonable efforts to satisfy the conditions set forth in Section 9.
10.1 Accuracy of TFA's Representation and Warranties. The
representations and warranties of TFA herein 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 as of the Closing Date.
10.2 Performance by TFA. TFA shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required hereunder to be performed, satisfied or complied with by TFA
at or prior to the Closing Date.
10.3 No Injunction. No Applicable Law shall prohibit TFA from
consummating the transactions contemplated by this Agreement, and no proceeding
for that purpose shall have been commenced.
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10.4 No Adverse Changes. Since the date of the TFA Financial
Statements was filed, no event or condition shall have occurred that had or
would likely have a Material Adverse Effect on TFA.
10.5 No Trading Suspension or Delisting of Common Stock. The
trading of the Common Stock shall not have been suspended by the SEC, nor shall
TFA has received any letter or notice of any suspension or delisting.
10.6 Consents Obtained. TFA shall have obtained any required
written consents of any other Person whose consent is required to the
transactions contemplated by this Agreement including an exempting order from
the Autorite des marches financiers du Quebec and the Ontario Securities
commission in respect of the issuance of TFA Shares in favour of certain
Shareholders, and that such exempting order shall not be received by the Closing
Date.
10.7 Consulting Agreement and Employment Agreements. TFA shall
have entered into a consulting agreement with the Principal Holder (the
"CONSULTING AGREEMENT"), and TFA shall cause Progestic to enter into employment
agreements with the four additional Progestic executives reasonably satisfactory
to TFA, or five additional Progestic executives in the event that Xxxxxx Xxxxxxx
is available to assume such duties prior to the expiration of one year from the
Closing Date (the "EMPLOYMENT AGREEMENTS") on terms and conditions satisfactory
to each of the parties. The Consulting Agreement shall include the grant to the
Principal Holder of three-year options to purchase 150,000 shares of TFA Common
Stock at US$0.85 per share, and Employment Agreements shall include the grant to
each of the other four Progestic's executives and Xxxxxx Xxxxxxx, in the event
that he is available to assume such duties, of three-year options to purchase
50,000 shares of TFA Common Stock each, at US$0.85 per share (collectively the
"OPTIONS"). The Options shall be subject to regulatory approvals and may not be
exercised until the expiration of nine months following the Closing Date.
10.8 Personal Obligation for Indebtedness. The Principal
Holder and four Progestic Executives shall have been released from any personal
obligation for indebtedness of Progestic reflected in the Financial Statements.
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10.9 Accounting and Legal Fees. TFA shall cause the payment at
Closing of all accounting and legal fees of TFA and Progestic attributable to
the purchase of Progestic Shares and the transaction contemplated by this
Agreement.
10.10 Registration Rights Agreement. TFA shall have executed
and delivered the Registration Rights Agreement.
10.11 Officer's Certificate. The Shareholders, including
Principal Holder, shall have received a Compliance Certificate in substantially
the form of Schedule 10.11, executed by the chief executive officer of TFA as at
the Closing Date.
11. INDEMNIFICATION
11.1 Indemnification by TFA. TFA shall indemnify and hold
harmless Progestic and its Affiliates, duly authorised agents and Control
Persons from and against any Liabilities and Litigation Expenses incurred by the
Indemnified Person in connection with any Proceeding to which the Indemnified
Person is, was or at any time becomes a party, arising from TFA's breach of its
representations and warranties under this Agreement or its failure to perform
any of its covenants contained in this Agreement.
11.2 Indemnification by the Principal Holder and the
Shareholders. The Principal Holder, and each of the Shareholders shall indemnify
and hold harmless TFA and its Affiliates, duly authorised agents and Control
Persons from and against any Liabilities and Litigation Expenses incurred by the
Indemnified Person in connection with any Proceeding to which the Indemnified
Person is, was or at any time becomes a party, arising from the Principal
Holder's or Shareholder's breach of its representations and warranties under
this Agreement or its failure to perform any of its covenants contained in this
Agreement.
11.3 Notice and Defence of Claim. The Indemnified Person shall
promptly notify the Indemnifying Person in writing of the commencement of any
Third Person Proceeding for which indemnification may be claimed hereunder,
provided that any failure to so notify the Indemnifying Person shall not relieve
it from its obligations under this Section 11. If it receives notice of a Third
Person Proceeding from the Indemnified Person, the Indemnifying Person may
-29-
participate in the Proceeding at its own expense and will be entitled to assume
the defence thereof with counsel of its choice unless counsel for the
Indemnifying Person reasonably concludes that there would be a conflict of
interest between the Indemnifying Person and the Indemnified Person that
precludes their joint representation under Applicable Law or ethical canons. If
the Indemnifying Person assumes the defence of the Third Person Proceeding, it
shall not be liable to the Indemnified Person for any Litigation Expenses
subsequently incurred by it in connection with the defence thereof, except to
the extent that the Indemnifying Person authorises the Indemnified Person to
engage separate counsel or the Indemnifying Person or its counsel fails to act
with reasonable diligence in assuming the defence of the Proceeding, in each of
which events all Litigation Expenses thereafter incurred by the Indemnified
Person for employing separate counsel shall be subject to indemnification
hereunder. In no event shall the Indemnifying Person be obligated for the
Litigation Expenses of more than one separate counsel to represent all
Indemnified Parties in a particular Third Person Proceeding.
11.4 Advancement of Expenses. Upon written request by the
Indemnified Person in connection with a Third Person Proceeding, the
Indemnifying Person shall promptly advance all Litigation Expenses incurred by
or on behalf of the Indemnified Person to the extent authorised under Section
11.3. The request shall contain a reasonably detailed description of the
Litigation Expenses or, if available to the Indemnified Person, documentation
evidencing the amount of the Litigation Expenses. The Indemnified Person's right
to advancement of Litigation Expenses shall be conditioned upon its agreement to
repay amounts advanced if it is ultimately determined that the Indemnified
Person is not entitled to be indemnified for those Litigation Expenses under
this Section 11.
11.5 Remedies of the Indemnified Person. In the event that (a)
advances of Litigation Expenses pursuant to Section 11.4 are not timely made,
(b) payment of Liabilities or Litigation Expenses are not timely made after a
determination of entitlement to indemnification hereunder or (c) the Indemnified
Person otherwise seeks to enforce its rights under this Section 11, the
Indemnified Person shall be entitled to a final adjudication of its rights
hereunder in any court of competent jurisdiction in the venue specified in
Section 13.1 (an "ADJUDICATION"). All Litigation Expenses reasonably incurred by
the Indemnified Person in connection with an Adjudication shall be borne by the
Indemnifying Person if the Indemnified Person is successful in the Adjudication.
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11.6 Settlement, Compromise and Consent. Without the prior
written consent of the Indemnified Person, the Indemnifying Person shall not
settle any Third Person Proceeding, permit a default judgement to be entered
therein or consent to the entry of any adverse judgement therein unless the
settlement, compromise or consent includes an unconditional release in favor of
the Indemnified Person by all claimants from any liability therein. The
Indemnifying Person shall not be liable to indemnify the Indemnified Person
under this Section 11 for any amounts paid in settlement of a Third Person
Proceeding effected without its written consent, which the Indemnifying Person
shall not unreasonably withhold or delay.
11.7 Non exclusivity. The rights of the Indemnified Person
under this Section 11 shall not be deemed exclusive or in limitation of any
other rights to which the Indemnified Person may be entitled under Applicable
Law.
11.8 Other Payments. The Indemnifying Person shall not be
liable to make any payment under this Section 11 to the extent that the
Indemnified Person has received payment from a third party of the amounts
otherwise payable by the Indemnifying Person hereunder.
11.9 Subrogation. The Indemnifying Person shall be subrogated,
to the extent of any indemnification payment under this Agreement, to all
related rights of recovery of the Indemnified Person, and the Indemnified Person
shall take all actions necessary to secure the Indemnifying Person's recovery
rights and perfect its ability to enforce those rights.
12. TERMINATION.
12.1 Progestic Termination Event. Provided that the
Shareholders have not materially breached any of their representations,
warranties, covenants or agreements contained herein, the Shareholders may
terminate this Agreement and abandon the transactions contemplated hereby at any
time prior to the Closing if TFA shall have failed to satisfy in any material
respect any of the conditions set forth in Section 10 or any of those conditions
shall have become incapable of fulfilment and shall not have been waived by a
majority of the Shareholders, including the Principal Holder, and the failure or
non fulfilment materially reduces the benefits of the transactions contemplated
hereby to the Shareholders.
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12.2 TFA Termination Event. Provided that TFA has not
materially breached any of its representations, warranties, covenants or
agreements contained herein, it may terminate this Agreement and abandon the
transactions contemplated hereby at any time prior to the Closing if the
Shareholders shall have failed to satisfy in any material respect any of the
conditions set forth in Section 9 or any of those conditions shall have become
incapable of fulfilment and shall not have been waived by TFA and the failure or
non fulfilment materially reduces the benefits of the transactions contemplated
hereby to TFA.
12.3 Other Termination Events. This Agreement may be
terminated and the transactions contemplated hereby abandoned by the Parties (i)
by mutual agreement, or (ii) if the Closing does not occur on or prior to the
Outside Closing Date, provided that the Party seeking termination pursuant to
this Section 12.3 is not in breach of its or their material representations,
warranties, covenants or agreements contained in this Agreement.
12.4 Notice of Termination. In the event TFA, the Principal
Holder or a Shareholder seeks to terminate this Agreement pursuant to this
Section 12, it shall provide written notice (a "TERMINATION NOTICE") thereof to
the other Party, setting forth in reasonable detail the grounds for termination,
whereupon the transactions contemplated by this Agreement shall be terminated,
without further action by any Party, subject to the provisions of Section 12.5.
12.5 Effects of Termination. If this Agreement is terminated
and the transactions contemplated hereby are abandoned as provided in this
Section 12, this Agreement shall become void and of no further force or effect,
except that each Party shall return all documents and other material received
from or on behalf of the counter Party in connection with the transactions
contemplated hereby, together with all copies thereof, whether so obtained
before or after the execution hereof. The restrictions set forth in Schedule 6.4
regarding disclosure of confidential information shall remain in full force and
effect notwithstanding any termination of this Agreement.
13. MISCELLANEOUS.
13.1 Choice of Law; Venue. This Agreement shall be governed by
and construed in accordance with the laws of the Province of Quebec without
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regard to principles of conflicts of laws. Any action brought by a Party against
the counter Party concerning the transactions contemplated by this Agreement may
be brought in the state courts of the Province of Quebec. All Parties agree to
submit to the jurisdiction of this court. The prevailing Party in any Proceeding
between the Parties shall be entitled to recover from the counter Party its
reasonable attorneys' fees and disbursements incurred in connection with the
Proceeding.
13.2 Assignment. Neither this Agreement nor any rights or
obligations of a Party hereunder may be assigned by any Party without the prior
written consent of the counter Party.
13.3 Binding Effect. The terms, conditions and provisions of
this Agreement and all rights and obligations of each Party hereunder shall
inure to the benefit of and be binding upon that Person and its successors and
permitted assigns. Nothing herein expressed or implied shall give or be
construed to give to any other Person any legal or equitable rights hereunder.
13.4 Amendment. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by all the
Parties.
13.5 Notices. Any notice given under this Agreement shall be
made in writing and shall be deemed to have been duly given or made if delivered
personally, mailed with postage prepaid by registered or certified mail or sent
by courier or facsimile to a Party at its address set forth or provided below.
Any notice so sent shall be deemed to have been given or delivered (a) at the
time that it is personally delivered, (b) within two business days after the
date deposited in the first class mail or one business day after deposit with an
overnight courier if sent by mail or courier or (c) when receipt is
acknowledged, if sent by facsimile. A Party may change its address by giving
notice in writing, stating its new address, to the other Party.
If to Shareholders or Principal Holder:
Xxxx XxXxxxx
1286, Grande Allee
Gatineau (Quebec)
J9H 5C9
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with a copy to:
Xxxxxxxxx et Associes
000, xxxx. xx x'Xxxxxxx, xxxxx 000
Xxxxxxxx (Quebec)
J8T 8A3
Att: Me Xxxxxxx Xxxxxx
If to TFA:
00000, Xx-Xxxxxxx Xxxx., xxxxx 000
Xxxx Xxxxx, Xxxxxxx
00000
Att: Xxxxxx Xxxxxxxxx
with a copy to:
Xxxxxxxx Xxxxxxxxxx
Bureau 1400, 0000, xxxx. Xxxx-Xxxxxxxx Xxxxx
Xxxxxxxx (Xxxxxx)
X0X 0X0
Att: Me Xxxxxx Xxxxxxx
13.6 Fees and Expenses. All reasonable legal fees of the
Shareholders attributable to the transactions contemplated by this Agreement
shall be paid at Closing by TFA.
13.7 Publicity. Except as required by Applicable Law, neither
TFA, the Principal Holder nor any Shareholder shall issue any press release or
otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
Progestic, in the case of a statement or announcement by TFA, or TFA, in the
case of a statement or announcement by the Principal Holder and any Shareholder,
which shall not be unreasonably withheld, conditioned or delayed in either case.
13.8 Entire Agreement. This Agreement, including the Schedules
and Exhibits, together with the confidentiality provisions of the
confidentiality agreement, set forth the entire agreement and understanding of
the Parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between or among the
Parties, both oral and written, relating to the subject matter hereof.
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13.9 Severability. In the event any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without that provision, severance of which shall not affect the validity
or enforceability of any other provision of this Agreement.
13.10 Waiver of Provisions. The waiver of compliance at any
time with any of the provisions, terms or conditions contained in this Agreement
shall not be considered a waiver of the provision, term or condition itself or
of any other provision, term or condition hereof.
13.11 Covenants. The parties agree and covenant to co-operate
fully and provide any certificates, documentation, financial statements and data
for purposes of making any filings or submissions to the regulatory authorities
having jurisdiction in the United States and Canada.
13.12 Captions. The headings and captions in this Agreement
and in the Schedules and Exhibits are for convenience and identification only
and are in no way intended to define, limit or expand the scope and intent of
this Agreement or any provision hereof.
13.13 Counterparts. This Agreement may be executed in separate
counterparts that together will constitute one and the same instrument.
13.14 IN WITNESS WHEREOF, the Parties have caused this
Agreement to be duly executed by the undersigned as of the date first set forth
above.
TOTAL FIRST AID, INC.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxxx
THE SHAREHOLDERS
By: /s/ Xxxx XxXxxxx
--------------------------------------------
Xxxx XxXxxxx
THE PRINCIPAL HOLDER
By: /s/ Xxxx XxXxxxx
--------------------------------------------
Xxxx XxXxxxx
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