EXHIBIT 2.01
ASSET PURCHASE AGREEMENT
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION................................................... 1
1.1 Defined Terms................................................... 1
1.2 Currency........................................................ 12
1.3 Sections and Headings........................................... 12
1.4 Number, Gender and Persons...................................... 12
1.5 Accounting Principles........................................... 12
1.6 Knowledge of Vendor............................................. 13
1.7 Entire Agreement................................................ 13
1.8 Offering Memorandum............................................. 14
1.9 Time of Essence................................................. 14
1.10 Applicable Law.................................................. 14
1.11 Successors and Assigns.......................................... 14
1.12 Amendments and Waivers.......................................... 14
1.13 Schedules and Exhibits.......................................... 15
ARTICLE 2 PURCHASE AND SALE OF PURCHASED ASSETS............................ 17
2.1 Purchased Assets................................................ 17
2.2 Excluded Assets................................................. 19
2.3 Non Transferability............................................. 20
2.4 Purchasers' Post-Closing Assistance............................. 21
2.5 Access to Purchased Assets...................................... 21
2.6 Supplier Claims................................................. 22
2.7 E-mail and Website Query Forwarding During Transition Period.... 22
ARTICLE 3 PURCHASE PRICE................................................... 22
3.1 Purchase Price.................................................. 22
3.2 Payment of Purchase Price....................................... 22
3.3 Determination of Closing Net Receivables........................ 23
3.4 Adjustment of Closing Date Payment.............................. 25
3.5 Allocation of Purchase Price.................................... 25
3.6 ETA Election.................................................... 26
3.7 Transfer Taxes, etc............................................. 26
3.8 Accounts Receivable Election.................................... 26
3.9 Deferred Revenue Obligations.................................... 27
3.10 Non-Competition Agreements...................................... 27
ARTICLE 4 ASSUMPTION OF LIABILITIES........................................ 27
4.1 Assumption of Certain Liabilities by the Purchasers............. 27
4.2 Retained Liabilities............................................ 29
4.3 Product Liability and Warranty Obligations...................... 29
4.4 Payment for Reimbursement of Certain Liabilities................ 31
4.5 Bulk Sales Legislation.......................................... 32
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE VENDOR..................... 33
5.1 Organization.................................................... 33
5.2 Authorization................................................... 33
5.3 No Other Agreements to Purchase................................. 33
5.4 No Violation.................................................... 33
5.5 Sufficiency of Purchased Assets................................. 34
5.6 Title to Personal and Movable Properly.......................... 34
5.7 Real and Immovable Property..................................... 35
5.8 Idem............................................................ 35
5.9 Leased Property................................................. 35
5.10 Inventories and Machinery, Equipment............................ 36
5.11 Accounts Receivable............................................. 36
5.12 Intellectual Property Rights.................................... 36
5.13 Insurance....................................................... 38
5.14 No Expropriation................................................ 38
5.15 Contracts....................................................... 38
5.16 Compliance with Laws; Governmental Authorization; Government
Programs........................................................ 40
5.17 Consents and Approvals.......................................... 40
5.18 Financial Statements............................................ 41
5.19 Books and Records............................................... 41
5.20 Absence of Changes.............................................. 41
5.21 Non Arm's Length Transactions................................... 42
5.22 Taxes........................................................... 43
5.23 Litigation...................................................... 43
5.24 Residency....................................................... 43
5.25 GST/QST Registration............................................ 43
5.26 Environmental................................................... 44
5.27 Customers and Suppliers......................................... 45
5.28 Employee Plans.................................................. 45
5.29 Collective Agreements........................................... 46
5.30 Employees....................................................... 46
5.31 Employee Accruals............................................... 46
5.32 Computer Systems, Etc........................................... 47
5.33 Costs to Complete, Etc.......................................... 47
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE PARENT..................... 47
6.1 Organization.................................................... 48
6.2 Authorization................................................... 48
6.3 No Violation.................................................... 48
6.4 Consents and Approvals.......................................... 48
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................. 48
7.1 Organization.................................................... 49
7.2 Authorization................................................... 49
7.3 No Violation.................................................... 49
7.4 Consents and Approvals.......................................... 49
7.5 Investment Canada............................................... 49
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7.6 GST/QST Registration............................................ 50
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF MDA............................ 50
8.1 Organization.................................................... 50
8.2 Authorization................................................... 50
8.3 No Violation.................................................... 50
8.4 Consents and Approvals.......................................... 51
ARTICLE 9 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES............ 51
9.1 Survival of Covenants, Representations and Warranties........... 51
ARTICLE 10 COVENANTS....................................................... 52
10.1 Access to Purchased Businesses and Purchased Assets............. 52
10.2 Delivery of Books and Records................................... 53
10.3 Conduct of Purchased Businesses and Other Matters Prior to
Closing......................................................... 53
10.4 Delivery of Conveyancing Documents.............................. 55
10.5 Delivery of Vendor's Closing Documentation...................... 55
10.6 Delivery of Purchasers' Closing Documentation................... 55
10.7 Employees....................................................... 55
10.8 Employee Plans.................................................. 56
10.9 Non-Pension Benefit Plans....................................... 57
10.10 Pension Plans................................................... 58
10.11 Post Closing Receipts........................................... 62
10.12 EMS Name........................................................ 62
10.13 Vendor Credit Support........................................... 62
10.14 MDA Guarantee................................................... 63
10.15 Parent Guarantee................................................ 63
10.16 Non-Solicitation................................................ 63
ARTICLE 11 CONDITIONS OF CLOSING........................................... 64
11.1 Conditions of Closing in Favour of the Purchasers............... 64
11.2 Conditions of Closing in Favour of the Vendor................... 66
11.3 Extension of Closing Date....................................... 68
ARTICLE 12 CLOSING DATE AND TRANSFER OF POSSESSION......................... 68
12.1 Transfer........................................................ 68
12.2 Place of Closing................................................ 68
12.3 Further Assurances.............................................. 69
12.4 Risk of Loss.................................................... 69
ARTICLE 13 INDEMNIFICATION................................................. 69
13.1 Indemnification by the Vendor................................... 69
13.2 Indemnification by the Purchasers............................... 70
13.3 Threshold and Limitations....................................... 70
13.4 Notice of Claim................................................. 72
13.5 Direct Claims................................................... 72
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13.6 Third Party Claims.............................................. 72
13.7 Settlement of Third Party Claims................................ 73
13.8 Co-operation.................................................... 73
13.9 Exclusivity..................................................... 74
ARTICLE 14 MISCELLANEOUS................................................... 74
14.1 Notices......................................................... 74
14.2 Commissions, etc................................................ 75
14.3 Consultation.................................................... 76
14.4 Disclosure...................................................... 76
14.5 Confidentiality................................................. 76
14.6 Assignment by Purchaser......................................... 76
14.7 Reasonable Best Efforts......................................... 77
14.8 Counterparts.................................................... 77
THIS AGREEMENT made the 28th day of October, 2005,
BETWEEN:
XXXXXXXXX, XXXXXXXXX AND ASSOCIATES LTD., a corporation existing under
the laws of Canada,
(hereinafter called "MDA"),
6457258 CANADA LTD., a corporation existing under the laws of Canada,
(hereinafter called the "Real Estate Purchaser")
MDA SPACE INC., a corporation incorporated under the laws of Canada,
(hereinafter called "Space Purchaser")
6457266 CANADA LTD., a corporation incorporated under the laws of
Canada,
(hereinafter called "Electronics Purchaser")
EMS TECHNOLOGIES CANADA, LTD., a corporation existing under the laws
of Canada,
(hereinafter called the "Vendor")
- and -
EMS TECHNOLOGIES, INC., a corporation existing under the laws of the
State of Georgia,
(hereinafter called "Parent")
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants,
representations, warranties and indemnities of the parties herein contained and
for other good and valuable consideration (the receipt and sufficiency of which
are acknowledged by each party), the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms
For the purposes of this Agreement, unless the context otherwise requires, the
following terms shall have the respective meanings specified or referred to
below and grammatical variations of such terms shall have corresponding
meanings:
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(a) "Act" means the Canada Business Corporations Act as in effect on the
date hereof;
(b) "Affiliate" has the meaning given to that term in the Act;
(c) "Agreement" means this Asset Purchase Agreement including all
Schedules, Exhibits and Appendices to this Asset Purchase Agreement
and all amendments made in writing by the parties hereto, "herein" and
similar expressions mean and refer to this Agreement and not to any
particular Article, Section, subsection, Schedule, Exhibit or
Appendix;
(d) "Annual Financial Statements" means the unconsolidated unaudited
financial statements of the Purchased Businesses as at and for the
financial year ended December 31, 2004, a copy of which is annexed
hereto as Schedule 1;
(e) "APBO" means the estimated accumulated post retirement benefit
obligations under the Retirement Plan;
(f) "Applicable Law" means:
(i) any domestic or foreign statute, law (including common and civil
law), code, ordinance or regulation;
(ii) any judgment, order, writ, injunction, decision, ruling, decree
or award; or
(iii) any Licence;
(iv) of any Governmental Authority, to the extent only that the same
is legally binding on the person referred to in the context in
which the term is used, and for greater certainty includes the
Tax Act in respect of the Employee Plans that purport to be
qualified for a particular type of plan thereunder;
(g) "Associate" has the meaning given to that term in the Act;
(h) "Assumed Contracts" means all Contracts, other than Completed
Contracts, relating to the Purchased Businesses including Operating
Contracts, leases of personal and immovable property, orders or
contracts for the provision of goods and services, distribution and
agency agreements, employment agreements for the Employees, Collective
Agreements to the extent provided hereunder;
(i) "Assumed Liabilities" has the meaning set out in Section 4.1;
(j) "Benefit Plans" has the meaning given to that term in Section 10.9;
(k) "Broadband Satellite Access Technology" means the Technology used in
the Space Business with respect to space-based applications and used
in the
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Vendor's Satellite Networks Division with respect to terrestrial
applications, which is further described in and is the subject of the
BSAT License Agreement, which agreement is one of the Other
Agreements;
(l) "BSAT License Agreement" means the agreement respecting the Vendor's
license to MDA of the Broadband Satellite Access Technology, which is
attached hereto as Exhibit V;
(m) "Business Day" means any day, other than a Saturday or a Sunday or
statutory holiday in any of Toronto, Ontario, Montreal, Quebec or
Vancouver, B.C.;
(n) "Cash on Hand" means cash on hand or in banks or other depositories,
term or time deposits and similar cash items including all accrued
interest thereon;
(o) "Claim" means any claim, action, suit or other proceeding, whether at
law or in equity, before or by any federal, provincial, state,
municipal or other governmental department, court, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before or
by any arbitrator, arbitration board or mediator;
(p) "Closing" means the completion of the purchase and sale of the
Purchased Assets contemplated by this Agreement which Closing shall be
effective as of the opening of business on the Closing Date;
(q) "Closing Date" means, subject to Section 11.3, the later of (i) two
Business Days following the satisfaction of the closing conditions
identified in Sections 11.1(c), (d), (e) and (j) and 11.2(c), (d), (e)
and (h); (ii) the Termination Date; or, (iii) such other date as the
Vendor and MDA may mutually determine in writing;
(r) "Closing Date Payment" has the meaning set out in Section 3.2;
(s) "Closing Net Receivables" has the meaning set out in subsection
3.3(c);
(t) "Closing Net Receivables Calculation Statement" has the meaning set
out in subsection 3.3(a);
(u) "Collective Agreements" means the collective bargaining agreements
binding the Vendor in connection with employees of the Purchased
Businesses all as listed and described in Schedule 8;
(v) "ComDev" means COMDEV International Ltd., a company incorporated under
the laws of Canada;
(w) "Completed Contracts" means any customer Contract of the Purchased
Businesses under which as at Closing all delivery and service
obligations (other than warranty obligations) of the Vendor have been
satisfied or completed;
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(x) "Computer Systems Software" has the meaning set forth in Section 5.32;
(y) "Computer Systems Hardware" has the meaning as set forth in Section
5.32;
(z) "Contract" means any agreement, indenture, contract, lease, deed of
trust, licence, option, instrument or other commitment, whether
written or oral and shall include any open invoice, tender, bid, quote
or order which has been accepted or which remains open for acceptance
but for greater certainty does not include any Employee Plans;
(aa) "Credit Support" has the meaning set out in Section 10.13;
(bb) "Customer-Owned Assets" has the meaning set forth in Section 5.5;
(cc) "Division Date" has the meaning given that term in Section
10.10(a)(i);
(dd) "Electronics Business" means the Space Science and Optics business
presently carried on by the Vendor at the Ottawa Premises and managed
from the Ste-Xxxx Premises and the Search and Rescue Transponder
product line presently developed or manufactured by the Vendor at the
Ste-Xxxx Premises;
(ee) "Electronics Employees" mean those Employees of the Vendor currently
employed by the Electronics Business and those other Employees of the
Vendor, if any, to be employed by Electronics Purchaser, as agreed to
by ComDev and MDA written notice of which will be given to the Vendor,
prior to the Closing Date;
(ff) "Employee Plans" has the meaning set out in Section 5.28;
(gg) "Employees" means all of those non unionized and unionized employees
of the Vendor who are employed in the Purchased Businesses immediately
prior to the Time of Closing, excluding the Excluded Employees, but
including part time and occasional employees, unionized employees who
are laid off or are on disability, the LTD Employees (as defined in
Section 10.7), employees receiving short-term disability payments or
benefits and employees on sick leave, maternity leave or parental
leave on the Closing Date, whether they have a right to return to work
under Contract or Applicable Law;
(hh) "EMS IP" means the Intellectual Property Rights and the Technology
owned by the Vendor, and currently or previously used in or necessary
for the operation of, the Purchased Businesses immediately prior to
the Closing Date (other than Intellectual Property Rights not
currently used in or necessary for the Purchased Businesses which is
currently used in other businesses of the Vendor);
(ii) "Encumbrance" means any encumbrance, lien, charge, hypothec, priority,
pledge, mortgage, title retention agreement, security interest of any
nature, adverse claim, exception, reservation, easement, right of
occupation, any matter capable of registration against title or any
Contract to create any of the foregoing
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but does not include contractual or legal restrictions to transfer
assets (including contractual rights) without the consent of a third
party or Governmental Authority;
(jj) "Environmental Laws" has the meaning set out in subsection 5.26(a);
(kk) "ETA" means Part IX of the Excise Tax Act (Canada), as amended from
time to time;
(ll) "Excluded Assets" has the meaning set out in Section 2.2;
(mm) "Excluded Employees" means Xxxx X. Xxxxx and up to 6 Employees to be
designated by MDA in writing to the Vendor not less than 2 Business
Days prior to the Closing Date and for the greater certainty any
SatNet Employees;
(nn) "Excluded Liabilities" has the meaning set out in Section 4.2;
(oo) "Expert" has the meaning set out in subsection 3.3(d);
(pp) "Export Laws" has the meaning set out in Section 5.16;
(qq) "Financial Statements" means the Annual Financial Statements and the
Interim Financial Statements;
(rr) "Governmental Authority" means any domestic or foreign government,
whether federal, provincial, state, territorial, local, regional,
municipal, or other political jurisdiction, and any agency, authority,
instrumentality, court, tribunal, board, commission, bureau,
arbitrator, arbitration tribunal or other tribunal, or any quasi
governmental or other entity, insofar as it exercises a legislative,
judicial, regulatory, administrative, expropriation or taxing power or
function of or pertaining to government;
(ss) "Grievance Claim" means those grievances identified in Section 1.1(ss)
of Schedule 31;
(tt) "Grievance Claim Liabilities" has the meaning set out in Section
4.1(h);
(uu) "GST" means all taxes payable under the ETA or under any provincial
legislation similar to the ETA, and any reference to a specific
provision of the ETA or any such provincial legislation shall refer to
any successor provision thereto of like or similar effect;
(vv) "Hazardous Substances" has the meaning set out in subsection
5.26(a)(i);
(ww) "Holdings" means EMS Investment Holdings, Inc., a company incorporated
under the laws of the State of Georgia;
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(xx) "Holdings Shares" means the 110 shares of common stock and 990
preferred shares of Holdings that are issued and outstanding;
(yy) "Indemnified Party" has the meaning set out in Section 13.4;
(zz) "Indemnifying Party" has the meaning set out in Section 13.4;
(aaa) "Intellectual Property Rights" means any and all rights, whether
registered or unregistered, existing from time to time in any
jurisdiction throughout the world under patent law, copyright law,
moral rights law, trade-secret law, semiconductor chip protection law,
trademark law, unfair competition law, or other similar laws or rights
throughout the world in, to, or arising out of, or associated with any
of the following: (i) trade secrets, proprietary information, Know How
and Technology, including ideas, research and development, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, drawing family trees, source
control documents and other documentation, specifications, pricing and
cost information, and business and marketing plans and proposals that
constitute trade secrets under Applicable Law (collectively, "Trade
Secrets"); (ii) works of authorship, copyrights, mask works, copyright
and mask work registrations and applications (collectively,
"Copyrights"); (iii) industrial designs and any registrations and
applications therefor (collectively, "Industrial Designs"); (iv) trade
names, logos, trademarks and service marks; trademark and service xxxx
registrations and applications (collectively, "Trademarks"); (v)
patents, applications for patents wherever registered (the "Patents")
(vi) Computer Software, databases and data collections (including
knowledge databases, customer lists and customer databases)
(collectively, "Software"); and (vii) translations, adaptations,
derivative works, and combinations thereof;
(bbb) "Interim Financial Statements" means the unconsolidated unaudited
financial statements of the Purchased Businesses as at and for the 8
month period ended July 2, 2005, a copy of which is annexed hereto as
Schedule 2;
(ccc) "Inventory" has the meaning set out in subsection 2.1(d);
(ddd) "Know-How" means technical knowledge, engineering knowledge,
unpatentable inventions, trade secrets, manufacturing secrets, secret
processes, formulae, manufacturing procedures, methods, data and
current and accumulated experience resulting from scientific research,
practical experience and otherwise that are not fixed in any tangible
medium of expression;
(eee) "Labour Code" means the Labour Code R.S.Q, chapter C-27, as amended
from time to time;
(fff) "Leased Property" has the meaning set out in Section 5.7;
(ggg) "Leases" has the meaning set out in Section 5.9;
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(hhh) "Licences" has the meaning set out in Section 5.16;
(iii) "Licensed IP" means the Intellectual Property Rights currently
licensed to the Vendor from third parties, and currently or previously
used in or necessary for, (other than Intellectual Property Rights not
currently used in or necessary for the Purchased Businesses which is
currently used in other businesses of the Vendor) the operation of the
Purchased Businesses immediately prior to the Closing Date;
(jjj) "Losses" means, in respect of any matter, all claims, demands,
proceedings, losses, damages, liabilities, deficiencies, costs and
expenses (including, without limitation, all third party related costs
including but not limited to consulting, transportation, handling and
all legal and other professional fees and disbursements, interest,
penalties and amounts paid in settlement) arising directly as a
consequence of such matter less in all cases any insurance received or
receivable in respect thereof;
(kkk) "Material Adverse Effect" means any change or effect that is
materially adverse to the financial condition, properties, assets,
operations, or business of the Purchased Businesses taken as a whole
which could reasonably be expected to reduce the fair market value of
the Purchased Businesses by $400,000 or more, but excluding (i)
changes or effects affecting the satellite systems industry as a whole
or resulting from general economic and market conditions, (ii) any
delay, failure or inability by the Vendor to acquire new customers or
prospective orders, including, without limiting the generality of the
foregoing, the failure or inability to execute contracts and
agreements currently under discussion or negotiation, or (iii) any
loss of customers due to a pre-existing competitive relationship
between the customer and MDA or a Purchaser;
(lll) "Material Contracts" has the meaning set out in Section 5.15;
(mmm) "ORST" means all taxes payable under the Retail Sales Tax Act Ontario
and any reference to any specific provision of the Retail Sales Tax
Act Ontario shall refer to any successor provision thereto of like or
similar effect;
(nnn) "Operating Contracts" mean any customer Contract of the Purchased
Businesses under which all delivery and service obligations have not
been completed or satisfied;
(ooo) "Other Agreements" means the Release, the Non-Competition Agreement,
the Confidentiality Agreement referred to in Section 14.5, the
Amendment to the Radarsat-2 Territorial License Agreement and
Sub-License Agreement, the Amendment to the Radarsat-2 Subcontract,
the Ottawa Premises Sublease and all documents, certificates and
instruments delivered by any of the parties at Closing;
(ppp) "Other IP" means the Intellectual Property Rights and Technology
(other than EMS IP and Licensed IP) developed by the Vendor for any
third party or for the
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Purchased Businesses and which may be used by the Vendor in the
Purchased Businesses;
(qqq) "Ottawa Premises" means the portion of the premises located on the
2nd floor at 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx as demised and set
out in the Ottawa Premises Sublease;
(rrr) "Ottawa Premises Sublease" means the sub-lease by the Vendor to the
Electronics Purchaser for the Ottawa Premises substantially upon the
terms set out in Exhibit IV;
(sss) "Pension Plans" means the following pension plans of the Vendor: (1)
EMS Technologies Canada, Ltd. Pension Plan for Employees Represented
by C.A.W. Local 188; (2) EMS Technologies Canada, Ltd. Pension Plan
for Employees Represented by C.E.P. Local 508; (3) EMS Technologies
Canada, Ltd. Pension Plan for Quebec Non-Represented Employees; and
(4) EMS Technologies Canada, Ltd. Pension Plan for Employees
Represented by the Space Systems Engineers and Scientists Association;
(ttt) "Pension Regulator" means each Governmental Authority with
jurisdiction over the applicable Pension Plan;
(uuu) "Permitted Encumbrances" means:
(i) servitudes, easements, restrictions, rights of way and other
similar rights in real property or any interest therein, provided
the same are not of such nature as to materially adversely affect
the use of the property subject thereto;
(ii) undetermined or inchoate liens, charges and privileges incidental
to current construction or current operations for amounts which
are not due or delinquent;
(iii) statutory liens, charges, adverse claims, security interests or
encumbrances of any nature whatsoever claimed or held by any
governmental authority that have not at the time been filed or
registered against the title to the asset or served upon the
Vendor pursuant to law or that relate to obligations not due or
delinquent;
(iv) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any lease, and liens or
rights reserved in any lease for rent or for compliance with the
terms of such lease;
(v) security given in the ordinary course of the Purchased Businesses
to any public utility, municipality or government or to any
statutory or public authority in connection with the operations
of the Purchased Businesses, other than security for borrowed
money;
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(vi) the reservations in any original grants from the Crown of any
real property or interest therein and statutory exceptions to
title, which do not materially detract from the value of the real
property concerned or materially impair its use in the operation
of the Purchased Business; and
(vii) the Encumbrances described in Schedule 13;
(vvv) "PIPEDA" means the Personal Information Protection and Electronics
Document Act (Canada);
(www) "Prime Rate" means the annual variable rate of interest quoted or
published from time to time by Royal Bank of Canada (Main Branch) at
its main branch in Toronto, Ontario as the "prime rate" of interest
charged by it for Canadian dollar commercial loans made in Canada and
for the purposes of this Agreement the "Prime Rate" shall vary,
upwards or downwards, as the case may be, at the same time and in the
same amount as the said "prime rate" so varies;
(xxx) "Pro Forma Net Receivables Statement" has the meaning set out in
Section 3.3(a);
(yyy) "Purchase Price" has the meaning set out in Section 3.1;
(zzz) "Purchased Businesses" means the Space Business and the Electronics
Business taken together and "Purchased Business" means any of the two
separately;
(aaaa) "Purchased Assets" has the meaning set out in Section 2.1;
(bbbb) "Purchasers" means Real Estate Purchaser, Electronics Purchaser and
Space Purchaser, collectively and "Purchaser" means any one of them;
(cccc) "PWGCS" means Public Works Government Services Canada;
(dddd) "QST" means all taxes payable under the Act respecting the Quebec
Sales Tax and any reference to any specific provision of the Act
respecting the Quebec Sales Tax shall refer to any successor provision
thereto of like or similar effect;
(eeee) "Radarsat-2 Subcontract" means the Radarsat-2 SAR Payload
Subcontract agreement #SC28682RC dated September 1, 1998, as amended;
(ffff) "Radarsat-2 Subcontract In-Orbit Incentive" means those payments
specified in paragraph 6.7.1.1 of the Radarsat-2 Subcontract;
(gggg) "Radarsat-2 Territorial License Agreement" means the Radarsat-2
territorial license agreement dated May 2, 2002 between the Vendor and
MDA;
(hhhh) "Radarsat-2 Territorial Sub-License Agreement" means the Radarsat-2
territorial sublicense agreement dated May 2, 2002 between EMS,
RADARSAT International Inc. and MDA;
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(iiii) "Radarsat-2 Warranties" means the obligations of the Vendor pursuant
to (i) Section 12.4 of the Radarsat-2 Subcontract; and (ii) pursuant
to Section 12.5(d) of the Radarsat-2 Subcontract to the extent as set
out in Section 12.4 of the Radarsat-2 Subcontract with respect to work
performed or acts or omissions taken by or on behalf of the Vendor
prior to Closing;
(jjjj) "Real Property" means the Ste-Xxxx Premises, the legal description
of which is set forth on Schedule 3;
(kkkk) "Receivables" means all current trade receivables, current unbilled
receivables and deferred revenue of the Purchased Businesses as at the
Closing Date but for greater certainty excluding any long-term
accounts receivables or long-term unbilled receivables;
(llll) "Retirement Plan" means the Post-Retirement Benefits Plan pursuant
to which the Vendor provides employees with post retirement benefits;
(mmmm) "Retirement Plan Participants" means all persons who are entitled to
receive benefits, whether now or in the future, under the Retirement
Plan including Employees, Excluded Employees and persons who were
formerly employees of the Purchased Businesses but excluding any
SatNet Employees and SatNet Former Employees;
(nnnn) "SatNet Employees" means the active and disabled employees of the
Satellite Networks Division of the Vendor, including employees on
lay-off with recall rights under collective agreements applicable to
such employees, as at the Division Date;
(oooo) "SatNet Former Employees" means, as at the Division Date, the former
employees of the Satellite Networks Division of the Vendor, including
retirees, and, if applicable, surviving spouses of such employees, who
terminated employment with the Vendor on or after April 11, 2004 and
who immediately prior to the Division Date continued to have rights
under the Pension Plans;
(pppp) "SkyBridge" means SkyBridge Limited Partnership, a limited
partnership formed under the laws of the State of Delaware;
(qqqq) "SkyBridge LPA" means the Third Amended and Restated Agreement of
Limited Partnership of SkyBridge dated December 20, 1999 as the same
may be amended, replaced or restated from time to time;
(rrrr) "SkyBridge Units" means the units in SkyBridge owned by Holdings;
(ssss) "Space Business" means the business presently carried on by the
Vendor through its Space & Technology/Montreal division, which
business is carried on at or from the Vendor's Ste-Xxxx Premises and
consisting primarily of the design, manufacture and supply of space
systems, antennas and electronic
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products including, components for civil, commercial and defence
satellites other than the Electronics Business;
(tttt) "Statutory Plans" means statutory benefit plans which the Vendor is
required to participate in or comply with, including the Canada and
Quebec Pension Plans and plans administered pursuant to applicable
health tax, workplace safety insurance and employment insurance
legislation;
(uuuu) "Ste-Xxxx Premises" means the real property and buildings known
municipally as 00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxx, X0X 0X0;
(vvvv) "Supplier Claims" has the meaning set out in Section 2.2(i);
(wwww) "Tax Act" or any reference to a specific provision thereof means the
Income Tax Act (Canada);
(xxxx) "Taxes" means taxes, duties, fees, premiums, assessments, imposts,
levies and other charges of any kind whatsoever imposed by any
Governmental Authority, including all interest, penalties, fines,
additions to tax or other additional amounts imposed in respect
thereof (including those levied on, or measured by, or referred to as,
income, gross receipts, profits, capital, transfer, land transfer,
sales, goods and services, harmonized sales, use, valued added,
excise, stamp, withholding, premium, business, franchising, property,
employer health, payroll, employment, health, social services,
education and social security taxes, surtaxes, customs duties and
import and export taxes, licence, franchise and registration fees and
employment insurance, health insurance and Xxxxxx, Xxxxxx, Xxxxxxx and
other government pension plan premiums or contributions), and "Tax"
has a corresponding meaning;
(yyyy) "Tax Return" means all returns, declarations, designations, forms,
schedules, reports and other documents of every nature whatsoever
required to be filed with any Governmental Authority with respect to
any Taxes;
(zzzz) "Technology" means all tangible embodiments of Intellectual Property
Rights, technical information, business information and software,
systems, source control documents, files, records, databases, data,
drawings, artwork, designs, displays, audio-visual works, devices,
hardware, apparatuses, documentation, manuals, specifications, flow
charts, hardware models, dedicated test systems, supplier lists,
equipment lists, electronic and other data, and other tangible
embodiments of, or materials describing or disclosing, technical or
business data, concepts, recipes, formulas, operating procedures,
Know-How, show-how, techniques, Trade Secrets, inventions (whether
patentable or unpatentable), algorithms, formulae, processes,
routines, databases, works of authorship and the like;
(aaaaa) "Termination Date" means December 31, 2005;
12
(bbbbb) "Time of Closing" means 10:00 a.m. (Toronto time) on the Closing
Date, or such other time on the Closing Date as the Vendor and MDA may
mutually determine in writing;
(ccccc) "Trade Payables" means all current accounts payable and current
accrued expenses for the Purchased Businesses as at the Closing Date
but for greater certainty excluding any long-term payables and any
payables with respect to any Excluded Liabilities;
(ddddd) "Transferred Employees" has the meaning set out in Section 10.7(a);
and
(eeeee) "Vendor Group" has the meaning set out in Section 10.13.
1.2 Currency
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in Canadian funds.
1.3 Sections and Headings
The division of this Agreement into Articles, Sections and subsections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to an Article, Section, subsection or Schedule or Exhibit
refers to the specified Article, Section or subsection of or Schedule or Exhibit
to this Agreement.
1.4 Number, Gender and Persons
In this Agreement, words importing the singular number only shall include the
plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind whatsoever.
1.5 Accounting Principles
Any reference in this Agreement to generally accepted accounting principles
refers to generally accepted accounting principles that have been established in
the United States of America applied on a basis consistent with those issued in
the Annual Financial Statements. It is understood that the financial statements
of the Purchased Businesses have been presented on the basis that the Purchased
Businesses are a "discontinued operation" as defined under generally accepted
accounting principles that have been established in the United States of America
and accordingly, among other things, (i) depreciation and amortization are not
expensed; (ii) income tax expense, as reported in the Annual Financial
Statements, represents only the Purchased Businesses' estimated pro-rata share
of the Vendor's large corporation tax (provincial and federal), which is based
on statutorily defined capital and not on taxable income/(loss) and (iii) the
Annual Financial Statements do not include the effect of any income tax expense
or benefit based on the taxable income/(loss) of the Purchased Businesses,
because Vendor has retained all tax benefits or liabilities of the Purchased
Businesses through the Closing Date.
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1.6 Knowledge of Vendor
Where any representation or warranty contained in this Agreement is expressly
qualified by reference to the knowledge of the Vendor or words to similar
effect, it shall be deemed to refer solely to the actual knowledge of the
following individuals, in all cases after such individuals have made due inquiry
of their files and their immediate subordinates.
Xxxxxx X. Xxxxxx
Xxx X. Xxxxxx
Xxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxxxxxx
Xxxxxxxx Xxxxxxx
Xxxx X. Xxxxx
Xxxxxxx Xxx
Xxxxxx Xxxxx
Xxxx Xxxxxx
Xxxx XxXxxxxx
Xxxxx XxxXxx
Xxxx Xxxxxxx
1.7 Entire Agreement
This Agreement together with the Other Agreements constitute the entire
agreement between the Parties pertaining to the subject matter of this Agreement
and the Other Agreements and supersede all prior correspondence, agreements,
negotiations, discussions and understandings, written or oral except to the
extent that any of the Other Agreements is an amendment to an existing
agreement. Except as specifically set out in this Agreement or the Other
Agreements, there are no representations, warranties, conditions or other
agreements or acknowledgements, whether direct or collateral, express or
implied, written or oral, statutory or otherwise (including without limitation
representations or warranties regarding merchantability, suitability, fitness
for a particular purpose or absence of defects, latent or patent), that form
part of or affect this Agreement or the Other Agreements or which induced any
party to enter into this Agreement or the Other Agreements.
No reliance is placed on any representation, warranty, opinion, advice or
assertion of fact made either prior to, concurrently with, or after entering
into, this Agreement or any Other Agreement,
14
or any amendment or supplement thereto, by any party to this Agreement or any
Other Agreement or its representatives, to any other party or its
representatives, except to the extent the representation, warranty, opinion,
advice or assertion of fact has been reduced to writing and included as a term
in this Agreement or that Other Agreement, and none of the parties to this
Agreement or any Other Agreement has been induced to enter into this Agreement
or any Other Agreement or any amendment or supplement by reason of any such
representation, warranty, opinion, advice or assertion of fact. There shall be
no liability, either in tort or in contract, assessed in relation to the
representation, warranty, opinion, advice or assertion of fact, except as
contemplated in this Agreement.
1.8 Offering Memorandum
The representations and warranties contained in this Agreement supersede in its
entirety the Confidential Information Memorandum (the "Memorandum") provided to
MDA by Xxxxxxx & Company, Inc. The Memorandum is not intended to be an "offering
memorandum" within the meaning of Applicable Laws and neither MDA nor any
Purchaser shall have any remedy for any misrepresentation or omission therein,
whether or not material, except to the extent that the state of facts giving
rise to such misrepresentation or omission also constitutes a breach of this
Agreement in which case MDA's and the Purchasers' sole remedies against the
Vendor or the Parent shall be the remedies available under this Agreement.
1.9 Time of Essence
Time shall be of the essence of this Agreement.
1.10 Applicable Law
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties shall be governed by,
the laws of the Province of British Columbia and the federal laws of Canada
applicable therein, and each party irrevocably and unconditionally submits to
the non exclusive jurisdiction of the courts of such province and all courts
competent to hear appeals therefrom.
1.11 Successors and Assigns
This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and their respective successors and permitted
assigns. Subject to Section 14.6, no party may assign any of its rights or
obligations hereunder without the prior written consent of in the case of the
Vendor or the Parent, MDA, and in the case of the Purchasers or MDA, the Vendor,
except that the Electronics Purchaser and MDA may assign their rights and their
obligations relating to the Electronics Purchaser to ComDev.
1.12 Amendments and Waivers
No amendment or waiver of any provision of this Agreement shall be binding on
any party unless consented to in writing by such party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise provided.
15
1.13 Schedules and Exhibits
The following Schedules and Exhibits are attached to and form part of this
Agreement:
Schedule 1 - Annual Financial Statements
Schedule 2 - Interim Financial Statements - July 2/05
Schedule 3 - Owned Real or Immoveable Property
Schedule 4 - Machinery and Equipment
Schedule 5 - Vehicles
Schedule 6 - Customer Owned Assets
Schedule 7 - Certain Contract Defaults
Schedule 8 - Employee Matters
Schedule 9 - Licences and Permits
Schedule 10 - Intellectual Property Rights
Schedule 11 - Allocation of Purchase Price
Schedule 12 - Location of Assets
Schedule 13 - Permitted Encumbrances
Schedule 14 - Insurance Policies
Schedule 15 - Legal and Regulatory Proceedings
Schedule 16 - Regulatory Consents
Schedule 17 - Third Party Consents
Schedule 18 - Environmental Matters
Schedule 19 - Major Customers, Suppliers and Strategic Partners
Schedule 20 - Excluded Assets
Schedule 21 - Material Changes
Schedule 22 - Contract Consents
Schedule 23 - Exceptions to Generally Accepted Accounting Principles
16
Schedule 24 - Pro Forma Net Receivables Statement
Schedule 25 - Credit Support
Schedule 26 - Exceptions to Compliance with Laws
Schedule 27 - Non-Arm's Length Contracts
Schedule 28 Purchasers Government Consents
Schedule 29 - Vendor Government Consents
Schedule 30 - Radarsat-2 - Payload Delivery Matters
Schedule 31 - Grievance Claim Liabilities (4.1(h)) - listing employees
Schedule 32 - Material Contracts
Schedule 33 - Employees
Schedule 34 - Computer Systems Hardware and Software, Etc.
Schedule 35 - Pension Plan Funding Position, etc.
Schedule 36 - Claims Excluded from Supplier Claims
Schedule 37 - Estimated Cost to Complete Report
(June 30/05 to September 30/05)
Schedule 38 - Permitted Encumbrances to be Released
Exhibit I - Non-Competition Agreement
Exhibit II - Release re Radarsat-2
Exhibit III - Assignment and Amendment Agreements re Radarsat-2
Territorial License and Sub-Sublicense (3)
Exhibit IV - Terms of Ottawa Premises Sublease
Exhibit V - BSAT License
Exhibit VI - Amendment to Radarsat-2 Subcontract
Disclosure of information on any Schedule shall be deemed to be disclosure of
such information on all other relevant Schedules provided such information
clearly identifies the nature of the information in a manner that its relevance
to such other schedule(s) would be apparent to a reader thereof. Inclusion of
specific information on any Schedule shall not constitute or be
17
deemed to constitute any admission that such information is material or is
required to be so disclosed.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 Purchased Assets
Subject to the provisions of this Agreement, the Vendor agrees to sell, assign
and transfer to the Purchasers and the Purchasers agree to purchase from the
Vendor, effective as of the Closing, all right, title and interest of the Vendor
in and to all of the property and assets used in connection with, and necessary
for, the Purchased Businesses (other than the Excluded Assets), whether real or
personal, tangible or intangible, of every kind and description and wheresoever
situated, as a going concern (collectively, the "Purchased Assets"), including
without limitation:
(a) Real Property. All real or immoveable property, together with the
buildings, structures, improvements and appurtenances situate thereon
including, without limitation, the Real Property described in Schedule
3;
(b) Buildings, Machinery and Equipment. All buildings, structures,
machinery, equipment, fixtures, furniture, furnishings, parts, tooling
moulds, dies, jigs or patterns and other fixed assets, including,
without limitation, the machinery and equipment described in Schedule
4;
(c) Vehicles. All trucks, cars and other vehicles (owned or leased),
including, without limitation, the vehicles described in Schedule 5;
(d) Inventories. All inventories, including, without limitation, raw
materials, work in process, finished goods and replacement parts
(collectively, the "Inventory");
(e) Accounts Receivable. All accounts receivable, trade accounts, notes
receivable, book debts and other debts due or accruing due to the
Vendor and the benefit of all security for such accounts, notes and
debts, including without limitation the Radarsat-2 Subcontract
In-Orbit Incentive and the receivable from MDA;
(f) Prepaid Expenses. All prepaid expenses of the Purchased Businesses
(other than those related to the Excluded Assets);
(g) Contracts. All rights and benefits under the Assumed Contracts and all
rights and benefits under all Completed Contracts;
(h) Licences and Permits. All Licences used in the Purchased Businesses to
the extent that they may be transferred with or without consent to the
extent provided hereunder, including to the extent so transferable,
all export permits and licenses and those described in Schedule 9;
(i) Intellectual Property Rights. All EMS IP and all other intellectual
property licensed from third parties or used in the Purchased
Businesses, immediately
18
prior to the Closing Date (excluding the Broadband Satellite Access
Technology, licensed to the Space Purchaser under the BSAT License
Agreement) and all Other IP and Licensed IP to the extent of the
Vendor's rights in such assets;
(j) Computer Systems Hardware and Computer Software. All Computer Systems
Hardware, and Computer Software including all rights under licences
and other agreements or instruments relating thereto, subject to
Section 2.3(a);
(k) Books and Records. All books of account, Tax records, personnel
records, sales and purchase records, inventory records, customer and
supplier lists, lists of potential customers, referral sources,
research and development reports and records, price lists and
catalogues, sales literature and advertising material, production
reports and records, manufacturing data, equipment logs, operating
guidelines and manuals, employee manuals, business reports, plans and
projections and all other documents, files, correspondence and other
information (whether in writing, printed, electronic or computer print
out form) used by the Purchased Businesses but excluding any such
books, records and lists prepared in connection with this transaction
or any other proposed sale of the Purchased Businesses;
(l) Attorney Work Product. All notes, memoranda, correspondence or similar
material in the possession of the Vendor reflecting the legal
conclusions, recommendations or work product of lawyers for the Vendor
or the Parent in respect of active files to the extent the same
relates to or arises out of the Purchased Assets, the Assumed
Liabilities or any Claims in respect thereof including any opinions or
advice on any Intellectual Property Rights (other than attorney work
produced and prepared in connection with this transaction or any other
proposed sale of the Purchased Businesses or in connection with
disputes involving MDA);
(m) Pension Assets. All rights of the Vendor, if any, to (i) amounts held
under any Pension Plans which are in excess of the amounts required at
Closing for the beneficiaries under the Pension Plans and (ii) all
surpluses under the Pension Plans except as provided in Section 10.10;
and
(n) Goodwill. All goodwill of the Purchased Businesses, together with the
exclusive right for the Purchasers to represent themselves, respecting
carrying on the applicable Purchased Business in succession to the
Vendor and the right to use any words indicating that the applicable
Purchased Business is carried on (subject to Section 10.15 hereof).
Prior to the Closing, MDA and the Vendor shall determine a division of the
Purchased Assets as set forth in (b), (c), (d), (e), (f), (g), (h), (i), (j),
(k), (l), (m) and (n) above between those to be purchased by Space Purchaser and
those to be purchased by Electronics Purchaser. The Real Property and the items
described in (a) will be purchased by the Real Property Purchaser. The Space
Purchaser will purchase the item in (m).
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2.2 Excluded Assets
Notwithstanding Section 2.1, the Purchased Assets shall not include any of the
following property and assets (collectively, the "Excluded Assets"):
(a) all Cash on Hand;
(b) all liabilities and obligations owing by any other division of the
Vendor or of any of its Affiliates to the Purchased Businesses
existing, accrued or accruing due at the Time of Closing for borrowed
money;
(c) all Tax instalments paid by the Vendor and the right to receive any
tax credit, rebate or any refund of Taxes paid by the Vendor accrued
or paid in respect of any period preceding the Closing including,
without limitation, any tax credit (including investment tax credits
and Quebec labour tax credits) or any manufacturing and processing
profits tax reduction or refund;
(d) all rights of the Vendor to use the name "EMS" or "EMS Technologies"
or any word or name containing such phrases or words (including
without limitation, all logos, trade or brand names, business names,
trade marks, trade xxxx registrations and applications, service xxxx
registrations and applications and copyrights containing or in respect
of such words or phrases) except to the extent set forth in Section
10.15;
(e) subject to Section 12.4, insurance policies of the Vendor relating to
the Purchased Business and the Purchased Assets and all rights in
connection therewith, including, without limitation, any rights to
outstanding claims thereunder or refunds of insurance premiums;
(f) all rights of the Vendor to any refunds of workers' compensation
payments in respect of the period before the Closing Date;
(g) any employment agreement or contract, whether written or oral, with
respect to the Excluded Employees;
(h) the Radarsat-2 Territorial License Agreement and the Radarsat-2
Territorial Sub-License Agreement;
(i) except for the matters set forth on Schedule 36, all Claims, including
but not limited to claims for late delivery penalties or warranty
repair work conducted to the Closing Date, against suppliers to the
Vendor under the Radarsat-2 Program in respect of any period before
the Closing Date (the "Supplier Claims");
(j) the Holding Shares and the Skybridge Units;
(k) rights to Uniform Resource Locators other than the access as provided
in Section 2.7, Web site addresses and domain names;
20
(l) the Technology licensed to MDA Space under the BSAT License Agreement;
(m) all constating documents, minute books and shareholder records of the
Vendor;
(n) all rights of the Vendor under this Agreement and the Other
Agreements; and
(o) the assets and Contracts listed on Schedule 20.
2.3 Non Transferability
(a) Subject to subsections 2.3(b) and 2.3(c), to the extent that any
Purchased Asset is not capable of being sold, assigned, transferred,
delivered or subleased without the consent or waiver of any person, or
if such sale, assignment, transfer, delivery or sublease, or attempted
sale, assignment, delivery or sublease would constitute a breach
thereof or a violation of any law, statute, ordinance, regulation,
rule having the force of law, judgment, decree, order, writ,
injunction or award, this Agreement shall not constitute a sale,
assignment, transfer, delivery or sublease thereof until such consent
or waiver, if applicable, is received, but instead shall be dealt with
as herein provided.
(b) The Vendor shall diligently attempt to obtain (and the Purchasers
shall diligently cooperate with the Vendor), on or before the Closing
Date and thereafter as required, the consents and waivers referred to
in subsection 2.3(a) and to resolve the impediments to the sale,
assignment, transfer, delivery or sublease referred to in subsection
2.3(a) and to obtain any other consents and waivers necessary to
convey to the applicable Purchaser any of the Purchased Assets
provided that in no event shall the Vendor be required to incur any
financial cost or burden (other than incidental costs) to obtain such
consents or waivers or resolve such impediments. The Purchasers shall
pay and be responsible for all costs charged by third parties to
approve any such assignment or transfer including without limitation,
fees for the transfer of Licenses held by third parties.
(c) The Vendor shall have no liability to the Purchasers if any of the
consents and waivers referred to in subsection 2.3(a) are not obtained
by Closing. To the extent that the consents and waivers referred to in
subsection 2.3(a) are not obtained by the Vendor, or until the
impediments to the sale, assignment, transfer, delivery or sublease
referred to therein are resolved, the applicable Purchaser shall, for
and on behalf of the Vendor perform and satisfy all obligations and
liabilities of the Vendor under or in respect of each of the Purchased
Assets referred to in subsection 2.3(a) and the Vendor shall, after
the Closing Date and, in the case of (iii) below, at the cost of the
applicable Purchaser:
(i) hold the benefits of any Purchased Asset referred to in
subsection 2.3(a) in trust for the applicable Purchaser in
accordance with the provisions of this subsection 2.3(c);
21
(ii) cooperate in any reasonable and lawful arrangement, approved by
MDA and the Vendor (it being understood that the Vendor shall act
reasonably recognizing that the applicable Purchaser has
purchased the Purchased Assets hereinafter and is entitled to the
full unencumbered benefit thereof), designed to provide such
benefits to the applicable Purchaser, without the Vendor thereby
incurring any financial obligation to the applicable Purchaser;
and
(iii) enforce for the account of the applicable Purchaser and only at
the request of the applicable Purchaser, any rights or
obligations of the Vendor arising from any Purchased Asset
referred to in subsection 2.3(a) against or in respect of any
person, including the right to elect to terminate in accordance
with the terms thereof upon the advice and request of the
applicable Purchaser.
This subsection 2.3(c) shall not constitute a waiver of any right of
the applicable Purchaser or Vendor to require delivery of the consents
and waivers on the Closing Date pursuant to Section 11.1 or 11.2.
2.4 Purchasers' Post-Closing Assistance
If any Claim is asserted against the Vendor in connection with any Excluded
Liability, the applicable Purchaser shall, at the request of the Vendor,
cooperate in any reasonable and lawful arrangement with the Vendor which assists
the Vendor in its defence of such Claim (including providing the Vendor with
access to the relevant records of the applicable Purchased Business and making
appropriate employees available as needed) provided that such arrangement does
not adversely affect the applicable Purchaser's right or ability to realize the
benefits from any of the Purchased Assets. The Vendor shall pay to the
applicable Purchaser the reasonable costs incurred by the applicable Purchaser
including the time incurred by any employee of the applicable Purchaser in
complying with any such request at the then current PWGSC rates applicable
thereto.
2.5 Access to Purchased Assets
Following Closing and for the eight years thereafter (it being understood that
the applicable Purchaser has no obligation to preserve books and records beyond
the time set forth in Section 10.2), the applicable Purchaser shall permit the
Vendor reasonable access to the books and records and Employees of the
applicable Purchased Business upon reasonable request in writing during normal
business hours, for the purposes of preparing tax and other governmental returns
and satisfying its obligations, and/or collecting, enforcing or defending its
rights, under or pursuant to, or in respect of, the Excluded Assets or the
Excluded Liabilities and shall, if requested by the Vendor, use all reasonable
efforts to make available to the Vendor those employees of the applicable
Purchaser whose assistance, testimony or presence is considered beneficial by
the Vendor, acting reasonably, to assist the Vendor in evaluating, defending or
prosecuting any claim or demand relating to any Excluded Liability. The Vendor
shall pay to the applicable Purchaser the reasonable costs incurred by the
applicable Purchaser in complying with any such request at the then current
PWGSC rates applicable thereto.
22
2.6 Supplier Claims
The Vendor shall not commence any claim against a supplier in respect of a
Supplier Claim prior to the launch of the Radarsat-2 satellite without the prior
written consent of MDA which consent may not be unreasonably withheld or
delayed; provided that the Vendor may commence a Claim against such a supplier
prior to the launch of the Radarsat-2 satellite without the consent of MDA if
the supplier has independently asserted a Claim against the Vendor or the Parent
and the Vendor provides prior written notice of the commencement of such Claim
to MDA.
2.7 E-mail and Website Query Forwarding During Transition Period
During a transition period of three months following the Closing Date, the
Vendor will forward to the Purchaser's, at the E-mail addresses and Websites
specified in writing by the applicable Purchaser, all e-mail messages addressed
to Transferred Employees and delivered to the Vendors (excluding any e-mail
messages routinely filtered or quarantined by the Vendor's e-mail security
systems) during such transition period and all Internet-based queries to the
Websites and Uniform Resource Locators of the Vendor dedicated to the Purchased
Businesses or otherwise clearly intended for such Websites and Uniform Resource
Locators and received during such transition period.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price
The aggregate purchase price (the "Purchase Price") payable by the Purchasers to
the Vendor for acquiring the Purchased Assets shall be Twenty Seven Million,
Three Hundred Thousand United States Dollars (US$27,300,000) as adjusted
pursuant to Section 3.4. In addition the Purchasers shall assume and satisfy the
Assumed Liabilities in accordance with the terms of this Agreement. The Purchase
Price shall be exclusive of all applicable GST, QST, ORST and other sales and
transfer taxes.
3.2 Payment of Purchase Price
The Purchase Price shall be payable by the Purchasers as follows:
(a) as to US$25,300,000 (the "Closing Date Payment"), by way of wire
transfer of immediately available funds to such bank accounts as the
Vendor may specify at least two Business Days prior to the Closing
Date; and
(b) as to US$2,000,000, such amount shall be payable as and to the extent
that the aggregate amounts payable under the terms of the Radarsat-2
Subcontract In-Orbit Incentive (as such terms currently exist without
amendment, modification or termination) exceed US$3,950,000. If the
aggregate amounts payable under the terms of such Incentive shall
exceed US$3,950,000 the Purchasers shall pay from time to time as and
when such amounts are payable, such excess amounts to the Vendor to a
maximum of US$2,000,000. For clarity, if the aggregate amount of such
Radarsat-2 Subcontract In-Orbit Incentives do not exceed
23
US$3,950,000 then there shall be no amount payable under this
subsection 3.2(b) and if, for example, the aggregate amount of
Radarsat-2 Subcontract In-Orbit Incentives is equal to US$5,200,000
the Purchasers shall pay to the Vendor under this subsection 3.2(b) a
total of US$1,250,000.
Notwithstanding the foregoing the Purchasers may set off against the Purchase
Price and reduce the amount payable in 3.2(a) by an equivalent amount owing by
the Vendor under the Release set forth in Exhibit II (the "Release").
3.3 Determination of Closing Net Receivables
(a) During the ten (10) Business Days period immediately following the
date of this Agreement, the Space Purchaser shall review any changes
from June 30, 2005 on the costs incurred, estimated costs to complete
and estimated costs at completion of the programs of the Space
Business as set forth on Schedule 37 to determine whether it is in
agreement with such costs and the determination of the amounts
thereof. To the extent that the Space Purchaser is not in agreement
with any of such costs the Vendor and the Space Purchaser will use all
reasonable efforts to resolve such issues and amend Schedule 37
accordingly, failing which, such issues shall be referred to the CEO's
of the Parent and MDA for resolution, which upon such resolution,
shall be the "Agreed Schedule 37". If there are no changes to Schedule
37 after such review and discussions, Schedule 37 shall be the "Agreed
Schedule 37. If the Vendor and the Space Purchaser are unable to agree
on any such issue, that issue will be resolved pursuant to Section
3.3(f) and upon such resolution Schedule 37 as so resolved will be the
"Agreed Schedule 37";
(b) Closing Net Receivables Statement. Within sixty (60) days following
the Closing Date, the Vendor shall deliver to the Space Purchaser an
unaudited statement of Closing Net Receivables (the "Closing Net
Receivables Statement") of the Purchased Businesses as at the opening
of business on the Closing Date, prepared using the same line items
and in accordance with generally accepted accounting principles
applied on a consistent basis with those used in the preparation of
the Pro Forma Net Receivables statement (the "Pro Forma Net
Receivables Statement"). For greater certainty the Closing Net
Receivables Statement shall be prepared (i) using accounting methods,
policies, practices, procedures and classification and estimation
methodologies identical to those used by the Vendor in preparation of
the Pro Forma Net Receivables Statement and Agreed Schedule 37 and
(ii) there shall be no changes to any reserve or provision for (or
estimates therein) or in respect of any Contracts (including any
"estimates of costs at completion" and estimated costs of and times to
completion for individual contracts) from the amounts reflected in the
Pro Forma Net Receivables Statement and the Agreed Schedule 37 except
changes that are required to reflect changes in facts or events
occurring on or after October 1, 2005 and on or before the Closing
Date or as resolved as part of the Agreed Schedule 37 pursuant to
Section 3.3(f), if any (any such changes shall be effected in a manner
consistent with the principles used in the
24
preparation of the Pro Forma Net Receivables Statement and the Agreed
Schedule 37). For the purpose of preparing the Closing Net Receivables
Statement, the Purchasers agree to grant the Vendor's authorized
representatives reasonable access during normal business hours to
relevant records, facilities and personnel of the Purchasers.
(c) Closing Net Receivables Calculation. At the time of delivery of the
Closing Net Receivables Statement, the Vendor shall also deliver to
the Space Purchaser, a written statement setting forth the amount by
which the Closing Net Receivables is greater than or less than
CDN$1,169,700.
(d) "Closing Net Receivables" is defined herein as the amount by which the
aggregate book value as at the Closing Date of the Receivables exceeds
the aggregate book value as at the Closing Date of the Trade Payables,
all as set forth on the Closing Net Receivables Statement. For greater
certainty, it is understood and agreed that no amount shall be
included in Net Receivables attributable to Milestones 52, 53, 54 and
55 under the Radarsat-2 Subcontract, and that with respect to
Milestones 46 through 51, inclusive, thereunder: (i) anticipated
effort or costs related to such Milestones shall be included in
determining the total anticipated cost of the Radarsat-2 Subcontract;
(ii) efforts or costs related thereto shall not be included in
determining the percentage-of-completion actually achieved by Vendor
as of the Closing Date except for not more than six months of support
actually provided as of the Closing Date as contemplated under
Milestone 46 and (iii) the value of such Milestones shall be included
in determining the total contract value of such Radarsat-2
Subcontract.
(e) Approval of Closing Net Receivables Statement. The Space Purchaser
shall have a period (the "Review Period") of thirty days from the date
it receives the Closing Net Receivables Statement in which to review
the same. For the purpose of such review, the Vendor shall permit the
Space Purchaser and its authorized representatives to examine all
accounting documentation used or prepared by the Vendor in preparing
the Closing Net Receivables Statement including the back-up material
and ledgers. If no objection in writing to the Closing Net Receivables
Statement is given to the Vendor by the Space Purchaser within the
Review Period, the Closing Net Receivables Statement shall be deemed
to have been approved as of the last day of such Review Period.
If the Space Purchaser objects to any item of the Closing Net
Receivables Statement, the Space Purchaser shall give written notice
to the Vendor on or before the end of the Review Period, setting out
in reasonable detail the nature of such objection and the related
amount(s) in dispute and the parties shall attempt to resolve the
matters in dispute within 30 days from the date the Space Purchaser
gives such notice to the Vendor. Without limitation, the Space
Purchaser shall not be precluded from raising objections that are
otherwise appropriate under the terms hereof solely because under
generally accepted accounting principles, the amount involved would
not be considered material for accounting purposes. If all matters in
dispute are resolved by the parties, the
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Closing Net Receivables Statement shall be modified to the extent
required to give effect to such resolution and shall be deemed to have
been approved as of the date of such resolution.
(f) Dispute Resolution
If the parties cannot resolve all matters in dispute pursuant to
Section 3.3(a) prior to the Closing Date or within such thirty day
period with respect to disputes under Section 3.3(e), all such
unresolved matters shall be submitted to KPMG LLP or, if they refuse
or are unable to act, a nationally recognized accounting firm
acceptable to the Space Purchaser and the Vendor (the "Expert") for
resolution. The Expert shall use its reasonable efforts to render its
written decision within 30 days of its appointment. The Expert shall
be given access to all materials and information reasonably requested
by it for such purpose. The rules and procedures to be followed in
such proceeding shall be determined by the Expert in its discretion.
The Expert's determination of all such matters shall be final and
binding on both parties and shall not be subject to appeal by either
party, absent manifest error. The fees and expenses of the Expert
shall be borne by the parties in the manner determined by the Expert
based on the relative success of each party in respect of such
disputes. The Purchase Price or the Closing Net Receivables, as
applicable, shall be modified to the extent required to give effect to
the Expert's determination and shall be deemed to have been approved
as of the date of such determination.
3.4 Adjustment of Closing Date Payment
Within two Business Days after the Review Period:
(a) if the Closing Net Receivables exceeds CDN$1,169,700 (the "Excess"),
the Space Purchaser shall pay the Vendor an amount equal to the
Excess, together with interest thereon at an annual rate equal to the
Prime Rate as adjusted from time to time plus 2% from and including
the Closing Date to but excluding the date of payment; and
(b) if the Closing Net Receivables is less than CDN$1,169,700 the Vendor
shall pay the Space Purchaser an amount equal to such deficit,
together with interest thereon at the Prime Rate as adjusted from time
to time plus 2% from and including the Closing Date to but excluding
the date of payment,
provided that if the Space Purchaser has objected to any part of the Closing Net
Receivables Statement in accordance with Section 3.3 no payment shall be made in
respect of the amount in dispute until 2 Business Days after the same has been
finally resolved by the parties or pursuant to Section 3.3.
3.5 Allocation of Purchase Price
The Vendor and the Purchasers agree to allocate the Purchase Price among the
Purchasers and the Purchased Assets and the Assumed Liabilities in accordance
with Schedule 11 and to report
26
the sale and purchase of the respective Purchased Assets for all federal,
provincial and local tax purposes in a manner consistent with such allocation.
The Purchasers and the Vendor agree that if any Tax authority does not agree
with any allocation of the applicable Purchase Price agreed to between the
parties, the Vendor and the applicable Purchaser shall use their best efforts
and good faith to agree upon a different allocation acceptable to the relevant
authority and, if the parties are so able to agree, they shall thereafter amend
the allocation and their relevant Tax Returns accordingly; provided, however
that nothing contained herein shall be construed so as to require any party to
commence or participate in any litigation or administrative process challenging
the determination so made by any applicable authority.
3.6 ETA Election
Each of the Electronics Purchaser and the Space Purchaser and the Vendor shall
elect jointly under subsection 167(1) of the ETA and Section 75 of an Act
respecting Quebec Sales Tax, in the form prescribed for the purposes of those
provisions to elect that GST and QST not apply in respect of the sale and
transfer of the Purchased Assets purchased by such Purchaser hereunder and such
Purchaser shall file such election in its GST and/or QST returns for the
reporting period that includes the Closing Date. Each of the Electronics
Purchaser and the Space Purchaser shall severally indemnify and save harmless
the Vendor from and against any GST, QST, interest and penalties imposed on the
Vendor as a result of any failure by a tax authority to accept any such election
in respect of such Purchased Assets. Without limiting the generality of the
foregoing if the Vendor receives any demand, assessment or request by the
appropriate Governmental Authority to remit GST or QST in respect of all or any
part of this transaction, the Space Purchaser and the Electronics Purchaser
shall immediately without any set-off, deduction or other reduction whatsoever,
pay to the Vendor the amount of such payment including any applicable interest
or penalties.
3.7 Transfer Taxes, etc.
The applicable Purchaser shall be liable for and shall pay all federal and
provincial sales taxes (including any GST, QST, ORST, retail sales taxes and
land transfer taxes) and all other taxes, duties, fees or other like charges of
any jurisdiction properly payable in connection with the transfer of the
applicable Purchased Assets by the Vendor to the applicable Purchaser (but not
including income taxes payable by the Vendor). The parties confirm that the
Electronics Purchaser and the Space Purchaser shall be solely responsible for
self-assessing and remitting all ORST in respect of its purchase of the
Electronics Business and the Space Business, respectively and that the Real
Estate Purchaser shall be solely responsible for self-assessing and remitting
all GST and QST in respect of its purchase of the Real Property. The Space
Purchaser shall pay all filing fees in connection with any filings or
notifications required to be made under the pre-merger notification provisions
of the Competition Act (Canada) if any.
3.8 Accounts Receivable Election
Each of the Space Purchaser and the Electronics Purchaser and the Vendor agree
to elect jointly in the prescribed form and manner under Section 22 of the Tax
Act (and sections 184 and 185 of the Taxation Act (Quebec)) as to the sale of
the accounts receivable and other assets that are referred to in subsection
2.1(f) hereof and described in Section 22 of the Tax Act (and section
27
184 of the Taxation Act (Quebec)) and to designate in such elections an amount
equal to the portion of the Purchase Price allocated to such assets pursuant to
Section 3.5 as the consideration paid by the applicable Purchaser therefor.
3.9 Deferred Revenue Obligations
The Vendor and each of the Space Purchaser and the Electronics Purchaser agree
to elect jointly pursuant to subsection 20(24) of the Tax Act and its equivalent
provisions under applicable provincial Tax legislation (including section 157.10
of the Taxation Act (Quebec)) to have the rules in subsection 20(24) of the Tax
Act (and the provincial equivalents thereof) apply in respect of amounts
relating to obligations of the Vendor from the applicable Purchased Business
that are described in paragraph 12(1)(a) of the Tax Act and that the applicable
Purchaser assumes pursuant to this Agreement. The Vendor and each of the Space
Purchaser and the Electronics Purchaser acknowledge that at Closing the Vendor
will transfer to the applicable Purchaser, applicable Purchased Assets having a
value equal to the amount of such obligations as consideration for the
assumption thereof by that Purchaser.
3.10 Non-Competition Agreements
Each of the Space Purchaser and the Electronics Purchaser and the Vendor shall
jointly elect in the prescribed form and manner, under proposed subsection
56.4(7) of the Tax Act (as released by the Department of Finance on July 18,
2005) and any applicable provision or proposed provision of the Taxation Act
(Quebec) or any successor provisions thereto in respect of the Non-Competition
Agreements and the Vendor shall file such elections and all required supporting
documents (including a copy of the Non-Competition Agreements) with the
appropriate Tax authorities.
ARTICLE 4
ASSUMPTION OF LIABILITIES
4.1 Assumption of Certain Liabilities by the Purchasers
The Purchasers severally agree to assume, pay, satisfy, discharge, perform and
fulfil, from and after the Time of Closing, all obligations and liabilities of
the Vendor relating to the Purchased Businesses or the Purchased Assets
purchased by each of them, other than Excluded Liabilities, existing, accrued or
accruing (whether direct, indirect or contingent) as at the Time of Closing as
set forth below (the "Assumed Liabilities"):
(a) all the liabilities and obligations under or relating to the Assumed
Contracts;
(b) all liabilities and obligations under all letters of credit, surety
bonds or performance bonds (including obligations to reimburse the
issuer thereof for any payments made thereunder) issued to secure or
ensure performance by the Vendor of its obligations or liabilities
under any Assumed Contract comprising part of the Purchased Assets to
the extent the same are set forth in the Schedules;
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(c) all licences, liabilities and obligations under or relating to the
Licences comprising part of the Purchased Assets which are to be
performed following the Closing to the extent that the Purchasers have
the benefits of such Licenses (including pursuant to Section 2.3);
(d) all trade and other accounts payable and other existing or accrued
liabilities arising in respect of, or in the ordinary course of the
Purchased Businesses (including, without limitation, trade payables
owing by the Purchased Businesses to Affiliates of the Vendor or to
any other division of the Vendor, capital lease payments, if any,
taxes respecting Real Property, liabilities in respect of Permitted
Encumbrances and unpaid, accrued or accumulated vacation pay and wages
for Transferred Employees) to the extent the same are reflected in the
Closing Net Receivables Statement;
(e) all liabilities and obligations under or relating to the Permitted
Encumbrances (other than the Permitted Encumbrances identified in
Schedule 38) which are to be performed following the Closing;
(f) all liabilities for capital leases for periods following the Closing
and any such pre-Closing liabilities to the extent reflected on the
Closing Net Receivables Statement and all indebtedness to Technologies
Partnerships Canada payable following Closing (whether or not
pre-Closing revenues or sales of the Vendor are used to determine
whether amount are payable following Closing);
(g) all liabilities and obligations arising out of or resulting from any
breach or violation of Environmental Laws by or in respect of the
Purchased Businesses or the Purchased Assets prior to or after Closing
whether known or unknown except to the extent the same constitutes a
breach of the representation and warranty set forth in Section 5.26
hereof;
(h) all liabilities and obligations to Employees or former employees of
the Purchased Business arising out of or relating to the Grievance
Claim or any appeals therefrom or settlements thereof (collectively
the "Grievance Claim Liabilities") which former employees are as set
forth on Schedule 31;
(i) all liabilities and obligations of the Vendor to Retirement Plan
Participants under or pursuant to the Retirement Plan, subject as
herein provided;
(j) all liabilities and obligations of the Vendor under the Pension Plans,
to Employees and former employees of the Vendor, including Excluded
Employees, except SatNet Employees and SatNet Former Employees,
subject as herein provided; and
(k) all liabilities and obligations that the Purchasers have expressly
assumed, or for which the Purchasers are expressly responsible, under
this Agreement.
For greater certainty the liabilities in (g) shall be assumed by the Real Estate
Purchaser and the liabilities in (h), (i) and (j) shall be assumed by the Space
Purchaser.
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4.2 Retained Liabilities
The Vendor shall remain liable for and shall pay, satisfy, discharge, perform
and fulfil, the obligations and liabilities of the Vendor existing, accrued or
accruing (whether direct or indirect, known or unknown) as at the Time of
Closing other than the Assumed Liabilities (the "Excluded Liabilities")
including without limitation:
(a) any liability for Taxes payable, collectible or remittable by the
Vendor in respect of the Purchased Businesses and the Purchased Assets
in respect of the period prior to the Closing Date;
(b) any liability owing to a lender of the Vendor, including without
limitation, any bank overdrafts or bank indebtedness and any
indebtedness or liabilities owing under any trust indenture, mortgage,
promissory note, loan agreement, guarantee or other Contract for the
borrowing of money;
(c) all liability owing to Affiliates of the Vendor for cash advances;
(d) the Radarsat 2 Warranties;
(e) any liability in respect of product liability, product warranty and
other claims and obligations respecting products and services for
which the Vendor is responsible pursuant to subsection 4.3(b) to the
extent as provided in Section 4.3;
(f) all obligations and liabilities whether before or after the Closing
with respect to the Excluded Employees, other than as contemplated in
Sections 4.1(i) and (j) provided that the Vendor shall be responsible
for all contributions to be made to such plans for the Excluded
Employees;
(g) all long-term liabilities, other than capital leases and liabilities
to Technologies Partnerships Canada to the extent assumed by the
Purchaser under Section 4.1(f); and
(h) all obligations or liabilities under Completed Contracts.
4.3 Product Liability and Warranty Obligations
(a) The Space Purchaser shall not assume and the Vendor shall be solely
responsible for the Radarsat Warranties, whether known or unknown.
Notwithstanding anything contained herein to the contrary, the
Purchasers shall have no right to make any claim against the Vendor
for a breach of any representation and warranty herein with respect to
the Radarsat-2 Subcontract.
(b) Without in any way limiting Section 4.1, the Purchasers shall not
assume, and the Vendor shall be solely responsible for and shall
indemnify and hold harmless the applicable Purchaser to the extent as
provided in Section 4.3(c) from and against any and all Losses arising
out of or resulting from any product liability,
30
product warranty and other claims, liabilities and obligations
respecting products delivered and/or services provided by the Vendor
in connection with the Purchased Businesses up to Closing (other than
in connection with the Radarsat-2 Subcontract (which is dealt with
under Section 4.3(a)) whether such Losses arise before or after the
Time of Closing and whether known or unknown as of the Time of
Closing, including under any Completed Contract.
(c) Notwithstanding anything contained herein to the contrary, the
applicable Purchaser may if the applicable Purchaser, acting
reasonably, determines in good faith to do so for valid business
reasons, and shall if requested to do so in writing by the Vendor,
satisfy or perform any applicable product warranty obligation of the
Vendor as set forth in (a) and (b), not assumed by the applicable
Purchaser, including under the Radarsat-2 Warranties, provided however
that, in either case, the applicable Purchaser shall first provide the
Vendor with an opportunity to assess the claim and comment on its
validity, the proposed response by the applicable Purchaser and the
applicable Purchaser's cost estimate for satisfying or performing such
warranty which cost shall be determined at the then applicable PWGSC
rates. In any such case, provided such obligation was a valid and
enforceable obligation or liability of the Vendor and the claim in
respect thereof was valid, to the extent such amount is payable by the
Vendor under Section 4.3(b) and to the extent that such amounts are in
excess of CDN$116,970 (the "4.3 Threshold Amount"), the Vendor shall
reimburse the applicable Purchaser forthwith following demand by the
applicable Purchaser for costs incurred by the applicable Purchaser in
satisfying such obligations or satisfying any warranty claim at the
then applicable PWGSC rates. Any costs of materials or equipment
required to be provided hereunder will be paid for at the direct costs
of the applicable Purchaser without any xxxx-up. For greater certainty
it is understood that the Purchaser will be responsible for the cost
of all claims under Sections 4.3(b) up to a maximum of the 4.3
Threshold Amount and the costs of all such claims under Section 4.3 in
excess thereof shall be paid by the Vendor.
(d) Except as set forth in this Section 4.3, the applicable Purchaser
shall assume, satisfy, discharge, perform and fulfill, at its sole
cost, from and after the Time of Closing all product warranty or
replacement claims against the Vendor or the applicable Purchaser
under or in respect of all Operating Contracts acquired by such
Purchaser. Furthermore, the Vendor shall not be responsible for, and
the applicable Purchaser shall be solely responsible for and shall
indemnify and hold harmless the Vendor from and against any and all
Losses arising out of or resulting from any product liability, product
warranty and other claims and obligations respecting products
delivered and/or services provided by the applicable Purchaser in
connection with Assumed Contracts after the opening of business on the
Closing Date (including work performed or products produced following
Closing to complete unfinished Inventory).
(e) Notwithstanding the foregoing but subject to Section 4.3(a), nothing
contained in this Section 4.3 shall affect the rights of the
applicable Purchaser under
31
Article 13 hereof in respect of any Losses suffered or incurred by it
as a result of or arising out of any inaccuracy of any representation
or warranty of the Vendor hereunder provided, however, that the
applicable Purchaser shall not be entitled to recover more than the
amount of its Loss in respect of any one claim or circumstance.
(f) It is acknowledged that MDA is a customer of the Vendor. For greater
certainty, references to Losses of the applicable Purchaser in this
section 4.3 shall refer solely to Losses suffered by the Space
Purchaser as successor to the Space Business and not to any Losses
suffered by MDA or the Space Purchaser as a customer of the Vendor
unless the Vendor would otherwise have been responsible to the Space
Purchaser or MDA for such Losses at law or under Contract or herein.
(g) For greater certainty, the provisions of Sections 13.4 to 13.9
inclusive, shall apply mutatis mutandis to any indemnity claim
pursuant to this Section 4.3.
4.4 Payment for Reimbursement of Certain Liabilities
(a) The Space Purchaser and the Vendor shall on Closing establish an
escrow account (the "Severance Liabilities Account") with Farris,
Vaughan, Xxxxx & Xxxxxx LLP, (the "Escrowholder") pursuant to an
escrow agreement to be enetered into on Closing (the "Escrow
Agreement") for the purpose of:
(i) satisfying Grievance Claim Liabilities; and
(ii) satisfying severance or termination liabilities arising from the
termination of employment by the Space Purchaser of any
Employees;
in both cases to the extent incurred up to the date that is 18 months after
the Closing Date (the "Severance Termination Date") (the liabilities in (i)
and (ii) above being collectively referred to as the "Severance
Liabilities").
On the Closing Date and on or before 4 Business Days following written
notice from the Escrowholder to each of the Space Purchaser and the Vendor
that the Severance Liabilities Account has less than CDN$100,000 remaining
therein, each of the Vendor and the Space Purchaser will pay to the
Escrowholder for deposit into the Severance Liabilities Account CDN$584,850
with the last written notice by the Escrowholder to be for CDN$292,425.
Notwithstanding the foregoing, each of the Vendor and the Space Purchaser
shall not be requested by the Escrowholder to pay more than CDN$1,462,125
in the aggregate for the Severance Liabilities Account and in no event
shall the obligations of the Vendor in respect of the Severance Liabilities
exceed CDN$1,462,125. The Severance Liabilities Account will be used to pay
the Severance Liabilities incurred by the Space Purchaser to the Severance
Termination Date. The Escrowholder will pay to the Space Purchaser 4
Business Days after receipt by the Escrowholder of a written request from
the Space Purchaser (the "Written Request") for funds from the Severance
Liabilities Account (which request shall detail the Severance Liabilities
incurred) and
32
which Written Request has been delivered by the Space Purchaser to the
Vendor, unless the Escrowholder and the Space Purchaser have received
within such 4 Business Days a written notice (the "Objection Notice") from
the Vendor objecting to that Written Request. If an Objection Notice is
received by the Escrowholder and the Space Purchaser, the Vendor and the
Space Purchaser shall in good faith resolve any issues with respect thereto
and such funds shall only be released from escrow upon the receipt by the
Escrowholder of a written notice signed by both the Vendor and the Space
Purchaser authorizing the release of the funds as specified in the joint
written notice. Any amounts remaining in the Severance Liabilities Account
after the Severance Termination Date will be returned in equal amounts to
the Vendor and the Space Purchaser. Interest on the monies in the Severance
Liabilities Account will be shared equally between the Vendor and the
Purchaser and the costs of the Escrowholder will be borne by the Space
Purchaser. The Space Purchaser will provide access to the Vendor to the
books and records of the Space Purchaser relating to the Severance
Liabilities so that the Vendor may audit same.
(b) The Vendor shall pay to the Space Purchaser upon request on or after
December 31, 2006 an amount equal to 50% of the excess, if any, of the
APBO of the Retirement Plan as at December 31, 2006 as determined by
Xxxxxx Human Resource Consulting as herein provided, over CDN$8.8
million, up to a maximum payment of CDN$584,850. The Space Purchaser
shall request Xxxxxx Human Resource Consulting to prepare an estimate
of the APBO as at December 31, 2006 for the Retirement Plan (assuming
no increase in benefits following Closing and in respect only of those
persons who are Retirement Plan Participants at Closing), such APBO to
be prepared in accordance with the terms of the Retirement Plan, and
using the same assumptions as set out in Schedule 35, as were used by
Xxxxxx Human Resource Consulting and the Vendor in calculation of the
APBO as of December 31, 2004, except that for the discount rate and
any other assumptions that are required by the Retirement Plan,
Applicable Law or actuarial standards to be determined as of the date
of calculation, the assumptions so required by the Retirement Plan,
Applicable Law or actuarial standards shall be used. The Space
Purchaser shall provide the Vendor with a copy of the APBO report so
prepared at the time of requesting payment.
4.5 Bulk Sales Legislation
The parties hereby waive compliance with any applicable bulk sales legislation;
provided however that the Vendor shall indemnify and save harmless each of the
Purchasers from and against all losses suffered or incurred by any Purchaser as
a result of such non compliance except to the extent such Losses arise from a
Purchaser's failure to satisfy or discharge any Assumed Liabilities or other
liabilities or obligations assumed by it hereunder.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor represents and warrants to the Purchasers as follows and acknowledges
that the Purchasers are relying on such representations and warranties in
connection with their purchase of the Purchased Assets as of the date of
execution of the Agreement and as of the Closing Date.
5.1 Organization
The Vendor is a corporation validly subsisting under the laws of the
jurisdiction of its incorporation and has the corporate power to own or lease
its property, to carry on the Purchased Businesses as now being conducted by it
and to enter into this Agreement and the Other Agreements and to perform its
obligations hereunder and thereunder.
5.2 Authorization
This Agreement and each of the Other Agreements has been duly authorized,
executed and delivered by the Vendor and is a legal, valid and binding
obligation of the Vendor, enforceable against the Vendor by the Purchasers in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors generally and except
that equitable remedies may be granted only in the discretion of a court of
competent jurisdiction.
5.3 No Other Agreements to Purchase
No person other than the Purchasers have any written or oral agreement or option
or any right or privilege (whether by law, pre emptive or contractual) capable
of becoming an agreement or option for the purchase or acquisition from the
Vendor of any of the Purchased Assets, other than pursuant to purchase orders
for the sale of Inventory accepted by the Vendor in the ordinary course of the
Purchased Businesses.
5.4 No Violation
The execution and delivery of this Agreement and the Other Agreements by the
Vendor and the consummation of the transactions herein provided for will not
result in:
(a) the breach or violation of any of the provisions of, or constitute a
default under, or conflict with or cause the acceleration of any
obligation of the Vendor under:
(i) any Contract to which the Vendor is a party or by which it is or
the Purchased Assets are bound except for (I) consents required
to assign to the Purchasers the Material Contracts all as set
forth on Schedule 17 (II) consents required to assign to the
Purchasers other Assumed Contracts not comprising Material
Contracts and (III) requirements in Contracts with Bank of
America, National Association (Canada branch) and G.E. Canada
Finance Holding Company and (IV) consents required to transfer
any rights to Customer-Owned Assets including those assets owned
by NASA;
34
(ii) any provision of the constating documents or by laws or
resolutions of the board of directors (or any committee thereof)
or shareholders or any unanimous shareholder agreement of the
Vendor;
(iii) any judgment, decree, order, writ, injunction or award of any
court, governmental body or arbitrator having jurisdiction over
the Vendor;
(iv) any material Licence held by the Vendor or necessary to the
operation of the Purchased Businesses; or
(v) any Applicable Law the breach or violation of which would
materially adversely affect the transactions contemplated hereby
or the Purchased Businesses as presently being conducted other
than bulk sales legislation relating to the sale of the Purchased
Assets; nor
(b) the creation or imposition of any Encumbrance on any of the Purchased
Assets.
5.5 Sufficiency of Purchased Assets
Except for the Excluded Assets and the customer owned and supplied property
described in Schedule 6 (the "Customer Owned Assets"), the Purchased Assets
owned or leased by the Vendor are all of the assets used by the Vendor in the
Purchased Businesses and are sufficient to carry on the Purchased Businesses as
presently being conducted. For greater certainty the EMS IP, the Other IP and
the Licensed IP, other than any Excluded Assets, are all the Intellectual
Property Rights that are necessary for the operation of the Purchased Business
as presently being conducted. Except as contemplated in Section 2.3, the
Purchaser will after the Time of Closing have the right to use the Customer
Owned Assets to the same extent as held by the Vendor prior to the Time of
Closing. Except for Excluded Assets or assets sold in the ordinary course, all
assets reflected in the Financial Statements form part of the Purchased Assets.
All the material tangible assets of the Purchased Businesses are situate at the
locations set out in Schedule 12. Neither Holdings nor Skybridge own any assets
which are used in or for the Purchased Businesses.
The Vendor in connection with the Purchased Businesses does not own, or have any
agreements to acquire, directly or indirectly, any shares in the capital of or
other equity or proprietary interest in any person that carries on all or any
portion of the Purchased Businesses currently carried on by the Vendor or any
business similar to such Purchased Businesses.
There are no shares in the capital of, or other equity or proprietary interests,
in any person that form part of the Purchased Assets.
5.6 Title to Personal and Movable Properly
The Vendor legally and beneficially owns all of the Purchased Assets, free and
clear of all Encumbrances other than Permitted Encumbrances.
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5.7 Real and Immovable Property
Schedule 3 sets forth the municipal addresses and complete and accurate legal
descriptions of all of the real and immovable property that is used in
connection with the Purchased Businesses and of which the Vendor is the
beneficial and registered owner (the "Real Property") and the municipal
addresses of all such property that is leased by the Vendor (the "Leased
Property"). There is no other real property used in or by the Purchased Business
other than the Real Property and the Leased Property. The Vendor has not agreed
to acquire any real or immovable property or any interest in any real or
immovable property which is used in connection with or otherwise relating to the
Purchased Business other than the Real Property and the Leased Property.
5.8 Idem
Except as set forth on Schedule 3, all buildings, structures, improvements and
appurtenances situate on the Real Property or comprising the Leased Property, to
the knowledge of the Vendor, do not require material repairs or replacement to
satisfy the purposes for which they are currently being used. The Vendor has
adequate rights of ingress and egress for the operation of the Purchased
Business in the ordinary course. None of such buildings, structures,
improvements or appurtenances (or any equipment therein), nor the operation or
maintenance thereof, violates in any material respect any restrictive covenant
or any provision of any federal, provincial or municipal law, ordinance, rule or
regulation, or encroaches in any material respect on any property owned by
others. Without limiting the generality of the foregoing:
(a) the Real Property, the Leased Property, the current uses thereof and
the conduct of the Purchased Business comply in all material respects
with all regulations, statutes, enactments, laws and by laws,
including, without limitation, those dealing with zoning, parking,
access, loading facilities, landscaped areas, building construction
and fire (but excluding Environmental Laws which are covered by the
representation and warranty contained in Section 5.26); and
(b) no material alteration, repair, improvement or other work has been
ordered, directed or requested in writing to be done or performed to
or in respect of the Real Property or the Leased Property, or to any
of the plumbing, heating, elevating, water, drainage or electrical
systems, fixtures or works comprising part of the same by any
municipal, provincial or other competent authority, which alteration,
repair, improvement or other work has not been completed, and the
Vendor has not received any written or oral notification of any such
outstanding work being ordered, directed or requested, other than
those that have been complied with.
5.9 Leased Property
The Vendor is not a party to any lease or agreement to lease or sublease in
respect of any real or immovable property used in connection with or otherwise
relating to the Purchased Businesses, whether as lessor or lessee or sublessor
or sublessee, other than the leases and subleases (the "Leases") described in
Schedule 3 relating to the Leased Property. Schedule 3 sets out the parties to
and dates of each of the Leases and any amendments thereto. Except as described
in
36
Schedule 3, the Vendor occupies the Leased Property and, subject to the terms
and conditions of the relevant Leases, has the exclusive right to occupy and use
the Leased Property. Except as set forth in Schedule 3, each of the Leases is in
good standing and in full force and effect, and neither the Vendor nor, to the
knowledge of the Vendor, any other party thereto is in breach of any material
covenants, conditions or obligations contained therein. The Vendor has made
available a true and complete copy of each Lease and all amendments thereto to
the Purchaser.
5.10 Inventories and Machinery, Equipment
(a) The value of all inventory items relating to the Purchased Businesses
have been recorded at the lower of cost or net realizable value and
otherwise in accordance with generally accepted accounting principles
applied on a basis consistent with the Vendor's past practice.
(b) To the Vendor's knowledge, all machinery and equipment forming part of
the Purchased Assets and used in the current operations of the
Purchased Business, are in good operating condition, normal wear and
tear excepted, except for circumstances which would not have a
Material Adverse Effect.
5.11 Accounts Receivable
All accounts receivable, book debts and other debts due or accruing to the
Vendor in connection with the Purchased Businesses are bona fide, have been
reflected on the books of the Vendor in accordance with generally accepted
accounting principles, and to the Vendor's knowledge, except as set forth in
Schedule 7 are not subject to any set off, counterclaim or disputes.
5.12 Intellectual Property Rights
(a) Schedule 10 contains a list of all EMS IP that is the subject of an
application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any private, state, government
or other public or quasi-public legal authority within a jurisdiction
in which the Purchased Businesses is conducted at any time
("Registered EMS IP"). Schedule 10 lists all proceedings or actions
before any court or tribunal (including the United States Patent and
Trademark Office or equivalent authority anywhere in the world)
related to the Registered EMS IP, and any actions that must be, but
have not been, taken prior to February 28, 2006 for the purposes of
obtaining, maintaining, perfecting or preserving or renewing any
Registered EMS IP, including the payment of any registration,
maintenance or renewals fees or the filing of any applications or
responses to office actions, documents, applications or certificates.
(b) Each item of Registered EMS IP is, to the knowledge of Vendor, valid
and enforceable and will continue to be valid and enforceable as of
the Closing Date, all necessary registration, maintenance and renewal
fees due at the Closing or within ninety days thereafter in connection
with Registered EMS IP have been made, and all necessary documents,
recordations and certificates in connection with Registered EMS IP
have been filed with the relevant patent, copyright, trademark or
other authorities in Canada and the United States, as the case may
37
be, for the purposes of prosecuting, perfecting and maintaining
Registered EMS IP in the intended jurisdictions. To the knowledge of
the Vendor, there exist no information, materials, facts, or
circumstances, including any information or fact that would constitute
prior art that would render any of the Registered EMS IP invalid or
unenforceable, or that would materially adversely affect any pending
application for any Registered EMS IP, and neither the Vendor nor any
Affiliate or has knowingly misrepresented, or knowingly failed to
disclose, any facts or circumstances in any application for any
Registered EMS IP that would constitute fraud or a misrepresentation
with respect to such application or that would otherwise affect the
validity or enforceability of any Registered EMS IP.
(c) The Vendor has agreed to, and has assumed, obligations or duties to
indemnify, reimburse, hold harmless, defend or otherwise assume or
incur any liability with respect to the infringement or
misappropriation of any Intellectual Property Rights pursuant to most
of the Operating Agreements.
(d) Neither the Vendor nor the Purchasers has knowledge of any facts or
circumstances that would render the EMS IP unusable in the Purchased
Businesses as currently conducted and as contemplated to be conducted
immediately prior to the Closing.
(e) The sale, transfer and assignment of the EMS IP or the purchase by the
applicable Purchaser of the EMS IP will not result in or otherwise
impose any royalty or license fee payment obligation on the applicable
Purchaser or the violation of any third person's rights, other then
for royalties pursuant to agreements with Technologies Partnership
Canada.
(f) The sale, transfer and assignment of the EMS IP to the applicable
Purchaser will not violate any Applicable Law.
(g) To the knowledge of the Vendor, neither the use of the EMS IP nor the
operation of the Purchased Businesses as currently conducted and as
contemplated to be conducted immediately prior to the Closing will
violate or infringe the rights of any third person or result in
infringement by the Vendor or any of its customers, of any
Intellectual Property Rights of any third person as of the Closing
Date. As of the Closing Date, the Vendor has not received notice or
knowledge of facts sufficient to form any reason to believe that the
use of the EMS IP, or the operation of the Purchased Businesses,
infringes the Intellectual Property Rights of any third party.
(h) The Vendor is the exclusive owner of all EMS IP.
(i) The Vendor has taken reasonable steps to protect its rights in its
Know-How, confidential information and Trade Secrets, EMS IP and any
Intellectual Property Rights of third parties provided to the Vendor
under an obligation of confidentiality. Without limiting the
foregoing, the Vendor has caused each current and former Employee and
each contractor who has been involved in the
38
development of any EMS IP to be bound by confidentiality obligations
with respect thereto.
5.13 Insurance
Schedule 14 identifies all insurance policies (specifying the insurer, the
amount of the coverage, the type of insurance, the policy number and any pending
claims thereunder) maintained by the Vendor on the Purchased Assets or personnel
as of the date hereof. Schedule 14 sets forth a list of the most recent
inspection reports, if any, received from insurance underwriters or others as to
the condition of the Purchased Assets, true and complete copies of which have
been provided t MDA, and a summary of all insurance claims made in the last
three years.
5.14 No Expropriation
No part of the Purchased Assets has been taken or expropriated by any federal,
provincial, municipal or other authority, nor has any notice or proceeding in
respect thereof been given to the Vendor, threatened or commenced, nor is the
Vendor aware of any intent or proposal to give any such notice or commence any
such proceedings.
5.15 Contracts
Schedules 3, 7, 8, 10, 32 and 34 set forth all of the following Contracts to be
assumed by and acquired by any of the Purchasers:
(a) all distributor, sales, advertising, agency or manufacturer's
representative Contracts;
(b) all collective bargaining agreements or other Contracts with any
labour union;
(c) all continuing Contracts for the purchase of materials, supplies,
equipment or services (other than Contracts for capital expenditures)
involving more than $100,000 in respect of any one such Contract;
(d) all employment or consulting Contracts or any other Contracts with any
of the non-unionized Employees or any consultant in excess of $100,000
per annum for a fixed term or providing for specified notice (or pay
in lieu) in the case of termination without cause;
(e) all trust indenture, mortgage, promissory note, loan agreement,
guarantee or other Contracts for the borrowing of money or a leasing
transaction of the type required to be capitalized in accordance with
generally accepted accounting principles except where it constitutes
an Excluded Liability;
(f) all Contracts for capital expenditures in excess of $50,000;
(g) all Contracts pursuant to which the Vendor is a lessor or lessee of
any machinery, equipment, motor vehicles, office furniture, fixtures
or other personal property that involves an annual rental in excess of
$25,000;
39
(h) all non competition or similar Contracts (whether the Vendor is a
beneficiary or obligor thereunder);
(i) all material licence agreements that relates in whole or in part to
any EMS IP forming part of the Purchased Business;
(j) all agreements of guarantee, support, indemnification, assumption or
endorsement of, or any other similar commitments with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other person, except for cheques
endorsed for collection in the ordinary course of the applicable
Purchased Business and except where it constitutes an Excluded
Liability;
(k) all Operating Contracts in excess of $1 million (other than for
proposals which upon acceptance do not create a legally binding
obligation on the Vendor or which are just rough order of magnitude
proposals), including Operating Contracts in excess of $1 million
where delivery has been made but formal acceptance, if required under
the Contract has not occurred or where a warranty obligation
continues;
(l) all other Contracts (other than Contracts of the types (ignoring
thresholds) referred to in paragraphs (a) to (k) above, and other than
for proposals which upon acceptance do not create a legally binding
obligation on the Vendor or which are just rough order of magnitude
proposals), in excess of $100,000 that expire, or may expire if the
same is renewed or extended at the option of any person other than the
Vendor, more than 1 year after the date of this Agreement; or
(m) all Contracts entered into by the Vendor other than in the ordinary
course of the Purchased Businesses;
(collectively, the "Material Contracts").
Except as set out in Schedule 7, the Vendor has performed in all material
respects all of the obligations required to be performed by it (including
milestone and delivery obligations) and is entitled to all benefits under, and
is not in default or alleged to be in default in any material respect of, any
Material Contract relating to the Purchased Businesses or Purchased Assets to
which it is a party or by which it is bound. To the knowledge of the Vendor, all
sub-contracts under any Material Contract are in good standing and no
sub-contractor is in default thereunder in any material respect. The books of
the Purchased Businesses reflect all holdbacks under and there are no material
claims alleged or threatened against the Vendor with respect to any Material
Contracts. There are no Operating Contracts that are "cost plus contracts" that
have a variable daily or hourly rate for the calculation of the xxxxxxxx to the
customer thereunder or are subject to a retroactive rate adjustment. To the
knowledge of the Vendor, all Material Contracts are in good standing and in full
force and effect and no other party thereto is in material breach of any
covenants, conditions or obligations contained therein.
40
Except as set out in Schedule 7, the Vendor has performed in all material
respects all of the obligations to be performed by it and is not in default or
alleged to be in default under any Contract or Permitted Encumbrance which is
not a Material Contract (collectively the "Other Contracts") comprising part of
the Purchased Assets, except for defaults or instances of non-performance which
do not, or will not constitute a Material Adverse Effect. To the knowledge of
the Vendor all such other Contracts are in good standing and in full force and
no other party thereto is in breach of any covenants, conditions or obligations
contained therein except for circumstances which do not in the aggregate
constitute a Material Adverse Effect.
5.16 Compliance with Laws; Governmental Authorization; Government Programs
Except for the matters addressed in Section 5.26 (which are represented and
warranted therein and except as set forth on Schedule 26), the Vendor has
complied with all Applicable Laws applicable to the Purchased Businesses or the
Purchased Assets including without limitation PIPEDA, pay equity laws, all
applicable export and import laws in Canada or the United States and in
particular, where applicable, has complied with, and there have been no
infraction of, the Control Goods Program or International Traffic in Arms
Regulations (the "Export Laws"), except where such non compliance does not
constitute a Material Adverse Effect. All representations made under any Assumed
Contract or Completed Contract to Technologies Partnership Canada or with
respect to any DIPP grant by the Vendor have been true and correct and all
payments due or accrued for any activities of the Vendor up to Closing have been
made in accordance with the required guidelines and no royalty is currently
payable under any Government of Canada program arising from product sales or
deliveries prior to Closing Date it being understood that prior sales or
revenues of the Vendor will be taken into account to determining future payments
under such program. Schedule 9 sets out a complete and accurate list of all
government or regulatory licences, permits, approvals, consents, certificates,
registrations and authorizations held by or granted to the Vendor which are
material to the conduct of the Purchased Businesses (the "Licences"), and there
are no other material such licences, permits, approvals, consents, certificates,
registrations or authorizations necessary to carry on the Purchased Businesses
as presently carried on by the Vendor or to own or lease any of the Purchased
Assets. Each Licence is valid, subsisting and in good standing and the Vendor is
not in default or breach of any Licence in any material respect, and, to the
knowledge of the Vendor, no proceeding is pending or threatened to revoke or
limit any Licence. The Vendor has made available a true and complete copy of
each Licence and all amendments thereto to the Purchasers.
5.17 Consents and Approvals
There is no requirement on the part of the Vendor to make any filing with, give
any notice to or to obtain any Licence from any government or regulatory
authority as a condition to the lawful consummation of the transactions
contemplated by this Agreement, except for the filings, notifications and
Licences described in Schedule 16 or that relate solely to the identity of the
Purchaser or ComDev, as applicable or the nature of any business carried on by
the Purchasers or ComDev, as applicable. There is no requirement under any
Material Contract relating to the Purchased Businesses or Purchased Assets to
which the Vendor is a party or by which it is bound to give any notice to, or to
obtain the consent or approval of, any party to such agreement,
41
instrument or commitment relating to the consummation of the transactions
contemplated by this Agreement, except for the notifications, consents and
approvals described in Schedule 17.
5.18 Financial Statements
The Financial Statements have been prepared in accordance with generally
accepted accounting principles (including for greater certainty as described in
Section 1.5) applied on a basis consistent with prior periods (except as set
forth in Schedule 23 and except that there are no notes to such financial
statements), and present fairly, in all material respects, the assets,
liabilities, financial position and results of operations of the Purchased
Businesses as at the respective dates of the Financial Statements and the sales,
earnings and results of operations of the Purchased Businesses for the
respective periods covered by the Financial Statements.
5.19 Books and Records
The books and records of the Vendor accurately, fairly and correctly set out and
disclose, in all material respects, all financial transactions of the Vendor
relating to the Purchased Businesses for the periods noted therein.
5.20 Absence of Changes
Since June 30, 2005, except as disclosed in Schedules 7 and 21, the Purchased
Businesses have been carried on only in the ordinary course consistent with past
practice and there has not been:
(a) any change in the financial condition, properties, assets, business,
liabilities or operations of each of the Purchased Businesses taken as
a whole which would result in or could reasonably be expected to
result in a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by insurance)
affecting the Purchased Assets which would result in or could
reasonably be expected to result in a Material Adverse Effect;
(c) any material obligation or liability (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) incurred by
the Vendor in connection with the Purchased Businesses, other than
those incurred in the ordinary course of the Purchased Businesses and
consistent with past practice;
(d) any payment, discharge or satisfaction of any material Encumbrance,
liability or obligation of the Vendor in relation to the Purchased
Businesses or the Purchased Assets (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) other than
Excluded Liabilities and other than payments in the ordinary course of
business consistent with past practice;
(e) any labour trouble affecting the Purchased Businesses or the Purchased
Assets which would result in or could reasonably be expected to result
in a Material Adverse Effect;
42
(f) any licence, sale, assignment, transfer, disposition, pledge, mortgage
or granting of a security interest or other Encumbrance on or over any
Purchased Assets, other than (i) Permitted Encumbrances and (ii) sales
of inventory to customers in the ordinary course of the Purchased
Businesses;
(g) any increase in the compensation of employees of the Vendor employed
in the Purchased Businesses (including, without limitation, any
increase pursuant to any Employee Plan except as may be required by
the terms of any Employee Plan), or any increase in any such
compensation or bonus payable to any officer, employee, consultant or
agent thereof (having an annual salary or remuneration in excess of
$50,000 or the making of any loan to, or engagement in any transaction
with, any employee, officer or director of the Vendor in relation to
the Purchased Businesses, other than changes pursuant to the
collective bargaining agreement recently negotiated with the
engineer's union or except with the Purchaser's approval, involve a
compensation or benefits adjustment of less than 3.5% of the base
annual salary for any individual employee;
(h) any capital expenditures or commitments in respect of capital
expenditures relating to the Purchased Businesses or Purchased Assets
in excess of $250,000 in the aggregate;
(i) any forward purchase commitments in excess of the requirements of any
Purchased Businesses for normal operating inventories or at prices
materially higher than the current market prices;
(j) any forward sales commitments other than in the ordinary course of any
Purchased Business;
(k) any change in the accounting practices followed by the Vendor in
relation to the Purchased Businesses;
(l) any change adopted in the depreciation or amortization policies or
rates;
(m) any material change in the credit terms offered to customers of, or by
suppliers to, the Purchased Businesses.
5.21 Non Arm's Length Transactions
With respect to the Purchased Businesses, except as set forth in Schedule 27:
(a) the Vendor has not since January 1, 2005 made any payment or loan to,
or borrowed any moneys from or is otherwise indebted to, any Employee
or, to the knowledge of the Vendor, any other person not dealing at
arm's length with the Employee, except as reflected in the Financial
Statements and except for usual employee reimbursements and
compensation paid in the ordinary course of the Purchased Businesses;
and
43
(b) except for Contracts of employment, the Vendor is not a party to any
Contract with any officer, director, employee, shareholder or any
other person not dealing at arm's length with the Vendor (within the
meaning of the Tax Act) or to the knowledge of the Vendor any
Affiliate or Associate of any of the foregoing in connection with the
Purchased Businesses.
5.22 Taxes
There are no outstanding liabilities for Taxes payable, collectible or
remittable by the Vendor, whether assessed or not, which may result in a
material Encumbrance on or other claim against or seizure or sale of all or any
part of the Purchased Assets or would otherwise adversely affect the Purchased
Businesses or would result in a Purchaser becoming liable or responsible
therefor. To the knowledge of the Vendor, there are no actions, suits,
proceedings, investigations or claims pending or threatened against the Vendor
in respect of Taxes which may result in a Encumbrance on or other claim against
or seizure or sale of any of the Purchased Assets or liability or responsibility
on the part of a Purchaser for Taxes payable, collectible or remittable by the
Vendor. The Vendor has withheld from all remuneration (including taxable
benefits) of employees of the Purchased Businesses all Taxes and other
deductions required to be withheld therefrom, and has remitted the same to the
proper Tax or other receiving authority within the time required under
applicable legislation.
5.23 Litigation
Except as described in Schedule 15, there are no actions, suits or proceedings
(whether or not purportedly on behalf of the Vendor) pending, or, to the
knowledge of the Vendor, threatened or anticipated against or affecting the
Vendor or the Purchased Businesses at law or in equity or before or by any
federal, provincial, municipal or other governmental department, court,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before or by an arbitrator, arbitration board or mediator and which do or could
pertain to the Purchased Businesses or the Purchased Assets or could affect the
ability of the Vendor to perform its obligations hereunder. The Vendor is not
aware of any ground on which any such action, suit or proceeding might be
commenced with any reasonable likelihood of success. The Vendor is not a
plaintiff or complainant in any action, suit or proceeding with respect to the
Purchased Businesses.
5.24 Residency
The Vendor is not a non-resident of Canada for the purposes of the Tax Act.
5.25 GST/QST Registration
The Vendor is a registrant for purposes of the ETA whose registration number is
86748 0857 RT00002 and is a registrant for the purposes of the Act respecting
the Quebec Sales Tax whose registration number is 1022024571-TQ0001.
44
5.26 Environmental
(a) Except as disclosed in Schedule 18:
(i) The Purchased Businesses, the Real Property, the Leased Property
and the Purchased Assets have, since January 1, 2000, been and
are in compliance, in all material respects, with all Applicable
Laws ("Environmental Laws") relating to the protection of the
environment, occupational health and safety or the use, storage,
disposal, discharge, transport, handling, remediation or
corrective action of any pollutants, contaminants, chemicals,
deleterious substances or industrial, caustic, dangerous goods,
toxic or hazardous wastes or substances ("Hazardous Substances").
(ii) The Purchased Businesses have not used or permitted to be used
since January 1, 2000, except in compliance, in all material
respects, with all Environmental Laws, the Real Property or the
Leased Property to store, deposit, dispose of or handle any
Hazardous Substance.
(iii) To the knowledge of the Vendor, the soil and subsoil, and the
surface and ground water in, on or under the Real Property or
Leased Property do not contain any Hazardous Substances in breach
of Environmental Laws, nor, to the knowledge of the Vendor, do
the Real Property or Leased Property contain any underground
storage tanks; all Hazardous Substances which have been or are
being treated or stored on the Real Property or Leased Property
by the Vendor have been generated, treated and stored in
compliance in all material respects with Environmental Law.
(iv) None of the Real Property or the Leased Property are insulated
with urea formaldehyde insulation and none of the Real Property
or the Leased Property contain asbestos or PCBs.
(v) The Vendor in connection with the Purchased Businesses has not
caused or permitted since January 1, 2000, except in material
compliance with all Environmental Laws, the emission, release,
spill, deposit or discharge of any Hazardous Substance, and the
Vendor is not aware of any Hazardous Substance on, in, under, or
migrating from the Real Property or the Leased Property. All
Hazardous Substances and all other wastes and other materials
used in whole or in part by the Purchased Businesses have been,
since January 1, 2000, disposed of, transported and stored by the
Vendor in compliance in all material respects with all
Environmental Laws.
(b) The Vendor has delivered to the Purchasers true and complete copies of
all environmental audits, evaluations, assessments, studies or tests
prepared by third parties and the most recent comprehensive internally
prepared report which it
45
has in its possession relating to the Purchased Businesses, the Real
Property, the Leased Property and their use which are or with
reasonable efforts could be within the possession or control of the
Vendor. The Vendor is not aware of the existence of any such audits,
evaluations, assessments, studies, tests or reports conducted or
prepared since January 1, 2000 that are not within the possession or
control of the Vendor.
5.27 Customers and Suppliers
Schedule 19 sets out the major customers, suppliers and strategic partners of
the Purchased Business (being those customers and suppliers of the Purchased
Businesses accounting for more than 10% of sales of the Purchased Businesses for
the period January 1, 2004 to May 28, 2005) and all strategic partners and there
has been no material adverse change in the Vendor's business relationship with
any major customer or supplier or group of major customers or suppliers or any
of the strategic partners identified in Schedule 19. The Vendor has not received
any notice from or believes that any such customer, supplier or strategic
partner is contemplating any materially adverse changes in its relationship with
the Purchased Businesses. For the purposes of this Section 5.27 "strategic
partner" means a party to a material teaming agreement or joint venture
agreement in connection with a Purchased Business.
5.28 Employee Plans
Schedule 8 identifies each retirement, pension, bonus, stock purchase, stock
option, profit sharing, deferred compensation, severance or termination pay,
insurance, medical, hospital, dental, vision care, drug, sick leave, disability,
salary continuation, legal benefits, unemployment benefits, vacation, incentive
or other compensation plan or arrangement or other employee benefit that is
maintained, or otherwise contributed to or required to be contributed to, by the
Vendor relating to the Purchased Businesses or the Purchased Assets for the
benefit of employees or former employees of the Vendor other than Statutory
Plans (the "Employee Plans") and except as set forth in Schedule 8 a complete
copy of each Employee Plan has been made available to the Purchaser. Each
Employee Plan has been maintained in compliance in all material respects with
its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Employee Plan. Except as set
forth in Schedule 8 no improvements to the benefits provided under the Employee
Plans have been promised by the Vendor and no amendments or improvements to any
Employee Plan will be made or promised by the Vendor prior to the Closing and no
amendments have been made to the Pension Plans since January 1, 2005. The
Pension Plans are in the funding and solvency position set out in Schedule 35
which is the most recent triennial valuation date for each Pension Plan. The
Vendor is in compliance with the funding requirements under Applicable Laws to
the Closing Date and is otherwise in compliance in all material respects with
all Applicable Laws with respect thereto and in accordance with the plan text.
The obligations for the Retirement Plan and obligations and funding for the
Pension Plans as set out in the next recent triennial calculation of such plans
have been calculated in accordance with Applicable Laws and the texts of such
plans, using assumptions referred to in Schedule 35. The Vendor believes that
such assumptions are reasonable for the purposes of such calculations as of and
in circumstances prevailing at the date they were made and/or prescribed by
Applicable Law. The assumptions as used by Xxxxxx Human Resource Consulting in
their calculation of the APBO as at December
46
31, 2004 are determined in accordance with the summary of actuarial methods and
assumptions set out in Schedule 35 and reflect the then current facts of the
Purchased Businesses and the Retirement Plan and such actuarial methods and
assumptions were determined in a manner consistent with those used in last
audited calculation thereof and the financial statements of the Vendor disclosed
to the Space Purchaser.
5.29 Collective Agreements
Except for the Collective Agreements or as described in Schedule 8, the Vendor
has not made any Contracts with any labour union or employee association with or
in respect of any of the Employees of the Purchased Businesses nor made
commitments to or conducted negotiations with any such labour union or employee
association with respect to any future agreements and, except as set out in
Schedule 8, the Vendor is not aware of any current attempts to organize or
establish any labour union or employee association with respect to any employees
of the Vendor employed in the Purchased Businesses nor, to the knowledge of the
Vendor, is there any certification of (or application for certification of) any
such union with regard to a bargaining unit comprising any of the employees of
the Vendor employed in the Purchased Businesses. Except as set out in Schedules
8 and 15, there are no grievances against the Vendor in respect of the Employees
or the Purchased Businesses for which the Vendor has received written notice
under any collective agreement.
5.30 Employees
Schedule 33 sets forth a list of all Employees including status, title, year of
hire, current compensation and location.
Except as disclosed in Schedule 8 or 15, no notice has been received by the
Vendor of any complaint filed by any of the employees employed in the Purchased
Businesses by the Vendor against the Vendor claiming that the Vendor has
violated the Labour Code, the Human Rights Act (or any applicable employee or
human rights or similar legislation in Ontario or the other jurisdictions in
which the Purchased Businesses is conducted) and, to the Vendor's knowledge, no
complaint against the Vendor in respect of the Purchased Businesses is pending
before any labour relations board, arbitrator or other adjudicator. There are no
outstanding orders, and no notice has been received by the Vendor of charges,
against the Vendor in respect of the Purchased Businesses or the Purchased
Assets under the Occupational Health and Safety Act (Quebec) (or any applicable
health and safety legislation in Ontario and in the other jurisdictions in which
the Purchased Businesses are conducted). All levies, assessments and penalties
made against the Vendor pursuant to the Industrial Accidents and Occupational
Diseases Act (Quebec) (and any applicable workers' compensation legislation in
Ontario and in the other jurisdictions in which the Purchased Businesses are
conducted) have been paid by the Vendor and the Vendor has not been reassessed
in respect of the Purchased Businesses in any material respect under any such
legislation during the past five years.
5.31 Employee Accruals
All accruals for unpaid vacation pay for employees of the Purchased Business,
premiums for unemployment insurance, health premiums, Canada Pension Plan
premiums, accrued wages,
47
salaries and commissions and employee benefit plan payments in each case in
respect of the Purchased Businesses have been reflected in the books and records
of the Vendor.
5.32 Computer Systems, Etc.
(a) Schedule 34 sets out an accurate and complete list of all:
(i) capitalized machinery and equipment constituting computer or
communications hardware owned by or leased to the Vendor in
connection with the Purchased Businesses (the "Computer Systems
Hardware");
(ii) computer software (including, where applicable, documentation,
source code and back-ups) owned or used by or licensed to the
Vendor in connection with the Purchased Businesses, whether
stored on or off-site, excluding any computer software that is
licensed to the Vendor under "shrink wrap" or "click-through"
license terms or through other mass market distribution means
(the "Computer Systems Software"); amd
(iii) material contracts, agreements, leases and other legally binding
instruments relating to Computer Systems Hardware and Computer
Systems Software, including, without limitation, all relevant
maintenance, extended warranty, software escrow, network service,
service bureau, outsourcing and on-line service agreements and
arrangements (the "Computer Systems Contracts").
(b) Nothing in this Section 5.32 affects the generality or applicability
of Sections 5.5, 5.10, 5.12, 5.15 and 5.17 insofar as they would
otherwise include Computer Systems Hardware, Computer Systems Software
and Computer Systems Contracts.
5.33 Costs to Complete, Etc.
The Vendor's estimates at completion, costs to complete or time to completion,
margins, milestone invoicing summary, risk assessments and variances in respect
of any or all of Operating Contracts of the Purchased Businesses or related
reserves or provisions therefor, or the calculation of the same, as they may
appear in the records of the Purchased Businesses or be reflected in any of the
Financial Statements have been made in good faith in the ordinary course of the
Purchased Businesses using procedures that meet the requirements of generally
accepted accounting principles.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent represents and warrants to the Purchasers as follows and acknowledges
and confirms that the Purchasers are relying on such representations and
warranties in connection with their purchase of the Purchased Assets, as of the
date of execution of this Agreement and the Closing Date.
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6.1 Organization
The Parent is a corporation validly subsisting under the laws of the State of
Georgia and has the corporate power to enter into this Agreement and to perform
its obligations hereunder.
6.2 Authorization
This Agreement has been duly authorized, executed and delivered by the Parent
and is a legal, valid and binding obligation of the Parent, enforceable against
the Parent by the Vendor in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may only be
granted in the discretion of a court of competent jurisdiction.
6.3 No Violation
The execution and delivery of this Agreement by the Parent and the consummation
of the transactions herein provided for will not result in the violation of, or
constitute a default under, or conflict with or cause the acceleration of any
obligation of the Parent under:
(a) any Contract to which the Parent is a party or by which it is bound;
(b) any provision of the constating documents or by laws or resolutions of
the board of directors (or any committee thereof) or shareholders of
the Parent;
(c) any judgment, decree, order, writ, injunction or award of any court,
governmental body or arbitrator having jurisdiction over the Parent
the breach or violation of which would adversely affect the
transactions contemplated hereby or impose liability on the Purchaser,
the Purchased Businesses or the Purchased Assets; or
(d) any Applicable Law.
6.4 Consents and Approvals
There is no requirement for the Parent to make any filing with, give any notice
to or obtain any Licence from any government or regulatory authority as a
condition to the lawful consummation of the transactions contemplated by this
Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, jointly and severally, represents and warrants to the
Vendor and Parent as follows and acknowledges and confirms that the Vendor is
relying on such representations and warranties in connection with its sale of
the Purchased Assets as of the date of execution of this Agreement and the
Closing Date:
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7.1 Organization
Each of the Purchasers is a corporation validly subsisting under the laws of
Canada and has the corporate power to enter into this Agreement and the Other
Agreements to which it is a party and to perform its obligations hereunder and
thereunder.
7.2 Authorization
This Agreement has been duly authorized, executed and delivered by each of the
Purchasers, and the Other Agreements to which it is a party will have been duly
authorized, executed and delivered by each of the Purchasers, as applicable, and
is and are legal, valid and binding obligations of the applicable Purchaser
enforceable against the applicable Purchaser by the Vendor or the Parent in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may only be granted in the
discretion of a court of competent jurisdiction.
7.3 No Violation
The execution and delivery of this Agreement by each of the Purchasers the
consummation of the transactions herein provided for will not result in the
violation of, or constitute a default under, or conflict with or cause the
acceleration of any obligation of the Purchasers under:
(a) any Contract to which each of the Purchasers is a party or by which it
is bound;
(b) any provision of the constating documents or by laws or resolutions of
the board of directors (or any committee thereof) or shareholders of
each of the Purchasers;
(c) any judgment, decree, order, writ, injunction or award of any court,
governmental body or arbitrator having jurisdiction over each of the
Purchasers the breach or violation of which would adversely affect the
transactions contemplated hereby or impose liability on the Vendor; or
(d) any Applicable Law.
7.4 Consents and Approvals
Except as set forth herein there is no requirement for a Purchaser to make any
filing with, give any notice to or obtain any Licence from any government or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
7.5 Investment Canada
Each of the Purchasers is a Canadian within the meaning of the Investment Canada
Act.
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7.6 GST/QST Registration
Each of the Purchasers will be a registrant for purposes of the ETA and will be
a registrant for the purposes of the Act respecting the Quebec Sales Tax within
3 Business Days of the date hereof and written notice thereof will be given to
the Vendor:
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF MDA
MDA represents and warrants to the Vendor and Parent as follows and acknowledges
and confirms that the Vendor is relying on such representations and warranties
in connection with its sale of the Purchased Assets as of the date of execution
of this Agreement and the Closing Date:
8.1 Organization
MDA is a corporation validly subsisting under the laws of Canada and has the
corporate power to enter into this Agreement and the Other Agreements to which
it is a party and to perform its obligations hereunder and thereunder.
8.2 Authorization
This Agreement has been duly authorized, executed and delivered by the
Purchasers and MDA, and the Other Agreements to which it is a party will have
been duly authorized, executed and delivered by MDA, as applicable, and is and
are legal, valid and binding obligations of MDA enforceable against MDA by the
Vendor or the Parent in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may only be granted in
the discretion of a court of competent jurisdiction.
8.3 No Violation
The execution and delivery of this Agreement by MDA the consummation of the
transactions herein provided for will not result in the violation of, or
constitute a default under, or conflict with or cause the acceleration of any
obligation of MDA under:
(a) any Contract to which MDA is a party or by which it is bound;
(b) any provision of the constating documents or by laws or resolutions of
the board of directors (or any committee thereof) or shareholders of
MDA;
(c) any judgment, decree, order, writ, injunction or award of any court,
governmental body or arbitrator having jurisdiction over MDA the
breach or violation of which would adversely affect the transactions
contemplated hereby or impose liability on the Vendor; or
(d) any Applicable Law.
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8.4 Consents and Approvals
Except as set forth herein, there is no requirement for MDA to make any filing
with, give any notice to or obtain any Licence from any government or regulatory
authority as a condition to the lawful consummation of the transactions
contemplated by this Agreement.
ARTICLE 9
SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
9.1 Survival of Covenants, Representations and Warranties
To the extent that they have not been fully performed at or prior to the Time of
Closing, the covenants, representations and warranties contained in this
Agreement and in all certificates and documents delivered pursuant to or
contemplated by this Agreement shall survive the closing of the transactions
contemplated hereby and shall continue for the applicable limitation period
notwithstanding such closing; provided, however, that:
(a) the representations and warranties set out in Articles 5, 6, 7 and 8
and the corresponding representations and warranties set out or
incorporated in the certificates to be delivered pursuant to
subsections 11.1(a) and 11.2(a) (other than those contained in
Sections 5.1, 5.2, 5.3 5.6 5.22, 5.24, 5.25, 5.26, 6.1, 6.2, 6.3, 7.1,
7.2 and 7.3 and 8.1, 8.2 and 8.3) shall terminate on March 31, 2007;
(b) the representations and warranties set out in Sections 5.1, 5.2, 5.3,
5.6, 6.1, 6.2, 6.3, 7.1, 7.2 and 7.3 and 8.1, 8.2 and 8.3 (and the
corresponding representations and warranties set out or incorporated
in the certificates to be delivered pursuant to subsections 11.1(a)
and 11.2(a)) shall terminate on September 30, 2012;
(c) the representations and warranties set out in Sections 5.26 (and the
corresponding representations and warranties set out or incorporated
in the certificate to be delivered pursuant to subsection 11.1(a))
shall terminate on September 30, 2012; and
(d) the representations and warranties contained in Sections 5.22, 5.24
and 5.25 and the corresponding representations and warranties set out
or incorporated in the certificate to be delivered pursuant to
subsection 11.1(a) shall survive until 30 days after the expiration of
all applicable time periods for assessment, reassessment, liens and
appeals relating thereto.
Any claim for breach of such representations and warranties, to be effective,
must be asserted in writing on or prior to the applicable expiration time.
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ARTICLE 10
COVENANTS
10.1 Access to Purchased Businesses and Purchased Assets
The Vendor shall forthwith make available to the applicable Purchaser and its
authorized representatives (which for this Section shall include ComDev) and, if
requested by a Purchaser, provide a copy of all title documents, Contracts,
financial statements, policies, plans, reports, licences, orders, permits, books
of account, accounting records and all other documents, information and data
relating to the Purchased Businesses which are in its possession or control,
except that the Vendor shall not be obligated to provide, and the Purchasers and
their authorized representatives shall not be entitled to make, copies of
technical data or drawings. The Vendor shall afford the Purchasers and their
authorized representatives every reasonable opportunity to have reasonable
access to the Purchased Assets and, subject to the consent of applicable third
parties, if any, all other property and assets utilized in the Purchased
Business provided that representatives of Space Business shall be permitted to
attend at the Ste-Xxxx Premises and the Ottawa Premises and representatives of
ComDev shall be permitted to attend at the Ottawa Premises during normal
business hours or as otherwise reasonably requested after the date hereof and
have access to the computer system equipment, proposals and books and records
provided that same does not interfere with normal business operations of the
Vendor. At the request of the applicable Purchaser, the Vendor shall execute
such consents, authorizations and directions as may be necessary to permit any
inspection of the Purchased Businesses or any of the Purchased Assets or to
enable the applicable Purchaser, or its authorized representatives (including
ComDev) to obtain reasonable access to all files and records relating to any of
the Purchased Assets maintained by governmental or other public authorities. The
Vendor will make available to the Purchasers at their request, a true and
complete copy of each Material Contract and all amendments thereto. At the
applicable Purchaser's request, the Vendor shall co operate with the applicable
Purchaser in arranging any such meetings as the applicable Purchaser should
reasonably request with:
(a) senior management and Employees as requested by the applicable
Purchaser of the applicable Purchased Business or ComDev, in the case
of the Electronic Business; and
(b) the auditors, solicitors or any other professionals or consultants
engaged or previously engaged to provide services to the Vendor who
have knowledge of matters relating to the Purchased Businesses or
Purchased Assets,
(c) any customers or suppliers of the Purchased Businesses,
provided that the Vendor shall be entitled, at its request, to attend and
participate in any and all such meetings.
Notwithstanding the foregoing unless required pursuant to the Radarsat-2
Subcontract, the Vendor shall not be required to provide to any Purchaser, MDA
or any authorized representatives any materials, strategies, advice or other
information prepared or obtained in connection with any dispute with MDA.
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Except as set forth in subsection 13.1(a) hereof, the exercise of any rights of
inspection by or on behalf of the applicable Purchaser under this Section 10.1
shall not mitigate or otherwise affect any of the representations and warranties
of the Vendor hereunder, which shall continue in full force and effect as
provided in Section 9.1.
10.2 Delivery of Books and Records
At the Time of Closing, there shall be delivered to the applicable Purchaser by
the Vendor all the books and records described in subsection 2.1(k). The
Purchasers agree that they will preserve the books and records so delivered to
it for a period of 6 years from the Closing Date, or for such longer period as
is required by any Applicable Law, and will permit the Vendor or its authorized
representatives reasonable access thereto.
10.3 Conduct of Purchased Businesses and Other Matters Prior to Closing
Without in any way limiting any other obligations of the Vendor and the
Purchasers hereunder, during the period from the date hereof to the Time of
Closing:
(a) Conduct Business in the Ordinary Course. The Vendor shall conduct the
Purchased Businesses only in the ordinary course consistent with past
practice, and the Vendor shall not, without the prior written consent
of the Purchaser, which consent shall not be unreasonably withheld,
enter into any transaction or refrain from doing any action that, if
effected before the date of this Agreement, would result in a breach
in any material respect of any representation, warranty, covenant or
other obligation of the Vendor contained herein;
(b) Notice of Certain Actions. The Vendor shall provide written notice to
MDA if, since June 30, 2005, it has taken, or after the date hereof it
takes, any of the following actions in respect of the Purchased
Businesses:
(i) hiring of new management or key employees or termination of
existing management or key employees;
(ii) incurring any encumbrances or expenses (capital or otherwise)
which arise and which are outside the normal scope of the
Purchased Businesses, or which are in excess of US$75,000;
(iii) entering into any other new Contracts or amendments or
modifications to Contracts, including but not limited to
financing arrangements or real property leases, which are
material to the Purchased Businesses or could affect any Material
Contracts or any material liabilities of the Purchasers;
(iv) changing the employee compensation, including bonuses, benefits,
or share options, other than changes pursuant to the collective
bargaining agreement recently negotiated with the engineer's
union (provided that the Vendor shall not after the date hereof,
make any other changes to Employee compensation without the
consent of MDA, which consent shall not be unreasonably
withheld); and
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(v) change any inter company allocations and/or assessments other
than interest, lease or other payments made in the ordinary
course of business and on a basis consistent with the prior
period, and other than any such allocations or assessments
relating to Excluded Liabilities.
Upon the Vendor taking any of the actions set forth in this subsection
(b) after the date hereof, the Vendor shall provide to the Purchasers
if applicable, revised Schedule(s) to this Agreement disclosing such
action and the applicable Schedules to this Agreement shall be deemed
to be amended accordingly.
(c) Continue Insurance. The Vendor shall continue to maintain in full
force and effect all policies of insurance regarding the Purchased
Businesses or the Purchased Assets or renewals thereof now in effect
and shall give all notices and present all claims under all policies
of insurance in a due and timely fashion;
(d) Contractual Consents. Each of MDA, the Parent, the Vendor and the
Purchasers shall use their respective reasonable efforts to give or
obtain at or prior to the Time of Closing, the notices, consents and
approvals described in Schedules 22, 28 and 29;
(e) Preserve Business. The Vendor shall use its reasonable efforts to
preserve intact the Purchased Businesses and Purchased Assets and to
carry on the Purchased Businesses as currently conducted;
(f) Discharge Liabilities. The Vendor shall pay and discharge the
liabilities of the Vendor relating to the Purchased Businesses in the
ordinary course of business in accordance and consistent with the
previous practice of the Vendor, except those contested in good faith
by the Vendor, written notice of which shall be given to the
Purchasers;
(g) Corporate Action. The parties shall take or cause to be taken all
necessary corporate action, steps and proceedings to approve or
authorize the transfer of the Purchased Assets to the Purchasers and
the execution and delivery of this Agreement, the Other Agreements and
the other agreements and documents contemplated hereby and to cause
all necessary meetings of their respective directors and shareholders
to be held for such purpose;
(h) Proposals. The Vendor will not make any proposals or respond to any
requests for proposal or enter into any teaming agreements without
permitting MDA an opportunity to review and comment on the same; and
(i) Reasonable Efforts. Each of MDA, the Parent, the Vendor and the
Purchasers shall use their respective reasonable efforts to satisfy
the conditions contained in Sections 11.1 and 11.2.
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10.4 Delivery of Conveyancing Documents
At Closing, the Vendor shall deliver to the Purchasers all necessary deeds,
conveyances, bills of sale, assurances, transfers, assignments and any other
documentation necessary or reasonably required to transfer the respective
Purchased Assets to the applicable Purchaser with a good and marketable title,
free and clear of all Encumbrances whatsoever except for Permitted Encumbrances.
10.5 Delivery of Vendor's Closing Documentation
At Closing, the Vendor shall deliver to the Purchasers a certificate of status
and two copies, certified by one of its senior officers as of the Closing Date,
of the resolution authorizing the execution, delivery and performance by it of
this Agreement and any documents to be provided by it pursuant to the provisions
hereof. The Vendor shall also execute and deliver or cause to be executed and
delivered to the Purchasers copies of such other documents relevant to the
closing of the transactions contemplated hereby as the Purchasers, acting
reasonably, may request (including, in the case of the Vendor, such conveyances,
transfers and other documents as may be reasonably requested to convey the
respective Purchased Assets to the applicable Purchaser).
10.6 Delivery of Purchasers' Closing Documentation
At Closing, each of the Purchasers shall deliver to the Vendor a certificate of
good standing and two copies, certified by one of its senior officers as of the
Closing Date, of the resolution authorizing the execution, delivery and
performance by it of this Agreement and any documents to be provided by it
pursuant to the provisions hereof. At Closing, each of the Purchasers shall also
execute and deliver or cause to be executed and delivered copies of such other
documents relevant to the closing of the transactions contemplated hereby as the
Vendor, acting reasonably, may request.
10.7 Employees
(a) The Vendor agrees to provide the Purchasers, at least two Business
Days and not more than 10 Business Days prior to the Closing Date,
with (i) an up to date list of the names of the Employees, and (ii) a
list of all persons who are employees of the Business and are
receiving long-term disability payments (the "LTD Employees"). The
Space Purchaser and the Electronics Purchaser agree that they shall
between them, offer employment to all Employees, effective as at the
Time of Closing, on terms and conditions of employment no less
favourable in aggregate at the Time of Closing as are then applicable
to each of such Employees, such offers to be made in writing at a time
prior to the Closing Date (and prior to making such offer such
Purchasers shall provide the Vendor with the proposed form of offer
for its comments). Such offer shall include continued membership in
the applicable Pension Plans and the Retirement Plan. All those
Employees who accept the offers of employment to be made by the Space
Purchaser and the Electronics Purchaser hereunder are called the
"Transferred Employees". If any Employee who is offered employment by
the Electronics Purchaser on the Closing does not accept that offer of
employment, the Space
56
Purchaser will offer that Employee employment on the terms as set
forth above and as set out in Sections 10.9 and 10.10. Such Purchasers
acknowledge and agree that effective as at the Time of Closing, such
Purchasers shall become the employer of all applicable Employees
covered by the terms of the Collective Agreements and shall assume all
obligations thereunder (including without limitation the obligation,
where applicable, to rehire laid off employees in the event of any
applicable employee hirings).
Save as provided in Sections 4.2 and 4.4(a), the Purchasers shall
indemnify and hold harmless the Vendor from and against all Losses
suffered or incurred by the Vendor as a result of, or arising directly
or indirectly out of, in connection with or pursuant to any
termination of employment by such Purchasers after the Closing Date of
any Transferred Employees hired by them respectively. The Purchasers
acknowledge and agree that they shall recognize the length of service
of the Transferred Employees with the Vendor (and any predecessor
owner of the Purchased Businesses) up to the Closing Date in respect
of any termination of employment. No employee of the Purchased
Businesses shall be entitled to any rights under this subsection
10.7(a) or under any other provisions of this Agreement.
(b) The Vendor shall employ all of the employees currently employed in the
Purchased Businesses until the Time of Closing, except for any
employees who prior to the Time of Closing:
(i) are terminated for cause;
(ii) are terminated with the applicable Purchaser's consent, which
consent shall not be unreasonably-withheld;
(iii) voluntarily resign; or
(iv) retire.
The Vendor shall not attempt in any way to discourage any of the
Employees from accepting any offer of employment to be made by the
applicable Purchaser pursuant hereto.
(c) Until such time that the applicable Purchaser, under Contract or
Applicable Law, becomes obliged to provide employment to any LTD
Employee, the Vendor shall reimburse the applicable Purchaser for all
contributions made to a Pension Plan and all liabilities under the
Retirement Plan in respect of any LTD Employee and the Vendor shall
maintain the relevant disability insurance applicable to such LTD
Employee.
10.8 Employee Plans
The Purchasers are not assuming, nor will it have any liability for, any
Employee Plans of the Vendor, unless expressly set forth in Sections 4.1, 10.9
and 10.10.
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10.9 Non-Pension Benefit Plans
(a) The Space Purchaser shall establish benefit plans, other than Pension
Plans which are dealt with in Section 10.10 (the "Benefit Plans"),
including the Retirement Plan in order to comply with its obligations
pursuant to Sections 4.1(i) and 10.7 to be in effect at the Closing
Date. In the case of unionized Employees the Space Purchaser shall
establish and maintain the Benefit Plans in compliance with the terms
of the applicable Collective Agreement. In any event the Benefit Plans
shall provide benefits (which benefits shall include a health care
benefit, dental benefit, life insurance, short term disability, and
long term disability and the Retirement Plan) substantially comparable
to the benefits provided under the Employee Plans as at the Time of
Closing for the Employees in respect of their employment by the
Purchasers from and after the Time of Closing. For the purpose of
determining the eligibility of an Employee for membership in or
entitlement to benefits under the Benefit Plans and the Pension Plans:
(i) the period of employment shall include employment with both the
Vendor (and any predecessor owner of the Purchased Businesses)
and the Purchasers and shall be deemed not to have been
interrupted at the Time of Closing; and
(ii) the period of membership shall include membership in both the
Employee Plans and the Benefit Plans and shall be deemed not to
have been interrupted at the Time of Closing;
(b) The Space Purchaser shall cause the Benefit Plans to (i) immediately,
and without any waiting period, be available to each Employee (and his
or her eligible dependants) as of the Closing Date; (ii) waive any
limitation of coverage of an Employee (and his or her eligible
dependants) due to pre-existing conditions, and (iii) credit each
Employee with all deductible payments and co-payments made by such
Employee under the Employee Plans for the purpose of determining the
extent to which any such Employee has satisfied his or her deductible
and whether he or she has reached the out-of-pocket maximum under the
Benefit Plans.
(c) The Vendor shall remain liable for all obligations for benefit claims
under the Employee Plans in respect of the Employees incurred prior to
the Closing Date. The Purchasers shall be liable for all obligations
for benefit claims in respect of the Employees incurred on or after
the Closing Date. For purposes of this section, a benefit claim is
deemed incurred: in the case of medical or dental benefits, when the
services that are subject to the claim are performed; in the case of
life insurance, when the death occurs; in the case of long-term
disability benefits, when the disability occurs; in the case of
workers compensation benefits, when the event giving rise to the
benefits occurs; and in respect of a long-term disability or workers
compensation claim recurring after the Closing Date, the Vendor is
liable for such recurring claim only if such recurring claim is
accepted by the Vendor's insurer as a valid claim under the Employee
Plans.
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10.10 Pension Plans
(a) Restructuring of Pension Plans
(i) The Vendor shall establish four new registered pension plans (the
"SatNet Pension Plans") and related funds (the "SatNet Trusts"),
each of which shall have an effective date that is on or before
the Closing Date, subject to the approval of the Pension
Regulator (the "Division Date") each resulting from the division
of the four existing Pension Plans of the Vendor. Each SatNet
Pension Plan shall cover, to the extent they would otherwise have
been covered under the Pension Plans were it not for the division
effected hereunder, all the SatNet Employees and SatNet Former
Employees who participate in or who are in the process of
satisfying the eligibility requirements for participation in the
related Pension Plan but only, in the latter case, at such time
that they effectively satisfy such eligibility requirements. Each
SatNet Pension Plan as adopted by the Vendor and the benefits
provided thereunder shall be substantially the same as the
related Pension Plan as at the Division Date, without limiting
the Vendor's right to amend the SatNet Pension Plans after the
Division Date, or after the Division Date, to perform any other
act or exercise any other right that the Vendor may have with
respect to the SatNet Pension Plans.
(ii) The provisions of Sections 10.10(a)(iii) through 10.10(a)(x)
shall apply separately to each Pension Plan and related fund (the
"Pension Trust"), and to each related SatNet Pension Plan and
SatNet Trust, as the case may be, with respect to the SatNet
Employees and SatNet Former Employees who on the Division Date
had rights under the Pension Plans.
(iii) Subject to and upon the transfer of the Agreed Amount or the
Regulatory Amount, as applicable (as those terms are defined
below), the Vendor and the SatNet Pension Plan shall assume the
pension liabilities accrued up to the Division Date in respect of
the SatNet Employees and SatNet Former Employees under the
Pension Plan.
(iv) Subject to verification by the Space Purchaser's actuary as set
forth below, and obtaining all necessary regulatory approvals,
the applicable Purchaser shall cause the administrator of the
Pension Plan to transfer from the Pension Trust to the SatNet
Trust the prescribed portion of assets (the "Agreed Amount"),
calculated in accordance with the requirements of the Quebec
Supplemental Pension Plans Act and its regulations. For further
clarity and without limiting the foregoing, the Agreed Amount
shall be calculated on a plan termination basis (except that if
there is a remaining surplus in the Pension Plan, the pro rata
distribution of such surplus assets shall be calculated on a
going concern basis) determined in accordance with the summary of
actuarial methods and assumptions annexed hereto as
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Schedule 35, applied in accordance with generally accepted
Canadian actuarial principles and all applicable laws, by the
actuaries for the Vendor (the "VA"). The Vendor shall make the
details of these calculations and their results available to the
Space Purchaser and its actuary (the "PA") within 30 days after
the above calculations are finalized, and shall furnish to them
such other information and data as may reasonably be required or
requested to permit a review, recalculation and confirmation of
the Agreed Amount by the Space Purchaser and the PA. The Space
Purchaser shall notify the Vendor in writing within 30 days after
receiving such information and data as to its agreement or
disagreement with the VA's calculation of the Agreed Amount. If
the Space Purchaser does not give such notice within such time,
the Space Purchaser is deemed to have agreed on the calculation
of the Agreed Amount. If the Vendor and the Space Purchaser are
unable to agree on the Agreed Amount within 15 days of the date
of the Vendor's receipt of the notice of disagreement from the
Space Purchaser, their differences shall be resolved by an
independent actuary selected by the VA and the PA and the expense
of such independent actuary shall be paid one-half by the Vendor
and one-half by the Space Purchaser. In verifying, certifying or
reviewing the calculation of the Agreed Amount or resolving their
differences, the VA, the PA and the independent actuary shall
have no responsibility or obligation to change the methods,
assumptions or any other term or condition of the summary of
actuarial methods and assumptions set out in Schedule 35.
(v) The Vendor shall, as soon as possible thereafter, file an
application with the Pension Regulator for approval of the
transfer of the Agreed Amount from the Pension Trust to the
SatNet Trust. The Vendor shall diligently pursue the application
for the approval for the transfer. The Space Purchaser shall
cooperate with the Vendor to the extent necessary.
(vi) The Vendor shall forthwith notify the Space Purchaser if the
Pension Regulator refuses to approve the transfer of the Agreed
Amount and directs either that a different amount be transferred
or that an assumption or method of calculation used to determine
the Agreed Amount be changed. In such event, the amount to be
transferred shall be adjusted in accordance with the Pension
Regulator's direction (the Agreed Amount so adjusted is referred
to as the "Regulatory Amount"). If the Pension Regulator requires
any party to make any additional contribution to the Pension
Trust or the SatNet Trust in order to obtain approval from the
Pension Regulator, the Space Purchaser shall make such additional
contributions to the Pension Trust and the Vendor shall make such
additional contributions to the SatNet Trust as are so required
to proceed with the transfer, provided however that the Vendor
shall at all times indemnify Space Purchaser from and against any
and all costs associated with the transfer to the SatNet Pension
Plan.
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(vii) From Closing until the completion of the transfer of the Agreed
Amount or the Regulatory Amount, as applicable, to the SatNet
Trust as contemplated herein (the "Interim Period"), the Space
Purchaser shall, provided that the administrator of the Pension
Plan agrees that the Space Purchaser acts as a delegate or, as
applicable and to the extent permitted by any delegation
agreement, sub-delegate, invest the pension assets of the Pension
Plan (including, for greater certainty, the Agreed Amount or the
Regulatory Amount) according to the terms of the Pension Plan,
the fiduciary duties applicable to the administrator and sponsor
of the Pension Plan and its agents, the investment policies of
the Pension Plan (as amended from time to time) and in compliance
with Applicable Law and the Tax Act and the administrative
practices of the Pension Regulator and Canada Revenue Agency.
During the Interim Period, the Space Purchaser shall not take any
action which may cause the revocation of the registration of the
Pension Plan under Applicable Law and the Tax Act or which will
jeopardize the tax-favoured treatment of the Pension Plan.
(viii) On the last Business Day of the month in which the approval for
the transfer of assets contemplated in Section 10.10(a)(iv) is
received or as soon thereafter as is practicable, the Space
Purchaser shall cause the administrator of the Pension Plan to
transfer from the Pension Trust to the SatNet Trust, cash or
assets with a value equal to the Agreed Amount or the Regulatory
Amount, as applicable, plus the net investment rate of return
thereon during the Interim Period but after deducting the amount
of any benefits paid to the SatNet Employees and the SatNet
Former Employees out of the Pension Plan and the Pension Trust
during the Interim Period and, to the extent not paid by the
Purchaser pursuant to Section 10.10(a)(x), the expenses and costs
referred to in Section 10.10(a)(x). If the Agreed Amount or the
Regulatory Amount, as the case may be, cannot be totally
transferred from the Pension Trust to the SatNet Trust without
liquidating Pension Trust's assets such as stocks or other
titles, the Vendor and the Space Purchaser shall cooperate to
achieve the most appropriate and cost effective method for
proceeding to such liquidation.
(ix) To the extent permitted by law and subject to confidentiality
obligations under the law, the Vendor shall provide to the Space
Purchaser, at the earliest possible time but not later than 30
days after the Closing Date, such information, records and data
in relation to the Employees or the Pension Plan as may be
necessary to the Space Purchaser for the ongoing administration
of the Pension Plan.
(x) Subject to the Pension Plan provisions' requirements on the
payment of the Pension Plan's administration expenses by the
Pension Trust, any direct and indirect expenses and costs for the
division of the Pension Plan contemplated by this Section
10.10(a) and for the administration of the Pension Plan and the
administration and investment of the Pension Trust
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during the Interim Period shall be shared pro rata between the
Vendor and the Space Purchaser, based upon the proportion of the
number of SatNet Employees who are members of the SatNet Pension
Plan to the total number of members of the Pension Plan as at the
Division Date. The Space Purchaser may invoice the Vendor for the
amount of such expenses, and the Vendor shall pay the amount of
such invoices within 30 days. Expenses and costs chargeable to
the SatNet Employees and SatNet Former Employees under the
Pension Plan and during the Interim Period shall be allocated to
the SatNet Employees' and SatNet Former Employees' accounts in
accordance with the terms of the Pension Plan.
(b) Vendor's Alternative Pension Arrangement
Notwithstanding Section 10.10(a) the Vendor may within 60 days of the
Closing Date, in consultation with, elect to create alternative
arrangements for all or some of the SatNet Employees and the SatNet
Former Employees who are members of the Pension Plans which do not
include the establishment of a registered pension plan, provided that
the Space Purchaser is not prejudiced in any manner in any such
alternative arrangements. The Vendor and the Space Purchaser shall act
reasonably in effecting such alternative arrangements. In any event,
the Vendor shall cause the accrual of benefits of the SatNet Employees
under the Pension Plans to cease no later than the Closing Date.
(c) Transfer of Pension Plans
(i) Subject to obtaining applicable approvals from the Pension
Regulator, the Vendor shall, effective as of the Closing Date,
transfer and assign to the Space Purchaser the Pension Plans and
the Pension Trusts, including all of the Vendor's rights,
obligations and liabilities associated with the sponsorship of
the Pension Plans and the Pension Trusts, in each case including
Employees, former employees of the Vendor and Excluded Employees,
but excluding SatNet Employees and SatNet Former Employees. The
Space Purchaser shall accept the transfer of the Pension Plans
and the Pension Trusts in respect of Employees, former employees
of the Vendor and Excluded Employees, but excluding SatNet
Employees and SatNet Former Employees, and shall accept the
assignment of rights, obligations and liabilities for sponsorship
thereof. As soon as practicable after the transfer, the Space
Purchaser shall amend the name of the Pension Plans and Pension
Trusts, and all applicable provisions therein and documents
related thereto, to remove all references to or affiliation with
the Vendor other than those required to recognize service and
earnings with the Vendor.
(ii) The Space Purchaser shall complete the division of the Pension
Plans and the transfer of assets and liabilities contemplated by
Section 10.10(a). The Vendor shall cooperate with the Space
Purchaser in effecting such division and transfer
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10.11 Post Closing Receipts
(a) If at any time following the Time of Closing, the Vendor receives, or
comes into possession of, any of the Purchased Assets or any receipts,
proceeds, cheques, securities or other property of any kind
comprising, arising out of or derived from the Purchased Assets
(including, without limitation any cheques, notes or cash in payment
of any account receivable or other intangible constituting part of the
Purchased Assets), the Vendor shall immediately deliver the same to
the applicable Purchaser, with such endorsements, transfers or
assignments as may be necessary or desirable to ensure that the
applicable Purchaser receives the immediate and full benefit thereof.
(b) On or immediately following the Time of Closing, the Vendor shall
provide such authorizations, approvals and/or consents as may be
necessary or desirable to permit the applicable Purchaser to deposit
into the applicable Purchaser's bank account all cheques or other
instruments made payable to the Vendor received by either the Vendor
or the applicable Purchaser following the Time of Closing in payment
of any account receivable or other intangible comprising a part of the
Purchased Assets.
10.12 EMS Name
The Purchasers agree that they shall not have any right or entitlement to the
words "EMS" or "EMS Technologies" or any word or expression similar thereto
other than to indicate they carry on a business formerly carried on by "EMS
Technologies" or "EMS" as hereinafter set out. The Purchasers and their
Affiliates shall as soon as practical and in any event within 60 days from
Closing cease all public use and shall as soon as practical and in any event
within 120 days from Closing cease all internal use, of any logos, trademarks,
trade names or other references containing the words "EMS", "EMS Technologies"
or any word or expression similar thereto. Any public use or references to such
words in connection with any statements, representations, negotiations or other
acts which could reasonably be expected to create legal obligations shall
clearly state that the applicable Purchased Business is being carried on by the
applicable Purchaser and not by the Vendor.
10.13 Vendor Credit Support
The parties acknowledge that the Vendor and/or certain Affiliates of the Vendor
(collectively the "Vendor Group") have given credit support to the Purchased
Businesses, including obligations of members of the Vendor Group in respect of
any letters of credit granted by any financial institution for the Purchased
Businesses as principal and guarantees given by any member of the Vendor Group
of any obligations of the Purchased Businesses ("Credit Support"). Set forth in
Schedule 25 is a complete and accurate list of Credit Support for the Purchased
Businesses currently outstanding. To the extent that any member of the Vendor
Group is unable to release or terminate its obligations in respect of any such
Credit Support on Closing, the applicable Purchaser shall, at its sole cost and
expense, (a) forthwith obtain or provide a letter of credit, guarantee or other
credit support that replaces that given by the relevant member of the Vendor
Group; (b) until such time as the Purchasers shall replace such Credit Support,
pay all such fees
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or charges (including letter of credit standby fees) paid or payable by the
relevant member of the Vendor Group in respect of such Credit Support in respect
of the period following Closing; (c) indemnify and save harmless the relevant
members of the Vendor Group for any Losses that such relevant members of the
Vendor Group may have in respect of such Credit Support; and (d) provide the
relevant members of the Vendor Group with such financial assurances, including
letters of credit, as the relevant members of the Vendor Group may reasonably
request in respect of the Purchaser's financial ability to pay its
indemnification obligations hereunder. The indemnification obligations of the
Purchasers hereunder shall apply whether the obligations of the relevant members
of the Vendor Group arise in respect of a matter occurring before or after
Closing, provided that to the extent that the matter giving rise to the Loss
also constitutes a breach of a representation or warranty given by the Vendor
hereunder, the applicable Purchaser may set off against its indemnification
obligations in respect hereof any amount for which the Vendor is required to
indemnify the Purchasers in respect of the same matter.
On Closing each of the guarantees in favour of MDA identified in Schedule 25
shall be released.
10.14 MDA Guarantee
MDA unconditionally promises to cause each of the Purchasers to perform any and
all of their obligations pursuant to this Agreement and the other Agreements to
which a Purchaser is party and guarantees the Purchasers' performance of their
obligations pursuant to this Agreement and such Other Agreements. This guaranty
is absolute, unconditional and irrevocable and constitutes an independent
guaranty of payment and not only of collectibility but is subject to all
defences, limitations and rights applicable to the Purchasers.
10.15 Parent Guarantee
The Parent unconditionally promises to cause the Vendor to perform any and all
of its obligations pursuant to this Agreement and the Other Agreements and
guarantees the Vendor's performance of its obligations pursuant to this
Agreement and the Other Agreements. This guaranty is absolute, unconditional and
irrevocable and constitutes an independent guaranty of payment and not only of
collectibility but is subject to all defences, limitations and rights applicable
to the Vendor.
10.16 Non-Solicitation
The Vendor agrees that for a period of three years following the Closing it will
not solicit any Employees or otherwise interfere with the employment of any
Employees by the applicable Purchaser after the Closing provided that the
foregoing restriction will not apply to Employees whose employment with the
applicable Purchaser is terminated by such Purchaser or to persons who respond
to an advertisement of general circulation.
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ARTICLE 11
CONDITIONS OF CLOSING
11.1 Conditions of Closing in Favour of the Purchasers
The sale and purchase of the Purchased Assets is subject to the following terms
and conditions for the exclusive benefit of the Purchasers, to be performed or
fulfilled at or prior to the Time of Closing:
(a) Representations and Warranties. The representations and warranties of
the Vendor and the Parent contained in this Agreement shall be true
and correct at the Time of Closing with the same force and effect as
if such representations and warranties were made at and as of such
time (excluding breaches of representations and warranties that do
not, in the aggregate, constitute a Material Adverse Effect (the
"Exclusion")), and a certificate of each of the Vendor and the Parent
signed by one of its senior officers dated the Closing Date, to that
effect shall have been delivered to the Purchasers. Notwithstanding
the foregoing Exclusion, the Vendors will give written notice to the
Purchasers of any changes to the representations and warranties which
fall within the Exclusion and the Vendor agrees that the Exclusion has
been provided in this Section 11.1(a) for the purposes of satisfying a
condition of Closing and shall not have any effect or relevance on the
indemnification provisions of Section 13.1 and the Threshold provided
in Section 13.3(a);
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendor at or before
the Time of Closing shall have been complied with or performed in all
material respects, and a certificate of the Vendor signed by a senior
officer of the Vendor, dated the Closing Date, to that effect shall
have been delivered to the Purchasers;
(c) Competition Act. Either (i) the Vendor and the Purchasers or MDA shall
have each filed the notice required under Section 114 of the
Competition Act (Canada) with respect to the transactions contemplated
by this Agreement or the obligation to give the requisite notice has
been waived pursuant to Section 113(c) of the Competition Act (Canada)
and the applicable waiting periods under Section 123 of the
Competition Act (Canada) shall have expired, been terminated or
waived, and the Commissioner of Competition (the "Commissioner")
appointed under the Competition Act (Canada) or a person authorized by
the Commissioner shall have advised MDA in writing (in form and
substance satisfactory to MDA, acting reasonably) that in effect,
there are not sufficient grounds to initiate proceedings before the
Competition Tribunal under the merger provisions of the Competition
Act (Canada) with respect to the transactions contemplated by this
Agreement; or (ii) the Commissioner shall have issued an advance
ruling certificate pursuant to Section 102 of the Competition Act
(Canada)with respect to the transactions contemplated by this
Agreement;
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(d) Contractual Consents. There shall have been given or obtained the
notices, consents and approvals described in Schedule 22, in each case
in form and substance satisfactory to MDA, acting reasonably and
provided that for greater certainty this condition shall not require
the delivery of a consent to the pledging, as security, of the
relevant agreement or the delivery of estoppel or similar
certificates;
(e) Governmental Consents. The Purchasers and/or the Vendor shall have
received from the applicable Governmental Authorities the consents,
licences and approvals identified in Schedule 28;
(f) BSAT License. The BSAT License from the Vendor to the Space Purchaser
shall have been executed and delivered in the form as set forth in
Exhibit V;
(g) Non-Competition Agreements. The Vendor and Parent and the Purchasers
shall have executed and delivered to the Purchasers and ComDev (if
applicable) the agreements in the forms of the agreements annexed
hereto as Exhibit I;
(h) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or, to the knowledge of the parties, threatened by
any person to enjoin, restrict or prohibit the purchase and sale of
the Purchased Assets contemplated hereby;
(i) No Material Adverse Effect. There shall not have occurred between the
date hereof and the Closing Date any event or happening which has a
Material Adverse Effect or could reasonably be expected to have a
Material Adverse Effect on the financial condition of the Purchased
Businesses or on the Purchased Assets;
(j) Delivery of Radarsat-2 Payload. The Vendor shall have completed the
matters set forth on Schedule 30;
(k) Assignments and Amendments of Radarsat-2 Territorial License and
Sublicense. The Vendor, the Parent and MDA shall have executed and
delivered to each other assignment and amendment agreements containing
the terms set forth in Exhibit III;
(l) Amendment of Radarsat-2 Subcontract. The Vendor and MDA shall have
executed and delivered to each other an amendment agreement relating
to the Radarsat-2 Subcontract containing the terms set forth in
Exhibit VI;
(m) Encumbrances. All Encumbrances as set forth on Schedule 38 shall be
released from all Purchased Assets or the secured parties thereunder
shall have delivered written undertakings reasonably satisfactory to
the Purchasers to do so immediately following Closing;
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(n) Escrow Agreement. The Vendor, the Space Purchaser and the Escrow Agent
will have entered into the Escrow Agreement as contemplated in Section
4.4; and
(o) Legal Opinion. The Vendor shall have delivered to the Purchasers,
addressed to the Purchasers and ComDev, an opinion of counsel to the
Vendor in form satisfactory to counsel for the Purchasers acting
reasonably.
Subject to Section 11.3, if any of the conditions contained in this Section 11.1
shall not be performed or fulfilled at or prior to the Termination Date to the
satisfaction of the Purchasers, acting reasonably, the Purchasers may, by notice
in writing to the Vendor, terminate this Agreement and the obligations of the
Vendor and the Purchasers under this Agreement and the Other Agreements (and the
parties shall be released therefrom), other than the obligations contained in
Sections 14.2, 14.3, 14.4 and 14.5, provided that the Purchasers may also bring
an action pursuant to Article 13 against the Vendor for breach of contract
damages suffered by the Purchasers where the non performance or non fulfilment
of the relevant condition is as a result of a breach of a covenant by the
Vendor. Any such condition may be waived in whole or in part by the Purchasers
in writing. Nothing contained herein shall affect the right of the Purchasers to
obtain an order or judgment for specific performance or injunctive relief.
11.2 Conditions of Closing in Favour of the Vendor
The sale and purchase of the Purchased Assets is subject to the following terms
and conditions for the exclusive benefit of the Vendor, to be performed or
fulfilled at or prior to the Time of Closing:
(a) Representations and Warranties. The representations and warranties of
the Purchasers and MDA contained in this Agreement shall be true and
correct in all material respects at the Time of Closing with the same
force and effect as if such representations and warranties were made
at and as of such time, and a certificate of each of the Purchasers
and MDA signed by one of their senior officers, dated the Closing
Date, to that effect shall have been delivered to the Vendor;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchasers at or
before the Time of Closing shall have been complied with or performed
in all material respects, and a certificate of each Purchaser signed
by a senior officer of each Purchaser, dated the Closing Date, to that
effect shall have been delivered to the Vendor;
(c) Competition Act. Either (i) the Vendor and the Purchasers or MDA shall
have each filed the notice required under Section 114 of the
Competition Act (Canada) with respect to the transactions contemplated
by this Agreement or the obligation to give the requisite notice has
been waived pursuant to Section 113(c) of the Competition Act (Canada)
and the applicable waiting periods under Section 123 of the
Competition Act (Canada) shall have expired, been terminated or
waived, and the Commissioner of Competition (the
00
"Xxxxxxxxxxxx") xxxxxxxxx xxxxx xxx Xxxxxxxxxxx Xxx (Xxxxxx) or a
person authorized by the Commissioner shall have advised MDA in
writing (in form and substance satisfactory to MDA, acting reasonably)
that in effect, there are not sufficient grounds to initiate
proceedings before the Competition Tribunal under the merger
provisions of the Competition Act (Canada) with respect to the
transactions contemplated by this Agreement; or (ii) the Commissioner
shall have issued an advance ruling certificate pursuant to Section
102 of the Competition Act (Canada)with respect to the transactions
contemplated by this Agreement;
(d) Contractual Consents. There shall have been given or obtained the
notices, consents and approvals described in Schedule 22 in each case
in form and substance satisfactory to the Vendor, acting reasonably;
(e) Governmental Consents. The Purchaser and/or the Vendor shall have
received from the applicable Governmental Authorities the consents,
licences and approvals identified in Schedule 29;
(f) Purchase Price. The Closing Date Payment shall have been paid in the
manner provided herein, and the Release shall have been executed and
delivered to the Vendor;
(g) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or, to the knowledge of the parties, threatened by
any person to enjoin, restrict or prohibit the purchase and sale of
the Purchased Assets contemplated hereby;
(h) Delivery of Radarsat Payload. The Vendor shall have completed the
matters set forth on Schedule 30;
(i) Assignments and Amendments of Radarsat-2 Territorial License and
Sublicense. The Vendor, the Parent and MDA shall have executed and
delivered to each other assignment and amendment agreements containing
the terms set forth in Exhibit III;
(j) Amendment of Radarsat-2 Subcontract. The Vendor and MDA shall have
executed and delivered to each other an amendment agreement relating
to the Radarsat-2 Subcontract containing the terms set forth in
Exhibit VI;
(k) Release. The granting of the Release;
(l) Escrow Agreement. The Vendor, the Space Purchaser and the Escrow Agent
will have entered into the Escrow Agreement as contemplated in Section
4.4; and
(m) Legal Opinion. The Purchaser shall have delivered to the Vendor an
opinion of counsel to the Purchaser in form satisfactory to counsel
for the Vendor acting reasonably.
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Subject to Section 11.3, if any of the conditions contained in this Section 11.2
shall not be performed or fulfilled at or prior to the Termination Date to the
satisfaction of the Vendor acting reasonably, the Vendor may, by notice to the
Purchasers, terminate this Agreement and the obligations of the Vendor and the
Purchasers under this Agreement (and the parties shall be released therefrom),
other than the obligations contained in Sections 14.2, 14.3, 14.4 and 14.5,
provided that the Vendor may also bring an action pursuant to Article 13 against
the Purchasers for breach of contract damages suffered by it where the non
performance or non fulfilment of the relevant condition is as a result of a
breach of covenant by the Purchasers. Any such condition may be waived in whole
or in part by the Vendor in writing. Nothing contained herein shall affect the
right of the Vendor to obtain an order or judgment for specific performance or
injunctive relief.
11.3 Extension of Closing Date
(a) If any of the conditions contained in Section 11.1 or Section 11.2
shall not be performed or fulfilled at or prior to the Termination
Date to the satisfaction of the Purchasers or the Vendor, as the case
may be, acting reasonably, either party hereto (provided such party is
not in default of any of its obligations hereunder) may, at or prior
to the Time of Closing, provide written notice to the other parties
extending the Closing Date and, provided such condition may be
performed or fulfilled within twenty (20) Business Days thereafter,
the Closing shall be postponed until such date as the parties may
agree, provided however that if the parties are unable to agree on a
new Closing Date the Closing Date shall occur on the twenty-fifth
(25th) Business Day following the original Closing Date in writing. In
attempting to establish a new Closing Date the parties shall take into
account the date on which such unfulfilled condition is expected to be
satisfied.
(b) If the Closing is extended to a later date pursuant to the terms of
this Section 11.3, the Closing Date shall mean for the purposes of
this Agreement, such later date.
(c) The rights under this Section 11.3 may only be exercised once such
that this Section 11.3 shall permit only one extension of the Closing
Date.
ARTICLE 12
CLOSING DATE AND TRANSFER OF POSSESSION
12.1 Transfer
Subject to compliance with the terms and conditions hereof, the transfer of
possession of the Purchased Assets shall be deemed to take effect as at the
Closing.
12.2 Place of Closing
The closing shall take place at the Time of Closing at the offices of Xxxxxx
Xxxxxx Xxxxxxx LLP, counsel for the Vendor in Toronto, Ontario.
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12.3 Further Assurances
From time to time subsequent to the Closing Date, each party to this Agreement
covenants and agrees that it will at all times after the Closing Date promptly
execute and deliver all such documents, including, without limitation, all such
additional conveyances, transfers, consents and other assurances and do all such
other acts and things as the other party, acting reasonably, may from time to
time request be executed or done in order to better evidence or perfect or
effectuate any provision of this Agreement or of any agreement or other document
executed pursuant to this Agreement or any of the respective obligations
intended to be created hereby or thereby.
12.4 Risk of Loss
From the date hereof up to the Time of Closing, the Purchased Assets shall be
and remain at the risk of the Vendor. If, prior to the Time of Closing, all or
any part of the Purchased Assets are destroyed or damaged by fire or any other
casualty or shall be appropriated, expropriated or seized by governmental or
other lawful authority (a "Property Loss"), the Purchasers shall complete the
purchase unless as a result of such Property Loss the Purchasers have the right
under Section 11.1 or otherwise to terminate their obligations under this
Agreement and elect to do so in accordance with the terms of this Agreement.
If a Property Loss so occurs and the Purchasers so elect, or is required to
complete the purchase of the Purchased Assets, the Purchase Price shall be
reduced by an amount equal to the amount, if any, by which the amount of the
loss caused by such destruction, damage, appropriation, expropriation or seizure
either (i) is not fully covered by insurance (whether because the loss exceeds
the insurance limits, is not covered by the applicable insurance, represents the
portion thereof that is an insurance deductible or otherwise) or (ii) does not
result in a dollar for dollar reduction of the Purchase Price as a result of
being reflected in the Closing Net Receivables. In such event, all proceeds of
insurance or compensation for appropriation, expropriation or seizure shall be
paid to the applicable Purchaser at the Time of Closing and all right and claim
of the Vendor to any such amounts not paid by the Closing Date shall be assigned
at the Time of Closing to the applicable Purchaser; provided that if
notwithstanding the reasonable efforts of the Purchaser, the applicable
Purchaser is unable to collect all such proceeds or compensation within one year
from Closing, the Vendor shall pay to the applicable Purchaser such uncollected
amount upon reassignment by the applicable Purchaser to the Vendor of any rights
the applicable Purchaser may have in respect thereof.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by the Vendor
Subject to the terms of this Article 13, the Vendor agrees to indemnify and save
harmless the Purchasers from all Losses suffered or incurred by the Purchasers
or any Purchaser as a result of or arising directly or indirectly out of or in
connection with:
(a) any breach or inaccuracy, in any material respect, of any
representation or warranty of the Vendor contained in this Agreement
or in any agreement,
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certificate or other document delivered pursuant hereto (provided that
the Vendor shall not be required to indemnify or save harmless the
Purchasers in respect of any breach or inaccuracy of any
representation or warranty unless a Purchaser shall have provided
notice to the Vendor in accordance with Section 13.4 on or prior to
the expiration of the applicable time period related to such
representation or warranty as set out in Section 9.1);
(b) any breach or non performance, in any material respect, by the Vendor
of any covenant to be performed by it that is contained in this
Agreement or in any agreement, certificate or other document delivered
pursuant hereto;
(c) any breaches of Canadian or United States Applicable Laws regarding
export control requirements committed by the Purchased Businesses
prior to Closing including ITAR;
(d) any costs or losses incurred by the Purchaser of or related to, or
arising out of, the SatNet Pension Plans including but not limited to
the transfer to such plans; and
(e) any of the Excluded Liabilities.
13.2 Indemnification by the Purchasers
Subject to the terms of this Article 13, the Purchasers severally agree to
indemnify and save harmless the Vendor from all Losses suffered or incurred by
the Vendor as a result of or arising directly or indirectly out of or in
connection with:
(a) any breach or inaccuracy, in any material respect, of any
representation or warranty contained in this Agreement or in any
agreement, instrument, certificate or other document delivered
pursuant hereto (provided that a Purchaser shall not be required to
indemnify or save harmless the Vendor in respect of any breach or
inaccuracy of any representation or warranty unless the Vendor shall
have provided notice to the Purchasers in accordance with Section 13.4
on or prior to the expiration of the applicable time period related to
such representation or warranty as set out in Section 9.1);
(b) any breach or non performance, in any material respect, by a Purchaser
of any covenant to be performed by it that is contained in this
Agreement or in any agreement, certificate or other document delivered
pursuant hereto; and
(c) any of the Assumed Liabilities.
13.3 Threshold and Limitations
(a) Notwithstanding Section 13.1, the Vendor's obligation to indemnify the
Purchasers in respect of Losses for breaches or inaccuracies of one or
more representations or warranties will be applicable only to the
extent that the aggregate of all such Losses is in excess of
CDN$204,697.50 (the "Threshold")
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(and then only with respect to that portion of the Losses that exceed
the Threshold) up to a maximum amount of CDN$5,848,500 for any Losses
suffered or incurred by the Purchasers within 6 months of the Closing
Date and for which notice has been given to the Vendor in accordance
with Section 13.4 on or prior to the date which is 6 months following
the Closing Date (the "Step Down Date"); and (ii) CDN$3,509,100 less
any amounts payable under (i) above, for any such Losses suffered or
incurred by the Purchasers after the Step Down Date or for which
notice has been given to the Vendor in accordance with Section 13.4
after the Step Down Date.
(b) Notwithstanding Section 13.2 hereof, the Purchasers' obligation to
indemnify the Vendor in respect of Losses for breaches or inaccuracies
of one or more representations or warranties will be applicable only
to the extent that the aggregate of all such Losses is in excess of
the Threshold up to a maximum amount of CDN$5,848,500 for any Losses
suffered or incurred by the Vendor within 6 months of the Closing Date
and for which notice has been given to the Purchasers in accordance
with Section 13.4 on or prior to the date which is 6 months following
the Closing Date (the "Step Down Date"); and (ii) CDN$3,509,100 less
any amounts payable under (i) above, for any such Losses suffered or
incurred by the Vendor after the Step Down Date or for which notice
has been given to the Purchasers in accordance with Section 13.4 after
the Step Down Date.
(c) An indemnified party may recover once in respect of each Loss, and no
liability shall attach to the indemnifying party in respect of any
representation and warranty contained in this Agreement or any other
document referred to herein to the extent that the indemnified party
has recovered from the other in respect of the same Loss under any
other representation and warranty in this Agreement or any other
document referred to herein.
(d) In calculating the liability of the Vendor in respect of any
representation or warranty contained in this Agreement or any other
document referred to herein, there shall be taken into account the
amount by which any taxation, for which the Purchaser is now or in the
future accountable or liable to be assessed, is ultimately reduced or
extinguished as a result of the matter giving rise to such liability.
(e) In respect of any Loss that is covered by insurance, the indemnified
party shall deduct the actual amount of insurance proceeds received by
the indemnified party in respect of a Loss from the indemnification
amount to be paid.
(f) To the extent that any breach of any representation or warranty
contained in this Agreement is capable of remedy, the indemnified
party shall afford the indemnifying party a reasonable opportunity of
not more than 30 days unless otherwise agreed, for the indemnified
party to remedy the matter complained of.
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(g) If Environmental Laws change after the Closing Date or the Real
Property Purchaser changes the use of the Real Property, the Vendor's
liability in respect of the representations and warranties contained
in Section 5.26 shall not be greater than it would have been had such
laws or use not changed.
13.4 Notice of Claim
In the event that a party (the "Indemnified Party") shall become aware of any
claim, proceeding or other matter (a "Claim") in respect of which the other
party (the "Indemnifying Party") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a "Direct Claim"),
and shall also specify with reasonable particularity (to the extent that the
information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to effectively contest the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses that, as a result of the Indemnified Party's failure to
give such notice on a timely basis, could not be contested and only to the
extent of the amount of liability that would have been successfully contested
had notice been given in a timely manner.
13.5 Direct Claims
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have forty-five
days to make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information in the possession of the indemnified party as the Indemnifying Party
may reasonably request. If both parties agree at or prior to the expiration of
such forty-five day period (or any mutually agreed upon extension thereof) to
the validity and amount of such Claim, the Indemnifying Party shall immediately
pay to the Indemnified Party the full agreed upon amount of the Claim.
Otherwise, the matter shall be referred to binding arbitration in such manner as
the parties may agree or shall be determined by a court of competent
jurisdiction. The costs of any such arbitration shall be borne by the party who
is not successful in such arbitration.
13.6 Third Party Claims
With respect to any Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defence of the Claim. The Indemnifying Party shall reimburse the
Indemnified Party for all the Indemnified Party's out of pocket expenses as a
result of such negotiation, settlement or defence included as a result of such
participation or assumption. If the Indemnifying Party elects to assume such
73
control, the Indemnified Party shall have the right to participate in the
negotiation, settlement or defence of such Third Party Claim and to retain
counsel, at its expense, to act on its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel or unless the named
parties to any action or proceeding include both the Indemnifying Party and the
Indemnified Party and a representation of both the Indemnifying Party and the
Indemnified Party by the same counsel would be inappropriate due to the actual
or potential differing interests between them (such as the availability of
inconsistent defences). If the Indemnifying Party, having elected to assume such
control, thereafter fails to defend the Third Party Claim within a reasonable
time, the Indemnified Party shall be entitled to assume such control and the
Indemnifying Party shall be bound by the results obtained by the Indemnified
Party with respect to such Third Party Claim. If any Third Party Claim is of a
nature such that the Indemnified Party is required by applicable law to make a
payment to any person (a "Third Party") with respect to the Third Party Claim
before the completion of settlement negotiations or related legal proceedings,
the Indemnified Party shall provide prior written notice thereof to the
Indemnifying Party and thereafter may make such payment and the Indemnifying
Party shall, forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for such payment. If the amount of any liability of the
Indemnified Party under the Third Party Claim in respect of which such a payment
was made, as finally determined, is less than the amount that was paid by the
Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party.
13.7 Settlement of Third Party Claims
If the Indemnifying Party fails to assume control of the defence of any Third
Party Claim, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed. Whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defence of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any such consent is
not obtained for any reason in respect of a monetary settlement and the
Indemnified Party shall indemnify and save harmless the Indemnifying Party from
and against any Losses resulting from or arising out of the failure of the
Indemnified Party to consent to such settlement.
13.8 Co-operation
The Indemnified Party and the Indemnifying Party shall co operate fully with
each other with respect to Third Party Claims and any defence thereof, and shall
keep each other fully advised with respect thereto (including supplying copies
of all relevant documentation promptly as it becomes available). Where the
defence of a Third Party Claim is being undertaken and controlled by the
Indemnifying Party, the Indemnified Party shall use all reasonable efforts to
make available to the Indemnifying Party those employees whose assistance,
testimony or presence is reasonably necessary to assist the Indemnifying Party
in evaluating and defending such Third Party Claims.
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13.9 Exclusivity
The provisions of this Article 13 shall apply to any Claim for breach of any
covenant, representation, warranty or other provision of this Agreement or any
certificate delivered pursuant to this Agreement (other than a claim for
specific performance or injunctive relief) with the intent that all such Claims
and recourses shall be subject to the limitations and other provisions contained
in this Article 13. The provisions of this Article 13 shall not apply to the
Release, the Radarsat-2 Subcontract or any amendment thereto, or the Radarsat-2
License Agreement, the Radarsat-2 Subcontract Agreement or any amendments
thereto or to the Purchaser's indemnity obligation in Section 3.6.
ARTICLE 14
MISCELLANEOUS
14.1 Notices
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person,
transmitted by telecopy or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed
as follows:
(i) if to the Purchasers or MDA:
XxxXxxxxx, Xxxxxxxxx and Associates Ltd.
00000 Xxxxxxxx Xxxxxxx
Xxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxx Xxxxx
Telecopier No.: 000-000-0000
E-mail: xxx@xxxxxxxxxxxxxx.xxx
with a copy to:
Farris, Vaughan, Xxxxx & Xxxxxx LLP
Suite 2500 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxxxxxx Xxxxxxxx, Q.C.
Telecopier No.: 000-000-0000
E-mail: xxxxxxxxx@xxxxxx.xxx
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(ii) if to the Vendor or the Parent:
c/o EMS Technologies, Inc
000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
00000
Attention: Vice President and General Counsel
Telecopier No.: 000-000-0000
E-mail: xxxx.x@xxx-x.xxx
with a copy to:
Xxxxxx Xxxxxx Gervais LLP
Suite 4200
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxxx
Telecopier No.: 416-367-6749
E-mail: xxxxxxxxxx@xxxxxxxxx.xxx
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered or transmitted
(or, if such day is not a Business Day, or if such delivery or
transmission occurs after normal business hours, on the next following
Business Day) or, if mailed, on the third Business Day following the
date of mailing; provided, however, that if at the time of mailing or
within three Business Days thereafter there is or occurs a labour
dispute or other event that might reasonably be expected to disrupt
the delivery of documents by mail, any notice or other communication
hereunder shall be delivered or transmitted by means of recorded
electronic communication as aforesaid.
(c) Either party may at any time change its address for service from time
to time by giving notice to the other party in accordance with this
Section 14.1.
14.2 Commissions, etc.
Each of the Vendor and the Parent, on the one hand, and the Purchasers and MDA,
on the other hand, agree to indemnify and save harmless each other party from
and against all Losses suffered or incurred by such other party in respect of
any commission or other remuneration payable or alleged to be payable to any
broker, agent or other intermediary who purports to act or have acted for or on
behalf of the Vendor or the Parent or the Purchasers or MDA, as the case may be.
76
14.3 Consultation
The parties shall consult with each other before issuing any press release or
making any other public announcement with respect to this Agreement or the
transactions contemplated hereby and, except as required by any applicable law
or regulatory requirement, neither of them shall issue any such press release or
make any such public announcement without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed.
14.4 Disclosure
Prior to any public announcement of the transaction contemplated hereby pursuant
to Section 14.3, neither party shall disclose this Agreement or any aspects of
such transaction except as required to comply with its obligations under this
Agreement or to its board of directors, its senior management, its legal,
accounting, financial or other professional advisors, any financial institution
contacted by it with respect to any financing required in connection with such
transaction and counsel to such institution, or as may be required by any
applicable law or any regulatory authority or stock exchange having
jurisdiction.
14.5 Confidentiality
Without limiting the obligations of the Vendor and MDA under the confidentiality
agreements between them dated June 3, 2005 and September 8, 2003, (the
"Confidentiality Agreements"), but subject to Section 14.4, the Vendor, MDA and
the Purchasers shall maintain the confidentiality of any information received
from each other in connection with the transactions contemplated by this
Agreement, whether received before or after the date of this Agreement. If the
transfer of the Purchased Assets to the Purchaser is not consummated, each shall
return to the other any confidential schedules, documents, or other written
information obtained from the other in connection with this Agreement whether
received before or after the date of this Agreement except that each party may
want one copy for archival purposes, and the Purchaser agrees that, except as
otherwise authorized by the Vendor, neither the Purchasers nor their
representatives, agents or employees will disclose to third parties except as
may be required by Applicable Law or as may be required in any suit or action
brought by one party against the other any confidential information or
confidential data relating to the Vendor, the Purchased Businesses or the
Purchased Assets discovered by the Purchasers or their representatives as a
result of the Vendor making available to the Purchasers and their
representatives the information requested by them in connection with the
transactions contemplated herein.
Upon Closing all provisions of the Confidentiality Agreements shall be
terminated.
14.6 Assignment by Purchaser
A Purchaser may with written notice to the Vendor assign its rights under this
Agreement in whole or in part to any Affiliate; provided, however, that any such
assignment shall not relieve such Purchaser or MDA from any of its obligations
hereunder and shall be subject to any equities which exist or may in the future
exist between the Vendor and such Purchaser.
77
14.7 Reasonable Best Efforts
The parties acknowledge and agree that, for all purposes of this Agreement, an
obligation on the part of either party to use its reasonable efforts or best
efforts to obtain any waiver, consent, approval, permit, licence or other
document shall not require such party to make any payment to any person for the
purpose of procuring the same, other than payments for amounts due and payable
to such person, payments for incidental expenses incurred by such person and
payments required by any Applicable Law, except as specifically provided herein.
14.8 Counterparts
This Agreement may be executed in counterparts by facsimile transmission, each
of which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties.
XXXXXXXXX, XXXXXXXXX AND ASSOCIATES LTD.
By:
------------------------------------
By:
------------------------------------
6457258 CANADA LTD.
By:
------------------------------------
By:
------------------------------------
MDA SPACE INC.
By:
------------------------------------
By:
------------------------------------
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6457266 CANADA LTD.
By:
------------------------------------
By:
------------------------------------
EMS TECHNOLOGIES CANADA, LTD.
By:
------------------------------------
By:
------------------------------------
EMS TECHNOLOGIES, INC.
By:
------------------------------------
By:
------------------------------------
The schedules and exhibits listed in Section 1.13 of the Asset Purchase
Agreement have been omitted from the form of Asset Purchase Agreement filed
herewith; any such schedule or exhibit will be furnished supplementally to the
Securities and Exchange Commission upon request.
EXHIBIT IV
TERMS FOR OTTAWA PRIMARY SUBLEASE
- 8,300ft at Cdn$27.30 plus GST per sq ft per year for up to 4 months,
generally consisting of the north-east half of the second floor and that
portion of the south-west half that ends after the ladies washroom (area
reflects ComDev agreement with EMS SATCOM management; rental rate reflects
actual cost paid by Vendor plus 10% for receptionist/switchboard,
facilities and telephone management services provided by Vendor during
occupancy)
- Electronics Purchaser will require the existing Ottawa website to, at first
continue to host (up to three months) and then re-direct customers,
suppliers, etc. to a Electronics Purchaser registered site for EMS Space
Science for six months
- Telecommunications infrastructure: Electronics Purchaser shall have the
use, without additional charge, of existing handsets and shared PBX, during
the period of occupancy. Aggregate long distance charges shall be prorated
between Vendor and the Electronics Purchaser based on relative numbers of
employees connected to the PBX. The Electronics Purchaser shall be
responsible for the installation and cost of its external data connections.
- Email will need to be forwarded to new Electronics Purchaser email
addresses for a period of 6 months
- Electronics Purchaser will provide 24/7 contacts for escorted access by
Vendor personnel to electrical, IT and elevator facilities located within
the area occupied by the Electronics Purchaser
- Locks, elevators and new doors and walls will be installed to securely
separate the leased area from the portion of the building occupied by
Vendor (including a portion of the second floor), to the reasonable
satisfaction of both Vendor and the Electronics Purchaser. The estimated
cost of installation is approximately US$10,000, to be paid by the
Electronics Purchaser. Vendor shall be responsible for removal to its
satisfaction after the Electronics Purchaser vacates the building.
