Exhibit 2.1
ACQUISITION AGREEMENT
DATED AS OF MARCH 17, 2006
AMONG
SUPREMEX INCOME FUND
CENVEO CORPORATION
AND
CENVEO, INC.
i
TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE AND SALE OF THE SHARES
1.1 Purchase and Sale...................................................1
1.2 Closing.............................................................1
1.3 Deliveries at the Closing...........................................1
1.4 Delivery Immediately Following the Closing..........................3
1.5 Closing Working Capital Adjustments.................................4
1.6 Withholding Taxes...................................................6
1.7 No Allocation to Restrictive Covenant...............................9
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF VENDOR AND CENVEO
2.1 Organization, Existence and Good Standing...........................9
2.2 Capacity; Authorization.............................................9
2.3 Ownership of Shares; Title.........................................10
2.4 Exclusivity of Representations and Warranties......................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
3.1 Organization, Existence and Good Standing..........................11
3.2 Capitalization of the Companies....................................11
3.3 No Conflict........................................................11
3.4 Required Authorizations............................................11
3.5 Financial Statements; Undisclosed Liabilities......................11
3.6 Business Since the Balance Sheet Date..............................12
3.7 Compliance with Law; Litigation; Injunctions.......................12
3.8 Material Contracts.................................................12
3.9 Employee Benefit Plans.............................................13
3.10 Employment-Related Matters.........................................13
3.11 Taxes..............................................................13
3.12 Permits............................................................14
3.13 Real Property......................................................14
3.14 Title; Condition of Assets.........................................14
3.15 Intellectual Property..............................................15
3.16 Insurance..........................................................15
3.17 Environmental Laws.................................................15
3.18 Affiliated Transactions............................................16
ii
3.19 Suppliers and Customers............................................16
3.20 Sufficiency of Assets..............................................16
3.21 Absence of Material Acquisitions...................................16
3.22 Relations With Auditors............................................16
3.23 Residency..........................................................16
3.24 Certain Amounts....................................................16
3.25 Full Disclosure....................................................16
3.26 Minute Books.......................................................16
3.27 Exclusivity of Representations and Warranties......................16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization, Existence and Good Standing..........................17
4.2 Capacity; Authorization............................................17
4.3 Financial Statements; Undisclosed Liabilities......................17
4.4 The Trustees.......................................................18
4.5 Capitalization.....................................................18
4.6 Description of Securities..........................................18
4.7 Voting of Securities...............................................18
4.8 Issuance of Units..................................................18
4.9 Qualification......................................................18
4.10 Approval for Trading...............................................19
4.11 Transaction Expenses...............................................19
ARTICLE 5
COVENANTS
5.1 Access.............................................................19
5.2 Notice of Proceedings; Agreement to Defend.........................19
5.3 Consummation of Agreement..........................................20
5.4 Consummation of the Pre-Closing Transactions.......................20
5.5 Consummation of the Post-Closing Transactions......................20
5.6 Announcements......................................................20
5.7 Funding of Pension Plan Deficits; Payment of Intercompany Payables.20
5.8 Books and Records..................................................20
5.9 Amounts Collected and Paid Post-Closing............................21
5.10 Confidentiality....................................................21
5.11 Cooperation........................................................21
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
6.1 Completion of the Offering.........................................21
6.2 Consent; Release of Liens..........................................22
6.3 Term Facility......................................................22
iii
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1 Survival...........................................................22
7.2 Indemnification....................................................24
7.3 Indemnification Procedures.........................................26
ARTICLE 8
TERMINATION
8.1 Termination of Agreement...........................................28
8.2 Liabilities Upon Termination.......................................28
ARTICLE 9
GENERAL PROVISIONS
9.1 Expenses...........................................................29
9.2 Notices............................................................29
9.3 Governing Law......................................................30
9.4 Counterparts.......................................................31
9.5 Headings; Schedules; Exhibits......................................31
9.6 Entire Agreement...................................................31
9.7 Third-Party Beneficiaries..........................................31
9.8 Assignment.........................................................31
9.9 Severability.......................................................32
9.10 Amendments; Waiver.................................................32
9.11 Interpretation; Absence of Presumption.............................32
SCHEDULES
Schedule 2.2 Capacity; Authorization
Schedule 3.1 Jurisdiction of Organization of Each Company
Schedule 3.2 Capitalization of Each Company
Schedule 3.3 No Conflict
Schedule 3.5(b) Undisclosed Liabilities
Schedule 3.7 Litigation
Schedule 3.10 Employment-Related Matters
Schedule 3.11 Taxes
Schedule 3.13(a) Owned Real Properties
Schedule 3.13(b) Leased Real Property
Schedule 3.14(a) Permitted Liens
Schedule 3.16 Insurance
iv
Schedule 3.17 Environmental Laws
Schedule 3.18 Affiliated Transactions
Schedule 3.19 Suppliers and Customers
Schedule 4.7 Voting of Securities
Schedule 4.11 Transaction Expenses
EXHIBITS
Exhibit A Certain Defined Terms
Exhibit B-1 Pre-Closing Transactions
Exhibit B-2 Post-Closing Transactions
Exhibit C Form of Reciprocal General Release
Exhibit D-1 Form of Initial Note Series 1
Exhibit D-2 Form of Initial Note Series 2
Exhibit D-3 Form of Initial Note Series 3
Exhibit D-4 Form of Over-Allotment Note
Exhibit E Form of Joinder Agreement
Exhibit F Form of Nonsolicitation Agreement
Exhibit G Form of Supply Agreement
Exhibit H Form of Registration Rights Agreement
Exhibit I Calculation of Target Working Capital
Exhibit J Form of Amended and Restated Declaration of Trust
ACQUISITION AGREEMENT
---------------------
This ACQUISITION AGREEMENT dated as of March 17, 2006 (this
"AGREEMENT") is among Cenveo, Inc., a Colorado corporation ("CENVEO"),
Cenveo Corporation, a Delaware corporation ("VENDOR"), and Supremex Income
Fund, an unincorporated open-ended trust established under the laws of the
Province of Quebec ("BUYER"). Capitalized terms not otherwise defined in
this Agreement are used as defined in Exhibit A.
---------
Vendor owns all of the outstanding capital stock of Cenveo Canada
Leasing Company, Inc., a corporation organized under the laws of Nova Scotia
("CENVEO CANADA"), which owns all of the outstanding capital stock of
Supremex Inc., a corporation organized under the laws of Canada
("SUPREMEX"). Prior to the Closing, Supremex will amalgamate with Cenveo
Canada (the "AMALGAMATION") to form Amalco and consummate the other
Pre-Closing Transactions.
Buyer intends to complete an initial public offering (the
"OFFERING") of certain of its trust units to the public under the
Prospectus.
Buyer desires to purchase all of the outstanding shares of Amalco
(the "SHARES"), and Vendor desires to sell the Shares, all on the terms and
conditions hereafter set forth.
After the Closing, Buyer will cause Amalco and AcquisiCo to
consummate the Post-Closing Transactions.
Accordingly, in consideration of the premises and of the respective
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
ARTICLE 1
---------
PURCHASE AND SALE OF THE SHARES
-------------------------------
1.1 Purchase and Sale. Upon the terms and subject to the
-----------------
conditions set forth in this Agreement, Vendor shall sell the Shares to
Buyer, without recourse, representation or warranty except as otherwise
expressly provided herein, and Buyer shall purchase the Shares from Vendor,
for a purchase price equal to the Purchase Price.
1.2 Closing. The closing of the sale and purchase of the
-------
Shares (the "CLOSING") shall take place at the offices of Stikeman Elliott
LLP, 0000 Xxxx-Xxxxxxxx Xxxx. Xxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxx X0X 0X0
immediately following the consummation of the closing of Units under the
Underwriting Agreement. The term "CLOSING DATE" means the date on which the
Closing occurs.
1.3 Deliveries at the Closing. Subject to the conditions set forth
-------------------------
in this Agreement, at the Closing:
2
(a) Vendor shall deliver or cause to be delivered to Buyer:
(i) one or more certificates representing the Shares,
together with duly endorsed blank stock powers;
(ii) a certificate of Industry Canada and Registraire des
enterprises du Quebec indicating the good standing of Supremex Inc.
and Cenveo Canada (the predecessor companies of Amalco) indicating
Amalco's good standing in such jurisdiction as of a recent date, a
certificate of Secretary of State of Delaware indicating Vendor's
good standing in such state as of a recent date and a certificate
of Secretary of State of Colorado indicating Cenveo's good standing
in such state as of a recent date;
(iii) a certificate of the Secretary of Cenveo certifying
as to: (A) the full force and effect of resolutions of its board of
directors attached thereto as an exhibit evidencing the authority
of Cenveo to consummate the transactions contemplated by this
Agreement; (B) the full force and effect of the articles of
incorporation and bylaws of Cenveo attached thereto as exhibits;
and (C) the incumbency of the officers of Cenveo with authority to
execute this Agreement and the Ancillary Instruments to which
Cenveo is a party;
(iv) a certificate of the Secretary of Vendor certifying
as to: (A) the full force and effect of resolutions of its board of
directors and stockholder attached thereto as exhibits evidencing
the authority of Vendor to consummate the transactions contemplated
by this Agreement; (B) the full force and effect of the certificate
of incorporation and bylaws of Vendor attached thereto as exhibits;
and (C) the incumbency of the officers of Vendor with authority to
execute this Agreement and the Ancillary Instruments to which
Vendor is a party;
(v) a certificate of the Secretary of Amalco certifying as
to: (A) the full force and effect of resolutions of its board of
directors attached thereto as an exhibit evidencing the authority
of Amalco to consummate the transactions contemplated by the
Ancillary Agreements to which it is a party; (B) the full force and
effect of the certificate of amalgamation and bylaws of Amalco
attached thereto as exhibits; and (C) the incumbency of the
officers of Amalco with authority to execute the Ancillary
Instruments to which Amalco is a party;
(vi) the Reciprocal General Release, duly executed by
Cenveo, Vendor and Amalco;
(vii) the Nonsolicitation Agreement, duly executed by
Cenveo and Amalco;
(viii) the Supply Agreement, duly executed by Cenveo and
Amalco;
(ix) the Joinder Agreement, duly executed by Amalco;
3
(x) the minutes of board and stockholder meetings and the
corporate seals of each Company to the extent any of the foregoing
are in the actual possession of Cenveo at its principal executive
offices; and
(xi) all other certificates and other instruments,
agreements and documents which are expressly required pursuant to
this Agreement to be delivered by Cenveo or Vendor to Buyer at the
Closing.
(b) Buyer shall:
(i) accept and purchase the Shares from Vendor and deliver
to Vendor as payment therefor (A) the Initial Notes; and (B) the
Over-Allotment Note;
(ii) issue the Initial Vendor Units in the name of Vendor
or such other nominee name or names as Vendor shall notify Buyer in
writing at least 24 hours prior to the Closing Date in "book entry
only" form in the depository service of The Canadian Depository for
Securities Limited;
(iii) issue the Over-Allotment Vendor Units in the name of
Vendor or such other nominee name or names as Vendor shall notify
Buyer in writing at least 24 hours prior to the date, if any, of
the conversion of the Over-Allotment Note in "book entry only" form
in the depository service of The Canadian Depository for Securities
Limited;
(iv) deliver or cause to be delivered to Vendor and
Cenveo: (A) a certificate of the Secretary of Buyer certifying as
to: (I) the full force and effect of resolutions of its trustees
attached thereto as an exhibit evidencing the authority of Buyer to
consummate the transactions contemplated by this Agreement; (II)
the full force and effect of the Amended and Restated Declaration
of Trust attached thereto as an exhibit; and (III) the incumbency
of the officers of Buyer with authority to execute this Agreement
and the Ancillary Instruments to which Buyer is a party; (B) the
Reciprocal General Release, duly executed by Buyer; (C) the
Nonsolicitation Agreement, duly executed by Buyer; (D) the Joinder
Agreement, duly executed by Buyer; and (E) all other instruments,
agreements and documents that are expressly required pursuant to
this Agreement to be delivered by Buyer or Amalco at the Closing;
and
(v) deliver or cause to be delivered to Cenveo the
Registration Rights Agreement, duly executed by Buyer.
1.4 Delivery Immediately Following the Closing. Immediately
------------------------------------------
following the Closing, Buyer shall cause Amalco to deliver to Vendor and
Cenveo a certificate of the Secretary of Amalco certifying as to the full
force and effect of resolutions of its board of directors attached thereto
as an exhibit evidencing the ratification by its board of directors of each
of the Ancillary Instruments to which it is a party.
4
1.5 Closing Working Capital Adjustments.
-----------------------------------
(a) Not less than one Business Day prior to the Closing
Date, Vendor shall prepare and deliver to Buyer a schedule (the "VENDOR'S
CLOSING SCHEDULE") setting forth its good faith estimate of the Closing
Working Capital (the "ESTIMATED CLOSING WORKING CAPITAL") and the
calculation thereof in reasonable detail. The Estimated Closing Working
Capital shall be based on the unaudited consolidated balance sheet of
Supremex dated February 28, 2006 and the unaudited balance sheet of Cenveo
Canada as of December 31, 2005, with such other adjustments as Vendor
believes necessary to reflect its good faith estimate of changes from the
date of such balance sheet to the Closing Date.
(b) As promptly as practicable, but in no event later than
60 days, after the Closing Date, Buyer shall prepare and deliver to Vendor a
schedule (the "BUYER'S CLOSING SCHEDULE") setting forth in reasonable detail
Buyer's calculation of the Closing Working Capital along with a copy of the
computations and workpapers used in connection with the preparation of
Buyer's Closing Schedule. If Buyer employs a firm of independent accountants
in connection with the preparation of Buyer's Closing Schedule, Buyer shall
cause such independent accountants to deliver to Vendor and its
representatives any computations and workpapers used in the preparation of
Buyer's Closing Schedule. Upon reasonable advance notice, Buyer and its
representatives will also give Vendor and its representatives access, during
the normal business hours of Buyer and the Companies, to all personnel,
books and records of the Companies as reasonably requested by Vendor to
assist it in the preparation of Vendor's Dispute Notice. Vendor shall notify
Buyer in writing (the "VENDOR'S DISPUTE NOTICE") within 30 days after
receiving Buyer's Closing Schedule if Vendor disagrees with Buyer's
calculation of the Closing Working Capital as set forth in Buyer's Closing
Schedule, which notice shall set forth in reasonable detail, the basis for
such disagreement, the dollar amounts involved and Vendor's calculation of
the Closing Working Capital. If no Vendor's Dispute Notice is received by
Buyer within such 30-day period, Buyer's calculation of the Closing Working
Capital as set forth in Buyer's Closing Schedule shall be final and binding
upon the parties hereto.
(c) Upon receipt by Buyer of the Vendor's Dispute Notice,
Vendor and Buyer shall negotiate in good faith to resolve any disagreement
with respect to Closing Working Capital set forth in Vendor's Dispute
Notice. To the extent Buyer and Vendor are unable to agree with respect to
the Closing Working Capital within 30 days after receipt by Buyer of
Vendor's Dispute Notice, Buyer and Vendor shall submit their dispute to the
Accounting Firm for a binding resolution. Except as specified in the
following sentence, the cost of any dispute resolution procedure (including
the fees and expenses of the Accounting Firm and any arbitrator) pursuant to
this Section 1.5 shall be borne, in its entirety, by the party whose
calculation of the Purchase Price based upon its calculation of the Closing
Working Capital as initially submitted to the Accounting Firm) is furthest
away from the Purchase Price based upon the Closing Working Capital as
determined by the Accounting Firm. The fees and expenses of Buyer's
independent auditors (if any) and attorneys (if any) incurred in connection
with the issuance of Buyer's Closing Schedule shall be borne by the Buyer,
and the fees and expenses of the independent auditors (if any) and attorneys
(if any) of Vendor incurred in connection with their review of Buyer's
Closing Schedule shall be borne by Vendor.
5
(d) Not later than 30 days after the engagement of the
Accounting Firm (as evidenced by its written acceptance by facsimile or
otherwise to the parties) (such 30-day period, the "BRIEFING PERIOD"),
Vendor and Buyer shall submit simultaneous briefs to the Accounting Firm
(with a copy to the other party) setting forth their respective positions
regarding the issues in dispute, and not later than 30 days after the
submission of such briefs (the "REPLY PERIOD") Vendor and Buyer shall submit
simultaneous reply briefs (with a copy to the other party). If an additional
briefing, a hearing or other information is required by the Accounting Firm,
the Accounting Firm shall give notice thereof to the parties as soon as
practicable before the expiration of the Reply Period, and the parties shall
promptly respond with a view to minimizing any delay in the decision date.
Vendor and Buyer shall instruct the Accounting Firm to render its decision
resolving the dispute within 30 days after the Reply Period or, in the event
additional briefing, a hearing or other information is required, within 30
days after the completion of such additional briefing, the completion of
such hearing, or the submission of such additional information, as the case
may be. In resolving any disputed item, the Accounting Firm (i) shall be
bound by the provisions of this Section 1.5 and the definition of Closing
Working Capital (and the definitions included in such definition), (ii)
shall limit its review to matters still in dispute as specifically set forth
in the Vendor's Dispute Notice (and only to the extent such matters are
still in dispute at the commencement of the Briefing Period) and (iii) shall
further limit its review solely to whether the Buyer's Closing Schedule has
been prepared in accordance with this Section 1.5. The determination of any
item that is a component of the Closing Working Capital and is the subject
of a dispute cannot, however, be in excess of, or less than, the greatest or
lowest value, respectively, claimed for any particular item in the Buyer's
Closing Schedule or the Vendor's Dispute Notice. Vendor and Buyer agree that
judgment may be entered upon the determination of the Accounting Firm in any
court having jurisdiction over the party against which such determination is
to be enforced. The Closing Working Capital as agreed upon by Vendor and
Buyer, as deemed agreed upon pursuant to the last sentence of Section 1.5(b)
or as determined by the Accounting Firm in accordance with Section 1.5(c)
and Section 1.5(d), shall be termed the "FINAL CLOSING WORKING CAPITAL."
(e) If the Final Closing Working Capital is greater than
the Estimated Closing Working Capital, Buyer shall pay to Vendor the amount
of such excess. If the Estimated Closing Working Capital is greater than the
Final Closing Working Capital, Vendor shall pay to Buyer the amount of such
excess. Buyer and Vendor agree that, except to the extent otherwise
expressly provided under Sections 1.5(f) and (g), any payment required to be
made pursuant to this Section 1.5(e) shall be made in Canadian Dollars
within five Business Days after the Final Closing Working Capital becomes
final and binding on the parties hereto by wire transfer in immediately
available funds to a bank account or bank accounts designated by Vendor or
Buyer, as the case may be, to the other party, as applicable. Any payment
pursuant to the first and second sentences of this Section 1.5(e) shall
constitute a payment in respect of the Purchase Price.
(f) In the event that (i) any amount is due to Vendor
pursuant to the first sentence of Section 1.5(e) and (ii) Vendor has not
delivered a certificate under subsection 116(4) of the Income Tax Act
(Canada) (the "TAX ACT") as referred to in Section 1.6 to Buyer on or before
the date of payment contemplated by Section 1.5(e)(i), then payment of 25%
of such amount shall be made by delivery on such date by Buyer (A) to Vendor
of a promissory note (in substantially the same form as Initial Note Series
2) in an amount equal to such 25% of such
6
amount, and (B) to TD Trust Company by wire transfer of immediately
available funds in Canadian Dollars in an amount equal to the amount of the
promissory note referred to in clause (A) above, which amount of Canadian
Dollars shall be held by TD Trust Company on substantially the same terms as
amounts held by it as contemplated by Section 1.6 and the Tax Escrow
Agreement with respect to the Initial Notes and the settlement thereof.
(g) In the event that (i) any amount is due to Vendor
pursuant to the first sentence of Section 1.5(e) and (ii) Vendor has not
delivered a certificate under Section 1100 of the Taxation Act (Quebec) (the
"QUEBEC TAX ACT") as referred to in Section 1.6 to Buyer on or before the
date of payment contemplated by Section 1.5(e)(i), then payment of 12% of
such amount shall be made by delivery on such date by Buyer (A) to Vendor of
a promissory note (in substantially the same form as Initial Note Series 3)
in an amount equal to such 12% of such amount, and (B) to TD Trust Company
by wire transfer of immediately available funds in Canadian Dollars in an
amount equal to the amount of the promissory note referred to in clause (A)
above, which amount of Canadian Dollars shall be held by TD Trust Company on
substantially the same terms as amounts held by it as contemplated by
Section 1.6 and the Tax Escrow Agreement with respect to the Initial Notes
and the settlement thereof.
(h) Buyer agrees that following the Closing through the
date on which the Final Closing Working Capital becomes final and binding it
shall not, and will cause each of the Companies to, take any actions with
respect to any accounting books, records, policies or procedures on which
the Closing Working Capital are to be based that (i) are inconsistent with
the practices prior to the Closing Date or (ii) would make it impossible or
impracticable to calculate the Closing Working Capital in the manner and
utilizing the methods required hereby.
1.6 Withholding Taxes.
-----------------
With respect to the payment of the Purchase Price to be made by
Buyer to Vendor on the Closing Date:
(a) If Vendor has delivered to Buyer, prior to the Closing
Date, a certificate (a "SECTION 116 CERTIFICATE") issued by the Minister of
National Revenue under subsection 116(2) of the Tax Act with a certificate
limit which is equal to or greater than an amount equal to or greater than
the Closing Purchase Price, Buyer shall (immediately after the resale of the
Shares by Buyer to AcquisiCo) pay to Vendor by wire transfer of immediately
available funds the face amount of the Initial Note Series 2.
(b) If Vendor has delivered to Buyer, prior to the Closing
Date a certificate (a "QUEBEC CERTIFICATE") issued by the Minister of
Revenue of Quebec under Section 1098 of the Quebec Tax Act with a
certificate limit which is equal to or greater than the Closing Purchase
Price, Buyer shall (immediately after the resale of the Shares by Buyer to
AcquisiCo) pay to Vendor by wire transfer of immediately available funds the
face amount of the Initial Note Series 3.
(c) If Vendor has delivered the Section 116 Certificate to
Buyer with a certificate limit less than the Closing Purchase Price, prior
to the Closing Date, Buyer shall (immediately after the resale of the Shares
by Buyer to AcquisiCo) pay to Vendor by wire
7
transfer of immediately available funds the face amount of the Initial Note
Series 2 minus 25% of such difference. The remaining balance of such face
amount shall be remitted by Buyer to TD Trust Company and shall be held by
TD Trust Company in accordance with this Section 1.6 and the Tax Escrow
Agreement.
(d) If Vendor has delivered a Quebec Certificate to Buyer
with a certificate limit less than the Closing Purchase Price, prior to the
Closing Date, Buyer shall (immediately after the resale of the Shares by
Buyer to AcquisiCo) pay to Vendor by wire transfer of immediately available
funds the face amount of the Initial Note Series 3 minus 12% of such
difference. The remaining balance of such face amount shall be remitted by
Buyer to TD Trust Company and shall be held by TD Trust Company in
accordance with this Section 1.6 and the Tax Escrow Agreement.
(e) If Vendor has not delivered to Buyer prior to the
Closing Date a Section 116 Certificate, Buyer shall not pay to Vendor in
cash on the Closing Date any portion of the Initial Note Series 2 and an
amount equal to the face value of the Initial Note Series 2 shall be
remitted by Buyer to TD Trust Company and shall be held by TD Trust Company
in accordance with this Section 1.6 and the Tax Escrow Agreement.
(f) If Vendor has not delivered to Buyer prior to the
Closing Date a Quebec Certificate, Buyer shall not pay to Vendor in cash on
the Closing Date any portion of the Initial Note Series 3 and an amount
equal to the face value of the Initial Note Series 3 shall be remitted by
Buyer to TD Trust Company and shall be held by TD Trust Company in
accordance with this Section 1.6 and the Tax Escrow Agreement.
(g) If Section 1.6(a) does not apply and Vendor delivers
to Buyer on or after the Closing and prior to the day that is 29 calendar
days after the end of the calendar month in which Closing occurs or, if such
day is not a Business Day, the immediately preceding Business Day (the
"REMITTANCE DATE") a certificate issued by the Minister of National Revenue
under subsection 116(4) of the Tax Act, Buyer shall, as soon as is
reasonably practicable (but in no event later than two Business Days)
following delivery to Buyer of such certificate, instruct TD Trust Company
to pay to Vendor by wire transfer of immediately available funds the amount
previously remitted in accordance with Sections 1.6(c) or 1.6(e), as the
case may be, by Buyer to TD Trust Company.
(h) If Section 1.6(b) does not apply and Vendor delivers
to Buyer on or after the Closing and prior to the Remittance Date a
certificate issued by the Minister of Revenue of Quebec under Section 1100
of the Quebec Tax Act, Buyer shall, as soon as is reasonably practicable
(but in no event later than two Business Days) following delivery to Buyer
of such certificate, instruct TD Trust Company to pay to Vendor by wire
transfer of immediately available funds the amount previously remitted in
accordance with Sections 1.6(d) or 1.6(f), as the case may be, by Buyer to
TD Trust Company.
(i) If Section 1.6(a) does not apply, Vendor fails to
deliver to Buyer prior to the Remittance Date a certificate issued by the
Minister of National Revenue under subsection 116(4) of the Tax Act and
Buyer has not received a letter from the Canada Revenue Agency ("CRA")
acceptable to Buyer acting reasonably (a "CRA COMFORT LETTER")
8
indicating that it need not remit any amount under Section 116 of the Tax
Act until the CRA has completed its review of the application for a Section
116 Certificate, then (A) Buyer shall instruct TD Trust Company to remit, to
the Receiver General of Canada on the Remittance Date and in accordance with
the provisions of the Tax Act, the amount previously remitted in accordance
with sections 1.6(c) or 1.6(e), as the case may be, by Buyer to TD Trust
Company, and (B) any amount paid by TD Trust Company to the Receiver General
of Canada shall constitute a payment in respect of the Initial Note Series 2
once the Receiver General of Canada acknowledges receipt of the payment
thereof.
(j) If Section 1.6(b) does not apply, Vendor fails to
deliver to Buyer prior to the Remittance Date a certificate issued by the
Minister of Revenue of Quebec under Section 1100 of the Quebec Tax Act and
Buyer has not received a letter from Revenue Quebec ("RQ") acceptable to
Buyer acting reasonably (a "RQ COMFORT LETTER") indicating that it need not
remit any amount under Section 1101 of the Quebec Tax Act until RQ has
completed its review of the application for a Quebec Certificate, then (A)
Buyer shall instruct TD Trust Company to remit, to the Minister of Revenue
of Quebec on the Remittance Date and in accordance with the provisions of
the Quebec Tax Act, the amount previously remitted in accordance with
sections 1.6(d) or 1.6(f), as the case may be, by Buyer to TD Trust Company,
and (B) any amount paid by TD Trust Company to the Minister of Revenue of
Quebec shall constitute a payment in respect of the Initial Note Series 3
once the Minister of Revenue of Quebec acknowledges receipt of the payment
thereof.
(k) If a CRA Comfort Letter is received by Buyer prior to
the Remittance Date, then the Remittance Date shall, for the purposes of
Sections 1.6(g) or 1.6(i), mean the date provided for in the CRA Comfort
Letter.
(l) If a RQ Comfort Letter is received by Buyer prior to
the Remittance Date, then the Remittance Date shall, for the purposes of
Sections 1.6(h) or 1.6(j), mean the date provided for in the RQ Comfort
Letter.
(m) Buyer, Cenveo and Vendor acknowledge that TD Trust
Company may be obliged to pay an amount, on or after 30 days after the end
of the calendar month in which Closing occurs, to the Receiver General of
Canada, in accordance with subsection 116(5) of the Tax Act as tax on behalf
of Vendor and that such payment constitutes a payment in respect of the
Initial Note Series 2 once the Receiver General of Canada acknowledges the
receipt of payment thereof.
(n) Buyer, Cenveo and Vendor acknowledge that TD Trust
Company may be obliged to pay an amount, on or after 30 days after the end
of the calendar month in which Closing occurs, to the Minister of Revenue of
Quebec, in accordance with Section 1101 of the Quebec Tax Act as tax on
behalf of Vendor and that such payment constitutes a payment in respect of
the Initial Note Series 3 once the Minister of Revenue of Quebec
acknowledges receipt of the payment thereof.
(o) If, pursuant to Sections 1.5(e) and 7.3(g),
adjustments are made after the Closing Date resulting in an increase in the
Purchase Price, such increase shall be paid by Buyer to Vendor, subject to
the application of this Section 1.6; provided, however, that amounts to be
-------- -------
remitted to TD Trust Company shall be determined by reference to the lesser
of such increase in Purchase Price or the excess, if any, of the Purchase
Price (as increased) over the applicable certificate amount, if any.
9
(p) If any Over-Allotment Vendor Units are issued to
Vendor, Vendor shall promptly thereafter remit to TD Trust Company an amount
equal to the lesser of 25% (with respect to amounts that may be payable to
the Receiver General of Canada unless Vendor delivers to Buyer prior to the
issuance of such Units a certificate issued by the Minister of National
Revenue under subsection 116(4) of the Tax Act) and 12% (with respect to
amounts that may be payable to the Minister of Revenue of Quebec unless
Vendor delivers to Buyer prior to the issuance of such Units a certificate
issued by the Minister of Revenue of Quebec under Section 1100 of the Quebec
Tax Act) of the lesser of (x) the product of CDN$0.55 and the number of
Over-Allotment Vendor Units so issued and (y) the excess, if any, of the sum
of the Closing Purchase Price and such product over the applicable
certificate amount, if any.
(q) Any earnings in amounts held in escrow pursuant to the
Tax Escrow Agreement shall be remitted to Vendor in accordance with the
terms thereof.
(r) Notwithstanding anything to the contrary contained in
this Agreement, any payment by Buyer to Vendor pursuant to this Agreement
shall be subject to the provisions of this Section 1.6.
1.7 No Allocation to Restrictive Covenant. The parties agree
-------------------------------------
that no portion of the Purchase Price is allocated to a "restrictive
covenant", as that term is defined in July 18, 2005 draft legislation to
amend the Tax Act. However, if any portion of the Purchase Price is
determined by tax authorities to be in respect of a "restrictive covenant",
then Buyer and Vendor agree that the full amount of such portion be subject
to an election under such draft legislation in order for such amount to be
treated as proceeds of disposition of the Shares. If any Canadian provincial
taxing authority proposes a similar provision, and it is determined by such
provincial tax authority that any portion of the Purchase Price is in
respect of a "restrictive covenant", then Buyer and Vendor shall make a
similar provincial election.
ARTICLE 2
---------
REPRESENTATIONS AND WARRANTIES OF VENDOR AND CENVEO
---------------------------------------------------
Vendor and Cenveo jointly and severally (or solidarily) represent
and warrant to Buyer that, except as set forth in the Schedules or the
Prospectus:
2.1 Organization, Existence and Good Standing. Vendor and
-----------------------------------------
Cenveo are each corporations duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Delaware and
Colorado, respectively.
2.2 Capacity; Authorization. Vendor and Cenveo have full
-----------------------
corporate power and authority to execute, deliver and perform this Agreement
and the Ancillary Instruments to which they are a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery
and performance by each of Vendor and Cenveo of this Agreement and the
10
Ancillary Instruments to which they are or at the Closing will be a party
and the consummation by Vendor and Cenveo of the transactions contemplated
hereby and thereby, including without limitation the issuance to Vendor of
the Initial Vendor Units, and the Over-Allotment Vendor Units, if any,
pursuant to the Over-Allotment Notes: (i) have been authorized by all
necessary action on the part of Vendor and Cenveo; and (ii) in the case of
clauses (B) and (C) with such exceptions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect or a
material adverse effect on the ability of Vendor or Cenveo to perform their
respective obligations hereunder: do not and will not (A) violate the
certificate of incorporation or bylaws of Vendor or Cenveo; or (B)
constitute a default under any contract to which either of them is a party;
or (C) violate any Law. This Agreement has been and, when executed and
delivered at the Closing, the Ancillary Instruments to which Vendor or
Cenveo (as applicable) is a party will be, duly executed and delivered by
Vendor and Cenveo. This Agreement constitutes and, when executed and
delivered at the Closing, the Ancillary Instruments to which Vendor or
Cenveo (as applicable) is a party will constitute, the legal, valid and
binding obligation of Vendor and Cenveo, enforceable against them in
accordance with their respective terms, except as such enforceability may be
limited by applicable laws relating to bankruptcy, insolvency,
reorganization, moratorium or other similar legal requirement relating to or
affecting creditors' rights generally and except as such enforceability is
subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
2.3 Ownership of Shares; Title. Vendor is the sole record and
--------------------------
beneficial owner of the Shares. Vendor has, and shall transfer to Buyer at
the Closing, good title to the Shares free and clear of all Liens except for
(a) Liens created by this Agreement and (b) restrictions imposed by
applicable securities laws.
2.4 Exclusivity of Representations and Warranties. EXCEPT FOR
---------------------------------------------
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 2 AND IN
ARTICLE 3, THE SHARES ARE BEING SOLD HEREUNDER ON A "WHERE IS AND AS IS"
BASIS, AND NEITHER VENDOR NOR CENVEO MAKES ANY REPRESENTATION OR WARRANTY,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER IMPLIED WARRANTY CONCERNING
THE SHARES, THE COMPANIES OR ANY OTHER MATTER WHATSOEVER. VENDOR AND CENVEO
HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY VENDOR OR CENVEO OR ANY OTHER
PERSON TO BUYER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE 3
---------
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
------------------------------------------------------
Vendor and Cenveo jointly and severally (or solidarily) represent
and warrant to Buyer that, except as set forth in the Schedules or the
Prospectus (with the exception of the following
11
"Risk Factors" therein: "Litigation" and (other than the last paragraph)
"Environment, Health and Safety Requirements"):
3.1 Organization, Existence and Good Standing. Each Company is
-----------------------------------------
the type of entity listed on Schedule 3.1, was duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
organization.
3.2 Capitalization of the Companies.
-------------------------------
(a) The authorized and outstanding capital stock of each
Company is as set forth on Schedule 3.2. The Shares and the other
outstanding shares of capital stock of the Companies have been duly and
validly authorized and issued, are fully paid and have not been issued in
violation of any preemptive or other contractual rights. Other than as
contemplated hereby, there is no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature
whatsoever, fixed or contingent, that directly or indirectly (i) calls for
the issuance, sale, pledge or other disposition by any Company of any of its
equity interests or any securities convertible into, or other rights to
acquire, any such equity interests, (ii) relates to the voting or control of
such equity interests or rights or (iii) obligates any Company to grant,
offer or enter into any of the foregoing.
(b) No Company has any Subsidiaries or investments in, or
joint venture agreements with, any other Person.
3.3 No Conflict. The execution, delivery and performance by
-----------
each of Vendor and Cenveo of this Agreement and the Ancillary Instruments to
which they are or at the Closing will be a party and the consummation by
Vendor and Cenveo of the transactions contemplated hereby and thereby: (i)
do not and will not violate the certificate of incorporation or bylaws of
any of the Companies; (ii) with such exceptions as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect,
constitute a default under any contract to which either of them or any
Company is a party; or (iii) with such exceptions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect,
violate any Law.
3.4 Required Authorizations. To the Knowledge of Vendor and
-----------------------
Cenveo, there is no requirement of any Company to make any filing or
registration with, give any notice to or obtain the consent of any
Governmental Authority as a condition to the lawful completion of the
transactions contemplated by this Agreement except for filings,
notifications and consents that have not been obtained and where the failure
to do so would not have a Material Adverse Effect.
3.5 Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) The consolidated balance sheets of Supremex as of
December 31, 2004 and 2005 (such balance sheet as of December 31, 2005, the
"BALANCE SHEET"; December 31, 2005 is referred to as the "BALANCE SHEET
DATE"), the consolidated statements of earnings and cash flows of Supremex
for the years ended December 31, 2003, 2004 and 2005, together with the
notes thereto and the unaudited balance sheet of Cenveo Canada as of
December 31, 2005 (collectively, the "FINANCIAL STATEMENTS") present fairly,
in all material respects, the consolidated financial position of Supremex or
Cenveo Canada, as the case may be, as of the applicable dates, and the
results of operations and cash flows of Supremex for the applicable
12
periods in conformity with Canadian generally accepted accounting principles
("GAAP"), except as otherwise indicated in the Financial Statements.
(b) Except as reflected, reserved against or otherwise
disclosed in the Balance Sheet, as of the Balance Sheet Date, Supremex did
not have any liabilities or obligations that would have been required to be
reflected by it in the Balance Sheet in accordance with GAAP and that would
be reasonably likely to have a Material Adverse Effect.
3.6 Business Since the Balance Sheet Date. Except as
-------------------------------------
contemplated by this Agreement, since the Balance Sheet Date, (x) the
Companies have operated their business, taken as a whole, in the ordinary
course, and (y) there has not been:
(a) any Material Adverse Effect;
(b) any acquisition of all or substantially all of the
assets or properties or of the securities or business of any other Person by
any Company or any merger, consolidation or amalgamation involving any
Company;
(c) through the date of this Agreement, any incurrence by
any Company of any indebtedness for borrowed money or incurrence, assumption
or guarantee of, or any other act to become responsible for, any obligations
of any other Person, or making of loans or advances by any Company to any
Person, other than in the ordinary course of business; or
(d) any change in the financial or accounting practices or
policies of any Company, except as required by Law or GAAP.
3.7 Compliance with Law; Litigation; Injunctions. None of the
--------------------------------------------
Companies is in violation of any Law, Permit or Order applicable to it and,
since December 31, 2003, the Companies have conducted and currently are
conducting the Business in compliance with all applicable Laws, except in
each case for violations the existence of which and cost of remedying would
not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. As of the date of this Agreement, (i) there is no
action, suit or other judicial or administrative proceeding pending or, to
the Knowledge of Vendor and Cenveo, overtly threatened against any Company,
at law or in equity, before any Governmental Authority which is reasonably
likely to, individually or in the aggregate, have a Material Adverse Effect,
and (ii) none of the Companies is a party to, or subject to or bound by, any
Order which has or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect. To the Knowledge of Vendor and Cenveo,
since December 31, 2003, none of the Companies has received any written
notice of any alleged violation of any such Laws, except with respect to
such violations that are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
3.8 Material Contracts. Except for such breaches, defaults or
------------------
events as have not had and are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect, (a) none of the Companies
nor, to the Knowledge of Vendor and Cenveo, any other party to any Material
Contract is in breach of or default under any Material Contract and (b) no
event has occurred which (after notice or lapse of time or both) would
become a breach or default by any Company under any Material Contract.
13
3.9 Employee Benefit Plans. With such exceptions as are not
----------------------
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect: (a) each Company Plan has been established and administered
substantially in accordance with its terms and in compliance with all
applicable Laws; (b) no actions, suits or claims (other than routine claims
for benefits in the ordinary course) are pending or, to the Knowledge of
Vendor and Cenveo, threatened with respect to any Company Plan; and (c) no
audit or, to the Knowledge of Vendor and Cenveo, investigation by any
Governmental Authority is pending, or to the Knowledge of Vendor and Cenveo,
threatened, with respect to any Company Plan.
3.10 Employment-Related Matters. With such exceptions as are
--------------------------
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect, as of the date of this Agreement, (a) no employees of any
Company are covered by a collective bargaining agreement, (b) there is no
labor strike, organized work stoppage, lockout or other labor controversy
presently pending or, to the Knowledge of Vendor and Cenveo, threatened
against any Company, (c) to the Knowledge of Vendor and Cenveo, there is no
union organization campaign relating to any employees of any Company, (d)
there is no unfair labor practice charge or complaint against any Company
pending or, to the Knowledge of Vendor and Cenveo, threatened before any
Governmental Authority, (e) to the Knowledge of Vendor and Cenveo, no
charges with respect to or relating to any employee of any Company are
pending before any Governmental Authority responsible for the prevention of
unlawful employment practices.
3.11 Taxes. Except as provided for in the Financial Statements
-----
or in the Final Closing Working Capital:
(a) The Companies have prepared and duly and timely filed
all Tax Returns required to be prepared or filed by them and have correctly
and completely reported all income and information required to be reported
thereon, have timely paid all Taxes that are or may become due and payable
on or prior to the date hereof and have made adequate provision for Taxes in
their Financial Statements for the period ended December 31, 2005.
(b) Since December 31, 2005, the Companies have only
incurred liabilities for Taxes in the ordinary course of business except as
a result of the Pre-Closing Transactions to occur before the Closing.
(c) There are no outstanding waivers of any limitation
periods or agreements providing for an extension of time for the filing of
any Tax Return or for the assessment or reassessment for collection of Tax
for which any of the Companies is or may be liable, or for the payment of
any Tax by the Companies, and there are no outstanding objections to any
assessment or reassessment of Taxes. Any proposed deficiencies have been
paid, settled or otherwise resolved.
(d) There are no liabilities for Taxes or any grounds that
could prompt an assessment or reassessment of the Companies nor have the
Companies received any notice from any Governmental Authorities that an
audit, investigation, assessment or reassessment of Taxes is proposed,
excluding items set forth on Schedule 3.11.
14
(e) The Companies have withheld from each payment made by
them the amount of all Taxes and other deductions required to be withheld
and has paid such amounts when due, or made adequate provision for the
payment of such amounts to the proper Governmental Authorities.
(f) The Companies have collected from each receipt from
any of the past and present customers (or other Persons paying amounts to
the Companies) the amount of all Taxes (including goods and services tax and
provincial sales taxes) required to be collected and have paid and remitted
such Taxes when due, in the form required under applicable Laws or made
adequate provision for the payment of such amounts to the proper
Governmental Authorities. The amount of Tax collected but not remitted by
the Companies will be retained in the appropriate accounts and remitted by
the Companies to the appropriate Governmental Authorities when due.
3.12. Permits. With such exceptions as are not reasonably likely
--------
to have, in the aggregate, a Material Adverse Effect, (a) all Permits that
are presently required for the operation of any Company, as currently
conducted, have been duly obtained and are in full force and effect and (b)
there is no action pending or, to the Knowledge of Vendor and Cenveo,
overtly threatened against any Company to terminate the rights of any
Company under any of such Permits.
3.13 Real Property.
-------------
(a) Schedule 3.13(a) lists the real property owned by each
----------------
Company (the "OWNED REAL PROPERTIES"). Except as set forth on Schedule
3.13(a), no Company owns any real property. Each Company has good title to
the Owned Real Properties owned by it, free and clear of any Liens other
than Permitted Liens or any conditions that a current, accurate survey or
physical inspection of any Owned Real Property would show. No Company has
leased any Owned Real Property or portion thereof.
(b) Schedule 3.13(b) lists all leases, subleases and
----------------
licenses relating to any real property to which any Company is a party or
pursuant to which any Company occupies any real property. Each Company has a
valid and binding leasehold interest in the real property leased by it and
the right to quiet enjoyment of such real property.
(c) With such exceptions as are not reasonably likely to
have, in the aggregate, a Material Adverse Effect, no Company has received
written notice of, nor to the Knowledge of Vendor and Cenveo does there
exist, any condemnation proceeding affecting any portion of the real
properties owned, leased, subleased or licensed by any Company.
3.14 Title; Condition of Assets.
--------------------------
(a) Each Company has good title to, or valid leasehold
interests in, all of the assets that it purports to own or lease, free and
clear of any Liens other than Permitted Liens.
(b) The tangible personal property of the Companies is in
all material respects in working condition, reasonable wear and tear and
loss due to normal operations excepted.
15
3.15 Intellectual Property. To the Knowledge of Vendor and
---------------------
Cenveo, the Companies own or have the right to use all Intellectual Property
and all Technology used or held for use in the conduct of their respective
businesses without any conflict with the rights of others, in each case with
such exceptions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect and subject to limitations contained in
any applicable license agreement; provided, however, that no representation
-------- -------
or warranty is made as to the extent to which ownership of or right to use
any particular Intellectual Property or Technology includes the exclusive
right to use such Intellectual Property or Technology.
3.16 Insurance. Schedule 3.16 lists all material liability and
--------- -------------
casualty insurance policies in force as of the date of this Agreement for
the benefit of any Company.
3.17 Environmental Laws. With such exceptions as are set forth
------------------
on Schedule 3.17 or not reasonably likely to have, in the aggregate, a
-------------
Material Adverse Effect:
(a) each Company complies and, since December 31, 2003,
has been in compliance with all applicable Environmental Laws;
(b) no Company has any Knowledge of any grounds to revoke
any of its Environmental Permits;
(c) since December 31, 2003, no Company has been convicted
of an offence or been subjected to any claim, judgment, Order, injunction or
other proceeding or been fined or otherwise sentenced for non-compliance
with any Environmental Laws in connection with the business of the Companies
and have not settled any claim or other proceeding in connection therewith;
(d) other than notices relating to matters that have been
resolved, no Company has received written notice alleging that it may be
potentially responsible for any remedial, corrective, preventative or other
response action from any Governmental Authority under any Environmental Law;
(e) there are no claims, written notices, judgments or
consent decrees pending or threatened by any other Person relating to any
Hazardous Substances against any of the Companies, including any relating to
off-site disposal and/or transportation of Hazardous Substances in violation
of any Environmental Laws;
(f) no Company has assumed any liability of any Person for
cleanup, remediation, removal, compliance or required capital expenditures
in connection with any matters pertaining to the Environment;
(g) each Company has provided or made available to Buyer
true and complete copies of all Environmental Reports prepared within the
last three years in Cenveo's possession or control; and
(h) there are no underground storage tanks or surface
impoundments that are located on real property currently owned or leased by
any Company in violation of any Environmental Laws.
16
3.18 Affiliated Transactions. As of the date of this Agreement,
-----------------------
no Affiliate of any Company is a party to any agreement with any Company.
3.19 Suppliers and Customers. Schedule 3.19 lists the names of
----------------------- -------------
the top 10 (based on invoice price) suppliers of products and/or services
to, and customers of, the Companies during each of calendar year 2004 and
2005.
3.20 Sufficiency of Assets. The assets owned by the Companies
---------------------
on the date of this Agreement are sufficient for them to operate the
business conducted by them on substantially the same basis as heretofore
conducted by them.
3.21 Absence of Material Acquisitions. During the three years
--------------------------------
prior to the date of this Agreement, none of the Companies has acquired the
business or capital stock of any Person for an amount in excess of
CDN$10,000,000.
3.22 Relations With Auditors. Ernst & Young LLP are independent
-----------------------
with respect to the Companies within the meaning of the applicable Laws
relating to securities matters and of the Code of Ethics of Chartered
Accountants of Quebec, and there has not been any disagreement (within the
meaning of National Instrument 51-102 of the Canadian Securities Regulators)
between the Companies and Ernst & Young LLP with respect to the financial
statements of the Companies that appear in the Prospectus.
3.23 Residency. None of the Companies, other than Buffalo
---------
Envelope Inc., is a non-resident of Canada for the purposes of the Tax Act.
3.24 Certain Amounts. As of December 31, 2005, the aggregate
---------------
book value of the assets in Canada of the Companies, Cenveo and their
respective Affiliates controlled by Cenveo was less than CDN$400 million,
and during the fiscal year ended December 31, 2005, the aggregate gross
revenues from sales in, to and from Canada of the Companies, Cenveo and
their respective Affiliates controlled by Cenveo was less than CDN$400
million.
3.25 Full Disclosure. The Prospectus (other than the sections
---------------
of the Prospectus entitled "Canadian Federal Income Tax Considerations,"
"Plan of Distribution," "Eligibility for Investment" and "Description of the
Fund" and the information and statements provided in writing by the
Underwriters specifically for use in the Prospectus as to which no
representation or warranty is given) constitutes full, true and plain
disclosure of all material facts relating to the Business and does not
contain any misrepresentation (as defined in applicable Laws relating to
securities matters).
3.26 Minute Books. To the Knowledge of Vendor and Cenveo, the
------------
minute books of the Companies made available to counsel for Buyer constitute
all the minute books in the Companies' possession.
3.27 Exclusivity of Representations and Warranties. EXCEPT FOR
---------------------------------------------
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 2 AND THIS ARTICLE
3, THE SHARES ARE BEING SOLD HEREUNDER ON A "WHERE IS AND AS IS" BASIS, AND
NEITHER VENDOR NOR CENVEO MAKES ANY REPRESENTATION OR WARRANTY, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY
17
OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
IMPLIED WARRANTY CONCERNING THE SHARES, THE COMPANIES OR ANY OTHER MATTER
WHATSOEVER. VENDOR AND CENVEO HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY
VENDOR OR CENVEO OR ANY OTHER PERSON TO BUYER OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR
OTHER INFORMATION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
ARTICLE 4
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Vendor and Cenveo as
follows:
4.1 Organization, Existence and Good Standing. Buyer is an
-----------------------------------------
unincorporated open-ended trust duly formed and validly existing and in good
standing under the laws of the Province of Quebec.
4.2 Capacity; Authorization. Buyer has all requisite trust
-----------------------
power and authority to execute, deliver and perform this Agreement and the
Ancillary Instruments to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and the Ancillary Instruments to
which it is or at the Closing will be a party and the consummation by Buyer
of the transactions contemplated hereby and thereby: (i) have been
authorized by all necessary action on the part of Buyer; and (ii) in the
case of clauses (B) and (C) with such exceptions as are not reasonably
likely to have a material adverse effect on the ability of Buyer to perform
its obligations hereunder: (A) do not and will not violate the declaration
of trust of Buyer, as in effect from time to time; (B) or constitute a
default under any contract to which it is a party or (C) violate any Law.
This Agreement has been and, when executed and delivered at the Closing, the
Ancillary Instruments to which Buyer is a party will be, duly executed and
delivered by Buyer. This Agreement constitutes and, when executed and
delivered at the Closing, the Ancillary Instruments to which Buyer is a
party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with their respective terms, except as
such enforceability may be limited by applicable laws relating to
bankruptcy, insolvency, reorganization, moratorium or other similar legal
requirement relating to or affecting creditors' rights generally and except
as such enforceability is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
4.3 Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) The consolidated balance sheets of Buyer as of
February 10, 2006 (such balance, the "BUYER'S BALANCE SHEET"; February 10,
2006 is referred to as the "BUYER'S BALANCE SHEET DATE"), together with the
notes thereto have been prepared in accordance with
18
the applicable books and records of Buyer and present fairly, in all
material respects, the consolidated financial position of Buyer as of such
date in conformity with GAAP.
(b) Buyer has no assets or liabilities or obligations of
any nature (whether known or unknown and whether absolute, accrued,
contingent or otherwise) except for assets, liabilities and obligations
incurred as a result of the formation of Buyer or its execution and delivery
of this Agreement or the Underwriting Agreement.
4.4 The Trustees. The trustees of Buyer, acting in such
------------
capacity, have all necessary power and authority to administer, control and
hold title to Buyer's assets and to execute its undertakings as described in
the Prospectus.
4.5 Capitalization. (a) Immediately prior to Closing and
--------------
completion of the transactions described under the heading "Funding and
Related Transactions - Closing Transactions" in the Prospectus, Buyer's
authorized capital consists of an unlimited number of Units of which 10
Units are issued and outstanding as of the date hereof; (b) immediately
following Closing, assuming the over-allotment option contemplated by the
Underwriting Agreement has not been exercised, there will be 31,311,667
Units issued and outstanding; (c) except for such over-allotment option, no
person, firm or corporation has any agreement or option, or right or
privilege (whether pre-emptive or contractual) capable of becoming an option
or other agreement for the purchase from Buyer of any unissued Units or
other securities of Buyer; and (d) immediately following Closing, Buyer will
not hold interests in any other entity other than Supremex, Amalco,
AcquisiCo and Buffalo Envelope Inc.
4.6 Description of Securities. The description of the
-------------------------
securities of Buyer, including the Units, in the Prospectus is, in all
material respects, a true, complete and accurate description of the rights,
privileges, restrictions, terms and conditions attaching to such securities.
4.7 Voting of Securities. Except as contained in the
--------------------
Registration Rights Agreement or the Amended and Restated Declaration of
Trust, no agreement is currently in force or effect that, in any manner,
affects the voting or control of any of the securities of Buyer and, at the
Closing, no such agreement will be in force or effect.
4.8 Issuance of Units. At the Closing, the Initial Vendor
-----------------
Units will be validly created and will be duly authorized and issued as
fully paid and non-assessable. At the time of the delivery of the
Over-Allotment Vendor Units upon conversion, if any, of the Over-Allotment
Note in accordance with the terms thereof, such Over-Allotment Vendor Units
will be validly created and will be duly authorized and issued as fully paid
and non-assessable.
4.9 Qualification. All documents have been filed, all
-------------
requisite proceedings have been taken and all legal requirements have been
fulfilled by Buyer to qualify the Vendor Units for distribution and sale to
Vendor under the applicable laws of Canada and the laws of the provinces of
Canada. All documents have been filed, all requisite proceedings have been
taken and all legal requirements have been fulfilled by Buyer to qualify the
Vendor Units for distribution and sale by Vendor under the applicable laws
of Canada and the laws of the provinces of Canada, provided, that the
--------
distribution and sale by Vendor thereof is not a "control distribution" as
such term is defined in Section 1.1 of NI 45-102.
19
4.10 Approval for Trading. The Vendor Units have been
--------------------
conditionally approved for trading on the TSX, subject to satisfaction of
the listing conditions set forth in the conditional approval letter of the
TSX dated March 16, 2006.
4.11 Transaction Expenses. Except as set forth on Schedule 4.11,
-------------------- -------------
neither Supremex, nor Cenveo Canada nor any of their respective Subsidiaries
has paid, and none of them shall, prior to the consummation of the Closing
pay, any costs or expenses incurred in connection with any of the
transactions contemplated by this Agreement ("TRANSACTION EXPENSES").
ARTICLE 5
---------
COVENANTS
---------
5.1 Access. At the reasonable request of Buyer, and upon
------
reasonable advance notice, Vendor shall from time to time prior to the
Closing give or cause to be given to the officers, employees, accountants,
counsel, lenders and their agents and representatives, potential lenders and
their agents and representatives and other authorized representatives of
Buyer (collectively, "BUYER'S REPRESENTATIVES") full access during normal
business hours to any and all premises, properties, files, books, records,
documents and other information of the Companies. Notwithstanding the
foregoing, Buyer shall not have access to personnel records of the Companies
relating to individual performance or evaluation records, medical histories
or other information that in Vendor's good faith opinion is sensitive or the
disclosure of which could subject Cenveo, Vendor or the Companies to risk of
liability. Buyer shall, and Buyer shall cause Buyer's Representatives to,
conduct its (or their) investigation in a manner designed to avoid any
unreasonable interference with the operations of the Companies.
5.2 Notice of Proceedings; Agreement to Defend.
------------------------------------------
(a) Each party to this Agreement will notify the other
promptly in writing upon (i) such party's becoming aware of any Order or
judgment restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereby or any complaint or overtly threatened
complaint seeking such an Order or judgment or (ii) such party's receiving
any notice from any Governmental Authority of its intention (A) to institute
an investigation into, or institute a suit or proceeding to restrain or
enjoin, the consummation of this Agreement or the transactions contemplated
hereby or (B) to nullify or render ineffective this Agreement or such
transactions if consummated.
(b) In the event any Person brings a suit or claim, or
commences an action, investigation or other proceeding, which challenges the
validity or legality of this Agreement or the transactions contemplated by
this Agreement or any instrument or document contemplated hereby, the
parties hereto agree to consult and to cooperate with each other and use
reasonable best efforts to defend against such suit, claim, action,
investigation or other proceeding and, in the event an injunction or other
Order is issued in connection with any of the foregoing, to use reasonable
best efforts to have such injunction lifted or such Order set aside so that
the transactions contemplated by this Agreement and the instruments and
documents contemplated hereby may proceed.
20
5.3 Consummation of Agreement. Each party hereto shall use
-------------------------
reasonable best efforts to fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this Agreement
and the Ancillary Instruments to which it is a party, and to cause the
transactions contemplated hereby and thereby to be fully carried out.
5.4 Consummation of the Pre-Closing Transactions. Prior to the
--------------------------------------------
consummation of the Closing each party to this Agreement will cause the
Pre-Closing Transactions for which it is responsible (it is understood and
agreed that the Pre-Closing Transactions for which a party is responsible
shall be those Pre-Closing Transactions that are required to be performed by
such party) to occur.
5.5 Consummation of the Post-Closing Transactions. Immediately
---------------------------------------------
following the consummation of the Closing, each party to this Agreement will
cause the Post-Closing Transactions for which it or any of its subsidiaries
is responsible (it is understood and agreed that the Post-Closing
Transactions for which a party is responsible shall be those Post-Closing
Transactions that are required to be performed by such party) to occur. Each
party to this Agreement shall carry out and perform its respective
obligations with respect to each item set forth under "Other Post-Closing
Adjustment" in Exhibit B-2 hereto.
5.6 Announcements. Prior to the consummation of the Closing,
-------------
no party hereto will (and each such party will cause the Affiliates
controlled by it not to) issue any press release or otherwise make any
public statement with respect to the transactions contemplated hereby
without the prior written consent of the other parties, except as and to the
extent that such party or any of its Affiliates determines in good faith
that it is so obligated by Law, in which case such party shall give notice
to the other parties in advance of such party's or its Affiliate's intent to
make such announcement or issue such press release and the parties hereto
shall use reasonable best efforts to cause a mutually agreeable release or
announcement to be issued.
5.7 Funding of Pension Plan Deficits; Payment of Intercompany
---------------------------------------------------------
Payables. Prior to the Amalgamation, Cenveo will make a CDN$10,000,000 cash
--------
capital contribution to Supremex in respect of its pension plan funding
deficit in the following sequence: first a subscription in such amount for
shares of Cenveo Canada, then a subscription in such amount utilizing all
such cash by Cenveo Canada for shares of Supremex, and then a capital
contribution in such amount utilizing all such cash by Supremex to such
plan. After the Amalgamation and prior to the Closing, Cenveo will make an
additional CDN$3,757,000 cash capital contribution to Amalco in respect of
its pension plan funding deficit in the same such sequence. Cenveo and
Amalco, as the case may be, shall pay off or cause to be paid off or
otherwise cancelled at the Closing all intercompany payables (other than
Intercompany Payables) owed to or by Supremex or any of its Subsidiaries to
Cenveo or any of its Subsidiaries (other than Supremex or any of its
Subsidiaries).
5.8 Books and Records.
-----------------
(a) For a period of six years after the Closing Date,
Buyer shall maintain and make available to Vendor and Cenveo the books and
records of the Companies for inspection and copying at the expense of Vendor
and Cenveo, provided, that there is no xxxx-up of the actual direct
--------
out-of-pocket cost thereof.
21
(b) For a period of six years after the Closing Date,
Vendor and Cenveo shall maintain and make available to Buyer the books and
records of the Companies for inspection and copying at the expense of Vendor
and Cenveo, provided, that there is no xxxx-up of the actual direct
out-of-pocket cost thereof.
5.9 Amounts Collected and Paid Post-Closing.
---------------------------------------
(a) After consummation of the Closing, Buyer shall
promptly (and in any event, with respect to each amount collected, not later
than the last day of the month after the month in which such amount was
collected) pay to Vendor, Cenveo or any of their respective Subsidiaries (as
applicable) all amounts collected by Buyer or Amalco or any of their
respective Subsidiaries that belong to Vendor, Cenveo or any of their
respective Subsidiaries.
(b) After consummation of the Closing, Vendor and Cenveo
shall promptly (and in any event, with respect to each amount collected, not
later than the last day of the month after the month in which such amount
was collected) pay to Buyer, Amalco or any of their respective Subsidiaries
(as applicable) all amounts collected by Vendor, Cenveo or any of their
respective Subsidiaries that belong to Buyer, Amalco or any of their
respective Subsidiaries.
5.10 Confidentiality. Cenveo and Vendor shall maintain the
---------------
confidentiality of any confidential information relating to the inquiries by
the Competition Bureau expressly described in the Prospectus under the
caption "Legal Proceedings" but only insofar as they relate to conduct that
occurred prior to the Closing; provided, however, that this Section 5.10
-------- -------
shall not restrict: (i) any disclosure required by applicable Law or any
securities exchange; (ii) any disclosure on a confidential basis to the
advisors or representatives of Cenveo or Vendor; or (iii) any disclosure of
information that: (A) is publicly available as of the date of this
Agreement; (B) after the date of this Agreement, becomes publicly available
through no fault of the disclosing party; or (C) is received by Vendor or
Cenveo from a third party not, to the knowledge of Vendor or Cenveo, subject
to any obligation of confidentiality with respect to such information.
5.11 Cooperation. Buyer, Cenveo and Vendor shall cooperate with
-----------
one another in preparing and filing any necessary reports or other documents
with the U.S. Securities and Exchange Commission in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE 6
---------
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
--------------------------------------------
The obligations of the parties under this Agreement to effect the
Closing are subject to the satisfaction of each of the following conditions
prior to or at the Closing, each of which may be waived (as conditions to
their obligations) by the each party in its sole discretion:
6.1 Completion of the Offering. Buyer shall have sold the
--------------------------
Units to the Underwriters pursuant to the Underwriting Agreement.
22
6.2 Consent; Release of Liens. The lenders under Cenveo's
-------------------------
existing revolving credit facility shall have consented to the transactions
contemplated by this Agreement and all Liens on the assets and shares of
Cenveo Canada and Supremex and the Subsidiaries of Supremex securing such
facility shall be released and discharged simultaneously with the
consummation of the Closing.
6.3 Term Facility. The Term Facility (as defined in the
-------------
Prospectus) shall have been made available to Amalco.
ARTICLE 7
---------
SURVIVAL; INDEMNIFICATION
-------------------------
7.1 Survival.
--------
(a) All representations, warranties, covenants and
agreements contained in this Agreement shall survive (and not be affected in
any respect by) the Closing indefinitely and any investigation conducted by
any party hereto. Notwithstanding the foregoing:
(i) the covenants and agreements contained in Sections 5.1
(Access; Confidentiality), 5.2 (Notice of Proceedings; Agreement to
Defend), 5.3 (Consummation of Agreement), 5.4 (Consummation of the
Pre-Closing Transactions), 5.6 (Announcements) and 5.7 (Funding of
Pension Plan Deficits) and the related indemnity obligations
contained in the applicable subsection of Section 7.2 shall
terminate as of the consummation of the Closing;
(ii) the covenants and agreements contained in Section 5.5
(Consummation of the Post-Closing Transactions) and the related
indemnity obligations contained in the applicable subsection of
Section 7.2 shall terminate on, and no claim or action with respect
thereto may be brought after the consummation of all of the
Post-Closing Transactions;
(iii) the covenants and agreements contained in Section
7.2(a)(iii) shall terminate on, and no claim or action with respect
thereto may be brought after, the date that is 30 months after the
Closing Date;
(iv) the covenants and agreements contained in Section
7.2(a)(iv) and (vi) shall survive indefinitely;
(v) the representations and warranties contained in this
Agreement and the related indemnity obligations for the inaccuracy
thereof set forth in the applicable subsection of Section 7.2 shall
terminate on, and no claim or action with respect thereto may be
brought after, the date that is 18 months after the Closing Date,
except that:
(A) the representations and warranties contained
in Section 3.17 (Environmental Laws) and the related
indemnity obligations for the
23
inaccuracy thereof contained in the applicable subsection
of Section 7.2 shall survive until the date that is
30 months after the Closing Date;
(B) the representations and warranties contained
in Section 3.11 (Taxes) and the related indemnity
obligations for the inaccuracy thereof contained in the
applicable subsection of Section 7.2 shall survive until
the later of the date that is 24 months after the Closing
Date and 90 days following the date on which the relevant
Governmental Authorities are no longer able to assess
liability with respect to the period in question; and
(C) the representations and warranties contained
in Section 3.25 (Full Disclosure) and the related
indemnity obligations for the inaccuracy thereof contained
in the applicable subsection of Section 7.2 shall survive
until the date that is three years and 90 days after the
Closing Date (i.e., the date on which the Fund is no
longer liable for a misrepresentation under the Prospectus
(as defined in the Underwriting Agreement) pursuant to
applicable Canadian securities laws); and
(D) the representations and warranties contained
in Sections 2.1 (Organization, Existence and Good
Standing), 2.2 (Capacity; Authorization), 2.3 (Ownership
of Shares), 3.1 (Organization, Existence and Good
Standing), 3.2 (Capitalization), 4.1 (Organization,
Existence and Good Standing), 4.2 (Capacity;
Authorization) and 4.4 through 4.9 and 4.11 and the
related indemnity obligations for the inaccuracy thereof
contained in the applicable subsection of Section 7.2
shall survive indefinitely (it is understood and agreed
that the limitations contained in Section 2.4 (Exclusivity
of Representations and Warranties) and 3.27 (Exclusivity
of Representations and Warranties) and the related
limitation on the indemnity obligations with respect
thereto shall also survive indefinitely);
(vi) the covenants and agreements contained in Section
7.2(a)(v) and (vii) shall survive until the later of the date that
is 24 months after the Closing Date and 90 days after the
expiration of the applicable statute of limitations;
(vii) the covenants and agreements contained in Section
5.8 (books and records) and the related indemnity obligations for
breaches thereof contained in the applicable subsection of Section
7.2 shall terminate on, and no claim or action with respect thereto
may be brought after the sixth anniversary of the Closing Date;
(viii) the covenants and agreements contained in Section
5.9 (Amounts Collected and Paid Post-Closing) and the related
indemnity obligations for breaches thereof contained in the
applicable subsection of Section 7.2 shall survive indefinitely;
and
(ix) nothing in this Section 7.1 shall limit the ability
of a party to this Agreement to bring a claim for fraud.
(b) The representations, warranties and covenants that
terminate pursuant to this Section 7.1, and the liability of any party
hereto with respect thereto pursuant to this
24
Article 7, shall not terminate with respect to any claim, whether or not
fixed as to liability or liquidated as to amount, with respect to which the
Indemnifying Party has been given written notice from the Indemnified Party
setting forth the facts upon which the claim for indemnification is based
and a reasonable estimate of the amount of the claims prior to the
expiration of the applicable survival period based on information available
at that time.
7.2 Indemnification.
---------------
(a) Vendor and Cenveo hereby jointly and severally
(solidarily) agree to indemnify and hold harmless Buyer from, and to
reimburse Buyer for, on a Net After-Tax Basis, any Losses that are the
direct result of:
(i) the inaccuracy of any representation or warranty of
Vendor or Cenveo contained in Article 2 or 3 of this Agreement;
(ii) the breach by Vendor or Cenveo of, or failure by
Vendor or Cenveo to perform, any of their respective covenants or
agreements contained in this Agreement;
(iii) the existing and potential inquiries by the
Competition Bureau referred to in the Prospectus under the caption
"Legal Proceedings" but only insofar as they relate to conduct that
occurred prior to the Closing;
(iv) the environmental liabilities and costs relating to
the Omemee Ontario property to be sold by Supremex to an Affiliate
of Cenveo in connection with the Pre-Closing Transactions;
(v) (A) the third party accrued liability reflected in the
Financial Statements and more particularly described in note 7
therein, (B) any other liabilities relating to Cenveo Canada but
only to the extent arising prior to the Amalgamation (irrespective
of when asserted); (C) the tax deductibility of intercompany
management fees in respect of periods prior to the Closing between
Supremex, on the one hand, and Cenveo and its non-Canadian
Affiliates, on the other hand, that have been or will be claimed as
deductible by Supremex in Tax Returns prepared on a basis
consistent with its Tax Returns filed prior to the Closing and (D)
any withholding Taxes, including gross up and indemnity obligations
under contracts with respect to withholding Taxes imposed with
respect to payments made by the Companies prior to the Closing;
provided, however, that this Section 7.2(a)(v) shall be void and of
-------- -------
no force or effect if Buyer or any of its Affiliates (including any
Company) or any of their respective agents or representatives shall
initiate communications with any Governmental Authority regarding
any of the foregoing;
(vi) the environmental liabilities and costs relating to
the LaSalle property and disclosed on Schedule 3.17; and
(vii) any net Tax liability resulting from the sale of
assets formerly owned by Cenveo Canada as part of the Pre-Closing
Transactions.
25
Notwithstanding anything contained in this Agreement to
the contrary:
(u) Vendor and Cenveo shall not be responsible for any
Losses under Sections 7.2(a)(i) or (ii) with respect to an
individual matter or series of related matters until the cumulative
aggregate amount of such Losses (calculated on a Net After-Tax
Basis but excluding any such Losses to the extent recovered by
Buyer or any of its Affiliates, including the Companies, pursuant
to Section 7.3(f) hereof) exceeds CDN$50,000 (the "MINI-BASKET
AMOUNT"), in which case the amount of such Losses (calculated on a
Net After-Tax Basis) shall then count towards, or be included in,
the Basket Amount;
(v) subject to the preceding clause (u), Vendor and Cenveo
shall not be responsible for any Losses under Sections 7.2(a)(i) or
(ii) until the cumulative aggregate amount of such Losses
(calculated on a Net After-Tax Basis but excluding any such Losses
to the extent recovered by Buyer pursuant to Section 7.3(f) hereof)
exceeds CDN$1,000,000 (the "BASKET AMOUNT"), in which case Vendor
and Cenveo shall then be liable only for such Losses (calculated on
a Net After-Tax Basis) in excess of CDN$500,000;
(w) Vendor and Cenveo shall not be responsible for any
Losses under Sections 7.2(a)(v)(A) or (B) or 7.2(a)(vii) with
respect to an individual matter or series of related matters until
the cumulative aggregate amount of such Losses (calculated on a Net
After-Tax Basis but excluding any such Losses to the extent
recovered by Buyer pursuant to by Section 7.3(f) hereof) exceeds
CDN$50,000 (the "CENVEO CANADA BASKET AMOUNT"), in which case
Vendor and Cenveo shall then be liable only for such Losses
(calculated on a Net After-Tax Basis but excluding any such Losses
to the extent recovered by Buyer pursuant to by Section 7.3(f)
hereof) in excess of CDN$25,000;
(x) the cumulative aggregate indemnity obligation of
Vendor and Cenveo under this Section 7.2(a) shall in no event
exceed one-half of the sum of (A) the original principal amount of
the Initial Notes, plus (B) the remaining balance of the Supremex
----
Loan Payable (as defined in Exhibit B-1) that is repaid in the
-----------
Post-Closing Transactions, plus (C) if and only if the
----
over-allotment option contemplated by the Underwriting Agreement
has been exercised, the net cash proceeds actually received by
Vendor from Buyer upon repayment of the Over-Allotment Note;
(y) Vendor and Cenveo shall in no event have any indemnity
obligation under Section 7.2(a), other than Sections 7.2(a)(iii),
(iv), (v), (vi) and (vii), if in a public offering of securities
they would be able to establish a due diligence defense (of the
nature provided under Canadian law) to a claim by a third party
relating to matters within the scope of such indemnity obligation,
except with respect to any claim based on the representations and
warranties contained in Sections 2.1, 2.2 (other than clause
(ii)(B) thereof), 2.3, 3.1 and 3.2(a); and
(z) Buyer shall not be entitled to indemnification under
this Section 7.2(a) for any Losses to the extent a reserve with
respect to such Loss is included in the calculation or
determination of Final Closing Working Capital.
26
(b) Buyer hereby agrees to indemnify and hold harmless Vendor and
Cenveo from, and to reimburse Vendor and Cenveo for, on a Net After-Tax
Basis, any Losses, that are the direct result of:
(i) the inaccuracy of any representation or
warranty of Buyer contained in Article 4 of this
Agreement; or
(ii) the breach by Buyer of, or failure by Buyer
to perform, any of its covenants or agreements contained
in this Agreement.
7.3 Indemnification Procedures.
--------------------------
(a) As promptly as practicable, and in any event within 30
days, after Buyer, Vendor or Cenveo shall receive any notice of, or
otherwise become aware of, the commencement of any Action, the assertion of
any claim, the occurrence of any event, the existence of any fact or
circumstance, or the incurrence of any Loss, for which indemnification is
provided for by Section 7.2(a) or (b) hereof (an "INDEMNIFICATION EVENT"),
the party entitled to such indemnification (an "INDEMNIFIED PARTY") shall
give written notice (an "INDEMNIFICATION CLAIM") to the party from which
such indemnification is (or, under such assumption, could be) sought (an
"INDEMNIFYING PARTY") describing in reasonable detail the Indemnification
Event and the basis on which indemnification is sought. If the Indemnifying
Party is not so notified by the Indemnified Party within 30 days after the
date of the receipt by the Indemnified Party or any of its Affiliates of
notice of, or of the Indemnified Party or any of its Affiliates otherwise
becoming aware of, any particular Indemnification Event, the Indemnifying
Party shall be relieved of all liability hereunder in respect of such
Indemnification Event (or the facts or circumstances giving rise thereto) to
the extent that such Indemnifying Party is prejudiced or harmed as a
consequence of such failure (and, to such extent, all Losses resulting from
such Indemnification Event shall thereafter be disregarded for purposes of
determining whether the Basket Amount, the Mini-Basket Amount or the Cenveo
Canada Basket Amount has been exceeded), and in any event the Indemnifying
Party shall not be liable for any expenses incurred during the period in
which the Indemnified Party was overdue in giving, and had not given, such
notice.
(b) If any Indemnification Event involves the claim of a
third party (a "THIRD-PARTY CLAIM"), the Indemnifying Party shall (whether
or not the Indemnified Party is entitled to claim indemnification under
Section 7.2(a) or (b), as the case may be) be entitled to, and the
Indemnified Party shall provide the Indemnifying Party with the right to,
participate in, and assume sole control over, the defense and settlement of
such Third-Party Claim (with counsel reasonably satisfactory to the
Indemnified Party); provided, however, that: (i) except in the case of
-------- -------
claims relating to Taxes (other than any such claims that could affect the
liability of the Companies for Taxes that are not indemnified hereunder),
the Indemnified Party shall be entitled to participate in the defense of
such Third-Party Claim and to employ counsel at its own expense to assist in
the handling of such Third-Party Claim; and (ii) except in the case of
claims relating to Taxes (other than any such claims that could affect the
liability of the Companies for Taxes that are not indemnified hereunder),
the Indemnifying Party shall obtain the prior written approval of the
Indemnified Party, which approval shall not be unreasonably withheld,
conditioned or delayed, before entering into any settlement of such
Third-Party Claim or ceasing
27
to defend against such Third-Party Claim if: (x) as a result of such
settlement or ceasing to defend, injunctive or other equitable relief would
be imposed against the Indemnified Party; or (y) in the case of a
settlement, the Indemnified Party would not thereby receive from the
claimant an unconditional release from all further liability in respect of
such Third-Party Claim, or (z) such settlement would affect the liability of
the Companies for Taxes that are not indemnified hereunder. After written
notice by the Indemnifying Party to the Indemnified Party of its election to
assume control of the defense of any such Third-Party Claim, the
Indemnifying Party shall not be liable hereunder to indemnify any Person for
any Legal Expenses subsequently incurred in connection therewith. If the
Indemnifying Party does not assume sole control over the defense or
settlement of such Third-Party Claim as provided in this Section 7.3(b)
within a reasonable period of time, or, after assuming such control, fails
to defend against such Third-Party Claim (it being agreed that settlement of
such Third-Party Claim does not constitute such a failure to defend), the
Indemnified Party shall have the right (as to itself) to defend and, upon
obtaining the written consent of the Indemnifying Party, settle the claim in
such manner as it may deem appropriate, and the Indemnifying Party shall
promptly reimburse the Indemnified Party therefor in accordance with (and to
the extent provided for (subject to, and not disregarding, the last
paragraph of Section 7.2(a)) in) Section 7.2(a) or (b), as appropriate. The
Indemnifying Party shall not be liable under Section 7.2(a) for any
settlement or compromise effected without its consent.
(c) The Indemnified Party and the Indemnifying Party shall
each cooperate fully (and shall each cause its Affiliates to cooperate
fully) with the other in the defense of any Third-Party Claim pursuant to
Section 7.3(b). Without limiting the generality of the foregoing, each such
Person shall furnish the other such Person (at the expense of the
Indemnifying Party) with such documentary or other evidence as is then in
its or any of its Affiliates' possession as may reasonably be requested by
the other Person for the purpose of defending against any such Third-Party
Claim.
(d) Upon payment of any amount pursuant to any
Indemnification Claim, the Indemnifying Party shall be subrogated, to the
extent of such payment, to all of the Indemnified Party's rights of recovery
(and, if Vendor or Cenveo are the Indemnifying Party, the Indemnified Party
shall cause Vendor and Cenveo to be subrogated to all of Buyer's and the
Companies' rights of recovery) against any third party with respect to the
matters to which such Indemnification Claim relates.
(e) Except as expressly provided in the Nonsolicitation
Agreement, the Supply Agreement, the Registration Rights Agreement, the
Declaration of Trust and the other Ancillary Instruments, the rights and
remedies of Buyer, Vendor and Cenveo under this Article 8 are exclusive and
in lieu of any and all other rights and remedies which Buyer, Vendor or
Cenveo, as the case may be, may have against the other, under this Agreement
or otherwise. All claims for indemnification must be asserted, if at all, in
good faith and in accordance with the provisions of Section 7.3(a) and, to
the extent applicable to such claims, within the relevant time period set
forth in Section 7.1(a).
(f) Where an Indemnified Party is at any time entitled to
recover from some other Person (including an insurer) any sums in respect of
any matter giving rise to a claim under this Agreement, such Indemnified
Party shall take all reasonable steps to enforce such recovery
28
prior to taking action against an Indemnifying Party and, in the event the
Indemnified Party recovers any amount from such other Person, the amount of
the claim against the Indemnifying Parties shall be reduced by the amounts
recovered or if an indemnity payment has already been made to the
Indemnified Party prior to the Indemnified Party recovering any such sum,
such Indemnified Party shall promptly pay to the Indemnifying Party an
amount equal to such sum, less any expense incurred by such Indemnified
Party in connection with the recovery of such sum, but in no event shall any
such payment exceed the amount of such indemnity payment.
(g) As a condition to its right to indemnification
hereunder, Buyer and its Affiliates (including, following the Closing, the
Companies) (i) shall not, without the consent of Vendor and Cenveo, file any
Tax Return (including any amended Tax Return) or take any position with any
Governmental Authority which would result in any Tax liability for which
Vendor and Cenveo are required to indemnify Buyer pursuant to Section 7.2
and (ii) shall take any actions reasonably requested by Vendor and Cenveo to
avoid such liability.
(h) Any payment made by Buyer, Vendor or Cenveo pursuant to this
Article 7 shall be deemed an adjustment to the Purchase Price.
ARTICLE 8
---------
TERMINATION
-----------
8.1 Termination of Agreement. This Agreement may be terminated at
------------------------
any time on or prior to the Closing:
(i) by the mutual consent of Vendor, Cenveo and Buyer;
(ii) by Buyer, on the one hand, or Vendor and Cenveo, on
the other hand, at any time following termination of the
Underwriting Agreement or at any time if the Closing has not
occurred by April 29, 2006; or
(iii) by Buyer, on the one hand, or Vendor and Cenveo, on
the other hand, if any court or Governmental Authority of competent
jurisdiction in the United States shall have issued an Order, or
taken any other action, permanently prohibiting the transactions
contemplated by this Agreement, and such Order, or other action,
shall have become final and non-appealable.
If Buyer or Vendor and Cenveo shall terminate this Agreement pursuant to the
foregoing provisions of this Section 8.1, such termination shall be effected
by written notice to the other party or parties specifying the provision
pursuant to which such termination is made.
8.2 Liabilities Upon Termination. In the event of termination
----------------------------
of this Agreement pursuant to Section 8.1, written notice thereof shall
forthwith be given by the terminating party or parties to the other parties,
and this Agreement shall thereupon terminate and become void and have no
effect, and the transactions contemplated hereby shall be abandoned without
further action by the parties hereto and no party (Vendor and Cenveo, on the
one hand, and Buyer, on the other hand) shall thereafter be liable to the
other hereunder.
29
ARTICLE 9
---------
GENERAL PROVISIONS
------------------
9.1 Expenses. Buyer shall bear all of the expenses incurred by
--------
the parties in connection with the transactions contemplated by this
Agreement, including accounting and legal fees or any stamp or transfer
Taxes incurred in connection herewith, provided that Buyer shall not pay any
such expenses at or prior to the consummation of the Closing or reserve any
such expenses for payment after the consummation of the Closing without the
prior written approval of Vendor and Cenveo.
9.2 Notices. Any notice or other communication required or
-------
permitted to be given hereunder or (except to the extent expressly set forth
therein) any Ancillary Instrument will be in writing and shall be delivered
via an overnight courier such as Federal Express or delivered against
receipt (including by confirmed facsimile transmission), as follows:
(a) If to Vendor or Cenveo:
Cenveo, Inc.
One Canterbury Green
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Fax No: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
(b) If to Buyer:
0000 Xxxxxxx
Xxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Fax No: (000) 000-0000
Attention: Xxxxxx Xxx, President
with a copy to:
Stikeman Elliott LLP
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax No: (000) 000-0000
Attention: Xxxxxxxxx Xxx
30
or to such other address as the party may have furnished in writing in
accordance with the provisions of this Section. Any notice or other
communication shall be deemed to have been given, made and received upon
receipt. Either party may change the address to which notices are to be
addressed by giving the other party notice in the manner herein set forth.
9.3 Governing Law.
-------------
(a) Except where and only to the extent that specific
provisions of Canadian law are expressly made applicable by some other
Section of this Agreement, this Agreement and (except to the extent
expressly set forth therein) each Ancillary Instrument shall be governed by,
and construed in accordance with, the laws of the State of New York.
(b) Except as and to the extent provided in the
penultimate sentence of Section 1.5(d), any controversy or claim arising out
of or relating to this Agreement or (except to the extent as otherwise
expressly set forth therein) the Ancillary Instruments, or otherwise,
including any controversy or claim involving the parent company,
subsidiaries, or affiliates under common control of any party (a "DISPUTE"),
shall be resolved by arbitration in accordance with the International
Arbitration Rules of the International Centre for Dispute Resolution ("ICDR
RULES"). The arbitration shall be conducted in the English language in
Xxxxxxxx, Xxxxxx, Xxxxxx, by three arbitrators, one named by each party and
the third appointed in accordance with the ICDR Rules. The award of the
arbitrators may be entered in any court of competent jurisdiction. The
arbitrators, by accepting appointment, must undertake to exert their best
efforts to conduct the process so as to issue an award within nine months of
the appointment of the last arbitrator. Any party may seek emergency,
interim or provisional relief prior to the appointment of a full arbitral
tribunal from any court of competent jurisdiction, without waiver of this
agreement to arbitrate. The arbitral tribunal shall be guided, but not
bound, in ruling on the exchange and taking of evidence by the IBA Rules on
the Taking of Evidence in International Commercial Arbitration. The arbitral
tribunal may award the costs and expenses of the arbitration as provided in
the ICDR Rules, but each party shall bear its own attorneys fees.
(c) Buyer has appointed Stikeman Elliott LLP as its
authorized agent ("BUYER'S AUTHORIZED AGENT") upon whom process may be
served in any Action arising out of or relating to this Agreement. Such
appointment is irrevocable, except that Buyer may at any time or from time
to time appoint a successor authorized agent by giving Cenveo and Vendor
written notice of same (which such notice shall contain the representations,
warranties and agreements of Buyer set forth in the last two sentences of
this Section 9.3(c)). Buyer represents and warrants that Buyer's Authorized
Agent has agreed to act as agent for service of process and has agreed to
take all action, including the filing of all documents and instruments, that
may be necessary, appropriate or desirable in order to continue such
appointment in full force and effect as aforesaid. Service of process upon
Buyer's Authorized Agent shall be deemed in every respect to constitute
effective service of process upon Buyer.
(d) Each of Cenveo and Vendor has appointed Stikeman
Elliott LLP as its authorized agent ("CENVEO'S AND VENDOR'S AUTHORIZED
AGENT") upon whom process may be
31
served in any Action arising out of or relating to this Agreement. Such
appointment is irrevocable, except that Vendor or Cenveo may at any time or
from time to time appoint a successor authorized agent by giving Buyer
written notice of same (which such notice shall contain the representations,
warranties and agreements of Cenveo or Vendor, as the case may be, set forth
in the last two sentences of this Section 9.3(d)). Each of Cenveo and Vendor
represents and warrants that Cenveo's and Vendor's Authorized Agent has
agreed to act as agent for service of process and has agreed to take all
action, including the filing of all documents and instruments, that may be
necessary, appropriate or desirable in order to continue such appointment in
full force and effect as aforesaid. Service of process upon Cenveo's and
Vendor's Authorized Agent shall be deemed in every respect to constitute
effective service of process upon Cenveo and Buyer, as the case may be.
9.4 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which will be deemed an original, but all of
which together shall constitute but one and the same instrument.
9.5 Headings; Schedules; Exhibits. The headings, subheadings
-----------------------------
and captions in this Agreement and in any Schedule hereto are for reference
purposes only and are not intended to affect the meaning or interpretation
of this Agreement. References in this Agreement to particular Sections,
Articles or Schedules are references to particular Sections, Articles or
Schedules as the case may be, of or to this Agreement. All definitions of
terms contained in this Agreement shall be equally applicable to both the
singular and plural forms of the terms defined, unless otherwise indicated.
Any information disclosed in any Schedule or in the Prospectus shall be
deemed fully disclosed for the purposes of all of the Schedules and shall be
deemed to qualify all representations and warranties of Vendor and Cenveo.
Neither the specification (directly or indirectly by reference to a defined
term hereof) of any dollar amount in the representations and warranties set
forth in Article 2, 3 or 4 or the indemnification provisions of Article 7
nor the inclusion of any items in the Schedules shall be deemed to
constitute an admission by Vendor, Cenveo or Buyer, or otherwise imply, that
any such amount or such items so included are material for the purposes of
this Agreement. The inclusion of, or reference to, any item within any
particular Schedule does not constitute an admission by Vendor, Cenveo or
Buyer that such item meets any or all of the criteria set forth in this
Agreement for inclusion on such Schedule.
9.6 Entire Agreement. This Agreement and the other Ancillary
----------------
Instruments contain the entire agreement among the parties hereto with
respect to their subject matter and supersede all negotiations, prior
discussions, agreements, arrangements, and understandings, written or oral,
relating to the subject matter of this Agreement and there are no other
covenants, provisions, agreements, representations or warranties, whether
written or oral, among the parties hereto with respect to such subject
matter.
9.7 Third-Party Beneficiaries. This Agreement is not intended
-------------------------
to confer any rights or remedies upon any Person other than the parties
hereto and their assigns expressly permitted pursuant to Section 9.8.
9.8 Assignment. This Agreement and all of the provisions
----------
hereof will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
32
assigned by any party hereto without the prior written consent of the other
party which shall not be unreasonably withheld; provided, however, that: (i)
-------- -------
Vendor or Cenveo, upon notice to Buyer, and Buyer, upon notice to Vendor and
Cenveo, or in each case their respective successors and permitted assigns,
may assign this Agreement (A) to an Affiliate of any such Person or (B) to
any Person that acquires all or substantially all the assets of either of
them; provided that clause (B) shall not apply to any proposed assignment by
--------
Buyer to a Person who is or may be, or whose parent company, Subsidiaries or
Affiliates is or may be, directly or indirectly, a competitor of Vendor,
Cenveo or any Affiliate of either of them; (ii) Buyer, upon notice to Vendor
and Cenveo, and Vendor or Cenveo, upon notice to Buyer, or in each case
their respective successors and permitted assigns, may: (A) assign its
rights under this Agreement to one of its Subsidiaries; and (B) collaterally
assign or grant security in its rights under this Agreement to one or more
financial institutions (or any person acting on behalf thereof) lending
monies to it or any of its Subsidiaries; provided that no such notice shall
--------
be required with respect to Liens granted as of the Closing Date in favor of
the lender(s) under the New Credit Facilities (as defined in the
Prospectus); and (iii) Vendor and its permitted assigns pursuant to this
Section 9.8, upon notice to Buyer, may from time to time assign its rights
under Sections 4.1, 4.2 and 4.6 through 4.10 to a transferee of Units
acquired by Vendor from Buyer hereunder.
9.9 Severability. If any one or more of the provisions of this
------------
Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement will not be affected thereby and the parties will use all
reasonable efforts to substitute one or more valid, legal and enforceable
provisions which, insofar as practicable, implement the purposes and intents
hereof. To the extent permitted by applicable law, each party waives any
provision of law that renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
9.10 Amendments; Waiver. This Agreement may not be amended or
------------------
modified except by written agreement of the parties. No breach of any
covenant, agreement, representation or warranty made herein shall be deemed
waived unless expressly waived in writing by the party who might assert such
breach.
9.11 Interpretation; Absence of Presumption. With regard to
--------------------------------------
each and every term and condition of this Agreement and the Ancillary
Instruments, the parties hereto understand and agree that the same have or
has been mutually negotiated, prepared and drafted, and if at any time the
parties hereto desire or are required to interpret or construe any such term
or condition or any agreement or instrument subject hereto, no consideration
will be given to the issue of which party hereto actually prepared, drafted
or requested any term or condition of this Agreement or any agreement or
instrument subject hereto.
[The next page is the signature page]
33
The parties have caused this Acquisition Agreement to be duly
executed as of the date first written above.
CENVEO, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CFO
CENVEO CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CFO
SUPREMEX INCOME FUND
By: /s/ Xxxxxx Xxx
-----------------------------
Name: Xxxxxx Xxx
Title: Trustee
EXHIBIT A
---------
CERTAIN DEFINED TERMS
1. For purposes of the Agreement to which this Exhibit A is
---------
attached, the following terms shall have the respective meanings specified
below.
"ACCOUNTING FIRM" means PricewaterhouseCoopers LLP.
"ACQUISICO" means 4273681 Canada Inc., a corporation organized
under the Canada Business Corporations Act.
"ACTION" means an action, suit or proceeding, at law or in equity.
"AFFILIATE" means, as to any specified Person, any other Person
which, directly or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with, such specified Person. For
the purposes of this definition, "control" means the possession of the power
to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AMALCO" means the new entity, a corporation to be formed under the
laws of Canada from the Amalgamation.
"AMENDED AND RESTATED DECLARATION OF TRUST" means the amended and
restated declaration of trust of Buyer in the form attached as Exhibit J.
---------
"ANCILLARY INSTRUMENTS" means all schedules, exhibits,
certificates, agreements, documents or statements delivered pursuant to the
Agreement or the transactions contemplated hereby, including, without
limitation, the Underwriting Agreement.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement among
Buffalo Envelope, Inc., Supremex, Buyer, Vendor and Cenveo pursuant to
which, among other things, Buffalo Envelope, Inc. is acquiring a division of
Vendor that is engaged in the business of providing envelopes and related
products directly to consumers and to direct mail marketing agents within
the upstate New York and northwest Pennsylvania markets.
"BASE PURCHASE PRICE" means an amount equal to the excess of (i)
the sum of (A) the value of the Initial Vendor Units (based on the initial
price per Unit to the public in the Offering), (B) CDN$75,000,000 (i.e., the
proceeds from the Term Facility (as defined in the Prospectus)), (C) the
total proceeds of the Offering (excluding the over-allotment option
contemplated by the Underwriting Agreement) and (D) the face amount of the
Over-Allotment Note over (ii) the sum of (A) all the fees (including
applicable goods and services taxes and sales taxes) approved prior to
Closing in writing by Cenveo relating to the Offering, the credit facilities
and the acquisition of the Shares and the U.S. Business Assets payable by
the Fund, AcquisiCo and Buffalo Envelope Inc., (B) the outstanding amount of
the Alberta Finance LP loan payable at Closing by Amalco and (C) the
Purchase Price (as defined in the Asset Purchase Agreement).
A-2
"BUSINESS" means (except as expressly set forth in the Agreement)
the business of the Companies as presently conducted consisting of the
manufacturing and marketing of a broad range of stock and custom envelopes
and related products.
"BUSINESS DAY" means any day except Saturday, Sunday or any other
day on which commercial banks in Xxxxxxxx, Xxxxxx, Xxxxxx or New York, New
York are authorized or required by Law to remain closed.
"CLOSING PURCHASE PRICE" means the Base Purchase Price (i) plus the
amount, if any, by which the Estimated Closing Working Capital exceeds the
Target Working Capital, or (ii) minus the amount, if any, by which the
Target Working Capital exceeds the Estimated Closing Working Capital.
"CLOSING WORKING CAPITAL" means the Working Capital as of 12:01
a.m. (Quebec time) on the Closing Date, taking into account all transactions
contemplated by the Agreement to occur on the Closing.
"COMPANIES" means Supremex (or, after the Amalgamation, Amalco) and
its Subsidiaries.
"COMPANY PLANS" means each material severance, retention,
employment, change-in-control, bonus, incentive, deferred compensation,
supplemental retirement or other employee benefit plan, agreement, program,
policy or arrangement with respect to the employees of the Companies that is
maintained, sponsored or entered into by any Company or with respect to
which any Company has any material liability.
"CONTRACTS" means all contracts and all other legally binding
agreements, commitments and undertakings to which any Company is a party.
"ENVIRONMENT" means the Environment or natural Environment as
defined in any Environmental Law and includes air, land, surface water,
groundwater, or other water, soil, subsurface strata, vegetation, animal
life, the Environment in the workplace, and any sewer system.
"ENVIRONMENTAL LAW" means any applicable Canadian federal or
provincial, United States federal or state, or local directive, statute,
law, rule, regulation, ordinance or rule of common law in effect and any
judicial or administrative decisions, including any judicial or
administrative order, consent decree or judgment, relating to the control of
any pollutant or Hazardous Substance, the protection of the Environment or
the effect of the Environment on human health.
"ENVIRONMENTAL PERMITS" means any license, permit, order, consent,
approval, registration, authorization, qualification or filing required
under any Environmental Law.
"ENVIRONMENTAL REPORT" means any document concerning an
environmental assessment or audit commissioned by any Company that addresses
any issue of noncompliance with, or liability under, any Environmental Law.
A-3
"GOVERNMENTAL AUTHORITY" means any government, any governmental,
administrative or regulatory entity, authority, commission, board, agency,
instrumentality, bureau or political subdivision and any court, tribunal or
judicial or arbitral body (whether Canadian, U.S. or any other national,
federal, provincial, state or local entity or, in the case of an arbitral
body, whether governmental, public or private).
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, Order, waiver, or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental
Authority or pursuant to any applicable Law, including the lapse of any
waiting period thereunder.
"HAZARDOUS SUBSTANCES" means any substance, material or waste which
is regulated, classified or otherwise characterized as hazardous, toxic,
pollutant, contaminant or words of similar meaning or regulatory effect by
any Environmental Law, including petroleum and its by-products, asbestos or
asbestos-containing materials, polychlorinated biphenyls, urea formaldehyde
insulation and radioactive materials.
"INITIAL NOTE SERIES 1" means the Promissory Note in the form
attached as Exhibit D-1.
-----------
"INITIAL NOTE SERIES 2" means the Promissory Note in the form
attached as Exhibit D-2.
-----------
"INITIAL NOTE SERIES 3" means the Promissory Note in the form
attached as Exhibit D-3.
-----------
"INITIAL NOTES" means the Initial Note Series 1, Initial Note
Series 2 and Initial Note Series 3.
"INITIAL VENDOR UNITS" means the 8,947,439 newly-issued Units to be
issued to Vendor at the Closing.
"INTELLECTUAL PROPERTY" means trademarks, trade names, service
marks, patents, copyrights, applications therefor and licenses or other
rights in respect thereof.
"INTERCOMPANY PAYABLES" means all intercompany trade payables owed
to or by Supremex or any of its Subsidiaries to Cenveo, Inc. or any of its
Subsidiaries (other than Supremex or any of its Subsidiaries).
"JOINDER AGREEMENT" means the Joinder Agreement in the form
attached as Exhibit E pursuant to which, among other things, Amalco assumes
---------
as a co-obligor all of the obligations of Buyer under the Agreement and
becomes jointly and severally liable with Buyer for all of Buyer's
obligations thereunder.
"KNOWLEDGE" of any Person means the actual knowledge of such Person
without investigation.
"LAWS" means all laws, constitutions, statutes, directives, codes,
ordinances, decrees, rules, regulations, municipal by-laws, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgments, Orders, decisions, ruling or awards, consent orders, consent
decrees and policies of any Governmental Authority, including general
principles of
A-4
common and civil law and equity, binding on or affecting the Person referred
to in the context in which such word is used.
"LEGAL EXPENSES" means the reasonable fees, costs and expenses of
any kind incurred by any Person indemnified under Article 7 and its counsel
in investigating, preparing for, defending against or providing evidence,
producing documents or taking other action with respect to any threatened or
asserted claim.
"LIEN" means any lien (including any Tax lien), pledge, mortgage,
security interest, defect in title or encumbrance.
"LOSSES" means all losses, damages, liabilities and claims, and
fees, costs and expenses of any kind related thereto including, without
limitation, Legal Expenses. Notwithstanding anything to the contrary
contained in the Agreement, Losses shall not include lost profits or
consequential, special, indirect or punitive damages.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition, results of operations or business of the Companies
taken as a whole, other than material adverse effect (i) resulting from (a)
conditions affecting the Canadian or United States economy or financial
markets in general or the industries in which the Companies operate as a
whole and not having a disproportionate effect on the Companies as a whole,
(b) changes in any Law applicable to any Company after the date of the
Agreement, (c) changes in GAAP after the date of the Agreement or (d) any
attack on, outbreak or escalation of hostilities or act of terrorism
involving, Canada or the United States, (ii) that constitutes a seasonal
reduction in the revenues or earnings of any Company that is consistent with
such Company's past operating history, or (iii) that arises, directly or
indirectly, from an act or omission of Buyer (or an Affiliate of Buyer) or
from an act or omission of Vendor, Cenveo or any Company to which Buyer has
consented.
"MATERIAL CONTRACTS" means, other than the Underwriting Agreement,
all of the following Contracts to which any Company is a party:
(a) any such Contract involving annual payments to or from
any Company of $400,000 or more, except commitments which may be terminated
without liability or penalty by the Company that is a party thereto on not
more than 30 days' notice;
(b) any such Contract containing any provision or covenant
prohibiting or limiting the ability of any Company to engage in any business
activity or to compete with any Person;
(c) any such Contract that creates or obligates any
Company to participate in any joint venture, limited liability company,
partnership agreements, shareholders arrangement or other similar
arrangement; and
(d) any such Contract relating to the lease of real
property which requires an annual payment of more than $100,000.
"NET AFTER-TAX BASIS" means, with respect to the calculation of any
indemnification payment owed to any party pursuant to the Agreement,
calculation thereof in a manner taking
A-5
into account any Taxes owing by the indemnified party or its Affiliates as a
result of receipt or accrual of the indemnity payment and any savings in
Taxes realized by the indemnified party or its Affiliates as a result of the
indemnified liability.
"NONSOLICITATION AGREEMENT" means the Nonsolicitation Agreement
among Cenveo, Inc., Buyer and Amalco in the form attached as Exhibit F.
---------
"ORDER" means any preliminary or permanent injunction or other
order or decree of a Governmental Authority of competent jurisdiction.
"OVER-ALLOTMENT NOTE" means the Convertible Promissory Note in the
form attached as Exhibit D-4.
-----------
"OVER-ALLOTMENT VENDOR UNITS" means the newly-issued Units, if any,
issuable to Vendor upon conversion of the Over-Allotment Note in accordance
with the terms thereof.
"PERMITTED LIENS" means (i) Liens for Taxes not yet due and
payable, that are payable without penalty or that are being contested in
good faith, (ii) Liens arising or resulting from any action taken by Buyer
or any of its Affiliates, (iii) Liens created by, arising out of or
specifically contemplated or permitted by the Agreement, (iv) Liens
identified in the Schedules, (v) with respect to real property or interests
therein, any minor defects or irregularities in title, (vi) materialmen's,
mechanics', workmen's, repairmen's, employees' or other like Liens arising
in the course of construction or in the ordinary course of operations or
maintenance in each such case securing obligations which are not delinquent
or are being contested in good faith and for which adequate reserves have
been taken or securing obligations which are bonded in a reasonable manner,
(vii) zoning restrictions, easements, licenses or other restrictions on the
use of real property or other minor irregularities in title thereto or
encumbrances thereon, so long as the same do not, individually or in the
aggregate, materially interfere with or impair the use of such real property
in the manner normally used, (viii) except for Liens disclosed on Schedule
3.14(a) (which will be released upon consummation of the Closing), Liens
disclosed in any title reports made available to Buyer or otherwise
disclosed to Buyer in writing, in each case prior to the date of the
Agreement, (ix) Liens arising out of judgments or awards with respect to
which at the time an appeal or proceeding for review is being prosecuted in
good faith if adequate reserves with respect thereto have been established
and are being maintained and with respect to which there shall have been
secured a stay of execution pending such appeal or proceeding for review and
(x) such other Liens as in the aggregate would not be reasonably likely to
have a Material Adverse Effect.
"PERMITS" means all licenses, permits, orders, consents, approvals,
registrations, authorizations, qualifications and filings which are required
to be made under all applicable Laws of the U.S. (federal, state or local)
or any other jurisdiction with all applicable Governmental Authorities.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"POST-CLOSING TRANSACTIONS" means the transactions described on
Exhibit B-2.
-----------
A-6
"PRE-CLOSING TRANSACTIONS" means the transactions described on
Exhibit B-1.
-----------
"PROSPECTUS" has the meaning assigned to such term in the
Underwriting Agreement.
"PURCHASE PRICE" means (except as expressly set forth in the
Agreement) the Base Purchase Price (i) plus the amount, if any, by which the
Final Closing Working Capital exceeds the Target Working Capital, or (ii)
minus the amount, if any, by which the Target Working Capital exceeds the
Final Closing Working Capital.
"RECIPROCAL GENERAL RELEASE" means the reciprocal general release
in the form attached as Exhibit C providing for, among other things, the
---------
release by Cenveo and Vendor, on the one hand, and Buyer and Amalco, on the
other hand of all claims against the other (with certain specified
exceptions).
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement among Buyer and Vendor in the form attached hereto as Exhibit H.
"SUBSIDIARY" means, with respect to any specified Person, any other
corporation, partnership, joint venture, association or other entity in
respect of which such specified Person directly, or indirectly through one
or more other Subsidiaries, either (i) owns not less than a majority of the
overall economic equity or (ii) has the power to elect a majority of the
board of directors (or individuals serving a function similar to that of a
board of directors of a corporation).
"SUPPLY AGREEMENT" means the Supply Agreement between Cenveo, Inc.
and Amalco in the form attached as Exhibit G.
---------
"TARGET WORKING CAPITAL" means CDN$22,600,000.
"TAXES" means all taxes, assessments, duties, levies, fees and
other governmental charges of any kind whatsoever (including taxes on or
with respect to net or gross income, employment, value added, rent, excise,
occupancy, licensing, sales, goods and services, harmonized sales, use,
transfer, ad valorem, intangibles, gross receipts, personal property, real
-- -------
property, land transfer, development, occupancy, health, payroll, customs
duties and import and export, social services and security, franchise, doing
business, withholding (including gross up and indemnity obligations under
contracts with respect to withholding Taxes), payroll, stamp and capital) of
Canada (federal, provincial or local), the United States (federal, state or
local) or other applicable jurisdiction, together with any interest thereon,
penalties, additions to tax or additional amounts with respect thereto.
"TAX ESCROW AGREEMENT" means the escrow agreement to be entered
into among Cenveo, Buyer and TD Trust Company.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes required to be
filed with any Governmental Authority, including any schedule or attachment
thereto, and including any amendment thereof.
A-7
"TECHNOLOGY" means trade secrets, proprietary information, software
and computer programs and source code data relating thereto, research
records, test information, market surveys, marketing know-how, inventions,
know-how, processes and procedures.
"TRANSACTIONS" means the Pre-Closing Transactions and the
Post-Closing Transactions and all transactions that shall occur at the
consummation of the Closing.
"TSX" means the Toronto Stock Exchange.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as
of the date of the Agreement among Buyer, Vendor and the underwriters named
therein relating to the Offering.
"UNITS" has the meaning assigned to such term in the Underwriting
Agreement.
"VENDOR UNITS" means, collectively, the Initial Vendor Units and
the Over-Allotment Vendor Units.
"WORKING CAPITAL" means, as of any date of determination the sum of
(a) the consolidated current assets (excluding current income tax
receivables) of Amalco minus the consolidated current liabilities (excluding
-----
current income tax payables) of Amalco and (b) the consolidated current
assets of the Business (as defined in the Asset Purchase Agreement) minus
-----
the consolidated current liabilities of the Business (as defined in the
Asset Purchase Agreement); provided, however, that Working Capital shall
-------- -------
exclude all intercompany payables (other than Intercompany Payables) owed to
or by Supremex or any of its Subsidiaries to Cenveo or any of its
Subsidiaries (other than Supremex or any of its Subsidiaries), or any other
intercompany amounts that are cancelled at the Closing. No accruals for any
Transaction Expenses shall be included in any calculation of Working
Capital, except for the prepaid expenses to the extent set forth on
Schedule 4.11. Working Capital shall be prepared using the same
-------------
methodologies and accounting practices, procedures and policies used to
determine the Target Working Capital, the computation of which is set forth
on Exhibit I.
---------
A-8
2. The following terms are defined in the sections of the Agreement
indicated:
DEFINED TERM SECTION
-------------------------------------------------------------- --------------
AGREEMENT.......................................................PARTY RECITALS
AMALCO..........................................................PARTY RECITALS
AMALGAMATION....................................................PARTY RECITALS
BALANCE SHEET...........................................................3.5(a)
BALANCE SHEET DATE......................................................3.5(a)
BASKET AMOUNT...........................................................7.2(a)
BRIEFING PERIOD.........................................................1.5(d)
BUYER...........................................................PARTY RECITALS
BUYER'S AUTHORIZED AGENT................................................9.3(c)
BUYER'S BALANCE SHEET...................................................4.3(a)
BUYER'S BALANCE SHEET DATE..............................................4.3(a)
BUYER'S CLOSING SCHEDULE................................................1.5(b)
BUYER'S REPRESENTATIVES....................................................5.2
CENVEO..........................................................PARTY RECITALS
CENVEO CANADA...................................................PARTY RECITALS
CENVEO CANADA BASKET AMOUNT.............................................7.2(a)
CENVEO'S AND VENDOR'S AUTHORIZED AGENT..................................9.3(d)
CLOSING....................................................................1.2
CLOSING DATE...............................................................1.2
CRA.....................................................................1.6(i)
CRA COMFORT LETTER......................................................1.6(i)
DISPUTE.................................................................9.3(b)
ESTIMATED CLOSING WORKING CAPITAL.......................................1.5(a)
FINAL CLOSING INTERCOMPANY PAYABLES.....................................1.5(d)
FINANCIAL STATEMENTS....................................................3.5(a)
GAAP....................................................................3.5(a)
ICDR RULES..............................................................9.3(b)
INDEMNIFICATION CLAIM...................................................7.3(a)
INDEMNIFICATION EVENT...................................................7.3(a)
INDEMNIFIED PARTY.......................................................7.3(a)
INDEMNIFYING PARTY......................................................7.3(a)
MINI-BASKET AMOUNT......................................................7.2(a)
OFFERING........................................................PARTY RECITALS
OWNED REAL PROPERTIES..................................................3.13(a)
QUEBEC CERTIFICATE......................................................1.6(b)
QUEBEC TAX ACT..........................................................1.5(g)
REMITTANCE DATE.........................................................1.6(g)
REPLY PERIOD............................................................1.5(d)
RQ......................................................................1.6(j)
RQ COMFORT LETTER.......................................................1.6(j)
SECTION 116 CERTIFICATE.................................................1.6(a)
A-9
SHARES..........................................................PARTY RECITALS
SUPREMEX........................................................PARTY RECITALS
THIRD-PARTY CLAIM.......................................................7.3(b)
TRANSACTION EXPENSES......................................................4.11
VENDOR..........................................................PARTY RECITALS
VENDOR'S CLOSING SCHEDULE...............................................1.5(a)
VENDOR'S DISPUTE NOTICE.................................................1.5(b)
