Exhibit 2.1
ACQUISITION AGREEMENT
BETWEEN
SELECT MEDICAL CORPORATION
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SLMC FINANCE CORPORATION
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CALLISTO CAPITAL L.P.
DATED the 23rd day of December, 2005
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION
1.1. Definitions............................................................................................. 1
1.2. Recitals................................................................................................ 9
1.3. Accounting Principles................................................................................... 9
1.4. Governing Law; Attornment............................................................................... 9
1.5. Entire Agreement; Amendment............................................................................. 9
1.6. Calculation of Time..................................................................................... 9
1.7. Performance on Holidays................................................................................. 10
1.8. Waiver of Rights........................................................................................ 10
1.9. Tender.................................................................................................. 10
1.10. Severability............................................................................................ 10
1.11. Conflict................................................................................................ 10
1.12. Consents and Approvals.................................................................................. 10
1.13. Remedies Cumulative..................................................................................... 11
1.14. Additional Rules of Interpretation...................................................................... 11
1.15. Schedules and Exhibits.................................................................................. 12
ARTICLE 2 PURCHASE AND SALE OF SHARES
2.1. Purchase and Sale....................................................................................... 13
2.2. Amount of Purchase Price................................................................................ 13
2.3. Estimate of Closing Working Capital..................................................................... 13
2.4. Purchase Price Adjustment............................................................................... 13
2.5. Preparation of Closing Balance Sheet.................................................................... 14
2.6. Payment of Estimated Purchase Price..................................................................... 15
2.7. Delivery of Share Certificates.......................................................................... 15
2.8. Place of Closing........................................................................................ 15
2.9. Delivery of Section 116 Certificate..................................................................... 15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties in respect of the Corporation, Subsidiaries and Business................. 17
3.2. Representations and Warranties in respect of the Guarantor and the Vendor............................... 23
3.3. Representations and Warranties of the Purchaser......................................................... 25
3.4. Commission.............................................................................................. 25
3.5. Due Diligence Review.................................................................................... 26
3.6. Survival of Representations and Warranties of the Guarantor and the Vendor.............................. 26
3.7. Survival of Representations and Warranties of the Purchaser............................................. 27
ARTICLE 4 OTHER COVENANTS OF THE PARTIES
4.1. Covenants of the Guarantor and the Vendor............................................................... 27
4.2. Covenants of the Purchaser.............................................................................. 28
4.3. Cooperation............................................................................................. 31
ARTICLE 5 CONDITIONS OF CLOSING
5.1. Conditions for the Benefit of the Purchaser............................................................. 31
5.2. Conditions for the Benefit of the Guarantor and the Vendor.............................................. 33
5.3. Waiver.................................................................................................. 34
5.4. Termination............................................................................................. 34
5.5. Liability of Purchaser, Guarantor and Vendor............................................................ 35
ARTICLE 6 INDEMNIFICATION
6.1. Indemnification by the Guarantor and the Vendor......................................................... 35
6.2. Indemnification by the Purchaser........................................................................ 36
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6.3. Agency for Representatives.............................................................................. 36
6.4. Notice of Third Party Claims............................................................................ 36
6.5. Defence of Third Party Claims........................................................................... 37
6.6. Assistance for Third Party Claims....................................................................... 37
6.7. Settlement of Third Party Claims........................................................................ 38
6.8. Direct Claims........................................................................................... 38
6.9. Failure to Give Timely Notice........................................................................... 38
6.10. Reductions.............................................................................................. 38
6.11. Payment and Interest.................................................................................... 39
6.12. Limitation.............................................................................................. 39
6.13. Additional Rules and Procedures......................................................................... 41
6.14. Exclusive Remedy........................................................................................ 41
ARTICLE 7 MISCELLANEOUS
7.1. Further Assurances...................................................................................... 42
7.2. Public Announcements.................................................................................... 42
7.3. Notices................................................................................................. 42
7.4. Time of the Essence..................................................................................... 43
7.5. Costs and Expenses...................................................................................... 43
7.6. Effect of Closing....................................................................................... 43
7.7. Counterparts............................................................................................ 44
7.8. Assignment.............................................................................................. 44
7.9. Parties in Interest..................................................................................... 44
7.10. Third Parties........................................................................................... 44
7.11. English Language........................................................................................ 44
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SCHEDULES
Schedule 1.1A - Annual Financial Statements
Schedule 1.1B - Interim Financial Statements
Schedule 3.1.1A Jurisdictions of Incorporation or Incorporation of
Each Subsidiary
Schedule 3.1.1B Governing Agreements
Schedule 3.1.3 - Clinics
Schedule 3.1.4 - Authorized and Issued Capital
Schedule 3.1.5 Title to Purchased Shares and Capital Securities of
Subsidiaries
Schedule 3.1.6 - Investments
Schedule 3.1.7 No Obligation to Issue Securities
Schedule 3.1.9 - Regulatory Approvals and Consents
Schedule 3.1.15 - Guarantees
Schedule 3.1.16 - Non-Arm's Length Transactions
Schedule 3.1.18 - Debt Instruments
Schedule 3.1.20 - Legal Proceedings
Schedule 3.1.21 - Banking Information
Schedule 4.3 Information Technology Matters
EXHIBITS
Exhibit A - Form of Legal Opinion of Vendor's Counsel
Exhibit B - Form of Legal Opinion of Purchaser's Counsel
Exhibit C - Form of Release
Exhibit D - Form of Non-Competition Agreement
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT made this 23rd day of December, 2005
between SELECT MEDICAL CORPORATION, a corporation incorporated under the laws of
the State of Delaware (the "Guarantor"), SLMC FINANCE CORPORATION (the "Vendor")
and CALLISTO CAPITAL L.P. (the "Purchaser"), by its general partner CALLISTO
CAPITAL (GP) L.P., by its general partner CALLISTO CAPITAL (GP) INC., a
corporation incorporated under the laws of the Province of Ontario.
RECITALS
WHEREAS the Guarantor is the sole registered and beneficial owner of
all of the outstanding shares in the capital of the Vendor;
AND WHEREAS the Vendor is the sole registered and beneficial owner
of 13,127,364 issued and outstanding common shares in the capital of CANADIAN
BACK INSTITUTE LIMITED, a corporation amalgamated under the laws of the Province
of Ontario (the "Corporation");
AND WHEREAS the Purchaser wishes to purchase, and the Vendor wishes
to sell, all of the issued and outstanding common shares in the capital of the
Corporation for the purchase price and upon the terms and conditions hereinafter
set forth;
AGREEMENT
NOW THEREFORE in consideration of the premises and mutual agreements
hereinafter set out and of other consideration (the receipt and sufficiency of
which are acknowledged by each Party), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1. DEFINITIONS
In this Agreement:
"ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED" means the generally
accepted accounting principles used in preparing the financial statements of the
Corporation as of and for the year ended December 31, 2004 (A) using the same
accounting methods, policies, practices and procedures, with consistent
classification, judgments, and estimation methodology, as were used in preparing
the financial statements as of and for the year ended December 31, 2004 and (B)
not taking into account any changes in circumstances or events occurring after
12:01 a.m. on the Closing Date.
"ACCOUNTING RECORDS" means all of the Corporation's books of
account, accounting records and other financial data and information, and
includes all records, data and information stored electronically, digitally or
on computer related media;
"AFFILIATE" means, with respect to any person, any other person that
directly or indirectly controls, is controlled by, or is under common control
with that other person. For purposes of this definition, a person "controls"
another person if that person directly or indirectly possesses the power to
direct or cause the direction of the management and policies of that other
person, whether through ownership of securities, by contract or otherwise and
"controlled by" and "under common control with" have similar meanings;
"AGREEMENT" means this acquisition agreement and all Schedules and
Exhibits attached hereto;
"ANNUAL FINANCIAL STATEMENTS" means collectively the consolidated
unaudited financial statements of the Corporation and its Subsidiaries as at
December 31, 2004, consisting of the balance sheet of the Corporation and the
accompanying income statement attached hereto as Schedule 1.1A;
"APPLICABLE LAW" means, in respect of any person, property,
transaction or event, any domestic or foreign statute, law (including the common
law), ordinance, rule, regulation, treaty, restriction, regulatory policy,
standard, code or guideline, by-law (zoning or otherwise) or Order that applies
in whole or in part to such person, property, transaction or event;
"BOOKS AND RECORDS" means the Accounting Records and all books,
records, books of account, sales and purchase records, lists of suppliers and
customers, credit and pricing information, personnel and payroll records,
employment and consulting agreements, production, inventory and accounts
receivable data, formulae, business, engineering and consulting reports and
research and development information and plans and projections of or relating to
the Corporation, the Subsidiaries or the Business and all other documents,
files, records and studies, correspondence, and other data and information,
financial or otherwise, which are relevant to the Corporation, the Subsidiaries
or the Business, including all data and information stored electronically,
digitally or on computer related media;
"BUSINESS" means (i) the business in Canada of providing programs
and/or services in physiotherapy, occupational and/or for exercise therapies as
well as massage therapy, physician and/or chiropractic services and elder care
services. For purposes of this definition, "physician services" shall mean
physician services provided in support of uni- or multi-discipline patient care
programs, or those directly provided for expert opinion, utilisation review or
independent examination, and "elder care services" shall mean physiotherapy,
occupational therapy, chiropody, massage therapy, nursing and personal support
provided in long-term care facilities, retirement homes and/or facilities,
assistive or supportive living residences and the patient's home; and (ii) the
licensing of certain rights by the Corporation and its Subsidiaries to third
parties;
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"BUSINESS DAY" means a day other than a Saturday, Sunday or any
other day on which the principal chartered banks located in the City of Toronto
are not open for the transaction of domestic business during normal banking
hours;
"CAPITAL SECURITIES" means, with respect to any person, all shares,
interests, participations, or other equivalents (however designated, voting or
non-voting) of such person's capital, including common shares, preferred shares,
membership interests, limited or general partnership interests in a partnership,
interest in a trust or other equivalent of such ownership interest.
"CLAIM" means any act, omission or state of facts, and any Legal
Proceeding, assessment, judgment, settlement or compromise relating thereto,
which may give rise to a right to indemnification under Sections 6.1 or 6.2
hereof;
"CLINIC" means rehabilitation clinics established, operated and
maintained by the Corporation and its Subsidiaries;
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares and the completion of all other transactions
contemplated by this Agreement that are to occur contemporaneously therewith;
"CLOSING BALANCE SHEET" means the consolidated balance sheet of the
Corporation as at the Closing Date, prepared in accordance with generally
accepted accounting principles in the United States, consistently applied, as
finally determined in accordance with the provisions of Section 2.5 hereof;
"CLOSING DATE" means February 1, 2006 or such earlier or later date
as may be agreed upon in writing by the Parties; and in the event that the
Vendor is unable to obtain the certificate of compliance referred to in Section
2.9 hereof prior to February 1, 2006, then the Closing Date shall automatically
be extended to February 15, 2006 or such earlier or later date as may be agreed
upon in writing by the Parties;
"CLOSING DOCUMENT" means any document or instrument delivered at the
Closing as provided in or pursuant to this Agreement;
"CLOSING TIME" means 10:00 o'clock a.m. Toronto time on the Closing
Date or such other time on the Closing Date as the Parties agree in writing that
the Closing shall take place;
"CLOSING WORKING CAPITAL" means the amount equal to: (i) the total
of the Corporation's current assets; less (ii) the total of its current
liabilities (excluding the current portion of any Long Term Liabilities); all on
a consolidated basis as shown on the Closing Balance Sheet;
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"CONSENT" means any consent, approval, permit, waiver, ruling,
exemption, or acknowledgement from any person (other than the Corporation or any
Subsidiary) under the terms of any Contract, Lease, or Equipment Lease issued to
or for the benefit of the Corporation or its Subsidiaries which is provided for
or required pursuant to the terms of such Contract, Lease or Equipment Lease in
connection with the sale of the Purchased Shares to the Purchaser and the
completion of the other transactions contemplated herein;
"CONSTATING DOCUMENTS" means, with respect to any body corporate,
the original or restated articles of incorporation, articles of amendment,
articles of amalgamation, articles of arrangement, articles of reorganization,
articles of revival, letters patent, memorandum of agreement, special Act or
statute and any other instrument or constating document by or pursuant to which
the body corporate is incorporated or comes into existence and with respect to
any partnership, the partnership agreement and any other instrument or
constating document by or pursuant to which the partnership is created or comes
into existence;
"CONTRACTS" means all contracts, agreements, instruments and other
legally binding commitments or arrangements, written or oral, entered into by
the Corporation or any of its Subsidiaries, including those listed or identified
on any Schedule attached hereto.
"CORPORATION" means Canadian Back Institute Limited, a corporation
amalgamated under the laws of the Province of Ontario, including its successors
and assigns;
"DEBT INSTRUMENT" means any bond, debenture, promissory note or
other instrument evidencing indebtedness for borrowed money;
"DEFENDING PARTY" has the meaning ascribed thereto in Section 6.6
hereof;
"DIRECT CLAIM" means any Claim asserted against an Indemnitor by an
Indemnitee which does not result from a Third Party Claim;
"EMPLOYEE" means an individual who is employed by, or has a
contractual relationship to provide services to, the Corporation or any of its
Subsidiaries, whether on a full-time or part-time basis;
"ENCUMBRANCE" means any mortgage, charge, easement, encroachment,
lien, adverse claim, restrictive covenant, assignment by way of security,
security interest of any nature, financing statement, servitude, pledge,
hypothecation, security agreement, title retention agreement, right of
occupation, option or privilege or any agreement to create any of the foregoing;
"EQUIPMENT LEASES" means all leases of personal property to which
the Corporation or any Subsidiary is a party or under which it has rights;
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"ESTIMATED CLOSING WORKING CAPITAL" means the estimated amount of
Closing Working Capital as determined on the Pre-Closing Statement in accordance
with Section 2.3 hereof;
"ESTIMATED LONG TERM LIABILITIES" means the estimated Long Term
Liabilities as determined on the Pre-Closing Statement in accordance with
Section 2.3 hereof.
"FINANCIAL STATEMENTS" means, collectively, the Annual Financial
Statements and Interim Financial Statements;
"GOVERNMENTAL AUTHORITY" means any domestic or foreign government,
whether federal, provincial, state, territorial or municipal; and any
governmental agency, ministry, department, Tribunal, commission, bureau, board
or other instrumentality exercising or purporting to exercise legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government;
"GUARANTEE" means any agreement, contract or commitment providing
for the guarantee, indemnification, assumption or endorsement or any like
commitment with respect to the obligations, liabilities (contingent or
otherwise) or indebtedness of any person;
"GUARANTOR" means Select Medical Corporation, a corporation
incorporated under the laws of the State of Delaware, including its successors
and assigns;
"INCOME TAX ACT" means, collectively, the Income Tax Act, R.S.C.
1985, 5th Supplement, the Income Tax Application Rules, R.S.C. 1985, 5th
Supplement, and the Income Tax Regulations, in each case as amended to the date
hereof;
"INDEMNITEE" means any Party and its Representatives entitled to
indemnification under this Agreement;
"INDEMNITOR" means any Party obligated to provide indemnification
under this Agreement;
"INDEMNITY PAYMENT" means any amount of a Loss required to be paid
pursuant to Sections 6.1, or 6.2 hereof;
"INFORMATION" has the meaning ascribed thereto in Section 4.2.1(a)
hereof;
"INTELLECTUAL PROPERTY RIGHTS" means:
(a) all trade marks, trade names, business names, styles, designs,
graphics, slogans, logos, service marks, brand names, internet
domain names and registrations and other commercial symbols and all
applications therefore;
(b) all copy rights and all applications therefore;
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(c) all know how, inventions, trade secrets, including business
methodologies and processes, confidential information and any
licensed property or technology;
(d) all computer software and software systems and rights related
thereto including all related code, specifications, documentation,
revisions, enhancements, and modifications thereto and all data,
databases and related documentation in whatever form and media;
and includes any statutory or common law rights in respect thereof and any and
all applications, registrations, licenses, sub-licenses, franchises, agreements
or any other evidence of a right in any of the foregoing.
"INTERIM FINANCIAL STATEMENTS" means the unaudited consolidated
financial statements of the Corporation for the ten (10) month period ended
October 31, 2005 attached hereto as Schedule 1.1B;
"INTERIM PERIOD" means the period from and including the time of
execution of this Agreement to and including the Closing Time;
"KNOWLEDGE OF THE GUARANTOR" means the current conscious awareness
of Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxx or Xxx Xxxxx without any duty of inquiry;
"LEASES" means the real property leases and other rights of
occupancy relating to real property to which the Corporation or any Subsidiary
is a party or under which it has rights, whether as lessor or lessee;
"LEGAL PROCEEDING" means any litigation, action, suit,
investigation, hearing, claim, complaint, grievance, arbitration proceeding or
other proceeding and includes any appeal or review and any application for same;
"LICENSE" means any license, permit, approval, authorization,
certificate, directive, order, variance, registration, right, privilege,
concession or franchise issued, granted, conferred or otherwise created by any
Governmental Authority;
"LONG TERM LIABILITIES" means the indebtedness for borrowed money,
capital leases and seller notes of the Corporation and its Subsidiaries as shown
on the Closing Balance Sheet, which for greater certainty includes the current
portion of any Long Term Liabilities;
"LOSS" means any and all loss, liability, damage, cost, expense,
charge, fine, penalty or assessment, resulting from or arising out of any Claim,
including the costs and expenses of any Legal Proceeding, assessment, judgment,
settlement or compromise relating thereto and all interest, fines and penalties
and reasonable legal fees and expenses incurred in connection therewith, but
excluding punitive damages (other than punitive paid to a third party in
connection with a Third Party Claim) loss of profits and consequential damages;
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"MATERIAL ADVERSE EFFECT" shall mean any effect or change that would
be materially adverse to the business, results of operations or financial
condition of the Corporation and its Subsidiaries on a consolidated basis.
"NOTICE PERIOD" has the meaning ascribed thereto in Section 6.5
hereof;
"ORDER" means any order, directive, judgment, decree, award or writ
of any Tribunal;
"PARTIES" means the Guarantor, the Vendor and the Purchaser and
"Party" means any one of them;
"PERSON" is to be broadly interpreted and includes an individual, an
incorporated body wherever or however incorporated, a partnership, a trust, a
fund, an unincorporated association or organization, a government of a country
or any political subdivision thereof, or any agency or department thereof, and
the executors, administrators or other legal representatives of an individual in
such capacity.
"PRIME RATE" for any day means the rate of interest expressed as a
rate per annum that the Bank of Montreal establishes at its head office in
Toronto, Ontario as the reference rate of interest that it will charge on that
day for Canadian dollar demand loans to its customers in Canada and which it at
present refers to as its prime rate;
"PURCHASE PRICE" means the price payable by the Purchaser to the
Vendor for the Purchased Shares provided for in Section 2.2 hereof;
"PURCHASED SHARES" means the 13,127,364 issued and outstanding
common shares in the capital of the Corporation;
"PURCHASER" means Callisto Capital (GP) Inc., a corporation
incorporated under the laws of the Province of Ontario, including its successors
and assigns;
"PURCHASER'S ADVISORS" means the directors, officers, employees,
auditors, legal counsel and fiscal and tax advisors of the Purchaser and of any
lenders or prospective lenders to the Purchaser and their respective
representatives and any other person authorized in writing by the Purchaser to
represent the Purchaser;
"PWC" means PricewaterhouseCoopers LLP;
"REGULATORY APPROVAL" means any approval, consent, ruling,
authorization, notice, permit or acknowledgement that may be required from any
Governmental Authority by Applicable Law, the terms of any License or the
conditions of any Order in connection with the sale of the Purchased Shares to
the Purchaser and the completion of the other transactions contemplated herein;
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"REPRESENTATIVE" means, in respect of an Indemnitee, each director,
officer, employee, agent, solicitor, accountant, professional advisor and other
representative of that Indemnitee and, in respect of the Purchaser, also
includes the Corporation or any Subsidiary;
"SENIOR EMPLOYEES OF THE CORPORATION" means Xxxxxxxxxxx Szybbo,
Xxxxxxx XxXxxxx, Xxxxx Xxxxxx, Xxxxxxxxx Xxxxx and Xxxxxx Xxxxxxx;
"SUBSIDIARY" means with respect to any person, a corporation,
partnership, limited partnership, limited liability company or other entity of
which such person owns, directly or indirectly, any number of outstanding
Capital Securities as have the ordinary voting power to determine the election
of directors or other managers of such corporation, partnership, limited
partnership, limited liability company or other entity. Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of the Corporation.
"TAX LEGISLATION" means, collectively, the Income Tax Act and all
federal, provincial, territorial, municipal, foreign, or other statutes,
including all treaties, conventions, case law, interpretation bulletins,
circulars and releases, rules, regulations, orders, and decrees of any
jurisdiction, imposing a tax;
"TAX RETURNS" means all reports, elections, returns, and other
documents required to be filed under the provisions of any Tax Legislation and
any Tax forms required to be filed, whether in connection with a Tax Return or
not, under any provisions of any applicable Tax Legislation;
"TAX" or "TAXES" means all taxes, assessments, charges, dues,
duties, rates, fees, imposts, levies and similar charges of any kind lawfully
levied, assessed or imposed by any Governmental Authority, including, Canadian
federal, provincial, territorial, municipal and local, foreign or other income,
capital, goods and services, capital gains, sales, use, consumption,
registration, environmental, excise, value-added, business, real property,
personal property, stamp, transfer, franchise, withholding, payroll and employee
withholding, or employer health taxes, customs, import, anti-dumping or
countervailing duties, Canada Pension Plan contributions, employment insurance
premiums, social security and workers' compensation premiums or payments,
including any interest, penalties and fines associated therewith or that may
become payable in respect thereof, and any liability for any of the foregoing as
a transferee or successor, guarantor or surety or in a similar capacity under
any contract, arrangement, agreement, understanding or commitment (whether
written or oral) or by operation of law;
"THIRD PARTY" has the meaning ascribed thereto in Section 6.13(a)
hereof;
"THIRD PARTY CLAIM" means any Claim asserted against an Indemnitee
that is paid or payable to, or claimed by, any person who is not a Party;
"TRIBUNAL" means any court (including a court of equity), arbitrator
or arbitration panel and any other Governmental Authority, stock exchange or
other body exercising adjudicative, regulatory, judicial or quasi-judicial
powers; and
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"VENDOR" means SLMC Finance Corporation, a corporation incorporated
under the laws of the State of Delaware, including its successors and assigns.
1.2. RECITALS
The Parties acknowledge and declare that the recitals in this
Agreement are true and correct.
1.3. ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be to the generally
accepted accounting principles from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board, applicable as at the date on which such principles
are to be applied or on which any calculation or determination is required to be
made in accordance with generally accepted accounting principles in the United
States.
1.4. GOVERNING LAW; ATTORNMENT
This Agreement shall be construed, interpreted and enforced in
accordance with, and the rights of the Parties shall be governed by, the laws of
the Province of Ontario and the federal laws of Canada applicable therein
(excluding any conflict of law rule or principle of such laws that might refer
such interpretation or enforcement to the laws of another jurisdiction) and each
Party irrevocably submits to the non-exclusive jurisdiction of the courts of
Ontario with respect to any matter arising hereunder or relating hereto.
1.5. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the transactions herein contemplated and cancels and supersedes
any prior understandings, agreements, negotiations and discussions, written or
oral, between the Parties with respect thereto (including the letter of intent
dated June 29, 2005 among the Guarantor, the Corporation and Callisto Capital
(GP) L.P.). There are no representations, warranties, terms, conditions,
undertakings or collateral agreements or understandings, express or implied,
between the Parties other than those expressly set forth in this Agreement. This
Agreement may not be amended, supplemented or otherwise modified in any respect
except by written instrument executed by the Parties.
1.6. CALCULATION OF TIME
In this Agreement, a period of days shall be deemed to begin on the
first day after the event which began the period and to end at 5:00 p.m.
(Toronto time) on the last day of the period. If any period of time is to expire
hereunder on any day that is not a Business Day, the
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period shall be deemed to expire at 5:00 p.m. (Toronto time) on the next
succeeding Business Day.
1.7. PERFORMANCE ON HOLIDAYS
If any act (including the giving of notice) is otherwise required by
the terms hereof to be performed on a day which is not a Business Day, such act
shall be valid if performed on the next succeeding Business Day.
1.8. WAIVER OF RIGHTS
Any waiver of, or consent to depart from, the requirements of any
provision of this Agreement shall be effective only if it is in writing and
signed by the Party giving it, and only in the specific instance and for the
specific purpose for which it has been given. No failure on the part of any
Party to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right. No single or partial exercise of any
such right shall preclude any other or further exercise of such right or the
exercise of any other right.
1.9. TENDER
Except as otherwise provided herein, any tender of documents or
money hereunder may be made upon the Parties or their respective counsel and
money shall be tendered by official bank draft drawn upon a Canadian chartered
bank or by negotiable cheque payable in Canadian funds and certified by a
Canadian bank listed in Schedule I, II or III to the Bank Act (Canada).
1.10. SEVERABILITY
Any provision in this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
1.11. CONFLICT
In the event of any conflict or inconsistency between the terms and
conditions in the body of this Agreement and those in any Schedule (including
any agreement entered into pursuant to this Agreement), the terms and conditions
in the body of this Agreement shall govern and take precedence and the Parties
shall take such steps as may be required or desirable to conform the conflicting
or inconsistent provisions thereof to this Agreement.
1.12. CONSENTS AND APPROVALS
Unless otherwise specified, where the consent or approval of a Party
is contemplated or required by the terms of this Agreement, that Party shall not
unreasonably delay
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or withhold the giving of such consent or approval after a request therefor has
been made by the other Party.
1.13. REMEDIES CUMULATIVE
The rights, remedies, powers and privileges herein provided to a
Party are cumulative and in addition to and not exclusive of or in substitution
for any rights, remedies, powers and privileges otherwise available to that
Party.
1.14. ADDITIONAL RULES OF INTERPRETATION
(a) In this Agreement, unless the context requires otherwise, words in
one gender include all genders and words in the singular include the
plural and vice versa.
(b) The division of this Agreement into Articles, Sections, Subsections,
Schedules and other subdivisions, the inclusion of headings and the
provision of a table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this
Agreement. The headings in the Agreement are not intended to be full
or precise descriptions of the text to which they refer.
(c) Unless something in the subject matter or context is inconsistent
therewith, references herein to an Article, Section, Subsection,
paragraph, clause, Schedule or Exhibit are to the applicable
article, section, subsection, paragraph, clause Schedule or Exhibit
of this Agreement.
(d) Wherever the words "include", "includes" or "including" are used in
this Agreement or in any Closing Document, they shall be deemed to
be followed by the words "without limitation" and the words
following "include", "includes" or "including" shall not be
considered to set forth an exhaustive list.
(e) The words "hereof", "herein", "hereto", "hereunder", "hereby" and
similar expressions shall be construed as referring to this
Agreement in its entirety and not to any particular section or
portion of it.
(f) Unless otherwise specified, all dollar amounts in this Agreement,
including the symbol "$", refer to Canadian currency.
(g) Unless otherwise indicated, all references in this Agreement to any
statute include the regulations thereunder and all applicable
guidelines, bulletins or policies made in connection therewith and
which are legally binding, in each case as amended, re-enacted,
consolidated or replaced from time to time and in the case of any
such amendment, re-enactment, consolidation or replacement,
reference herein to a particular provision shall be read as
referring to such amended, re-enacted, consolidated or replaced
provision.
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(h) All references herein to any agreement (including this Agreement),
document or instrument mean such agreement, document or instrument
as amended, supplemented, modified, varied, restated or replaced
from time to time in accordance with the terms thereof and, unless
otherwise specified therein, includes all schedules and exhibits
attached thereto.
(i) Unless otherwise defined herein, words or abbreviations which have
well-known trade meanings are used herein with those meanings.
1.15. SCHEDULES AND EXHIBITS
The following are the Schedules and Exhibits attached to and
incorporated in this Agreement by reference and deemed to be a part hereof:
Schedules
Schedule 1.1A - Annual Financial Statements
Schedule 1.1B - Interim Financial Statements
Schedule 3.1.1A Jurisdictions of Incorporation and Formation of
Each Subsidiary
Schedule 3.1.1B Governing Agreements
Schedule 3.1.3 - Clinics
Schedule 3.1.4 - Authorized and Issued Capital
Schedule 3.1.5 Title to Purchases Shares and Capital Securities
of Subsidiaries
Schedule 3.1.6 - Investments
Schedule 3.1.7 - No Obligation to Issue Securities
Schedule 3.1.9 - Regulatory Approvals and Consents
Schedule 3.1.15 - Guarantees
Schedule 3.1.16 - Non-Arm's Length Transactions
Schedule 3.1.18 - Debt Instruments
Schedule 3.1.20 - Legal Proceedings
Schedule 3.1.21 - Banking Information
Schedule 4.3 Information Technology Matters
Exhibits
Exhibit A - Form of Legal Opinion of Guarantor's and Vendor's
Counsel
Exhibit B - Form of Legal Opinion of Purchaser's Counsel
Exhibit C - Form of Release
Exhibit D - Form of Non-Competition Agreement
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ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1. PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, the Vendor
agrees to sell, transfer and assign the Purchased Shares to the Purchaser and
the Purchaser agrees to purchase the Purchased Shares from the Vendor.
2.2. AMOUNT OF PURCHASE PRICE
The aggregate price payable by the Purchaser to the Vendor for the
Purchased Shares (the "Purchase Price") shall equal Ninety Million Seven Hundred
and Eighteen Thousand Nine Hundred and Sixty-Six Dollars ($90,718,966) less the
amount of any Long Term Liabilities on the Closing Date, subject to adjustment
pursuant to Section 2.3 and Section 2.4 hereof, and shall be payable in
accordance with provisions of Section 2.6 hereof.
2.3. ESTIMATE OF CLOSING WORKING CAPITAL
At least five (5) Business Days prior to the Closing Date, the
Toronto office of PWC will have worked with the Corporation and the Vendor to
have prepared and delivered to the Purchaser and the Vendor a written statement
(the "Pre-Closing Statement"), based upon the Books and Records of the
Corporation, that sets forth the Estimated Closing Working Capital and the
Estimated Long Term Liabilities. The Pre-Closing Statement, the Estimated
Closing Working Capital and the Estimated Long Term Liabilities set forth
therein shall be binding on the parties hereto, subject to any adjustments to
the Estimated Closing Working Capital and the Estimated Long Term Liabilities
after the Closing pursuant to Section 2.4 hereof.
2.4. PURCHASE PRICE ADJUSTMENT
Within ten (10) Business Days following the date on which the
Closing Balance Sheet becomes final and binding on the Parties, as determined in
Section 2.5 below, the Purchase Price shall be adjusted, on a dollar-for-dollar
basis:
(a) upward or downward, by an amount by which the Long Term Liabilities
is less or greater than, respectively, the Estimated Long Term
Liabilities;
(b) upward or downward, by the amount by which the Closing Working
Capital is greater or less than, respectively, the Estimated Closing
Working Capital; and
(c) upward by the amount of the aggregate purchase price paid by the
Corporation or any Subsidiary in connection with any acquisitions
completed by the Corporation or any Subsidiary from and after the
date hereof and prior to the Closing Date.
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In the event of any aggregate downward adjustments to the Purchase
Price pursuant to the foregoing provisions of this Section 2.4, the Vendor shall
pay to the Purchaser, by wire transfer or bank draft, within ten (10) Business
Days following the date on which the Closing Balance Sheet becomes final and
binding upon the Parties, as determined in Section 2.5 below, an amount equal to
such downward adjustment. The Guarantor hereby agrees to forthwith pay the
amount of such downward adjustment to the Purchaser in the event that the Vendor
does not so pay the Purchaser within the ten (10) Business Day period. In the
event of any aggregate upward adjustment to the Purchase Price pursuant to the
foregoing provisions of this Section 2.4, subject to Section 2.9 below, the
Purchaser shall pay to the Vendor, by wire transfer or bank draft, within ten
(10) Business Days following the date on which the Closing Balance Sheet becomes
final and binding upon the Parties, as determined in Section 2.5 below, an
amount equal to such upward adjustment.
2.5. PREPARATION OF CLOSING BALANCE SHEET
2.5.1 INITIAL PREPARATION
Promptly after the Closing Time, the Purchaser shall prepare, at the
Purchaser's expense and in accordance with Accounting Principles Consistently
Applied, a balance sheet of the Corporation as at 12:01 a.m. on the Closing Date
(the "Closing Balance Sheet") and a calculation of Closing Working Capital and
Long Term Liabilities at that time. A draft of the Closing Balance Sheet and a
draft calculation of Closing Working Capital and Long Term Liabilities shall be
delivered to the Vendor no later than sixty (60) days following the Closing
Date. The Purchaser shall provide the Vendor with copies of all working papers
used in the preparation of the draft Closing Balance Sheet. If the Vendor does
not give a notice of disagreement in accordance with Section 2.5.2 hereof, the
Vendor shall be deemed to have accepted the draft Closing Balance Sheet and
draft calculation of the Closing Working Capital and Long Term Liabilities
prepared by the Purchaser which shall be final and binding on the Parties and
the draft calculations of Closing Working Capital and Long Term Liabilities
shall constitute the Closing Working Capital and Long Term Liabilities for
purposes of this Agreement immediately following the expiry date for the giving
of such notice of disagreement.
2.5.2 DISPUTE SETTLEMENT
If the Vendor disagrees with any item in the draft Closing Balance
Sheet or the draft calculation of the Closing Working Capital or Long Term
Liabilities prepared pursuant to Section 2.5.1 hereof, the Vendor shall give
written notice to the Purchaser of such disagreement no later than forty-five
(45) Business Days after delivery of the draft Closing Balance Sheet. Any notice
of disagreement given by the Vendor shall set forth in detail the particulars of
such disagreement. The Vendor and the Purchaser shall then use reasonable
efforts to resolve such disagreement for a period of thirty (30) days following
the giving of such notice. If the matter is not resolved by the end of such
thirty (30) day period, then such disagreement shall be submitted by the Vendor
and the Purchaser to a national accounting firm in Canada and the United States
agreed upon by the Parties (the "Arbitrator"). In the event that the Parties
cannot agree on an arbitrator, then the Arbitrator shall be determined by PWC.
The Arbitrator shall, as promptly as
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practicable (but in any event within forty-five (45) days following its
appointment), make a determination of the Closing Working Capital and Long Term
Liabilities, based solely on written submissions submitted by the Vendor and the
Purchaser to the Arbitrator. In resolving any disputed item, the Arbitrator: (a)
shall be bound by the principles set forth in this Agreement, (b) shall limit
its review to matters specifically set forth in the notice of disagreement, and
(c) shall not assign a value greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed by
either party. The decision of the Arbitrator as to the Closing Working Capital
and Long Term Liabilities shall be final and binding upon the Parties and shall
constitute the Closing Working Capital and Long Term Liabilities for purposes of
this Agreement. The Purchaser shall pay one-half of the fees and expenses of the
Arbitrator with respect to the resolution of the dispute and the Vendor shall
pay the balance.
2.6. PAYMENT OF ESTIMATED PURCHASE PRICE
On the Closing Date, subject to Section 2.9, the Purchaser shall pay
the Vendor, by wire transfer of immediately available funds, an estimate of the
Purchase Price, being an amount equal to Ninety Million Seven Hundred and
Eighteen Thousand Nine Hundred and Sixty-Six Dollars ($90,718,966) plus or
minus, as the case may be, the amount by which the Estimated Closing Working
Capital is greater than or less than, respectively, Twelve Million Three Hundred
Seventy-Two Thousand Nine Hundred and Ninety-Five Dollars ($12,372,995), minus
the Estimated Long Term Liabilities.
2.7. DELIVERY OF SHARE CERTIFICATES
The Vendor shall transfer and deliver to the Purchaser at the
Closing Time share certificates representing the Purchased Shares owned by the
Vendor duly endorsed in blank for transfer, or accompanied by irrevocable
security transfer powers of attorney duly executed in blank.
2.8. PLACE OF CLOSING
The Closing shall take place at the Closing Time at the offices of
Fraser Xxxxxx Casgrain LLP, Suite 4200, 1 First Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxx, or at such other place as may be agreed upon by the Vendor and the
Purchaser.
2.9. DELIVERY OF SECTION 116 CERTIFICATE
(a) The Vendor shall provide the Purchaser on or before the Closing Date
with a certificate of compliance for the purposes of section 116 of
the Income Tax Act with a certificate limit (as defined in
subsection 2 of section 116 of the Income Tax Act) fixed by the
Minister of National Revenue in such certificate equal to the
Purchase Price payable to the Vendor on Closing.
(b) In the event that the estimated Purchase Price determined under
Section 2.6 results in an amount payable on the Closing Date by the
Purchaser that is greater
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than the certificate limit (such excess amount hereinafter referred
to as the "CD Excess Amount"), then the Purchaser shall only pay to
the Vendor on the Closing Date an amount equal to the certificate
limit plus 75% of such CD Excess Amount on the date set out in
Section 2.6. The Vendor shall provide the Purchaser on or before the
date that is 30 days after the end of the month in which the Closing
Date occurred (the "CD Remittance Date") with a certificate of
compliance issued under subsection 116(4) of the Income Tax Act with
a certificate limit fixed by the Minister of National Revenue in
such certificate equal to the amount payable pursuant to Section
2.6. Upon receipt of such certificate, the Purchaser shall pay the
balance of the CD Excess Amount to the Vendor forthwith. If the
Vendor fails to deliver to the Purchaser such certificate on or
before the CD Remittance Date, the Purchaser shall, on the
Remittance Date, pay to the Receiver General for Canada the balance
of the CD Excess Amount, and the amount so paid by the Purchaser
shall be considered for all purposes to be a payment made by the
Purchaser to the Vendor on account of the total aggregate Purchase
Price.
(c) In the event that any aggregate upward adjustment to the Purchase
Price pursuant to the provisions of Section 2.4 results in an amount
payable by the Purchaser that is greater than the certificate limit
(such excess amount hereinafter referred to as the "AD Excess
Amount"), then the Purchaser shall only pay to the Vendor an amount
equal to 75% of such AD Excess Amount on the date set out in Section
2.4 (the "Adjustment Date"). The Vendor shall provide the Purchaser
on or before the date that is 30 days after the end of the month in
which the Adjustment Date occurred (the "AD Remittance Date") with a
certificate of compliance issued under subsection 116(4) of the
Income Tax Act with a certificate limit fixed by the Minister of
National Revenue in such certificate equal to the total aggregate
Purchase Price including any adjustment under Section 2.4. Upon
receipt of such certificate, the Purchaser shall pay the balance of
the AD Excess Amount to the Vendor forthwith. If the Vendor fails to
deliver to the Purchaser such certificate on or before the AD
Remittance Date, the Purchaser shall, on the AD Remittance Date, pay
to the Receiver General for Canada the balance of the AD Excess
Amount, and the amount so paid by the Purchaser shall be considered
for all purposes to be a payment made by the Purchaser to the Vendor
on account of the total aggregate Purchase Price.
(d) If necessary for the Vendor to obtain an amended certificate from
Canada Revenue Agency, the Purchaser agrees to return the original
certificate to the Vendor at any time on receiving written
assurances that a revised certificate having an appropriate
certificate limit will be issued by Canada Revenue Agency and
delivered to the Purchaser immediately thereafter.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
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3.1. REPRESENTATIONS AND WARRANTIES IN RESPECT OF THE CORPORATION, SUBSIDIARIES
AND BUSINESS
The Guarantor and the Vendor hereby represent and warrant on a joint
and several basis to the Purchaser as set out in this Section 3.1 and
acknowledge that the Purchaser is relying on such representations and warranties
in connection with the transactions contemplated in this Agreement.
3.1.1 INCORPORATION AND ORGANIZATION OF THE CORPORATION
The Corporation is a corporation amalgamated and subsisting under
the laws of the Province of Ontario. Each Subsidiary, if a corporation, is a
corporation incorporated and subsisting under the laws of the jurisdiction of
its corporation, if a partnership, is a partnership formed and subsisting under
the laws of the jurisdiction in which such partnership has been formed. Each
jurisdiction of incorporation or formation of each Subsidiary is set forth in
Schedule 3.1.1A attached hereto. No proceedings have been taken or authorized by
any of the Guarantor, Vendor, or to the Knowledge of the Guarantor, the
Corporation or any Subsidiary or by any other person with respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of the
Corporation or any Subsidiary or with respect to any amalgamation, merger,
consolidation, arrangement or reorganization of, or relating to, the Corporation
or any Subsidiary nor to the Knowledge of the Guarantor have any such
proceedings been taken by any other person. True and complete copies of the
Constating Documents and by-laws, if applicable, of the Corporation and every
Subsidiary are contained in the applicable minute books of the Corporation or
Subsidiary made available to the Purchaser and such Constating Documents and
by-laws, if applicable, to the Knowledge of the Guarantor constitute all of the
Constating Documents and by-laws, if applicable, of such parties, and are
complete and correct and are in full force and effect. Each shareholders'
agreement, unanimous shareholders' agreement, partnership agreement, joint
venture agreement or other agreement governing the affairs of the Corporation
and each Subsidiary or governing the relationship, rights and duties of their
respective shareholders, unitholders or members is listed in Schedule 3.1.1B
attached hereto.
3.1.2 CORPORATE RECORDS
To the Knowledge of the Guarantor, the minute books of the
Corporation and each Subsidiary and other corporate records made available to
the Purchaser for review have been maintained in accordance with Applicable Law
and contain, without limitation, complete and accurate copies of all by-laws of
the Corporation and each Subsidiary and minutes of all meetings of, and
resolutions passed by, the Corporation's and each Subsidiary's shareholders,
directors and committees of directors, partners and committees of partners since
the date of incorporation or formation of the Corporation and each Subsidiary.
To the Knowledge of the Guarantor, all such meetings were duly called and held
and all such by-laws and resolutions were duly passed or enacted. To the
Knowledge of the Guarantor, the share certificate book, register of
shareholders, register of transfers, register of directors and register of
partners of the Corporation and each Subsidiary are complete, accurate and
current.
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3.1.3 QUALIFICATION TO DO BUSINESS, JURISDICTIONS AND CLINICS
The Corporation and each Subsidiary has the necessary power,
authority and capacity to own or lease and use its property and assets and to
carry on its business as now being conducted by it and, to the Knowledge of the
Guarantor, is registered, licensed or otherwise qualified to carry on its
business in the jurisdictions in which the nature of its business as carried on
by the Corporation and each Subsidiary or the property or assets owned or leased
or used by them makes such qualification necessary. As of the date hereof, the
Clinics established, operated and maintained by the Corporation and its
Subsidiaries are identified and set forth on Schedule 3.1.3 attached hereto.
3.1.4 AUTHORIZED AND ISSUED CAPITAL
The authorized capital of the Corporation consists of an unlimited
number of common shares, of which only the Purchased Shares have been validly
issued and are outstanding as fully paid and non-assessable shares. The
authorized and issued Capital Securities of each Subsidiary is as set forth in
Schedule 3.1.4 attached hereto and such Capital Securities have been validly
issued and are outstanding as fully paid and, if such Capital Securities
represent shares in the capital of a corporation, non-assessable shares. The
Purchased Shares and the Capital Securities set forth in Schedule 3.1.4 attached
hereto were not issued in violation of pre-emptive rights or in violation of
contractual restrictions. Except for the Purchased Shares and the Capital
Securities set forth in Schedule 3.1.4 attached hereto, there are no other
Capital Securities of the Corporation or any Subsidiary outstanding.
3.1.5 TITLE TO PURCHASED SHARES AND CAPITAL SECURITIES OF SUBSIDIARIES
The Vendor is the sole registered and beneficial owner of the
Purchased Shares. The Vendor now has, and on Closing the Purchaser shall
acquire, good title to the Purchased Shares, free and clear of all Encumbrances.
There are no restrictions of any kind on the transfer of the Purchased Shares
except those set out in the Constating Documents of the Corporation. No person
has, or has any right capable of becoming, any contract, commitment,
understanding, arrangement, agreement or option for the purchase or other
acquisition from the Vendor of any of the Purchased Shares.
Schedule 3.1.4 attached hereto sets forth the registered and
beneficial owners of the issued Capital Securities of each Subsidiary. Except as
set forth on Schedule 3.1.5 attached hereto, the Corporation and each Subsidiary
has good title to the Capital Securities of the Subsidiaries in respect of which
it is shown as the registered and beneficial owner on Schedule 3.1.4 attached
hereto, free and clear of all Encumbrances. Except as set forth on Schedule
3.1.5 attached hereto, no person has, or has any right capable of becoming, any
contract, commitment, understanding, arrangement, agreement or option for the
purchase or other acquisition from the Corporation or any Subsidiary of any of
the Capital Securities of the Subsidiaries in respect of which it is shown as
the registered and beneficial owner on Schedule 3.1.4 attached hereto.
3.1.6 INVESTMENTS
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Except for the Capital Securities in respect of each Subsidiary as
set forth on Schedule 3.1.4 attached hereto, the Corporation does not have any
other Subsidiary and except as set forth on Schedule 3.1.6 attached hereto does
not own, directly or indirectly, any Capital Securities of any other body
corporate or any equity or ownership interest in any other business or person
and has not agreed to acquire any Subsidiary or any such Capital Securities or
other equity ownership or interest. Except as set forth on Schedule 3.1.6
attached hereto, neither the Corporation nor any Subsidiary is subject to any
contract, commitment, understanding, arrangement or agreement requiring it to
acquire any Capital Securities of any Subsidiary apart from those which it
currently owns. To the Knowledge of the Guarantor, except as set forth on
Schedule 3.1.6 attached hereto, neither the Corporation nor any Subsidiary is
subject to any obligation or requirement to provide funds to or to make any
investment in any business or person by way of loan, capital contribution or
otherwise.
3.1.7 NO OBLIGATION TO ISSUE SECURITIES
Except as set forth on Schedule 3.1.7 attached hereto, there are no
agreements, options, warrants, rights of conversion or other rights pursuant to
which the Corporation or, any Subsidiary is, or may become, obligated to issue
any shares or other securities.
3.1.8 CONFLICTING INSTRUMENTS
To the Knowledge of the Guarantor, neither the entering into of this
Agreement by the Parties, nor the entering into of any agreement or other
instrument contemplated hereby nor the completion of the transactions herein
contemplated nor the performance by the Guarantor or the Vendor of its
obligations hereunder will: (a) conflict with, or result in the breach or
violation of or default under, or cause the acceleration of any obligations of
the Corporation or any Subsidiary under, any of the terms and provisions of (i)
any Applicable Law, (ii) the Constating Documents of the Corporation or any
Subsidiary or their respective by-laws or any resolution of their respective
directors or shareholders or members or partners; or (iii) subject to obtaining
any Consent or Regulatory Approval which may be required thereunder in
connection with the completion of the transactions herein contemplated, any
License, Order or agreement, contract (including employment contracts) or
commitment, written or oral to which the Corporation or any Subsidiary is a
party or by which it is bound, (b) relieve any other party to any Contract,
Lease or Equipment Lease of that party's obligations thereunder or enable it to
terminate its obligations thereunder; (c) cause the Corporation or any
Subsidiary to lose any rights under any Contract, Lease or Equipment Lease or
any right to a government grant or tax credit or refund; or (d) result in the
creation of any lien or encumbrance on any of the property or assets of the
Corporation or any Subsidiary.
3.1.9 REGULATORY APPROVALS AND CONSENTS
Except as set forth in Schedule 3.1.9, no Regulatory Approval,
Consent or registration or filing with, notice to, or waiver from any
Governmental Authority or other person is required to be obtained or made by the
Guarantor or the Vendor, or, to the Knowledge of the Guarantor, the Corporation
or any Subsidiary: (a) in connection with the execution, delivery and
- 19 -
performance by the Guarantor or the Vendor of their obligations under this
Agreement or the Closing Documents or the consummation of the transactions
contemplated hereby; (b) to avoid the loss of any License relating to the
Business; or (c) to permit the Corporation or any Subsidiary to carry on the
Business after the Closing as the Business is currently carried on by the
Corporation and any Subsidiary.
3.1.10 BOOKS AND RECORDS
The Financial Statements are derived from the Books and Records of
the Company and its Subsidiaries.
3.1.11 FINANCIAL STATEMENTS
The Financial Statements have been prepared in accordance with
generally accepted accounting principles in the United States (other than for
the absence of notes to such Financial Statements and other than, in the case of
the Interim Financial Statements, normal year end adjustments) applied on a
consistent basis and present fairly in all material respects the results of
operation and financial condition of the Corporation and its Subsidiaries, in
each case as of the date and throughout the period indicated.
3.1.12 NO MATERIAL CHANGE
Since October 31, 2005, to the Knowledge of the Guarantor there has
been no change in the business, results of operations or financial condition of
the Corporation and its Subsidiaries on a consolidated basis, including any such
change arising as a result of any change in Applicable Law, revocation of any
License or as a result of fire, explosion, accident, casualty, labor problem,
flood, drought, riot, storm, act of God or otherwise, except for changes
occurring in the ordinary course of business and which, either individually or
in the aggregate, have not had or will not have a Material Adverse Effect.
3.1.13 NO LIABILITIES
To the Knowledge of the Guarantor, neither the Corporation nor any
Subsidiary has any liabilities (whether accrued, absolute, contingent, matured
or unmatured or otherwise) except:
(a) liabilities disclosed on, reflected in or provided for in the
Financial Statements;
(b) liabilities disclosed or referred to in this Agreement; and
(c) liabilities incurred in the ordinary course of business and
attributable to the period since October 31, 2005, which do not
have, either individually or in the aggregate, a Material Adverse
Effect.
3.1.14 BUSINESS CARRIED ON IN ORDINARY COURSE
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Since October 31, 2005, except as contemplated in Section 5.1.6 of
this Agreement, to the Knowledge of the Guarantor the Corporation and each
Subsidiary has carried on its business in the ordinary course, consistent with
past practice.
3.1.15 GUARANTEES
Except as set forth and described in Schedule 3.1.15 attached
hereto, neither the Guarantor nor the Vendor has caused (without the knowledge
of the senior management of the Corporation) either the Corporation or any
Subsidiary to give or agree to give, or become a party to or be bound by or
subject to any Guarantee of any obligation of the Guarantor, the Vendor or its
subsidiaries (other than the Corporation and its Subsidiaries).
3.1.16 NON-ARM'S LENGTH TRANSACTIONS
Neither the Guarantor, the Vendor nor any subsidiary of the
Guarantor or the Vendor (other than the Corporation and its Subsidiaries) is
indebted to the Corporation or any Subsidiary, nor is the Corporation or any
Subsidiary indebted to the Guarantor, the Vendor or any subsidiary of the
Guarantor or the Vendor (other than the Corporation and its Subsidiaries),
except such indebtedness as is disclosed in Schedule 3.1.16 or expressly
disclosed in the Financial Statements. Except as described in Schedule 3.1.16,
neither the Corporation nor any Subsidiary is a party to any Contract with the
Guarantor or the Vendor or any subsidiary of the Guarantor or the Vendor (other
than the Corporation and its Subsidiaries).
3.1.17 EMPLOYEES
No amounts are payable directly or indirectly to any Senior
Employees of the Corporation as a result of the consummation of the transactions
contemplated hereby. Neither the Guarantor nor the Vendor has entered into any
employment arrangements on behalf of or in any way binding, the Corporation or
any of its Subsidiaries. To the Knowledge of the Guarantor, neither the
Corporation nor any Subsidiary (a) has any Employee who cannot be dismissed on
reasonable notice, (b) is liable to any Employee or former employee for any
damages under any Applicable Law or damages under any agreement or arrangement
relating to any employee benefit under or pursuant to any employee benefit plans
or (c) would be liable to any director, officer or Employee of the Corporation
or any Subsidiary to make a payment upon the change of control of the
Corporation and its Subsidiaries.
3.1.18 DEBT INSTRUMENTS
Except as set forth and described in Schedule 3.1.18 attached
hereto, neither the Guarantor nor the Vendor has caused (without the knowledge
of the senior management of the Corporation) either the Corporation or any
Subsidiary to become a party to or to be bound by or subject to any Debt
Instrument or any agreement, contract or commitment to create, assume or issue
any Debt Instrument and except as set forth and described in Schedule 3.1.18
attached hereto no Debt Instrument or Encumbrance which the Corporation or any
Subsidiary is a party to
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or bound by or subject to is dependent upon the Guarantee of or any security
provided by the Guarantor or the Vendor.
3.1.19 LEASES AND LEASED PROPERTY
To the Knowledge of the Guarantor, (a) each Lease is valid and
subsisting and in good standing, there is no default thereunder, nor is there
any dispute between the Corporation or any Subsidiary on the one hand, and any
landlord or tenant on the other under any Lease and the Corporation and each
Subsidiary, as applicable, is entitled to all rights and benefits under the
Leases and neither the Corporation nor any Subsidiary has sublet, assigned,
licensed or otherwise conveyed any rights in the Leases or the property subject
thereto to any other person; (b) neither the Corporation nor any Subsidiary, or,
any other party thereto is in breach of any of the provisions of any Lease
(subject to obtaining any Consents and Regulatory Approvals to the change in
control of the Corporation herein contemplated, or in connection with the change
of control of any Subsidiary); and (c) the completion of the transactions herein
contemplated will not afford any of the parties to any Lease or any other person
(other than the Corporation or any Subsidiary, as applicable) the right to
terminate any Lease nor will the completion of the transactions herein
contemplated result in any additional or more onerous obligation on the
Corporation or any Subsidiary, as applicable under any Lease.
3.1.20 LEGAL PROCEEDINGS
Except as set forth and described in Schedule 3.1.20 attached
hereto, to the Knowledge of the Guarantor there is no material Legal Proceeding
(whether or not purportedly on behalf of the Corporation or any Subsidiary) in
progress, pending or threatened against the Corporation or any Subsidiary before
or by any Tribunal. Except as set forth and described in Schedule 3.1.20
attached hereto, to the Knowledge of the Guarantor there is no Order outstanding
against or affecting the Corporation or any Subsidiary.
3.1.21 BANKING INFORMATION
To the Knowledge of the Guarantor, Schedule 3.1.21 attached hereto
sets forth the name and location (including municipal address) of each bank,
trust company or other institution in which the Corporation or any Subsidiary
has an account, money on deposit or a safety deposit box and the name of each
person authorized to draw thereon or to have access thereto and the name of each
person holding a power of attorney from the Corporation or any Subsidiary and a
summary of the terms thereof.
3.1.22 TAX MATTERS
(a) Taxes and Tax Returns
The Corporation and each Subsidiary has duly filed in the prescribed
manner and within the prescribed time all material Tax Returns required to be
filed by it and such Tax Returns are correct and complete in all material
respects, except in respect of a particular Tax
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Return to the extent that it may have been modified in a subsequent Tax Return.
The Corporation and each Subsidiary has paid all Taxes shown on such Tax Returns
as being due and payable and all Taxes payable under any assessment or
reassessment.
(b) Liabilities for Taxes
The Financial Statements fully reflect, in accordance with generally
accepted accounting principles in the United States, accrued liabilities (net of
any payments made) for all Taxes which are not yet due and payable and for which
Tax Returns are not yet required to be filed. To the Knowledge of the Guarantor,
as of the date hereof, no examination of any material Tax Return of the
Corporation or any Subsidiary by a Governmental Authority is currently in
progress. To the Knowledge of the Guarantor there is no Legal Proceeding,
assessment or re-assessment outstanding against the Corporation or any
Subsidiary with respect to Taxes.
(c) Waivers
There are no presently effective agreements, waivers or other
arrangements providing for an extension of time with respect to any assessment
or reassessment of Tax, the filing of any Tax Return or the payment of any Tax
under any applicable Tax Legislation by the Corporation or any Subsidiary.
3.1.23 INTELLECTUAL PROPERTY RIGHTS
Neither the Guarantor nor the Vendor directly owns, licenses,
sub-licenses, has an interest in or to the Knowledge of the Guarantor infringes
upon any of the Intellectual Property Rights owned by the Corporation or its
Subsidiaries.
3.2. REPRESENTATIONS AND WARRANTIES IN RESPECT OF THE GUARANTOR AND THE VENDOR
The Guarantor and the Vendor represent and warrant on a joint and
several basis to the Purchaser as set out in this Section 3.2 and acknowledge
that the Purchaser is relying on such representations and warranties in
connection with the transactions contemplated in this Agreement.
3.2.1 INCORPORATION OF THE VENDOR
The Vendor is a wholly owned subsidiary of the Guarantor. The Vendor
is a corporation incorporated and in good standing under the laws of the State
of Delaware and has the corporate power, authority and capacity to execute and
deliver this Agreement, to own the Purchased Shares, to sell the Purchased
Shares to the Purchaser as herein contemplated and to perform its other
obligations hereunder. No proceedings have been taken or authorized by the
Vendor or by any other person with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of the Vendor nor, to the Knowledge of
the Guarantor, have any such proceedings been threatened by any other person.
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3.2.2 INCORPORATION OF THE GUARANTOR
The Guarantor is a corporation incorporated and in good standing
under the laws of the State of Delaware and has the corporate power, authority
and capacity to execute and deliver this Agreement and to perform its other
obligations hereunder. No proceedings have been taken or authorized by the
Guarantor or by any other person with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of the Guarantor nor, to the Knowledge of
the Guarantor, have any such proceedings been threatened by any other person.
3.2.3 AUTHORIZATION BY GUARANTOR AND THE VENDOR
The execution and delivery of this Agreement and the completion of
the transactions herein contemplated have been duly and validly authorized by
all necessary corporate action on behalf of the Guarantor and the Vendor and
this Agreement has been duly and validly executed and delivered by the Guarantor
and the Vendor and is a valid and binding obligation of the Guarantor and the
Vendor enforceable against the Guarantor and the Vendor in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors' rights generally, and as limited by laws relating to
the availability of a specific performance, injunctive relief, or other
equitable remedies. There is no Legal Proceeding in progress, pending, or, to
the Knowledge of the Guarantor, threatened against or affecting the Guarantor or
the Vendor or affecting the title of the Vendor to any of the Purchased Shares
at law or in equity or before or by any Tribunal and there is no Order
outstanding against or affecting the Guarantor or the Vendor which, in any such
case, affects adversely or might affect adversely the ability of the Guarantor
or the Vendor to enter into this Agreement or to perform its obligations
hereunder.
3.2.4 CONFLICTING INSTRUMENTS
Neither the entering into of this Agreement by the Parties nor the
completion of the transactions herein contemplated will: conflict with, or
result in the breach or violation of or default under, or cause the acceleration
of any obligations of the Guarantor or the Vendor under, any of the terms and
provisions of (a) any Applicable Law, (b) the Constating Documents or by-laws of
the Guarantor or the Vendor or any resolution of the directors or shareholders
of the Guarantor or the Vendor; or (c) any agreement, contract or commitment to
which the Guarantor or the Vendor is a party or by which it is bound; except in
the case of clauses (a) through (c) above, for such matters that do not affect
the Guarantor's and the Vendor's ability to consummate the transactions
contemplated herein.
3.2.5 COMPETITION ACT (CANADA)
Other than for its ownership interest in the Corporation and the
revenues from sales in, from or into Canada generated by the Business, neither
the Guarantor nor the Vendor has any other assets in Canada and do not have any
other revenues from sales in, from or into Canada in connection with any other
business, investment or venture.
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3.3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Guarantor and the
Vendor as set out in this Section 3.3 and acknowledges that the Guarantor and
the Vendor are relying on such representations and warranties in connection with
the transactions contemplated in this Agreement.
3.3.1 INCORPORATION, AUTHORITY AND ENFORCEABILITY, VENDOR'S INTELLECTUAL
PROPERTY
Each of the Purchaser and Callisto Capital (GP) L.P. (the "Limited
General Partner") is a limited partnership under the Limited Partnerships Act
(Ontario). Callisto Capital (GP) Inc. (the "Corporate General Partner") is a
corporation incorporated and subsisting under the laws of the Province of
Ontario. The Limited General Partner has all necessary power and authority to
act as the general partner of the Purchaser. The Corporate General Partner for
and on behalf of the Limited General Partner, has the necessary corporate power
and authority to act as the general partner of the Limited General Partner and
for and on behalf of the Limited General Partner, in its capacity as the general
partner of the Purchaser, to enter into this Agreement, to purchase the
Purchased Shares from the Vendor as herein contemplated and to perform the
Purchaser's other obligations hereunder. The execution and delivery of this
Agreement and the completion of the transactions herein contemplated have been
duly and validly authorized by all necessary action of the Corporate General
Partner and this Agreement has been duly and validly executed and delivered by
the Corporate General Partner, in its capacity as the general partner of the
Limited General Partner, in its capacity as General Partner of the Purchaser and
is a valid and binding obligation of the Corporate General Partner, in its
capacity as the general partner of the Limited General Partner, in its capacity
as General Partner of the Purchaser, enforceable against the Corporate General
Partner, in its capacity as the general partner of the Limited General Partner,
in its capacity as General Partner of the Purchaser and against the Purchaser in
accordance with its terms. The Purchaser acknowledges that after the Closing the
Purchaser, the Corporation and the Subsidiaries will not have any right to use
the name "Select Medical Corporation" or any derivative thereof or the Select
Medical logo, nor, except for any name exclusively used by the Corporation and
its Subsidiaries, any other tradename or trademark owned by the Guarantor or it
subsidiaries.
3.3.2 INVESTMENT CANADA ACT
The Purchaser is not a "non-Canadian" within the meaning of the
Investment Canada Act (Canada).
3.4. COMMISSION
Each Party represents and warrants to the other Party that other
than Nucleus GC and Xx. Xxxxx Xxxx, whose fees are the responsibility of the
Purchaser, neither Party has employed any broker, finder, or financial advisor
or incurred any liability for any brokerage fee or commission, finder's fee or
financial advisory fee, in connection with the transactions
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contemplated by this Agreement, nor is there any basis known to the Parties for
any such fee or commission to be claimed by any person or entity.
3.5. DUE DILIGENCE REVIEW
Purchaser acknowledges that: (a) it has completed to its
satisfaction its own due diligence review with respect to the Corporation and
its Subsidiaries and it is entering into the transactions contemplated by this
Agreement based on such investigation and, except for the specific
representations and warranties made by the Guarantor or the Vendor in this
Agreement, it is not relying upon any representations or warranty of the
Guarantor or the Vendor or any affiliate thereof or any officer, director,
employee, agent or advisor, or any of them, nor upon the accuracy of any record,
projection or statement made available or given to Purchaser in the performance
of such investigation, (b) it has had access to its full satisfaction to the
Corporation and its Subsidiaries and their respective books and records, and
employees, agents and representatives, and (c) it has had such opportunity to
seek accounting, legal or other advice or information in connection with its
entry into this Agreement and the other documents referred to herein relating to
the consummation of the transactions contemplated hereby and thereby as it has
seen fit. Purchaser has no knowledge that the representations and warranties of
the Guarantor or the Vendor in this Agreement and the Schedules attached hereto
are not true and correct in all material respects. For purposes of this
Agreement, other than in respect of the first sentence of Section 3.1.17,
Purchaser's knowledge shall include the knowledge of the Senior Employees of the
Corporation. The Purchaser acknowledges that it is not aware of any fact or
facts as of the date hereof that either individually or in the aggregate would
cause it to conclude that the condition set forth in this Section 5.1.3 hereof
will not be satisfied.
3.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR AND THE VENDOR
The representations and warranties of the Guarantor and the Vendor
contained in this Agreement and in any Closing Document delivered or given
pursuant to this Agreement or any Closing Document shall survive the Closing
and, notwithstanding the Closing or any investigation made by or on behalf of
the Purchaser with respect thereto, shall continue in full force and effect for
the benefit of the Purchaser provided, however, that no claim in respect thereof
shall be valid unless it is made within the following time periods:
(a) in the case of a claim based upon or relating to tax fraud, and in
respect of the representations or warranties in the first sentence
of Section 3.1.1, Sections 3.1.4, 3.1.5, 3.1.15, 3.1.18, and Section
3.2, there shall be no time limit within which such a claim may be
made;
(b) in the case of a claim in respect of a representation or warranty in
Section 3.1.22 within a period commencing on the Closing Date and
ending on the date on which the last applicable limitation period
under any applicable Tax Legislation expires with respect to any
taxation year which is relevant in determining any liability under
this Agreement with respect to Tax matters;
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(c) in the case of a claim in respect of representations or warranties
(i) in Sections 3.1.6, 3.1.7, 3.1.9 and 3.1.13, and (ii) all
representations and warranties of the Guarantor or the Vendor
qualified by the "Knowledge of the Guarantor", within a period of
four years from the Closing Date;
(d) in the case of a claim in respect of any other representation or
warranty within a period of fifteen months from the Closing Date;
and any such claim as aforesaid shall be made in accordance with the provisions
set forth in Article 6 and, upon the expiry of the relevant limitation period
referred to in clauses (b) and (c) of this Section 3.6, neither the Guarantor
nor the Vendor shall have any further liability to the Purchaser with respect to
the representations or warranties referred to in such clauses, respectively,
except in respect of claims which have theretofore been timely made in good
faith in accordance with the provisions set forth above.
3.7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The representations and warranties of the Purchaser contained in
this Agreement and in any Closing Document and in any agreement, certificate,
affidavit, statutory declaration or other document delivered or given pursuant
to this Agreement or any Closing Document shall survive the Closing and,
notwithstanding the Closing or any investigation made by or on behalf of the
Guarantor or the Vendor with respect thereto, shall continue in full force and
effect for the benefit of the Guarantor and the Vendor provided, however, that
no claim in respect thereof shall be valid unless it is made within the
following time periods:
(a) in the case of a claim in respect of the representations and
warranties set forth in Section 3.3.1, there shall be no time limit
within which such a claim may be made; and
(b) in the case of a claim in respect of any other representation and
warranty, within a period of fifteen months from the Closing Date;
and any such claim shall be made in accordance with the provisions set forth in
Article 6 and, upon the expiry of the relevant limitation period, the Purchaser
shall have no further liability to the Guarantor or the Vendor with respect to
any of such representations or warranties, except in respect of claims which
have theretofore been timely made in good faith in accordance with the
provisions set forth above.
ARTICLE 4
OTHER COVENANTS OF THE PARTIES
4.1. COVENANTS OF THE GUARANTOR AND THE VENDOR
The Guarantor and the Vendor hereby jointly and severally covenant
and agree with the Purchaser as set out in this Section 4.1.
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4.1.1 CONDUCT OF BUSINESS
During the Interim Period, the Guarantor and the Vendor (a) shall
and shall cause its officers and employees to assist the Corporation in
transitioning its computer systems from the Guarantor's systems; and (b) shall
not enter into agreements on behalf of, or make commitments on behalf of, the
Corporation or its Subsidiaries without the prior knowledge of the Senior
Employees of the Corporation.
4.1.2 NO SOLICITATION OF ALTERNATE TRANSACTION
From the date of this Agreement until the earlier of: (i) the
Closing Date; and (ii) the termination of this Agreement pursuant to Section 5.4
hereof, neither the Guarantor nor the Vendor will, and will use their
commercially reasonable efforts to cause the Corporation and each Subsidiary,
and their respective directors, officers, partners and employees, independent
contractors, consultants, counsel, accountants, investment advisors and other
representatives and agents not to, directly or indirectly, solicit, initiate or
encourage discussions or negotiations with, provide any non-public information
to, or enter into any agreement with, any third party concerning (or concerning
the business of the Corporation or any Subsidiary in connection with) any
merger, consolidation, sale of substantial assets or of a significant amount of
assets, sale of securities, acquisition of beneficial ownership of or the right
to vote securities of the Corporation or any Subsidiary or liquidation,
dissolution or similar transactions involving the Corporation or any Subsidiary
or any division thereof. In the event the Corporation, any Subsidiary, the
Guarantor, the Vendor or any agent or representative of such parties, shall
receive, prior to the Closing Date or termination of this Agreement, an offer
for such a transaction, the Guarantor and the Vendor shall promptly notify the
Purchaser thereof and provide the Purchaser with the identity of the third party
and the specific terms of any proposal.
4.2. COVENANTS OF THE PURCHASER
The Purchaser hereby covenants and agrees with the Guarantor and the
Vendor as set out in this Section 4.2:
4.2.1 CONFIDENTIALITY
(a) During the Interim Period, the Purchaser shall keep confidential any
trade secrets, know-how or confidential, personal or proprietary
information and any financial or business documents or information
(collectively in this Section 4.2.1(a) the "Information") received
by it from the Guarantor or the Vendor, whether in oral, written or
electronic form, the Corporation or any Subsidiary concerning the
Corporation, any Subsidiary or the Business and shall not disclose
any Information to any third party, provided that any Information
may be disclosed to the Purchaser's Advisors who need to know such
Information in connection with the transactions herein contemplated,
and such Purchaser's Advisors are informed of the confidential and
proprietary nature of the Information and agree to keep the
Information confidential. The Purchaser shall use all reasonable
efforts to ensure
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that the Purchaser's Advisors keep confidential any Information
disclosed to them. Notwithstanding the foregoing, the Purchaser will
not be liable for disclosure of any Information upon the completion
of the Closing of the transactions herein contemplated or if:
(i) the Information becomes generally known in the industry to
which the Business is related other than through a breach of
this Agreement by the Purchaser;
(ii) the Information is lawfully obtained from a third party on a
non-confidential basis without breach of this Agreement by the
Purchaser, provided that such third party was not known by the
Purchaser to be prohibited from disclosing such Information to
the Purchaser by a legal, contractual or fiduciary obligation
owed to the Guarantor or the Vendor, the Corporation or a
Subsidiary;
(iii) the Purchaser can establish through written records that the
Information was known to the Purchaser prior to its disclosure
by the Guarantor or the Vendor, the Corporation or any
Subsidiary;
(iv) the Information is required to be disclosed pursuant to the
requirements of Applicable Law (and the Purchaser shall have
received advice to such effect from reputable and experienced
outside counsel); or
(v) the Guarantor or the Vendor provides its prior written
approval of such disclosure by the Purchaser.
(b) If this Agreement is terminated in accordance with the provisions
hereof or if the transaction is not completed for any other reason,
the Purchaser shall:
(i) use all reasonable efforts to ensure that all Information and
all copies thereof are either destroyed or returned to the
Guarantor or the Vendor if it so requests so that, so far as
possible, any Information obtained during and as a result of
any investigation by the Purchaser's Advisors is not
disseminated beyond those persons concerned with such
investigations; and
(ii) not, directly or indirectly, use for its own purposes, any
Information discovered or acquired by the Purchaser's Advisors
as a result of the Guarantor, the Vendor, the Corporation or
any Subsidiary making available to them documents and
materials relating to the Corporation.
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4.2.2 TAX MATTERS
(a) Following the Closing, the Guarantor and the Vendor shall, at their
sole cost and expense, cause to be prepared and filed, with a copy
to be delivered to the Purchaser, any Tax Returns required to be
filed by the Corporation and each Subsidiary in respect of the
period up to and including December 31, 2005. The Purchaser will
coordinate and cooperate with the Guarantor and the Vendor in
exchanging such information and supplying such assistance as may be
reasonably requested in connection with the foregoing including,
without limitation, providing all notices and information supplied
or filed with any Governmental Authority (except for notices and
information which the Purchaser considers, acting reasonably, highly
confidential and sensitive which may be filed on a confidential
basis), and all notices and correspondences received from any
Governmental Authority.
(b) Following the Closing, the Purchaser shall cause to be prepared and
filed, with a copy to be delivered to the Vendor at least 14 days
prior to filing for the Vendor's review and comment, any Tax Returns
required to be filed by the Corporation and each Subsidiary in
respect of the deemed fiscal year end caused by the sale by the
Vendor of the Purchased Shares to the Purchaser. The costs and
expenses associated with the preparation and filing of such Tax
Returns will be shared equally by the Purchaser and the Guarantor.
The Guarantor and the Vendor will coordinate and cooperate with the
Purchaser in exchanging such information and supplying such
assistance as may be reasonably requested in connection with the
foregoing, including, without limitation, providing all notices and
information supplied or filed with any Governmental Authority
(except for notices and information which the Vendor considers,
acting reasonably, highly confidential and sensitive which may be
filed on a confidential basis), and all notices and correspondence
received from any Governmental Authority.
(c) The Purchaser shall cause the Corporation and each Subsidiary from
and after the Closing Date to retain all Books and Records relating
to any period ending on or prior to the Closing Date for a period of
seven years following the Closing Date. So long as such Books and
Records and other documents, information and files are retained by
the Corporation and each Subsidiary pursuant to the provisions
hereof, the Guarantor and the Vendor shall have the right, for the
purpose of filing any Tax Returns as required under this Agreement
and for the purpose of contesting any assessment or reassessment for
Tax in accordance with the provisions of Article 6 to inspect and
make copies of the same at the expense of the Guarantor and the
Vendor during normal business hours and upon reasonable notice.
(d) After Closing, the Purchaser agrees to cause the Corporation to
cooperate in a reasonable manner with the Guarantor and the Vendor
and their agents,
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representatives and auditors for the purposes of the preparation of
the Guarantor's and the Vendor's accounts and tax returns and in
providing all information required for legal, filing and regulatory
purposes. Without limiting the generality of the foregoing, the
Purchaser shall, upon reasonable notice, cause the Corporation to
provide the Guarantor and the Vendor, their agents, representatives
and auditors reasonable access during normal business hours to all
Books and Records necessary for the preparation of such accounts and
tax returns and for gathering the required information for legal,
filing and regulatory purposes together with the assistance of those
Employees of the Corporation that the Guarantor and the Vendor may
reasonably request; provided that the Guarantor and the Vendor shall
pay proper and reasonable compensation to the Corporation for the
assistance of such Employees.
4.2.3 BROKERAGE FEES
The Purchaser hereby covenants and agrees to pay any and all fees of
Xx. Xxxxx Xxxx and Nucleus GC incurred in connection with the transactions
contemplated by this Agreement, and none of the Guarantor, the Vendor nor the
Corporation or its Subsidiaries shall be responsible for any such fees.
4.3. COOPERATION
Each Party hereby covenants and agrees with the other Party that the
Parties shall cooperate fully in good faith with each other and their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, including with respect to the
information technology matters set forth on Schedule 4.3 hereto.
ARTICLE 5
CONDITIONS OF CLOSING
5.1. CONDITIONS FOR THE BENEFIT OF THE PURCHASER
The transactions herein contemplated, including the sale and
purchase of the Purchased Shares in accordance with the terms of this Agreement,
are subject to the conditions precedent set out in this Section 5.1, each of
which is hereby declared to be for the exclusive benefit of the Purchaser. Each
of such conditions is to be satisfied in full at or prior to the Closing Time
unless waived by the Purchaser. Subject to the terms and conditions of this
Agreement, the Guarantor and the Vendor covenant and agree to use their
commercially reasonable efforts to cause each of such conditions within its
control to be fulfilled at or prior to the Closing Time.
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5.1.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GUARANTOR AND THE VENDOR
(a) All representations and warranties of the Guarantor and the Vendor
made in or pursuant to this Agreement shall have been true and
correct in all material respects on the date hereof and shall be
true and correct in all material respects at the Closing Time with
the same force and effect as if such representations and warranties
had been made at and as of the Closing Time; provided that all
representations and warranties of the Guarantor and the Vendor made
in or pursuant to this Agreement that contain an express materiality
qualification shall have been true and correct in all respects on
the date hereof and shall be true and correct in all respects at the
Closing Time as if such representations and warranties had been made
at and as of the Closing Time.
(b) The Guarantor and the Vendor shall have performed or complied with,
in all material respects, all obligations, covenants and agreements
contained in this Agreement to be performed by them at or prior to
the Closing Time.
(c) As evidence of the satisfaction of the conditions in Sections
5.1.1(a) and (b), the Guarantor and the Vendor shall deliver to the
Purchaser at the Closing Time a certificate of the Guarantor and the
Vendor, confirming the matters in Sections 5.1.1(a) and (b).
Notwithstanding the foregoing, unless otherwise explicitly stated in
the certificate, the receipt of such certificate and the completion
of the transactions herein contemplated shall not constitute a
waiver (in whole or in part) of, or have the effect of modifying or
qualifying in any way, any of the representations and warranties of
the Guarantor and the Vendor made in or pursuant to this Agreement,
each of which shall survive the Closing and remain in full force and
effect for the benefit of the Purchaser as provided in Section 3.6.
5.1.2 LEGAL OPINION
A legal opinion of counsel, or counsels, as the case may be, to the
Guarantor and the Vendor dated the Closing Date and being substantially in the
form of Exhibit A attached hereto shall have been received by the Purchaser at
the Closing Time. In rendering such opinion, counsel may rely as to the laws of
jurisdictions other than the Province of Ontario upon the opinions of counsel
qualified to practice in such jurisdictions satisfactory to the Purchaser.
5.1.3 DUE DILIGENCE
The Purchaser shall be satisfied, in its reasonable judgment, with
the results of its financial, business, legal, environmental, employment, labour
and other due diligence investigations.
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5.1.4 RELEASES
The Guarantor and the Vendor shall deliver an executed general
release from each director of the Corporation and each Subsidiary who is an
employee of the Guarantor or the Vendor with respect to all claims against the
Corporation and each Subsidiary up to the Closing Time, substantially in the
form of Exhibit C attached hereto.
5.1.5 NON-COMPETITION AGREEMENT
Non-Competition Agreements satisfactory in form and substance to the
Purchaser shall have been entered into by the Guarantor and the Vendor with the
Corporation substantially in the form of Exhibit D attached hereto.
5.1.6 DISCHARGE OF RELATED PARTY OBLIGATIONS
At or prior to the Closing Date, the Guarantor or the Vendor will
capitalize, cause to be capitalized or cause to be repaid all indebtedness owed
by the Corporation or any Subsidiary to the Guarantor or the Vendor or owing by
the Guarantor, the Vendor or any of their subsidiaries (other than the
Corporation and its Subsidiaries) to the Corporation or any Subsidiary, and
deliver to the Purchaser evidence of same reasonably satisfactory to the
Purchaser.
5.2. CONDITIONS FOR THE BENEFIT OF THE GUARANTOR AND THE VENDOR
The transactions herein contemplated, including the sale and
purchase of the Purchased Shares in accordance with the terms of this Agreement,
are subject to the conditions precedent set out in this Section 5.2, each of
which is hereby declared to be for the exclusive benefit of the Guarantor and
the Vendor. Each of such conditions is to be satisfied in full at or prior to
the Closing Time unless waived by the Guarantor and the Vendor. Subject to the
terms and conditions of this Agreement, the Purchaser covenants and agrees to
use its commercially reasonable efforts to cause each of such conditions within
its control to be fulfilled at or prior to the Closing Time.
5.2.1 TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
(a) The representations and warranties of the Purchaser made in or
pursuant to this Agreement shall have been true and correct in all
material respects on the date hereof and shall be true and correct
in all material respects at the Closing Time with the same force and
effect as if such representations and warranties had been made at
and as of the Closing Time.
(b) The Purchaser shall have performed or complied with, in all material
respects, all obligations, covenants and agreements contained in
this Agreement to be performed by it at or prior to the Closing
Time.
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(c) As evidence of the satisfaction of the conditions in Sections
5.2.1(a) and (b), the Purchaser shall deliver to the Guarantor and
the Vendor at the Closing Time a certificate of the Purchaser
confirming the matters in Section 5.2.1(a) and (b). Notwithstanding
the foregoing, unless otherwise explicitly stated in the
certificate, the receipt of such certificate and the completion of
the transactions herein contemplated shall not constitute a waiver
(in whole or in part) of, or be interpreted to modify or qualify in
any way, any of the representations and warranties of the Purchaser
made in or pursuant to this Agreement, each of which shall survive
the Closing and remain in full force and effect for the benefit of
the Guarantor and the Vendor as provided in Section 3.7.
5.2.2 LEGAL OPINION
A legal opinion of counsel to the Purchaser dated the Closing Date
and being substantially in the form of Exhibit B attached hereto shall have been
received by the Guarantor and the Vendor at the Closing Time. In rendering such
opinion, counsel may rely as to the laws of jurisdictions other than the
Province of Ontario upon the opinions of counsel qualified to practice in such
jurisdictions satisfactory to the Guarantor and the Vendor.
5.3. WAIVER
Any Party may waive, in whole or in part, by notice to the other
Parties, any closing delivery set forth in this Article 5 which is for its
benefit. No waiver by a Party of any closing delivery, in whole or in part,
shall operate as a waiver of any other closing delivery.
5.4. TERMINATION
This Agreement may be terminated at any time prior to the Closing
Date as follows, and in no other manner:
(a) by mutual consent of the Guarantor, the Vendor and the Purchaser;
(b) by the Purchaser if any of the conditions set forth in Section 5.1
shall have become incapable of fulfillment, and shall not have been
waived by the Purchaser; or
(c) by the Guarantor or the Vendor if any of the conditions set forth in
Section 5.2 shall have become incapable of fulfillment, and shall
not have been waived by the Guarantor or the Vendor;
(d) by the Guarantor, the Vendor or the Purchaser if by the date six
weeks from the date hereof the Purchaser shall have failed to
deliver to the Guarantor and the Vendor fully executed financing
commitments for $30 million in debt financing. Such financing
commitment letters must be in form and substance reasonably
satisfactory to the Guarantor, the Vendor and the Purchaser, and
must be
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delivered together with a written statement of the Purchaser that
(i) such commitment letters are in full force and effect, (ii) any
and all commitment fees required to be paid thereunder have been
paid, (iii) the Purchaser has no reason to believe that any
conditions set forth in such commitment letters will not be
satisfied, and (iv) the Purchaser is not aware of any fact or facts
as of the date thereof that either individually or in the aggregate
would cause it to conclude that the condition set forth in this
Section 5.1.3 hereof will not be satisfied; or
(e) by either the Purchaser, the Guarantor or the Vendor if the Closing
has not occurred by the Closing Time.
5.5. LIABILITY OF PURCHASER, GUARANTOR AND VENDOR
Upon termination of this Agreement pursuant to Section 5.4 hereof,
there shall be no liability or obligation on the part of any party hereto,
except that no such termination shall relieve any party hereto of any liability
or damages resulting from any willful breach of this Agreement.
ARTICLE 6
INDEMNIFICATION
6.1. INDEMNIFICATION BY THE GUARANTOR AND THE VENDOR
The Guarantor and the Vendor shall, jointly and severally,
indemnify, defend and save harmless the Purchaser and each of its
Representatives from and against any and all Loss suffered or incurred by them,
as a direct or indirect result of, or arising in connection with or related in
any manner whatever to:
(a) subject to Section 3.6 and the limitations set forth in Section
6.12(a), any misrepresentation or breach of warranty made or given
by the Guarantor or the Vendor in this Agreement or in any
certificate delivered pursuant to this Agreement;
(b) any failure by the Guarantor or the Vendor to observe or perform any
covenant or obligation contained in this Agreement or in any
certificate delivered pursuant to this Agreement;
and, without limiting the generality of the provisions of Sections 6.1(a) and
(b), the indemnity provided for in this Section 6.1 shall also extend to:
(c) any Taxes required to be paid by the Corporation or any Subsidiary
relating to any period ending on or before the Closing Date, in
excess of the Taxes accrued as a liability on the Closing Balance
Sheet, so long as the liability for such Taxes is not the result of
any amendment to or refiling of Tax Returns by the Corporation after
the Closing Date.
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Notwithstanding the Closing and the delivery of the certificate pursuant to
Section 5.1.1(c) for the purposes of the Purchaser's right to be indemnified as
provided in this Section 6.1 (but subject to the limitations in Section 6.12),
unless otherwise explicitly stated in the certificate, the said certificate
shall be deemed to repeat the representations and warranties of the Guarantor
and the Vendor, made in this Agreement on and as of the Closing Date as if then
made without qualification as to materiality, except for the representations and
warranties expressly so qualified in this Agreement.
6.2. INDEMNIFICATION BY THE PURCHASER
The Purchaser shall indemnify, defend and save harmless the
Guarantor and the Vendor and their Representatives from and against any and all
Loss suffered or incurred by them, as a direct or indirect result of, or arising
in connection with or related in any manner whatsoever to:
(a) subject to Section 3.7 and the limitations set forth in Section
6.12(b), any misrepresentation or breach of any warranty made or
given by the Purchaser in this Agreement or in any certificate
delivered pursuant to this Agreement; or
(b) any failure by the Purchaser to observe or perform any covenant or
obligation contained in this Agreement or in any certificate
delivered pursuant to this Agreement.
Notwithstanding the Closing and the delivery of the certificate pursuant to
Section 5.2.1(c) for the purposes of the Guarantor's and the Vendor's right to
be indemnified as provided in this Section 6.2 (but subject to the limitations
in Section 6.12), unless otherwise explicitly stated in the certificate, the
said certificate shall be deemed to repeat the representations and warranties of
the Purchaser, made in this Agreement on and as of the Closing Date as if then
made without qualification as to materiality, except for the representations and
warranties expressly so qualified in this Agreement.
6.3. AGENCY FOR REPRESENTATIVES
Each Party agrees that it accepts each indemnity in favour of any of
its Representatives as agent and trustee of that Representative. Each Party
agrees that the other Party may enforce an indemnity in favour of any of that
Party's Representatives on behalf of that Representative.
6.4. NOTICE OF THIRD PARTY CLAIMS
If an Indemnitee receives notice of the commencement or assertion of
any Third Party Claim, the Indemnitee shall give the Indemnitor reasonably
prompt notice thereof, but in any event no later than thirty (30) days after
receipt of such notice of such Third Party Claim. Such notice to the Indemnitor
shall describe the Third Party Claim in reasonable detail and shall
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indicate, if reasonably practicable, the estimated amount of the Loss that has
been or may be sustained by the Indemnitee.
6.5. DEFENCE OF THIRD PARTY CLAIMS
The Indemnitor may participate in or assume the defence of any Third
Party Claim by giving notice to that effect to the Indemnitee not later than
thirty (30 days) after receiving notice of that Third Party Claim (the "Notice
Period"). The Indemnitor shall pay all of its own expenses of participating in
or assuming such defence. The Indemnitee shall co-operate in good faith in the
defence of each Third Party Claim, even if the defence has been assumed by the
Indemnitor, and may participate in such defence assisted by counsel of its own
choice at its own expense, and in such case the Indemnitor shall not be liable
to the Indemnitee for any legal fees, costs and expenses incurred by the
Indemnitee in connection with such defence. If the Indemnitee has not received
notice within the Notice Period that the Indemnitor has elected to assume the
defence of such Third Party Claim, the Indemnitee may, but only with the prior
written consent of the Indemnitor (not to be unreasonably withheld), elect to
settle or compromise the Third Party Claim, or the Indemnitee may assume such
defence, assisted by counsel of its own choosing and the Indemnitor shall be
liable for all reasonable costs and expenses paid or incurred in connection
therewith and any Loss suffered or incurred by the Indemnitee with respect to
such Third Party Claim that is covered by the indemnification provisions of this
Agreement. If the Indemnitor elects to assume the defence of a Third Party
Claims under this Section 6.5, the Indemnitor shall not have the right
thereafter to contest its liability for such claim.
6.6. ASSISTANCE FOR THIRD PARTY CLAIMS
The Indemnitor and the Indemnitee will use all reasonable efforts to
make available to the Party which is undertaking and controlling the defence of
any Third Party Claim (the "Defending Party"):
(a) those employees and other persons whose assistance, testimony or
presence is necessary to assist the Defending Party in evaluating
and in defending any Third Party Claim; and
(b) all documents, records and other materials in the possession of such
Party reasonably required by the Defending Party for its use in
defending any Third Party Claim;
and shall otherwise cooperate with the Defending Party. The Indemnitor shall be
responsible for all reasonable expenses associated with making such documents,
records and materials available and for all reasonable expenses of any employees
or other persons made available by the Indemnitee to the Indemnitor hereunder,
which expense shall not exceed the actual cost to the Indemnitee associated with
such employees and other persons.
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6.7. SETTLEMENT OF THIRD PARTY CLAIMS
If an Indemnitor elects to assume the defence of any Third Party
Claim as provided in Section 6.5, the Indemnitor shall not be liable for any
legal expenses incurred by the Indemnitee in connection with the defence of such
Third Party Claim following the receipt by the Indemnitee of notice of such
assumption. However, if the Indemnitor fails to take reasonable steps necessary
to defend diligently such Third Party Claim within thirty (30) days after
receiving notice from the Indemnitee that the Indemnitee believes on reasonable
grounds that the Indemnitor has failed to take such steps, the Indemnitee may,
at its option, elect to assume the defence of and with the prior written consent
of the Indemnitor (not to be unreasonably withheld) to negotiate, settle or
compromise the Third Party Claim assisted by counsel of its own choosing and the
Indemnitor shall also be liable for all reasonable costs and expenses paid or
incurred in connection therewith. The Indemnitor shall not, without the prior
written consent of the Indemnitee, enter into any compromise or settlement of a
Third Party Claim, which would lead to liability or create any other obligation,
financial or otherwise, on the Indemnitee.
6.8. DIRECT CLAIMS
Any Direct Claim shall be asserted by giving the Indemnitor
reasonably prompt written notice thereof, but in any event not later than thirty
(30) days after the Indemnitee becomes aware of such Direct Claim. The
Indemnitor shall then have a period of thirty (30) days within which to respond
in writing to such Direct Claim. If the Indemnitor does not so respond within
such thirty (30) day period, the Indemnitor shall be deemed to have rejected
such Claim, and in such event the Indemnitee shall be free to pursue such
remedies as may be available to the Indemnitee.
6.9. FAILURE TO GIVE TIMELY NOTICE
A failure to give timely notice as provided in this Article 6 shall
not affect the rights or obligations of any Party except and only to the extent
that, as a result of such failure, any Party which was entitled to receive such
notice was deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise directly and materially damaged as a result
of such failure.
6.10. REDUCTIONS
Notwithstanding anything contained herein to the contrary, the
amount of any damages incurred or suffered by an Indemnitee shall by calculated
after giving effect to any proceeds (including insurance proceeds), benefits or
recoveries obtained by the Indemnitee from any other third party. Each
Indemnitee shall exercise commercially reasonable efforts to obtain such
proceeds, benefits and recoveries. If the amount of any Loss at any time
subsequent to the making of an Indemnity Payment in respect of that Loss is
reduced by any recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement or payment by
or against any other person, the amount of such reduction (less any costs,
expenses (including Taxes) or premiums incurred in connection therewith), shall
promptly
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be repaid by the Indemnitee to the Indemnitor. Upon making a full Indemnity
Payment, the Indemnitor shall, to the extent of such Indemnity Payment, be
subrogated to all rights of the Indemnitee against any third party that is not
an Affiliate of the Indemnitee in respect of the Loss to which the Indemnity
Payment relates. Until the Indemnitee recovers full payment of its Loss, and any
and all claims of the Indemnitor against any such third party on account of such
Indemnity Payment shall be postponed and subordinated in right of payment to the
Indemnitee's rights against such third party. Without limiting the generality or
effect of any other provision hereof, the Indemnitee and Indemnitor shall duly
execute upon request all instruments reasonably necessary to evidence and
perfect such postponement and subordination. The amount of any Loss claimed by
any Indemnitee hereunder shall be reduced to the extent of any Tax savings or
benefits realized by any Indemnitee that is attributable to any deduction, loss,
credit or other tax benefit resulting from or arising out of such Loss.
Notwithstanding anything to the contrary contained in this Agreement, Vendor
shall have no liability under this Agreement with respect to any matter to the
extent the expense, loss or liability comprising the Loss (or a part thereof)
with respect to such matter has been taken into account in the determination of
Closing Working Capital.
6.11. PAYMENT AND INTEREST
All Losses shall bear interest at a rate per annum equal to the
Prime Rate, calculated and payable monthly, both before and after judgment, with
interest on overdue interest at the same rate, from the date that the Indemnitee
disbursed funds, suffered damages or losses or incurred a loss, liability or
expense in respect of a Loss, to the date of payment by the Indemnitor to the
Indemnitee.
6.12. LIMITATION
(a) No claims may be asserted by the Purchaser or the Purchaser's
Representatives under Section 6.1(a) unless and until the aggregate
of the Losses of the Purchaser and its Representatives collectively,
in respect of such Claims exceeds $750,000 in the aggregate, in
which event only the amount of any and all such Loss exceeding such
amount may be asserted. In addition, the maximum aggregate liability
of the Guarantor and the Vendor for all claims made under Section
6.1(a) and Section 6.1(c) shall not exceed the following:
(i) in respect of all claims based on any of those matters
described in Sections 3.6(a), 3.6(b), 3.6(c)(i) or Section
6.1(c), the Purchase Price;
(ii) notwithstanding anything to the contrary in Section 6.12(a)(i)
above, in respect of all claims based on any of those matters
described in Section 3.6(c)(ii), the Purchase Price in the
event that the claim is made on or before the first
anniversary following the Closing, seventy-five percent (75%)
of the Purchase Price in the event that the claim is made
after the first anniversary following the Closing and on or
before the second anniversary following the Closing, fifty
percent (50%) of the Purchase
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Price in the event that the claim is made after the second
anniversary following the Closing and on or before the third
anniversary following the Closing, and twenty-five percent
(25%) of the Purchase Price in the event that the claim is
made after the third anniversary following the Closing and on
or before the fourth anniversary of the Closing Date; and
(iii) in respect of all claims based on any of those matters
described in Section 3.6(d), or any claims not otherwise
described above, fifty percent (50%) of the Purchase Price.
Further, the maximum aggregate liability of the Guarantor and the
Vendor for all claims described in paragraphs (i) through (iii)
above, shall not exceed the Purchase Price.
In calculating the amount of any Loss, the amount of such Loss
claimed by the Purchaser or Purchaser's Representative under Section
6.1(a) for a breach of representation or warranty set forth in this
Agreement or Section 6.1(c) in respect of the indemnity relating to
Taxes (excluding for this purpose any Taxes imposed by the United
States on the Corporation or its Subsidiaries or withholding or
similar Taxes imposed by Canada on payments made by the Corporation
or its Subsidiaries to the Guarantor or the Vendor), shall be
reduced to the extent that any of the facts giving rise to such
breach or indemnification obligation were known by the Purchaser or
any of its officers, directors, accountants, consultants or legal
counsel prior to the Closing Date or were known by the Senior
Employees of the Corporation, and solely for purposes of this
subsection, the Purchaser shall at the Closing deliver to the
Guarantor and the Vendor a certificate, dated as of the Closing
Date, to the effect that neither Purchaser nor any of its officers,
directors, accountants, consultants or legal counsel is aware of any
fact which, if known, would result in a reduction of the amount of
Loss claimed by the Purchaser or the Purchaser's Representative
pursuant to this sentence. For purposes of this paragraph, neither
the Purchaser nor any of its officers, directors, accountants,
consultants or legal counsel nor any of the Senior Employees of the
Corporation shall be deemed to have knowledge of any fact solely due
to the preparation and filing of any Tax Return pursuant to Section
4.2.2(a) hereof.
(b) No Claim may be asserted by the Guarantor, the Vendor or their
Representatives under Section 6.2(a) unless and until the aggregate
of the Losses of the Guarantor and the Vendor and their
Representatives collectively, in respect of such Claims exceeds
$750,000 in the aggregate, in which event only the amount of all
such Loss exceeding such amount may be asserted. In addition, the
maximum aggregate liability of the Purchaser for all claims made
under Section 6.2(a) shall not exceed the following: (i) in respect
of all claims based on any of those matters described in Section
3.7(a), the Purchase Price; and (ii) in respect of all
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claims based on any of those matters described in Section 3.7(b), or
any claims not otherwise described above, fifty percent (50%) of the
Purchase Price.
Further, the maximum aggregate liability of the Purchaser for all
claims described in paragraphs (i) and (ii) above, shall not exceed
the Purchase Price.
6.13. ADDITIONAL RULES AND PROCEDURES
(a) If any Third Party Claim is of a nature such that the Indemnitee is
required by Applicable Law to make a payment to any person (a "Third
Party") with respect to such Third Party Claim before the completion
of settlement negotiations or related legal proceedings, the
Indemnitee may make such payment and the Indemnitor shall, forthwith
after demand by the Indemnitee, reimburse the Indemnitee for any
such payment. If the amount of any liability under the Third Party
Claim in respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the Indemnitor
to the Indemnitee , the Indemnitee shall, forthwith after receipt of
the difference from the Third Party, pay such difference to the
Indemnitor;
(b) The Indemnitee and the Indemnitor shall co-operate fully with each
other with respect to Third Party Claims, shall keep each other
fully advised with respect thereto (including supplying copies of
all relevant documentation promptly as it becomes available) and
shall each designate a senior officer who will keep himself informed
about and be prepared to discuss the Third Party Claim with his
counterpart and with counsel at all reasonable times.
6.14. EXCLUSIVE REMEDY
Notwithstanding anything else contained in this Agreement to the
contrary, after the Closing, indemnification pursuant to the provisions of this
Article 6 shall be the sole and exclusive remedy with respect to any and all
claims by Purchaser relating to this Agreement, the Corporation and its
Subsidiaries, the events giving rise to or subject matter of this Agreement and
the transactions contemplated hereby. Without limiting the generality or effect
of the foregoing, as a material inducement to the Guarantor and the Vendor
entering into this Agreement, Purchaser hereby waives, from and after the
Closing, any claim or cause of action, known and unknown, foreseen and
unforeseen, which it or any of its affiliates may have against the other parties
hereto or their directors, officers or stockholders, including without
limitation under the common law or federal or state securities laws, trade
regulation laws or other laws, by reason of this Agreement, the events giving
rise to or subject matter of this Agreement and the transactions contemplated
hereby, except for claims or causes of action brought under and subject to the
terms and conditions of the provisions contained in this Article 6.
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ARTICLE 7
MISCELLANEOUS
7.1. FURTHER ASSURANCES
Each Party shall from time to time execute and deliver or cause to
be executed and delivered all such further documents and instruments and do or
cause to be done all further acts and things as the other Party may, before or
after the Closing Time, reasonably require as being necessary or desirable in
order to effectively carry out or better evidence or perfect the full intent and
meaning of this Agreement or any provision hereof.
7.2. PUBLIC ANNOUNCEMENTS
Except to the extent required by Applicable Law or on Form 8-K under
the Securities Exchange Act of 1934, as amended, each Party agrees that no
public disclosure, public announcement or other disclosure to a third party
(other than on a need to know basis in order to complete the transactions
contemplated herein) regarding this Agreement, the transactions contemplated
hereby or the identity of the Parties, shall be made by either Party without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld. It is understood that the Agreement will be disclosed as
part of the Form 8-K filing of the Guarantor described above, but that unless
required by Applicable Law or by request of the Securities and Exchange
Commission, the Schedules and Exhibits forming part of this Agreement will not
be publicly disclosed.
7.3. NOTICES
(a) Any notice, direction or other communication (in this Section, a
"notice") required or permitted to be given to a Party shall be in
writing and shall be sufficiently given if delivered personally,
mailed or transmitted by facsimile as follows:
(i) in the case of the Guarantor and the Vendor, at:
Select Medical Corporation
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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(ii) in the case of the Purchaser, at
Callisto Capital (GP) Inc.
Canada Trust Tower
BCE Place
000 Xxx Xxxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, XX X0X 0X0
Fax No.: 000-000-0000
Attention: Mr. Xxxxx Xxxxxx
(b) Any notice delivered personally, shall be deemed to have been given
and received on the day on which it was delivered, if delivered
prior to 5:00 p.m. (recipient's time) on a Business Day; otherwise
on the first Business Day thereafter. Any notice mailed shall be
deemed to have been given and received on the third Business Day
after it was mailed, provided that if the Party giving the notice
knows or ought reasonably to know of disruptions in the postal
system that might affect the delivery of mail, such notice shall not
be mailed but shall be given by personal delivery or facsimile
transmission. Any notice transmitted by facsimile shall be deemed to
have been given and received on the day of its transmission if the
machine from which it was sent receives the answerback code of the
Party to whom it was sent prior to 5:00 p.m. (recipient's time) on
such day provided that such day is a Business Day; otherwise on the
first Business Day thereafter.
(c) Either Party may change its address for service from time to time by
notice given to each of the other Party in accordance with the
foregoing provisions.
7.4. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
7.5. COSTS AND EXPENSES
Except as set forth herein, each Party shall be responsible for all
costs and expenses (including the fees and disbursements of legal counsel,
bankers, investment bankers, accountants, brokers and other advisors) incurred
by it in connection with this Agreement and the transactions contemplated
herein.
7.6. EFFECT OF CLOSING
All provisions of this Agreement shall remain in full force and
effect notwithstanding the Closing, subject only to the limitation periods
specified in Sections 3.6 and 3.7 and the related indemnities in Article 6.
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7.7. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
be deemed to be an original and both of which together shall constitute one and
the same instrument. To evidence its execution of an original counterpart of
this Agreement, a Party may send a copy of its original signature on the
execution page hereof to the other Party by facsimile transmission and such
transmission shall constitute delivery of an executed copy of this Agreement to
the receiving Party.
7.8. ASSIGNMENT
This Agreement may not be assigned by either Party without the prior
written consent of the other Party provided that this Agreement may be assigned
by the Purchaser prior to the Closing Date without the consent of the Guarantor
and the Vendor to an Affiliate of the Purchaser (which Affiliate is reasonably
acceptable to the Vendor), provided further that such Affiliate enters into a
written agreement with the Guarantor and the Vendor to be bound by the
obligations, covenants and agreements contained in this Agreement in all
respects and to the same extent as the Purchaser and provided that the Purchaser
shall continue to be bound by all such obligations, covenants and agreements to
the extent that such Affiliate fails to perform the same.
7.9. PARTIES IN INTEREST
This Agreement shall enure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
7.10. THIRD PARTIES
Except as specifically set forth or referred to herein, nothing
herein is intended or shall be construed to confer upon or give to any person,
other than the Parties and their respective successors and permitted assigns,
any rights or remedies under or by reason of this Agreement.
7.11. ENGLISH LANGUAGE
The parties confirm that it is their wish that this Agreement and
any other documents delivered or given pursuant to this Agreement, including
notices, have been and shall be in the English language only.
[Signature Page Follows]
- 44 -
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto.
SELECT MEDICAL CORPORATION
Per: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Per: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
SLMC FINANCE CORPORATION
Per: /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President and Treasurer
Per: /s/ Xxxxx Xxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
CALLISTO CAPITAL L.P., BY ITS GENERAL
PARTNER CALLISTO CAPITAL (GP) L.P., BY
ITS GENERAL PARTNER CALLISTO CAPITAL
(GP) INC.
Per: /s/ X.X. Xxxxxx
----------------------------------
Name: X.X. Xxxxxx
Title: Managing Director
Per: /s/ Xxx Xxxxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxxxx
Title: Managing Director
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