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EXHIBIT 2.1
THIS ASSET PURCHASE AGREEMENT DATED THE 7TH DAY OF JUNE, 0000
X X X X X X X:
REPUBLIC ENVIRONMENTAL SYSTEMS (FORT ERIE) LTD., a corporation
incorporated under the laws of the Province of Ontario,
REPUBLIC ENVIRONMENTAL SYSTEMS (BRANTFORD) LTD., a corporation
incorporated under the laws of the Province of Ontario, and
REPUBLIC ENVIRONMENTAL SYSTEMS (PICKERING) LTD., a corporation
incorporated under the laws of the Province of Ontario
(hereinafter collectively called the "Vendors")
- and -
XXXXXX ENTERPRISES INC., a corporation amalgamated pursuant to
the laws of the Province of Ontario
(hereinafter called the "Purchaser")
- and -
REPUBLIC ENVIRONMENTAL SYSTEMS, INC., a corporation
incorporated under the laws of the State of Delaware
(hereinafter called "RESI")
WHEREAS the Vendors carry on the business of liquid and solid
hazardous and non-hazardous waste treatment, storage, disposal and
transportation services from their facilities located in Fort Erie, Brantford
and Pickering, Ontario;
AND WHEREAS the Purchaser wishes to purchase from the Vendors and the
Vendors wish to sell to the Purchaser, certain property, assets and
undertakings pertaining to the said business upon the terms and conditions
herein contained;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of these
presents, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and promise and agree with each other as follows:
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ARTICLE 1
DEFINITIONS
1.1 In this Agreement and in any amending or supplemental agreement
hereto, unless the subject matter or context is inconsistent therewith, the
following words and phrases shall have the meanings set forth below:
(a) "AGREEMENT", "THIS AGREEMENT", "HERETO", "HEREIN", "HEREOF",
"HEREBY", "HEREUNDER" and similar expressions refer to this Agreement
as amended from time to time;
(b) "BENEFIT PLANS", means the employee benefit plans as more
fully described in Schedule 1.1(b) attached hereto;
(c) "BUSINESS" means the business of operating the liquid and
solid hazardous and non-hazardous waste treatment, storage, disposal
and transportation services presently carried on by the Vendors at
their facilities located in Fort Erie, Brantford and Pickering,
Ontario;
(d) "BUSINESS DAY" means any day other than a day which is a
Saturday, a Sunday or a Statutory holiday in the Province of Ontario;
(e) "CLOSING" means the completion of the sale and purchase by the
Purchaser of the Purchased Assets under this Agreement;
(f) "CLOSING DATE" means the 7th day of July, 1997 or such earlier
or later date as may be mutually agreed upon in writing by the parties
hereto but in any event, no later than the 31st day of July, 1997;
(g) "CONTAMINANT" means any solid, liquid, gas, odour, heat,
sound, vibration, radiation, or combination of any of them resulting
directly or indirectly from human activities that may cause any of the
following: (i) impairment of the quality of the Natural Environment
for any use that can be made of it; (ii) injury or damage to property
or to plant or animal life; (iii) harm or material discomfort to any
person; (iv) an adverse effect on the health of any person; (v)
impairment of the safety of any person; (vi) rendering any property or
plant or animal life unfit for human use; (vii) loss of enjoyment of
normal use of property; and (viii) interference with the normal
conduct of business;
(h) "CONTRACTS" shall have the meaning attributed hereto in
Section 2.1(n) hereof;
(i) "ENCUMBRANCES" means mortgages, charges, pledges, security
interests, liens, encumbrances, actions, claims, demands and equities
of any nature whatsoever or howsoever arising and any rights or
privileges capable of becoming any of the foregoing;
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(j) "ENVIRONMENTAL ACTIVITY" means any activity, event or
circumstance in respect of a Contaminant, including, without
limitation, its storage, use, holding, collection, purchase,
accumulation, assessment, generation, manufacture, construction,
processing, treatment, stabilization, disposition, handling or
transportation, or its Release, escape, leaching, dispersal or
migration into or movement through the Natural Environment;
(k) "ENVIRONMENTAL LAWS" means at any time any and all of the then
applicable international, federal, state, municipal or local laws,
statutes, regulations, codes, rules, treaties, orders, judgments,
decrees and ordinances relating in full or in part to the protection
of the Natural Environment or Environmental Activity, product
liability and employee and public health and safety;
(l) "EQUIPMENT" means the equipment beneficially owned by the
Vendors and used in the Business, as more particularly set out in
Schedule 1.1(l);
(m) "EQUIPMENT LEASES" means those leases for equipment used in
the Business by the Vendors as more particularly set out in Schedule
1.1(m);
(n) "FINANCIAL STATEMENTS" means the unaudited combined statement
of assets, liabilities and stockholders' equity for the fiscal period
ended December 31, 1996 and the accompanying statement of revenue,
expenses and retained earnings and statement of cashflows for the
period then ended as reported on by the Vendors and prepared in
accordance with GAAP and a copy of such statements is attached as
Schedule 1.1(n);
(o) "GAAP" means at any time, generally accepted accounting
principles in Canada at such time.
(p) "GOVERNMENTAL ENTITY" means: (i) any multinational, federal,
state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency or instrumentality, domestic
or foreign; (ii) any subdivision, agent, commission, board, or
authority of any of the foregoing; or (iii) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;
(q) "HAZARDOUS SUBSTANCE" means: (i) any flammable explosives;
(ii) radioactive materials; (iii) substances included within the
definitions of "hazardous substances", "hazardous materials", or
"toxic substances" in the Environmental Laws or any regulations or
rules promulgated pursuant to the Environmental Laws, all as enacted,
promulgated and published and as enforced by authorities of competent
jurisdiction as at the Closing; (iv) asbestos; (v) polychlorinated
biphenyls, (vi) radon and (vii) gasoline, waste oil and other
petroleum products;
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(r) "INTERIM PERIOD" means the period between the date of
execution of this Agreement and the Time of Closing.
(s) "LAWS" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative
or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, policies, voluntary restraints,
guidelines, or any provisions of the foregoing, including general
principles of common and civil law and equity, binding on or affecting
the Person referred to in the context in which such word is used; and
"LAW" means any one of them;
(t) "LEASES" means the lease and subleases of real property to
which the Vendors are a party, as listed and described in the attached
Schedule 1.1(t);
(u) "LEASED EQUIPMENT" means the equipment used in relation to the
Business that is leased pursuant to the Equipment Leases;
(v) "LICENSE" means any permit, license, certificate, approval or
authorization required under applicable Environmental Laws;
(w) "LOSS" means any loss whatsoever, including expenses, costs,
damages, penalties, fines, charges, claims, demands, liabilities,
interest and any and all legal fees and disbursements;
(x) "NATURAL ENVIRONMENT" means the air, land, subsoil, surface
water and ground water, or any combination or part thereof in any
jurisdiction in which the Vendors carries on business;
(y) "NET WORKING CAPITAL" means cash and cash equivalents plus
Accounts Receivable (net of any allowance for bad debts) plus
inventory plus pre-paid expenses less accounts payable less accrued
liabilities;
(z) "PERMITS" shall have the meaning attributed hereto in Section
2.1(j), copies of which are more particularly set out in Schedule
1.1(z);
(aa) "PERMITTED ENCUMBRANCES" means the Encumbrances set out in
Schedule 1.1(aa);
(bb) "PERSON" includes an individual, partnership, corporation,
trust or unincorporated organization, a Governmental Entity or
political subdivision thereof, a regulatory body or agency or any
combination of the foregoing;
(cc) "PURCHASE PRICE" shall have the meaning attributed thereto in
Section 3.1;
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(dd) "PURCHASED ASSETS" means the undertaking and assets of the
Business, which are to be sold by the Vendors to the Purchaser
pursuant to Section 2.1 hereof;
(ee) "REAL PROPERTY" means all the real property, the registered
and beneficial ownership of which is held by the Vendors or an
affiliate and used in relation to the Business, which property is as
described in Schedule 1.1(ee);
(ff) "RELEASE" means, without limitation, to deposit, leak, emit,
add, spray, inject, inoculate, abandon, spill, seep, pour, empty,
throw, dump, place and exhaust, and when used as a noun has a similar
meaning;
(gg) "TIME OF CLOSING" means 1:00 p.m. (local time) on the Closing
Date.
1.2 CURRENCY OF FUNDS: Unless otherwise indicated all dollar amounts
referred to in this Agreement are in United States funds.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS OR PARTY DRAFTING: The
division of this Agreement into articles, sections, paragraphs, subparagraphs
and clauses and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement. The
terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions
refer to this Agreement and the schedules hereto and not to any particular
article, section, paragraph, subparagraph, clause or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto. Each
party hereto acknowledges that it and its legal counsel have reviewed and
participated in settling the terms of this Agreement.
1.4 NUMBER AND GENDER: Words importing the singular include the plural
and vice versa, and words importing gender include all genders.
1.5 CALCULATION OF TIME: When calculating the period of time within or
following which any act is to be done or step taken pursuant to this Agreement,
the date which is the reference date in calculating such period shall be
excluded. If the last day of such period is not a Business Day, the period in
question shall end on the next Business Day.
1.6 SCHEDULES: The following are the schedules attached to and
incorporated in this Agreement by reference and deemed to be part hereof:
Schedule 1.1(b) Benefit Plans
Schedule 1.1(l) Equipment
Schedule 1.1(m) Equipment Leases
Schedule 1.1(n) Financial Statements
Schedule 1.1(t) Leases
Schedule 1.1(z) Permits
Schedule 1.1(aa) Permitted Encumbrances
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Schedule 1.1(ee) Real Property
Schedule 2.1(e) Customer List
Schedule 2.1(m) Supply Contracts
Schedule 2.1(n) Contracts
Schedule 2.1(o) Intellectual Properties
Schedule 2.3 Assumed Liabilities
Schedule 2.4 Retained Liabilities
Schedule 3.1 Purchased Assets
Schedule 3.3(a) Note
Schedule 3.3(b) Guarantee
Schedule 3.5 Allocation of Purchase Price
Schedule 4.1(p) Environmental Matters
Schedule 4.1(r) Litigation
Schedule 4.1(t) Employee Matters
Schedule 5.1(a) Retained Employees
Schedule 7.2(e) Non-Competition Agreement
Schedule 8.8 Letters of Credit and Bonds
ARTICLE 2
AGREEMENT OF PURCHASE AND SALE
2.1 PURCHASED ASSETS: Subject to the terms and conditions hereof, the
Vendors hereby agree to sell, assign, transfer and convey to the Purchaser and
the Purchaser hereby agrees to purchase from the Vendors, free and clear of
Encumbrances, all of the property, assets and undertakings owned by the Vendors
(other than the property and assets described in Section 2.2) and used in the
operation of the Business, including, without limiting the generality of the
foregoing:
(a) MACHINERY, EQUIPMENT AND FURNITURE: all machinery, equipment,
computer equipment, tools, furniture, furnishings and other
miscellaneous items used in or relating to the Business including,
without limitation, all those listed in Schedule 1.1(l) attached
hereto;
(b) LEASED EQUIPMENT AND VEHICLES: all right, title and interest of
the Vendors in and under leases of equipment and vehicles used in or
relating to the Business including, without limitation, all leases and
other agreements listed in Schedule 1.1(m) attached hereto;
(c) PREPAID EXPENSES: all prepaid expenses which are usable and
consumable in the ordinary course of the Business relating to the
Equipment, Leased Equipment and spare parts thereto of the Business as
of the Time of Closing except for all prepaid insurance expenses;
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(d) REAL PROPERTY: all rights, title and interest of the Vendors in
and to the Real Property set forth in Schedule 1.1(ee);
(e) CUSTOMER LISTS AND INFORMATION: all customer lists, files, data
and information relating to customers and prospective customers of the
Business as of the Time of Closing, which most current customer list
is attached hereto as Schedule 2.1(e);
(f) WARRANTY RIGHTS AND MAINTENANCE CONTRACTS: the full benefit of
all warranties and warranty rights (express and implied) against
manufacturers or sellers which apply to any of the Purchased Assets
and all maintenance contracts on machinery, equipment and the other
Purchased Assets;
(g) INVENTORIES: all raw materials and work-in-progress which are
used or held for use by Vendors in the operation of the Business;
(h) BUSINESS RECORDS: all books, records, files and documents
relating to the Business, including without limitation, books of
account, ledgers, journals, sales and purchase records, lists of
suppliers, credit information, cost and pricing information, business
reports, plans and projections and all other correspondence, data and
information, financial or otherwise, in any format and media
whatsoever, related to the Business;
(i) GOODWILL: the goodwill of the Business, together with the
exclusive right of the Purchaser to represent itself as carrying on
the Business in continuation of and in succession to the Vendors
(j) LICENSE RIGHTS AND PERMITS: all licenses, permits and other
rights and privileges owned or held by the Vendors in relation to the
Business including those described in Schedule 1.1(z), other than
those licenses specifically set out in such schedule as being
non-transferable;
(k) REGULATORY LICENSES: all licenses, registrations and
qualifications of the Business required by any governmental or
regulatory authority, to the extent transferable, including those
described in Schedule 1.1(z);
(l) INSURANCE BENEFITS: any benefits payable under all insurance
policies relating to the Business or the other Purchased Assets in
respect of claims based on occurrences prior to the Time of Closing as
included in assets and balance sheets contained in the Financial
Statements;
(m) SUPPLY CONTRACTS: the full benefit of all contracts providing
for the supply of goods and services to the Business which are
referred to in Schedule 2.1(m);
(n) CONTRACTS: all right, title and interest of the Vendors in, to
and under, and the full benefit of, the customer contracts, all other
revenue generating contracts and agreements of or pertaining to the
Business to which the Vendors are party, as set out in Schedule 2.1(n)
attached hereto;
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(o) INTELLECTUAL PROPERTY: all right, title, interest and benefit of
Vendors in and to all patents, copyrights, registered and unregistered
trademarks, tradenames, logos, commercial symbols, industrial designs
(including applications for all of the foregoing and renewals,
divisions, extensions and re-issues, where applicable, relating
thereto), inventions, licenses, trade secrets, patterns, drawings,
computer software, formulae, technical information, concepts, methods,
procedures, designs, service-marks and all other intellectual or
industrial property relating to the Business or the Purchased Assets
including without limitation the property listed in Schedule 2.1(o)
("Intellectual Properties");
(p) ACCOUNTS RECEIVABLE: all accounts receivable, notes receivable,
rights to receive payments, and other debts due or accruing due to
Vendors, generated by the Business and relating to work performed
prior to the Time of Closing and any actions or proceedings which have
been commenced in connection therewith ("Accounts Receivable"); and
(q) OTHER AGREEMENTS: all of the Vendors' right, title and interest
to and under all contracts and agreements (written or oral) relating
directly or indirectly to the Business as required for the operation
of the Business.
(all of which property and assets are herein collectively referred to
as the "Purchased Assets").
2.2 EXCLUDED ASSETS: There shall be specifically excluded from the
Purchased Assets the following property and assets of the Vendors pertaining to
the Business:
(a) the real property located in Pickering, Ontario, municipally
known as 0000 Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxx (the "Pickering
Facility");
(b) all machinery, equipment and furniture located at the Pickering
Facility;
(c) Certificate of Approval #A390414 in respect of the Pickering
Facility; and
(d) any proceeds received from the surrender, satisfaction or
replacement of the Financial Assurances pursuant to Section 8.8 of
this Agreement.
2.3 ASSUMED LIABILITIES: Subject to the terms and conditions hereof, the
Purchaser shall assume the following obligations of the Vendors pertaining to
the Business upon Closing ("Assumed Liabilities"):
(a) all remaining obligations under the Equipment Leases, the Leases,
the Benefit Plans and all Contracts to be assigned to the Purchaser as
at the Time of Closing, it being agreed that any obligations under
such leases, contracts and plans
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which occurred or arose prior to the Time of Closing are not being
assumed by the Purchaser and shall remain the liability of the
Vendors;
(b) third party trade payables and operating accruals of the Business
as at the Time of Closing; and
(c) waste disposal accruals,
all of such Assumed Liabilities being more particularly set forth in
Schedule 2.3.
The Vendors will not be liable for, and the Purchaser will defend,
indemnify and save harmless the Vendors, its officers, directors, employees,
agents and shareholders from and against all obligations, commitments,
expenses, costs and liabilities of and claims against the Vendors (whether
absolute, accrued or contingent) relating to the Assumed Liabilities outlined
in this Section 2.3.
2.4 RETAINED LIABILITIES AND INDEMNITY: The Purchaser will not assume and
will not be liable for, and the Vendors will indemnify and save harmless the
Purchaser, its officers, directors, employees, agents and shareholders from and
against, all obligations, commitments, expenses, costs and liabilities of and
claims against the Purchaser (whether absolute, accrued or contingent) relating
to the Business, except for the Assumed Liabilities outlined in Section 2.3
above and any liabilities which are subject to the Purchaser's indemnification
obligation pursuant to Section 8.3(d). Without limiting the generality of the
foregoing, it is agreed that the Purchaser will have no liability for any of
the following obligations and liabilities ("Retained Liabilities"):
(a) all liabilities in respect of all indebtedness of the Vendors
to all persons, except as may be included in the assumed liabilities
outlined in Section 2.3 above;
(b) all product liability claims and liabilities for product
claims relating to any product or service of the Business produced,
sold performed or delivered prior to the Closing Date;
(c) all liabilities for all taxes, duties, levies, assessments and
other such charges, including any penalties, interests and fines with
respect thereto, payable by the Vendors to any federal, provincial,
local or other governmental agency, authority, board, bureau or
commission, domestic or foreign, including, without limitation, any
taxes in respect of or measured by the sale, consumption or
performance by the Vendors of any product or service prior to the
Closing Date and pursuant to any legislation in respect of all
remuneration payable to all persons employed in the Business prior to
the Closing Date.
(d) all liabilities for salary, bonus, vacation pay and other
compensation and all liabilities under employee benefit plans of the
Vendors relating to employment of all persons in the Business prior to
the Time of Closing;
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(e) all severance payments, costs or expenses associated with the
termination of any of the corporate personnel of the Business
presently located at the corporate offices in Burlington, Ontario, as
more particularly set out in Schedule 2.4 and all severance payments,
costs, expenses or damages for wrongful dismissal and all related
costs in respect of the termination by the Vendors of the employment
of any employee of the Business who does not accept the Purchaser's
offer of employment and in respect of any employee of the Business who
is not offered employment by the Purchaser;
(f) all liabilities for claims for injury, disability, death or
workers' compensation arising from or related to employment in the
Business prior to the Closing Date.
2.5 PAYMENT OF TAXES: The Purchaser shall be liable for and shall pay all
applicable federal and provincial sales tax, excise taxes and all other taxes
(other than income taxes of the Vendors), duties and other like charges
properly payable upon and in connection with the conveyance and transfer of the
Purchased Assets to the Purchaser. The Vendors will do and cause to be done
such things as are reasonably requested to enable the Purchaser to comply with
such obligation in an efficient manner. The parties agree to jointly make,
execute and file with the appropriate taxation authorities the election
required under subsection 167(1) of the Excise Tax Act (Canada) so that there
is no liability for tax under such Act. The parties further agree to jointly
make, execute and file with the appropriate taxation authorities the election
required under section 22 of the Income Tax Act (Canada). Such elections shall
be prepared and filed in form and substance approved by the Purchaser.
2.6 SALES TAX CLEARANCE: The Vendors hereby represents and warrants to
the Purchaser that all sales taxes and related interest and penalties in
respect of the Business or the Purchased Assets have been fully paid. The
Vendors shall provide, at the Time of Closing, tax clearances from the Province
of Ontario or Revenue Canada to such effect.
ARTICLE 3
PURCHASE PRICE, ALLOCATION AND ADJUSTMENTS
3.1 PURCHASE PRICE: Subject to the adjustments provided for in this
Agreement pursuant to Sections 3.2 and 3.4, the Purchase Price payable by the
Purchaser to the Vendors for the Purchased Assets shall be the sum of Seven
Million Dollars ($7,000,000). The Purchase Price shall be allocated to the
Purchased Assets in accordance with Schedule 3.1. The Parties shall jointly
file elections under Section 22 of the Income Tax Act (Canada) and under
Section 167 of the Excise Tax Act in relation to such allocation.
3.2 ADJUSTMENTS: Notwithstanding anything herein to the contrary
contained, the Purchase Price shall be reduced by an amount equal to the value
of all accrued but unpaid
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sick leave credits and employee vacation pay to the extent not paid by the
Vendors as at the close of business the day prior to the Closing Date in
respect of those employees of the Business. In addition, all taxes, local
improvements, rates, utilities, fuel, prepaid expenses (including insurance
premiums), lease payments and fees and similar adjustments shall be apportioned
and adjusted as at the close of business on the day prior to the Closing Date.
3.3 PAYMENT: Subject to the adjustments set out in Section 3.2 above, the
Purchase Price shall be paid by the Purchaser to the Vendors by delivery of a
note at Closing in the principal amount of Seven Million Dollars ($7,000,000)
in substantially the form set out in Schedule 3.3(a) (the "Note"), subject to
the guarantee of Xxxxxx Services Corp. described in Schedule 3.3(b) (the
"Guarantee").
3.4 ADJUSTMENT OF PURCHASE PRICE.
(a) The Purchase Price shall be adjusted following the Closing
Date in the following manner:
(i) If the Net Working Capital of the Vendors as reported
on the Vendors' balance sheet as of the Closing Date (the
"Closing Date Balance Sheet") is less than $468,000, the
Purchase Price shall be reduced by an amount equal to the
difference between $468,000 and the Net Working Capital of the
Vendors as reported on the Closing Date Balance Sheet.
(b) The Closing Date Balance Sheet shall be prepared by the
Vendors in accordance with GAAP and shall be delivered by the Vendors
to the Purchaser as promptly as practicable and in any event within
fifteen Business Days after the Closing.
(c) The Purchaser shall have the opportunity to examine the work
papers, schedules and other documents prepared by the Vendors in
connection with its preparation of the Closing Date Balance Sheet.
The Closing Date Balance Sheet shall be final and binding on the
Parties unless, within fifteen Business Days after delivery to the
Purchaser, notice is given by the Purchaser of its objection setting
forth in reasonable detail the basis for such objection. If the
Parties are unable to reach agreement within fifteen days after the
notice of objection has been given, the dispute shall be referred for
resolution to the offices of Ernst & Young LLP (the "Accountants") as
promptly as practicable. The Accountants will make a determination as
to each of the items in dispute, which determination will be (i) in
writing, (ii) furnished to each of the Parties hereto as promptly as
practicable after the items in dispute have been referred to the
Accountants, (iii) made in accordance with this Agreement, and (iv)
conclusive and binding upon each of the Parties hereto. The fees and
expenses of the Accountants will be shared equally by the Purchaser
and the Vendors. Each of the Parties hereto will use reasonable
efforts to cause the Accountants to render their decision as soon as
reasonably practicable, including, without limitation, by promptly
complying with all
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reasonable requests by the Accountants for information, books, records
and similar items.
(d) Within three Business Days after the final determination of
the Closing Date Balance Sheet, the Purchase Price shall be adjusted
if and as required by Section 3.4(a) and the amount of any such
decrease in the Purchase Price shall be set-off against the amount due
pursuant to the Note.
3.5 ALLOCATION: The Vendors and the Purchaser covenant to agree upon the
allocation of the Purchase Price among the Purchased Assets which allocation
shall be set out in Schedule 3.5 and which allocation is subject to adjustment
as agreed upon by the parties hereto pursuant to any adjustments under Section
3.4.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS: To induce the
Purchaser to enter into this Agreement and to consummate the transaction of
purchase and sale herein contemplated, the Vendors hereby represent and warrant
to the Purchaser as follows and hereby acknowledge and confirm that the
Purchaser is relying on such representations and warranties in connection with
the purchase by it of the Purchased Assets:
(i) as to the Vendors;
(a) the Vendors are corporations duly incorporated, validly
existing and in good standing under the laws of the Province of
Ontario with full corporate capacity, power and authority (i) to own,
lease and operate the Purchased Assets, (ii) to carry on the Business
as heretofore conducted by them, (iii) to execute and deliver this
Agreement, and all other agreements, documents and instruments to be
executed and delivered pursuant hereto, (iv) to sell, assign,
transfer, convey and deliver the Purchased Assets to the Purchaser as
herein contemplated, and (v) to otherwise observe, perform, satisfy
and carry out their obligations hereunder. Except as otherwise
provided herein, the Vendors are duly authorized, qualified,
permitted, and licensed under all applicable Laws to carry on the
Business at the locations and in the manner in which such Business is
now being conducted;
(b) the execution and delivery of this Agreement and all other
agreements, documents and instruments to be executed and delivered by
the Vendors pursuant hereto or in connection with the completion of
the transaction contemplated herein will have been duly authorized and
approved by all necessary action of the board of directors of the
Vendors on or prior to the Closing Date and by any other necessary
corporate action on the part of the Vendors to comply with applicable
law;
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(c) no suit, action or any other legal proceedings of any nature,
kind or description whatsoever are pending or are threatened against
the Vendors which would restrain or otherwise prevent, in any manner,
the Vendors from effectually and legally transferring good and
marketable title to the Purchased Assets to the Purchaser hereunder,
nor are any suits, actions or any other legal proceedings relative to
the Vendors, the effect of which would be to cause a lien to attach to
such property or assets or to divest title to such property or assets
from the Vendors hereunder, pending or threatened, and in particular,
and without restricting the generality of the foregoing, the Vendors:
(i) have not had any petition or application for a
receiving order in bankruptcy filed against them;
(ii) have not filed a proposal under any applicable
insolvency, bankruptcy or creditor's rights legislation or
otherwise taken any proceedings with respect to a compromise
or arrangement with their creditors;
(iii) have not made a voluntary assignment in bankruptcy;
(iv) have not taken any proceedings, nor has any person
instituted proceedings, to have the Vendors wound up or to
have their charters canceled or their corporate existence
terminated;
(v) have not taken any proceedings, nor have any
proceedings been filed or taken against them, to have a
receiver appointed to all or any part of their property or
assets;
which petition, application, proposal, compromise, arrangement or
other proceeding is presently pending and no execution has become
enforceable against the Vendors or become levied upon any of their
property or assets nor has any encumbrancer taken possession of any of
the property or assets of the Vendors;
(d) no governmental or regulatory authorization, approval, order,
consent or filing is required on the part of the Vendors in connection
with the execution, delivery and performance of this Agreement or any
other documents and agreements to be delivered under this Agreement or
the performance of the Vendors' obligations under this Agreement;
(e) the Financial Statements have been prepared in accordance GAAP
applied consistently, are correct and complete in all material
respects and present fairly all of the assets, liabilities and
financial position of the Business for the year ended December 31,
1996;
(f) since March 31, 1997:
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(i) there has not been any material change in the
financial condition, operations or prospects of the Business
or the Purchased Assets other than changes in the ordinary and
usual course of business, none of which has been materially
adverse; or
(ii) there has not been any damage, destruction, loss,
labour concerns or other event, development or condition of
any character (whether or not covered by insurance) materially
and adversely affecting the assets, properties or future
prospects of the Business.
(g) this Agreement and any ancillary documents pursuant hereto
have been duly and validly executed and delivered by the Vendors and
constitute valid and legally binding obligations of the Vendors
enforceable against them in accordance with the respective terms
thereof, subject to the qualification that enforceability may be
limited by bankruptcy, insolvency or other laws affecting the
enforceability of creditors' rights generally and by general equitable
principles;
(ii) as to the Purchased Assets:
(h) the Vendors, at the Time of Closing will be the sole
unconditional owner of, and have good, valid and marketable title to,
all of the Purchased Assets free and clear of all Encumbrances,
conditional sale or other title retention agreements, restrictions,
demands, equities, encumbrances and rights of any Persons or every
nature, kind and description whatsoever (and, subject to zoning,
occupancy and similar laws and regulations pertaining to use of the
Real Properties, easements and restrictions of record, and Permitted
Encumbrances, has good title to the Real Properties), including
without limitation, rights of any Person (other than the Purchaser
hereunder) to acquire any ownership interest in or right to possess or
occupy any of the Purchased Assets, and the Vendors have the exclusive
right and full power and authority to sell, assign, transfer, convey
and deliver good and marketable title to such assets to the Purchaser
as herein contemplated;
(i) all of the Equipment and Leased Equipment used in the
operation of the Business is in substantially the same state of repair
as when viewed and examined during the Purchaser's due diligence;
(j) the Leases are in good standing with the respective landlords
and the Vendors are not in breach of any terms each of the Leases nor
have the Vendors received any notice of breach of any terms of each of
the Leases;
(k) each of the Equipment Leases are in good standing and the
Vendors are not in breach of any terms of each of the Equipment Leases
nor have the Vendors received any notice of breach of any terms of
each of the Equipment Leases;
(l) all inventories are in good condition and repair, fit for
their intended purpose and not obsolete;
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(m) the Contracts and Supply Contracts, true and complete copies
of which (or, in the case of oral arrangements, brief and accurate
summaries of which) have been delivered to the Purchaser are in good
standing and in full force and effect and have not been modified or
supplemented in any way and constitute the entire agreement between
the Vendors, on the one hand, and the lessee or other co-contractant
on the other hand, such that there are no understandings,
representations, warranties, allowances, concessions or promises
affecting the Vendors' rights or obligations thereunder except as set
forth in the said agreements. There exists no default or event of
default or event, occurrence, condition or act (including the purchase
of the Purchased Assets hereunder) which, with the giving of notice,
lapse of time or the happening of any other event or condition, would
become a material default or an event of default thereunder, except
for the necessity of obtaining a consent;
(n) all Accounts Receivable shall have arisen only from bona fide
transactions in the ordinary course of the Business, are fully
collectible when due and are not subject to counterclaim or set off or
are disputed by the account debtor except to the extent of the normal
allowance for doubtful accounts computed in a manner consistent with
the Vendors' prior practices;
(o) The Intellectual Properties used in or reasonably required for
the carrying on of the Business in the manner heretofore carried on
are set out in Schedule 2.1(o) and are validly owned by, or validly
licensed to, the Vendors as indicated in Schedule 2.1(o). Except as
otherwise expressly stated in Schedule 2.1(o), the Vendors (i) have
the right to use such Intellectual Properties; (ii) are the owners of
record of such Intellectual Properties; and (iii) have not conveyed,
assigned or encumbered any of them in any manner which would permit
use in the ordinary course by any party other than the Company. All
registrations and filings necessary to preserve the rights of the
Company in the Intellectual Properties have been made and are in good
standing. To the knowledge of the Vendors, the conduct of the
Business does not infringe upon the intellectual properties of any
other Person.
(p) (i) Compliance. The Vendors have conducted and are
conducting the Business in material compliance with all
applicable Environmental Laws. There are no outstanding
complaints, orders, citations, notices or orders of violation
or non-compliance issued to the Vendors under any applicable
Environmental Laws, and the Vendors do not to the best of
their knowledge have reasonable grounds to know of any facts
which could give rise to a notice of non-compliance with any
applicable Environmental Laws. To the best of the Vendors'
knowledge, a full and complete listing of any and all
violations or alleged violations of any applicable
Environmental Laws which have occurred within a period of two
(2) years prior to Closing is set out in Schedule 4.1(p).
(ii) Licenses. The Vendors possess all Licenses required
for the operation of the Business as presently conducted by
them. All such
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Licenses are valid and in full force and effect without
conditions other than such conditions which are generally
applicable to such Licenses. To the best of the Vendors'
knowledge, a full and complete listing of any and all
violations thereof which have occurred or been noted within a
period of two (2) years prior to Closing is set out in
Schedule 4.1(p). To the best of the Vendors' knowledge, no
proceeding is pending or threatened to revoke or limit any of
such Licenses. The Licenses were not obtained by a
misrepresentation or false statement and all relevant facts
were disclosed in obtaining the Licenses.
(iii) Offsite Remedial Action. Except as set forth in
Schedule 4.1(p), there are no locations to which the Vendors
have ever transported, or ever caused to be transported, or
allowed or authorized any third party to transport on behalf
of the Vendors, any Hazardous Substances generated by the
Vendors for storage, treatment, processing, recycling, burning
or disposal which have been designated for remedial action
pursuant to any Environmental Laws.
(iv) On-Site Release of Hazardous Substances or
Contaminants. Except as set forth in Schedule 4.1(p), the
Vendors have not caused or permitted and do not have any
knowledge of, the Release of any Hazardous Substance on any
property owned, leased or used by them or of any Release (with
respect to which the Vendors would be held liable) from a
facility owned or operated by third parties.
(v) Hazardous Substance Spills. Except as set forth in
Schedule 4.1(p), to the best of the Vendors' knowledge, there
are no underground storage tanks containing Hazardous
Substances situated on the Leased Properties or the Real
Properties, no Hazardous Substance from any underground
storage tank has been spilled, leaked, discharged or deposited
on or in the Leased Properties or Real Properties in an amount
which would constitute a reportable spill, leak, discharge or
deposit under any applicable Environmental Laws, and there
have been no violations or alleged violations of any
Environmental Laws related to underground storage tanks owned
or operated by the Vendors.
(vi) Documents and Records. The Vendors have maintained
all environmental records and reports substantially in the
manner and for the time period required by applicable
Environmental Laws.
(q) there are no outstanding work orders, non-compliance orders,
deficiency notices or other such notices relative to the Real
Properties, the Purchased Assets or the Business which have been
issued by any regulatory authority, police or fire department,
sanitation, labour or other governmental authorities or agencies.
There are no matters under discussion with any such department or
authority relating to work orders, non-compliance orders, deficiency
notices or other such
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notices. The Business in not being carried on, and none of the Real
Properties or the other Purchased Assets are being operated, in a
manner which is in material contravention of any Law. No amounts are
owing by the Vendors in respect of the Real Properties to any
Governmental Entity or public utility, other than current accounts
which are not in arrears. There are no premises leased by the Vendors
for the operation of the Business pursuant to the terms of any lease,
whether oral or written;
(iii) as to the Condition of the Business:
(r) except as disclosed in Schedule 4.1(r) attached hereto there
are no claims, actions, suits, proceedings (including arbitration
proceedings), or, to the best knowledge of the Vendors, investigations
(whether or not purportedly on behalf or the Vendors) at law or in
equity or before or by any federal, provincial, municipal or other
governmental department, commission, bureau, agency or
instrumentality, domestic or foreign, which involves the possibility
of materially and adversely affecting the Purchased Assets or the
Business; and to the best knowledge of the Vendors there are no
existing grounds on which any claim, action, suit, proceeding or
investigation might be commenced with any reasonable likelihood or
success;
(s) during the period between March 31, 1997 to the date of this Agreement;
(i) the Business was operated in the ordinary course
thereof, consistent with past practices;
(ii) no obligation or liability (fixed or contingent) was
incurred except normal trade or business obligations incurred
in the ordinary course of the Business, none of which is
materially adverse to the Business.
(iv) as to Employee matters;
(t) Schedule 4.1 (t) annexed hereto sets forth:
(i) the names, current annual salaries, job positions,
length of employment and date and amounts of the most recent
increases in salaries of all Persons who are employed by the
Vendors on a full-time or part-time basis in connection with
the Business and including all independent commission agents;
(ii) particulars of any contracts, commitments,
arrangements or understandings, written or oral, with any such
employees or agents;
(iii) particulars of any agreements with any labour union
or employee associations; and
(iv) particulars of all employee insurance, hospital or
medical expense program, pension, retirement, profit sharing,
stock options or other
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employee benefit plans, programs or arrangements or any
executive or key personnel incentives or other special
compensation arrangements to which the Vendors are a party or
are bound in respect of the employees or agents contemplated
in (i) above.
(u) save as disclosed in Schedule 4.1(t), the Vendors do not have
any agreements with any labour union or employee association nor have
they made commitments to or conducted negotiations with any union or
employee association with respect to any future agreements, and the
Vendors are not aware of any current attempts to organize or establish
any labour union or employee association for the employees of Vendors;
(v) the Vendors are not engaged in any material dispute with any
of the employees identified in Schedule 4.1(t) annexed hereto and
there is not now pending or threatened any labour dispute or work
stoppage which affects or may affect the Business or may interfere
with its continued operations and there are no outstanding breaches of
any collective agreement or outstanding or potential grievances.
(w) the terms and conditions of employment of all such employees
of the Business conform with the minimum employment and labour
standards requirements laid down by the Province of Ontario, as
applicable;
(x) all salaries, workers compensation assessments and surcharges,
unemployment insurance assessments, pension remittances, remittances
under the Business' profit sharing plan, employer health tax
remittances, sick day credits, vacation pay including the monetary
value of lieu days and associated payroll costs thereof, and similar
charges or amounts with respect to all of the employees owing by the
Vendors to those of its employees identified in Schedule 4.1(t)
annexed hereto will have been paid up to the Closing Date or adjusted
for at the Closing Date;
(v) as to Insurance:
(y) all of the Purchased Assets are insured and will be up to the
Time of Closing (subject to the amount of any deductibles under such
policies) against loss or damage by all insurable risks and hazards
customarily insured against by Persons owning and operating property
and assets and/or carrying on a business similar to the Purchased
Assets and the Business. The Vendors are not in any technical or
non-material breach or default with respect to any of the provisions
contained in any such insurance policy which could result in the
cancellation of any policy of insurance;
(vi) Miscellaneous:
(z) INTENTIONALLY BLANK.
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(aa) at the Time of Closing, all remittances with respect to retail
sales tax will have been made up to and including the Closing Date;
(bb)
(i) The Vendors are the registered and beneficial owner
of the Real Properties, subject to zoning, occupancy and
similar laws and regulations pertaining to use thereof,
easements and restrictions of record and the Permitted
Encumbrances.
(ii) All of the buildings and fixtures on the Real
Properties (i) were to the best knowledge of the Vendors
constructed in substantial accordance with all applicable laws
and with all authorizations validly issued pursuant thereto;
(ii) are in substantially the same condition as when viewed
and examined during the Purchaser's due diligence; and (iii)
to the best knowledge of the Vendors are adequate and suitable
for the purposes for which they are presently being used; and
the Vendors have adequate rights of ingress and egress for the
operation of the Business in the ordinary course. None of the
Real Properties or the buildings and fixtures thereon, nor the
use, operation or maintenance thereof for the purpose of
carrying on the Business, violates any restrictive covenant or
any provision of any Law or encroaches on any property owned
by any other Person, which violation has or would have a
material adverse effect on the normal operation of the
Business. No condemnation or expropriation proceeding is
pending or, to the best knowledge of the Vendors, threatened
which would preclude or materially impair the use of any such
property or any part thereof for the purposes for which it is
currently used. Except as may occur in the ordinary course of
business, there are no outstanding work orders with respect to
any of the Assets from or required by any municipality, police
department, fire department, sanitation, health or safety
authorities or from any other Person.
(cc) except for those liabilities set forth on the Financial
Statements or otherwise disclosed hereunder, and for those liabilities
incurred in the ordinary course of business, the Business or Purchased
Assets are not subject to any liabilities, absolute or contingent, and
whether or not required in accordance with GAAP to be disclosed on a
balance sheet.
(dd) the Vendors have been and are conducting the Business in
substantial compliance with all applicable Laws, other than
Environmental Laws.
(ee) no representation or warranty of the Vendors contained in the
Agreement or contained in any statement, document, certificate or list
made, delivered or furnished by or on behalf of the Vendors pursuant
to this Agreement or in connection with the consummation of the
transaction herein contemplated contains
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or will contain any untrue statement of a material fact or omits or
will omit to state any fact necessary to make the statements herein
and therein not misleading.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER: The Purchaser hereby
represents and warrants to the Vendors as follows and hereby acknowledges and
confirms that the Vendors are relying on such representations and warranties in
connection with the sale of the Purchased Assets:
(a) the Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the Province of
Ontario with full corporate capacity, power and authority to enter
into this Agreement and carry out its obligations hereunder;
(b) the execution and delivery of the Agreement, and all other
agreements, documents and instruments to be executed and delivered by
the Purchaser pursuant hereto or in connection with the completion of
the transaction contemplated herein have been duly authorized and
approved by all necessary action of the board of directors of the
Purchaser on or prior to the Closing Date and by any other necessary
corporate action on the part of the Purchaser to comply with
applicable law;
(c) the execution and delivery of the Agreement and all other
agreements, documents and instruments to be executed and delivered by
the Purchaser pursuant hereto or in connection with the completion of
the transaction contemplated herein, and the performance of this
Agreement or any other such agreement by the Purchaser will not:
(i) violate any provision of the Purchaser's Articles of
Incorporation or by-laws, or
(ii) result in the breach of violation of any provision of
or constitute a default under any indenture, agreement or
other instrument to which the Purchaser is a party or by which
the Purchaser or any of its properties may be bound, or
(iii) to the best knowledge of the Purchaser violate any
law, rules or regulations to which the Purchaser is subject.
4.3 NON-WAIVER: Subject to the provisions of Section 4.4, no
investigations made by or on behalf of either the Purchaser or the Vendors at
any time shall have the effect of waiving, diminishing the scope of or
otherwise affecting or mitigating any representation or warranty made herein or
pursuant hereto or the right of the party or parties to whom such
representation or warranty is made to rely on such representation and warranty.
4.4 KNOWLEDGE OF PARTIES: In the event that the Vendors on the one hand,
or the Purchaser on the other hand (the "Knowing Party"), has actual knowledge
at the time of the Closing that a representation or warranty made by the other
Party is false or the other
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Party has violated a covenant made by it under this Agreement, and the Knowing
Party proceeds to the Closing notwithstanding such knowledge, the Knowing Party
shall be deemed to have waived any rights it may have for indemnification or
damages against the other Party to the extent that any damages result from such
breach of representation or warranty or failure to perform such covenant.
ARTICLE 5
OTHER COVENANTS OF THE PARTIES
5.1 EMPLOYEES:
(a) OFFER OF EMPLOYMENT. Upon Closing, the Purchaser (i) shall offer
employment to the employees of the Business set forth in Schedule
5.1(a) located at the facilities in Fort Erie and Brantford by way of
a letter, at a minimum, on substantially the same terms and conditions
of employment as each such employee has with the Vendors on the
Closing Date, and (ii) may, in its sole discretion, offer employment
to certain sales employees located at the Burlington, Ontario office
as may be identified and selected by the Purchaser.
(b) OTHER BENEFITS. Until Closing, the Vendors shall be responsible
for all wages, bonuses, earned vacations, sick leave, severance pay,
and other remuneration benefits for all of the employees of the
Business in respect of any period prior to the Closing Date.
Thereafter, the Purchaser shall be responsible for all such benefits
of the employees relating to after the Closing Date.
(c) SEVERANCE. Save and except in respect of those employees who
accept the Purchaser's offers of employment made pursuant to Section
5.1(a), the Vendors shall be responsible for all notice of
termination, severance and other obligations to the employees of the
Business arising out of their termination of employment with the
Vendors and the Vendors shall indemnify and save the Purchaser
harmless in respect of all such obligations.
5.2 BULK SALES: The Vendors and the Purchaser hereby waive compliance
with the provisions of applicable bulk sales legislation. Notwithstanding the
foregoing, the Vendors shall indemnify and hold harmless the Purchaser from and
against any and all claims which may be made or brought against the Purchaser
or which the Purchaser may suffer or incur as a result of, or arising out of
such non-compliance unless such non-compliance is a result of the Purchaser's
non- satisfaction of assumed liabilities as described herein.
5.3 TAX ELECTIONS: The Vendors shall execute, in form and content to be
reviewed and accepted by the Purchaser, the tax elections referred to in
Section 2.5.
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5.4 PICKERING PERMIT: The Vendors shall diligently pursue cancellation
of the Certificate of Approval #A390414 of Republic Environmental Systems
(Pickering) Ltd. in respect of its facility located at 0000 Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx, and shall in any case have arranged such surrender and
cancellation within five (5) years following the Closing Date.
ARTICLE 6
INTERIM PERIOD COVENANTS
6.1 ACCESS FOR INVESTIGATION: During the Interim Period, the Vendors
shall permit the Purchaser and its employees, agents, counsel and other
representatives to make such reasonable investigation of the Purchased Assets
and of the Business as the Purchaser deems reasonably necessary or advisable to
familiarize itself with such properties, assets and other matters relating to
the Business and the Purchased Assets and to confirm the matters represented
and warranted in Section 4.1 hereof. For purposes of such investigation, the
Vendors shall cause the directors, officers and employees of the Vendors to
permit the Purchaser, the Purchaser's solicitors and other representatives of
the Purchaser to have reasonable access, during normal business hours, on
reasonable advance notice and without disruption to the operation of the
Business, to all locations where the Business is carried on or where any of the
Purchased Assets are located and to the books, contracts, commitments and
records of the Vendors pertaining to the Business.
6.2 CONFIDENTIALITY COVENANT: Subject to disclosure in accordance with
the provisions of Section 8.1 hereof, the Purchaser will treat as confidential
all confidential documents and information concerning the Vendors, the
Purchased Assets and the Business as the Vendors shall have furnished to the
Purchaser or which is acquired by the Purchaser during its investigation
pursuant to Section 6.1 hereof, and, if the sale of the Purchased Assets
pursuant hereto shall not be consummated, such confidence shall be maintained
and the Purchaser will not use or disclose to any Person any such document or
information (except to the extent that such information can be shown to be
previously known to the Purchaser, in the public domain, or later acquired by
the Purchaser from other sources without any breach of confidentiality to the
Vendors). In the event that this Agreement is terminated without consummation
of the transaction of purchase and sale herein contemplated the Purchaser shall
promptly return to the Vendors all documents, work papers and other written
material and any copies thereof supplied to the Purchaser or its
representatives by the Vendors in connection with the negotiation of this
Agreement or pursuant to the investigation, if any, conducted by the Purchaser
pursuant to Section 6.1 hereof.
6.3 COVENANTS OF VENDORS: The Vendors hereby covenant and agree that,
during the Interim Period, the Vendors will:
(a) do all things and cause all things to be done to ensure that all
of the warranties and representations of the Vendors contained in this
Agreement remain
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true and correct throughout the Interim Period, as if such
representations and warranties were continuously made throughout such
period;
(b) carry on the Business only in the usual course thereof,
consistent with past practices, which, without limitation, shall
include substantial compliance with all applicable laws, regulations
and administrative orders of all governmental, administrative or
regulatory bodies or agencies having jurisdiction including all
Environmental Laws, and use its best efforts to preserve the goodwill
of the Business;
(c) refrain from any acts having the effect of dissuading any of the
employees, agents, customers, clients, representatives, agents or
suppliers of the Business to become associated with, or having the
effect of inducing them to terminate its association with, the
Purchaser;
(d) continue to maintain in full force and effect all policies of
insurance of the Vendors now in effect relating to the Purchased
Assets or the Business and give all notices and to present all claims
under all such policies of insurance in due and timely fashion;
(e) not sell, agree to sell or otherwise dispose of or pledge,
subject to lien, create security interest in or otherwise encumber any
of the Purchased Assets except in the ordinary course of business;
(f) not increase the wages, salaries or any other forms of
remuneration, direct or indirect, of any of the employees of the
Business except in the ordinary course of business;
(g) use its best efforts to aid the Purchaser in engaging the
Vendors' employees as are identified on Schedule 4.1(t) annexed
hereto, which the Purchaser wishes to re-hire;
(h) promptly advise the Purchaser in writing of any material adverse
change in the condition (financial or otherwise) of the Business or of
the Purchased Assets or of the occurrence or filing of any dispute or
complaint.
ARTICLE 7
CLOSING ARRANGEMENTS AND CONDITIONS AND RISK OF LOSS
7.1 PLACE OF CLOSING: The Closing of the transaction contemplated hereto
shall take place at the Time of Closing, on the Closing Date at the Purchaser's
office in Hamilton, Ontario, or at such other place as may be mutually agreed
upon by the parties hereto or their respective solicitors.
7.2 CONDITIONS OF CLOSING: Completion of the purchase and sale of the
Purchased Assets contemplated hereto is subject to the following conditions
having been satisfied.
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The conditions contained in Sections 7.2 (a) to (n), both inclusive, are for
the exclusive benefit of the Purchaser. The conditions contained in Sections
7.2 (o) to (r), both inclusive, are for the exclusive benefit of the Vendors.
All conditions referred to herein are to be satisfied at the Time of Closing.
The following are the conditions:
(a) all of the representations and warranties of the Vendors
contained in the Agreement or contained in any certificate or other
document delivered to the Purchaser pursuant hereto shall be true and
correct on and as of the Closing Date, with the same force and effect
as if those representations and warranties had been made on and as of
such date, regardless of the date as of which the information in this
Agreement or in any such certificate or document is given, and there
shall have been compliance with the covenants and obligations on the
part of the Vendors contained herein which were to have been complied
with by the Vendors at or prior to the Time of Closing and the Vendors
shall have delivered to the Purchaser a certificate executed by the
president or chief executive officer of the Vendors to that effect.
The acceptance of such certificate and the completion of the
transaction of purchase and sale herein contemplated shall not be a
waiver of the covenants, representations and warranties contained
herein or in any certificate or other document given pursuant to this
Agreement (except to the extent that any such representations or
warranties have been modified by the information disclosed in the
certificate so delivered and accepted by the Purchaser), which
covenants, representations and warranties shall continue in full force
and effect as provided in Section 8.1 hereof;
(b) the Vendors shall deliver to the Purchaser all necessary deeds,
conveyances, bills of sale, assurances, transfers, assignments,
consents, releases, discharges and other documents, necessary or
reasonably required in the opinion of the Purchaser, to transfer
effectively to the Purchaser good and marketable title to the
Purchased Assets free and clear of all mortgages, liens, charges,
security interests, pledges, adverse claims, conditional sale or other
title retention agreements, restrictions, demands, equities,
encumbrances and rights of any Person of every nature, kind and
description whatsoever including, without limiting the generality of
the foregoing, of the tax clearance certificates referred to in
Section 2.6 hereof with respect to the remittance of Ontario sales
taxes;
(c) the Vendors shall have delivered to the Purchaser possession of
the Purchased Assets including documents relating to the Business
contemplated in Section 2.1 hereof;
(d) the Purchaser shall have obtained or received all licenses,
permits, consents, approvals and authorizations from all Governmental
Entities under all applicable Laws, as may be necessary and
appropriate to enable the Purchaser to carry on the Business in the
same manner in which such Business in now being carried on by the
Vendors or as may be required to permit the change of ownership of the
Purchased Assets herein provided for to be completed, without
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affecting or resulting in the cancellation or termination of any
Permit or of any license or permit held by the Purchaser;
(e) the Vendors and RESI shall execute a non-competition agreement
whereby the Vendors and RESI agree to refrain from engaging in any
similar business to the Business within Canada for a period of five
(5) years from the Closing Date, which agreement shall be in
substantially the form as set forth in Schedule 7.2(e);
(f) on the Closing Date, and except as otherwise contemplated
hereunder, title to the Purchased Assets shall be free and clear of
all mortgages, liens, charges, security interest, pledges, adverse
claims, conditional sale or other title retention agreements,
restrictions, description whatsoever and there shall have been no
material change to the Purchased Assets;
(g) the Vendors shall provide to the Purchaser on the Closing Date
the written consent of each lessor or third party under the Equipment
Leases, Supply Contracts and Contracts to the assignment of same to
the Purchaser and each of the lessors' and third party's
acknowledgments that the Vendors are not in breach of any terms of
each of the Equipment Leases, Contracts and Supply Contracts;
(h) INTENTIONALLY BLANK
(i) INTENTIONALLY BLANK
(j) the Vendors shall have delivered to the Purchaser reasonable and
satisfactory evidence that the Vendors are at the Closing Date
residents of Canada within the meaning of the Income Tax Act (Canada);
(k) the Vendors shall have performed or complied with all of its
obligations, covenants and agreements hereunder;
(l) the Purchaser shall have satisfied itself
(i) as to the accuracy of the Financial Statements; and
(ii) that no material adverse change in the Business has
occurred or is likely to occur.
(m) the Purchaser shall have secured the approval of its board,
authorizing and approving the transaction of purchase and sale herein
contemplated, and shall have delivered to the Vendors a copy of such
resolution of the board of directors evidencing the due authorization
of the Purchaser to enter into this Agreement, to consummate the
transaction of purchase and sale herein contemplated and to otherwise
perform its obligations hereunder;
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(n) the transaction contemplated in and by the share purchase
agreement between Republic Environmental Systems, Inc., as vendor, and
Xxxxxx Environmental (Delaware), Inc., as purchaser, shall have been
completed;
(o) all of the representations and warranties of the Purchaser
contained in this Agreement or contained in any certificate or other
document delivered to the Vendors pursuant hereto shall be true and
correct on and as of the Closing Date with the same force and effect
as if such representations and warranties have been made on and as of
such date, regardless of the date as of which the information in this
Agreement or in any such certificate or document is given, and there
shall have been compliance with the covenants and obligations on the
part of the Purchaser contained herein which were to have been
complied with at or prior to Closing and the Purchaser shall have
delivered to the Vendors a certificate executed by the president or
chief executive officer of the Purchaser to that effect. The
acceptance of such certificate and the completion of the transaction
of purchase and sale herein contemplated shall not be a waiver of the
covenants, representations and warranties contained herein or in any
certificate or document given pursuant to this Agreement (except to
the extent that any such representations or warranties have been
modified by the information disclosed in the certificate so delivered
and accepted by the Vendors), which covenants, representations and
warranties shall continue in full force and effect as provided in
Section 8.1 hereof;
(p) the Purchaser shall have paid to the Vendors the amount payable
at Closing pursuant to Section 8.1;
(q) the Purchaser shall have performed on complied with all its
obligations, covenants and agreements hereunder; and
(r) the transaction contemplated in and by the share purchase
agreement between Republic Environmental Systems, Inc., as vendor, and
Xxxxxx Environmental (Delaware), Inc., as purchaser, shall have been
completed.
7.3 RISK OF LOSS: If, at or prior to the Closing, all or any part of the
Purchased Assets are lost, destroyed or damaged by fire or any other casualty,
event or circumstance or are expropriated or otherwise seized by governmental
or other lawful authority the Vendors shall immediately advise the Purchaser
thereof in writing and the Purchaser shall have the option, exercisable by
notice in writing to be given by the Purchaser to the Vendors within five (5)
business days of the Purchaser receiving the aforesaid notice from the Vendors
to either:
(a) reduce the Purchase Price by the fair market value of all or any
part of the Purchased Assets so lost, destroyed or damaged, or
(b) in regard to circumstances in which a material part of the
Purchased Assets is so lost destroyed or damaged, refuse to complete
the transaction contemplated
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herein by notice to the Vendors and in such event all parties hereto
shall be released from all obligations hereunder.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
8.1 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES: The
representations, warranties, covenants and agreements of the parties hereto
contained in this Agreement shall survive the Closing for a period of one (1)
year, save and except those representations and warranties made pursuant to
Section 4.1(p)(iii), which shall survive for a period of five (5) years.
8.2 INDEMNIFICATION BY VENDORS AND RESI: The Vendors and RESI covenant and
agree to indemnify and save harmless the Purchaser and its shareholders and
their officers, directors, employees, agents and representatives from and
against any and all losses, damages, liabilities, costs and expenses (including
reasonable legal fees and disbursements on a solicitor and his own client
basis) suffered or incurred by the Purchaser or any such other Person as a
result of, in consequence of or arising out of, under or by reason of:
(a) any representations or warranty of the Vendors contained in this
Agreement or contained in any document or certificate delivered by the
Vendors pursuant hereto or in connection with the completion of the
transaction herein contemplated being untrue, inaccurate or misleading
in any material respect;
(b) a breach by the Vendors in any respect of any of its covenants or
obligations contained herein or contained in any document or
instrument delivered by the Vendors pursuant hereto or in connection
with completion of the transaction contemplated herein; or
(c) any claim made against the Purchaser in relation to the Retained
Liabilities.
The Vendors and RESI have no obligation to indemnify an indemnified party under
Section 8.2 until the Purchaser has suffered (i) losses, claims or damages
related to or arising from a breach of the Vendors' representations and
warranties made pursuant to Section 4.1(p) for which the Vendors are
responsible hereunder in excess of an aggregate of Two Hundred and Fifty
Thousand Dollars ($250,000) (the "Environmental Indemnification Threshold"), or
(ii) losses, claims or damages for which the Vendors are responsible hereunder,
other than those relating to matters set forth in (i) above in excess of an
aggregate of One Hundred and Twenty-Five Thousand Dollars ($125,000) (the
"General Indemnification Threshold") and then only to the extent that such
losses, claims and damages exceed the respective indemnification threshold.
The Vendors shall not be liable for any losses, claims or damages once the
aggregate amount of all such losses, claims or damages paid, or due to be paid,
by the Vendors shall have reached $7,000,000.
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The Vendors shall be entitled to reduce the principal amount due under the Note
in satisfaction of any claims in respect of which it is obligated to indemnify
the Purchaser pursuant hereto.
8.3 INDEMNIFICATION BY PURCHASER: The Purchaser covenants and agrees to
indemnify and save harmless the Vendors and their shareholders and their
directors, offices, employees, agents and representatives (in respect of which
the Vendors hereby act as agent and trustee with respect thereto) from and
against any and all losses, damages, liabilities, costs and expenses (including
reasonable legal fees and disbursements on a solicitor and his own client
basis) suffered or incurred by the Vendors as a result of, in consequence of or
arising our of, under or by reason of:
(a) any representation or warranty of the Purchaser contained in this
Agreement or contained in any document or certificate delivered by the
Purchaser pursuant hereto or in connection with the completion of the
transaction herein contemplated being untrue, inaccurate or misleading
in any material respect;
(b) any other breach by the Purchaser in any respect of any of its
covenants or obligations contained herein or contained in any document
or instrument delivered by the Purchaser pursuant hereto or in
connection with the completion of the transactions contemplated
herein;
(c) any liability pertaining to the Business, which occurs or arises
after the Time of Closing in respect of an event or occurrence in a
period after the Closing Date, except for the Retained Liabilities,
and except for any liability resulting from a breach of the Vendors'
representations and warranties made hereunder or from their failure to
fulfill their covenants; or
(d) any liability pertaining to the Business arising directly or
indirectly from breaches of Environmental Laws by the Vendors,
Environmental Activity by the Vendors or the Release of Hazardous
Substances to the Natural Environment by the Vendors, except to the
extent such liability (i) results from a breach of any of the
representations or warranties given by the Vendors hereunder within
the respective survival period, (ii) results from a failure of the
Vendors to fulfill any of their covenants hereunder, or (iii) relates
to the Excluded Assets set forth in Schedule 2.2.
8.4 COLLECTION OF ACCOUNTS RECEIVABLE: If any Accounts Receivable, net
of any allowance for doubtful accounts, in excess of an aggregate amount of
Twenty-Five Thousand Dollars ($25,000) shall not have been collected within one
hundred and eighty days (180) from the Closing Date (the "Uncollected
Receivables"), the Uncollected Receivables shall thereupon be assigned to the
Vendors for collection. The Vendors shall forthwith make dollar-for-dollar
payment to the Purchaser in respect of all Uncollected Receivables so assigned
and the Purchaser shall thereupon assign to the Vendors all of the Purchaser's
rights and entitlement under the Uncollected Receivables. All costs associated
with such collection shall be borne by the Vendors.
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8.5 INDEMNIFICATION PROCEDURE:
(a) Any party seeking indemnification under this Article (the
"indemnified party") shall forthwith notify the party against whom a
claim for indemnification is sought hereunder (the "indemnifying
party") in writing, which notice shall specify, in reasonable detail,
the nature and estimated amount of the claim. If a claim by a third
party is made against an indemnified party, and if the indemnified
party intends to seek indemnity with respect thereto under this
Article, the indemnified party shall promptly (and in any case within
20 days of such claim being made) notify the indemnifying party of
such claim with reasonable particulars. The indemnifying party shall
have 20 days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing and at its expense, the
settlement or defense thereof, and the indemnified party shall
cooperate with the indemnifying party in connection therewith; except
that with respect to settlements entered into by the indemnifying
party (i) the consent of the indemnified party shall be required if
the settlement provides for equitable relief against the indemnified
party, which consent shall not be unreasonably withheld or delayed;
and (ii) the indemnifying party shall obtain the approval of the
indemnified party. If the indemnifying party undertakes, conducts and
controls the settlement or defense of such claim (i) the indemnifying
party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party,
provided that the fees and expenses of such counsel shall be borne by
the indemnified party; and (ii) the indemnifying party shall promptly
reimburse the indemnified party for the full amount of any Loss
resulting from any claim and all related expenses (other than the fees
and expenses of counsel as aforesaid) incurred by the indemnified
party in respect of any valid claim for indemnification under this
Agreement. The indemnified part shall not pay or settle any claims so
long as the indemnifying party is reasonably contesting any such claim
in good faith on a timely basis. Notwithstanding the two immediately
preceding sentences, the indemnified party shall have the right to pay
or settle any such claim provided that in such event it shall waive
any right to indemnity therefor by the indemnifying party.
(b) With respect to third party claims, if the indemnifying party
does not notify the indemnified party within 20 days after the receipt
of the indemnified party's notice of a claim of indemnity hereunder
that it elects to undertake the defense thereof, the indemnified party
shall have the right, but not the obligation, to contest, settle or
compromise the claim in the exercise of its reasonable judgment at the
expense of the indemnifying party.
(c) In the event of any claim by a third party against an indemnified
party, the defense of which is being undertaken and controlled by the
indemnifying party, the indemnified part will use all reasonable
efforts to make available to the indemnifying party those employees
whose assistance, testimony or presence is necessary to assist the
indemnifying party in evaluating and in defending any such claims.
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(d) With respect to third party claims, the indemnified party shall
make available to the indemnifying party or its representatives on a
timely basis all documents, invoices and financial ledgers, records
and other materials in the possession of the indemnified party, at the
expense of the indemnifying party, reasonably required by the
indemnifying party for its use in defending any claim and shall
otherwise cooperate on a timely basis with the indemnifying part in
the defense of such claim.
(e) With respect to the Environmental Indemnification Threshold and
the Indemnification Threshold, the Purchaser shall provide to the
Vendors an accounting at three (3) month intervals, commencing with
the first three (3) month period after the Closing Date, summarizing
the costs which the Purchaser claims are being assessed to the
respective threshold amounts. Upon request of the Vendors, the
Purchaser shall submit to the Vendors all documentation supporting
such costs, including consultant and contractor invoices.
(f) With respect to any liability for income, corporate, sales,
excise, or other tax or other liability which has resulted in an
encumbrance against the property of the indemnified party, the
indemnifying party's right to so contest shall only apply after such
payment of such re-assessment or the provision of such security as is
necessary to remove such encumbrance on the property of the
indemnified party.
8.6 REMEDIATION REQUIREMENTS: The Purchaser agrees that any remediation
performed by the Purchaser or the Vendors shall be consistent with the
industrial use of the Real Property and shall make maximum benefit, to the
extent commercially reasonable to do so, of institutional controls, engineering
controls and natural remediation pursuant to Environmental Laws in order to
minimize investigation and remediation costs to the extent feasible.
8.7 VENDORS' RIGHT TO ASSERT CLAIMS: Nothing in this Agreement shall
prevent the Vendors from asserting any claim which they may have against any
person, corporation, partnership or other entity (other than the Purchaser or
any of its affiliated companies) related to matters which are the subject of
the Vendors' indemnification obligations pursuant to Section 8.2; provided,
however, that in no case shall the Vendors' obligation to indemnify the
Purchaser hereunder be conditional upon the assertion or ultimate success or
any such claim. The Purchaser agrees to assign to the Vendors any claim in
respect of such indemnified matters which the Purchaser may have against any
Person, other than claims against any Persons the assertion of which, in the
reasonable judgment of the Purchaser, would interfere with the on-going
business relations of the Purchaser with such Persons. The Purchaser agrees
that any amounts recovered by the Vendors regarding any claims asserted by them
in accordance with the terms hereof shall be retained solely by the Vendors.
8.8 LETTERS OF CREDIT AND BONDS: The Purchaser shall, as soon as is
reasonably practicable, and in any case within 90 days after the Closing date,
replace the outstanding letters of credit, bonds, financial assurances,
guarantees and security interests ("Financial
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Assurances") set forth in Schedule 8.8 which the Vendors have in place in
relation to the Business and shall indemnify and hold harmless the Vendors from
any liabilities arising therefrom. Any proceeds from the surrender,
satisfaction or replacement of any of the above shall remain the asset of the
Vendors or RESI, as the case may be.
ARTICLE 9
GENERAL CONTRACT PROVISIONS
9.1 NOTICE:
(1) Any notice, designation, communication, request, demand or other
document, required or permitted to be given or sent or delivered hereunder to
any party hereto shall be in writing and shall be sufficiently given or sent or
delivered if it is:
(a) delivered personally to an officer or director of such party;
(b) sent to the party entitled to receive it by registered mail,
postage prepaid, mailed in Canada or the United States, or
(c) sent by telecopy machine.
(2) Notices shall be sent to the following addresses or telecopy numbers:
(a) in the case of the Vendors:
c/o Republic Environmental Systems, Inc.
000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
(b) in the case of the Purchaser:
Xxxxxx Enterprises Inc.
000 Xxxx Xxxxxx Xxxx
P. O. Box 2440 LCD 1
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: General Counsel
Fax No.: (000) 000-0000
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(c) in the case of RESI:
Republic Environmental Systems, Inc.
000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
or to such other address or telecopier number as the party entitled to
or receiving such notice, designation, communication, request, demand
or other document shall, by a notice given in accordance with this
section, have communicated to the party giving or sending or
delivering such notice, designation, communication, request, demand or
other document.
Any notice, designation, communication, request, demand or other
document given or sent or delivered as aforesaid shall
(c) if delivered as aforesaid, be deemed to have been given, sent,
delivered and received on the date of delivery;
(d) if sent by mail as aforesaid, be deemed to have been given,
sent, delivered and received (but not actually received) on the tenth
Business Day following the date of mailing, unless at any time between
the date of mailing and the fourth Business day thereafter there is a
discontinuance or interruption of regular postal service, whether due
to strike or lockout or work slowdown affecting postal service at the
point of dispatch or delivery or any intermediate point, in which case
the same shall be deemed to have been given, sent, delivered and
received in the ordinary course of the mails, allowing for such
discontinuance of interruption of regular postal service, and,
(e) if sent by telecopy machine, be deemed to have been given,
sent, delivered and received on the date the sender receives the
telecopy answer back confirming receipt by the recipient.
9.2 TIME OF ESSENCE: Time shall be of the essence of this Agreement and
of every part hereof and no extension or variation of this Agreement shall
operate as a waiver of this provision.
9.3 FURTHER ASSURANCES: The parties hereto shall, with reasonable
diligence do all such things and provide all such reasonable assurances as may
be required to consummate the transactions contemplated hereby and each party
shall provide such further documents or instruments required by any other party
as may be reasonably necessary or desirable to effect the purpose of this
Agreement and to carry out its provisions, whether before or after the
consummation of the transaction contemplated herein.
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9.4 EXPENSES: Each of the parties hereto shall bear its own respective
expenses (including, but not limited to, all compensation and expenses of
counsel, financial advisors, consultants, actuaries, auditors, brokerage
finder's fees or other fees or commissions) incurred in connection with the
negotiations, preparation and execution of this Agreement, the consummation of
the transaction contemplated hereto and any post-closing matters. The Vendors
shall indemnify and save harmless the Purchaser from any such fees or
commissions payable by the Business.
9.5 GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario, which shall be deemed to
be the proper law hereof. The Courts of the Province of Ontario shall have
jurisdiction to entertain and determine all dispute and claims, both at law and
in equity, arising our of or in any way connected with the construction, breach
or alleged, threatened or anticipated breach of this Agreement, and shall have
jurisdiction to hear and determine all questions as to the validity, existence
or enforceability thereof.
9.6 ENTIRE AGREEMENT: This Agreement shall constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties hereto,
and there are no representations, warranties or agreements between the parties
hereto except as set forth in contemplated herein or in any document or
instrument delivered pursuant hereto. This Agreement shall not be amended
except by a memorandum in writing signed by all of the parties hereto and any
amendment hereof shall be null and void and shall not be binding upon any party
which has not given its consent as aforesaid.
9.7 ASSIGNMENT: Neither this Agreement nor any rights or obligations
hereunder shall be assignable by any party hereto without the prior written
consent of the other parties hereto, except that the Purchaser shall, without
any prior consent required, be entitled to assign this Agreement to a related
or affiliated company to be incorporated in the Province of Ontario, provided,
however, that in no case shall such assignment relieve the Purchaser from its
obligations hereunder. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, legal representative, successors and permitted assigns.
9.8 PUBLICITY: Neither the Vendors nor the Purchaser shall issue any
press release or make any other public statement or announcement relating to or
connected with or arising out of this Agreement or the matters contained
herein, without consulting in advance with the other party on the form, timing,
contents, manner of presentation and publication thereof. If disclosure is
required by law or by any stock exchange, the disclosing party shall consult in
advance with the other party hereto and attempt in good faith to reflect such
other party's concerns in the required disclosure.
9.9 COUNTERPARTS: This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an
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original and such counterparts together shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such counterpart.
9.10 STORAGE AND ACCESS TO RECORDS: The Purchaser agrees to provide the
Vendors (as well as the Vendors' accountants, auditors or other
representatives) reasonable use of the Purchaser's (and Vendors' former)
employees to gain access to the books and records forming part of the Purchased
Assets and otherwise provide reasonable access to such books and records during
normal business hours at the premises of the Business, to the extent necessary
to complete any financial statements required for this Agreement or otherwise
required by the Vendors, to collect any accounts receivable re-assigned by the
Purchaser to the Vendors, to prosecute or defend claims or lawsuits, to prepare
tax returns and to comply with audits by taxing authorities. The Purchaser
will not dispose of any such books and records that were compiled by the
Vendors without prior written notice to the Vendors and providing the Vendors
with a reasonable opportunity to re-possess such books and records.
9.11 INTERIM PERIOD. The Vendors and RESI hereby agree that during the
Interim Period, they shall not enter into any discussions or negotiations with
any third party in respect of the sale of the Business or the Purchased Assets,
or substantially all of the assets or shares of the Vendors.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties hereto have hereunto set their
respective hands and seals as of the date first written above.
REPUBLIC ENVIRONMENTAL REPUBLIC ENVIRONMENTAL
SYSTEMS (FORT ERIE) LTD. SYSTEMS (BRANTFORD) LTD.
PER: PER:
---------------------------- ----------------------------
REPUBLIC ENVIRONMENTAL XXXXXX ENTERPRISES INC.
SYSTEMS (XXXXXXXXX) LTD.
PER: PER:
---------------------------- ----------------------------
REPUBLIC ENVIRONMENTAL
SYSTEMS, INC.
PER:
----------------------------
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SCHEDULE 3.3(b)
GUARANTY AGREEMENT
This Guaranty Agreement ("Guaranty") is made on July 23, 1997, by
XXXXXX SERVICES CORP., an Ontario corporation (the "Guarantor") (which term
shall be deemed to include its distributees, successors and assigns).
RECITALS
A. XXXXXX ENTERPRISES, INC. ("Purchaser"), REPUBLIC ENVIRONMENTAL
SYSTEMS, INC. and REPUBLIC ENVIRONMENTAL SYSTEMS (BRANTFORD) LTD. ("Vendor")
are parties to an Asset Purchase Agreement dated June 13, 1997 (the
"Agreement").
B. Pursuant to the Agreement, Purchaser has substantial
obligations to Vendor and is delivering to Vendor a promissory note (the
"Note").
C. Execution and delivery of this Guaranty is required pursuant
to Section 3.3 of the Agreement.
D. Guarantor is executing and delivering this Guaranty in
consideration of and as inducement for Vendor closing the transactions under
the Agreement.
E. Guarantor is the parent company of Purchaser and will derive a
substantial and direct benefit from the consummation of the transactions under
the Agreement.
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor agrees as follows:
1. GUARANTY. Guarantor, intending to be legally bound,
hereby guarantees, absolutely and unconditionally, to Vendor the full and
prompt payment of and any and all amounts (including, without limitation,
Vendor's legal expenses and reasonable attorneys' fees and disbursements)
payable by Purchaser under the Agreement and the Note, and hereby further
guarantees the full and timely performance and observance of all of the
covenants, terms, indemnities, conditions and agreements therein provided to be
performed and observed by Purchaser; and Guarantor hereby covenants and agrees
to and with Vendor that if default shall at any time be made by Purchaser in
the payment of any amounts due under the Agreement or the Note, or if Purchaser
should default in the performance and observance of any of the terms,
covenants, agreements, indemnities and conditions contained in the Agreement or
the Note, Guarantor shall and will forthwith pay amounts and will faithfully
perform, observe and fulfill all of such terms, covenants, indemnities,
agreements and conditions and will forthwith pay to Vendor all damages that
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may arise in consequence of any default by Purchaser under the Agreement or the
Note, including, without limitation, all reasonable attorneys' fees, and
disbursements incurred by Vendor or caused by any such default or the
enforcement of this Guaranty.
2. EFFECTIVENESS. This Guaranty is an absolute and
unconditional guaranty of payment (and not of collection) and of performance.
The liability of Guarantor is co-extensive with that of Purchaser. Guarantor
hereby expressly agrees that the validity of this Guaranty and the obligations
of Guarantor hereunder shall in no way be terminated, affected, diminished or
impaired by reason of: (a) the assertion or the failure to assert by Vendor
against Purchaser of any of the rights or remedies reserved to Vendor pursuant
to the terms, covenants and conditions of the Agreement or the Note, or (b) by
non-liability of Purchaser under the Agreement or the Note by reason of
Purchaser's insolvency or discharge in bankruptcy.
3. CONTINUING GUARANTY. This Guaranty is a continuing
guaranty, and the liability of Guarantor hereunder shall in no way be affected,
modified or diminished by reason of: (a) any assignment of the Agreement or
the Note, or (b) any extension of time that may be granted by Vendor to
Purchaser, or (c) any consent, indulgence or other action, inaction or omission
under or in respect of the Agreement or the Note, or (d) any bankruptcy,
insolvency, reorganization, liquidation, arrangement, assignment for the
benefit of creditors, receivership, trusteeship or similar proceeding affecting
Purchaser, whether or not notice thereof is given to Guarantor.
4. BANKRUPTCY, ETC. Should Vendor be obligated by any
bankruptcy or other law to repay to Purchaser or to Guarantor or to any
trustee, receiver or other representative of either of them, any amounts
previously paid, this Guaranty shall be reinstated in the amount of any such
repayment. Vendor shall not be required to litigate or otherwise dispute its
obligations to make such repayments if Vendor, in good faith, believes that
such obligation exists.
5. NO WAIVER. No delay on the part of Vendor in exercising
any right, power or privilege under this Guaranty or failure to exercise the
same shall operate as a waiver of or otherwise affect any such right, power or
privilege, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. No waiver or modification of any provision of this Guaranty nor any
release or termination of this Guaranty shall be effective unless in writing,
signed by Vendor; nor shall any such waiver be applicable except in the
specific instance for which given.
6. EXERCISE OF RIGHTS. All of Vendor's rights and remedies
under the Agreement, the Note and under this Guaranty, now or hereafter
existing at law or in equity or by statute or otherwise, are intended to be
distinct, separate and cumulative, and
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no exercise or partial exercise of any such right or remedy therein or herein
mentioned is intended to be in exclusion of or a waiver of any of the others.
7. PAYMENTS. Guarantor agrees that whenever at any time or
from time to time Guarantor shall make any payment to Vendor or perform or
fulfill any term, covenant or condition hereunder or under the Agreement or the
Note on account of the liability of Guarantor hereunder, Guarantor will notify
Vendor in writing that such payment or performance, as the case may be, is for
such purpose. No such payment or performance by Guarantor pursuant to any
provision hereof shall entitle Guarantor, by subrogation or otherwise, to the
rights of Vendor to any payment by Purchaser or out of the property of
Purchaser, except after payment of all sums or fulfillment of all covenants,
terms, conditions or agreements to be paid or performed by Purchaser.
8. ESTOPPEL. Guarantor agrees that Guarantor will at any
time and from time to time, within ten business days following written request
by Vendor, execute, acknowledge and deliver to Vendor a statement certifying
that this Guaranty is unmodified and in full force and effect (or if there has
been any modification, that the same is in full force and effect as modified
and stating such modification). Guarantor agrees that such certificate may be
relied on by anyone holding or proposing to acquire any interest in Vendor.
9. WAIVER OF JURY TRIAL. AS A FURTHER INDUCEMENT TO VENDOR TO
CLOSE UNDER THE AGREEMENT AND IN CONSIDERATION THEREOF, GUARANTOR COVENANTS AND
AGREES THAT IN ANY ACTION OR PROCEEDING BROUGHT ON, UNDER OR BY VIRTUE OF THIS
GUARANTY, GUARANTOR SHALL AND DOES HEREBY WAIVE TRIAL BY JURY.
10. GOVERNING LAW. Without regard to principles of conflicts of
laws, the validity, interpretation, performance and enforcement of this
Guaranty shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
11. LEGAL CAPACITY. Guarantor warrants and represents to Vendor
that Guarantor has the legal right and capacity to execute this Guaranty. In
the event that this Guaranty shall be held ineffective or unenforceable by any
court of competent jurisdiction, then Guarantor shall be deemed to be Purchaser
under the Agreement and the Note with the same force and effect as if Guarantor
were expressly named as Purchaser therein.
12. NUMBER; GENDER. All terms and words in this Guaranty,
regardless of the number or gender in which they are used, shall be deemed to
include any other number or any other gender as the context may require.
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13. DEFAULT. If Guarantor fails to pay any amount payable
under this Guaranty when due, interest on such amount shall accrue from the
date such amount was due until paid at the prime rate per annum (or substitute
similar rate) quoted by Citibank, N.A., plus 4% on the basis of a 360-day year
for the actual number of days elapsed.
14. JURISDICTION; SERVICE OF PROCESS. Guarantor
irrevocably submits to the jurisdiction of any Pennsylvania State or Federal
court sitting in the Commonwealth of Pennsylvania over any suit, action or
proceeding arising out of or relating to this Guaranty. Guarantor hereby
agrees that Vendor shall have the option in its sole discretion to lay the
venue of any such suit, action or proceeding in the courts of the Commonwealth
of Pennsylvania or the United States of America for the District of
Pennsylvania. Guarantor irrevocably waives to the fullest extent permitted by
law any objection which Guarantor may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in such court and any
claim that any suit, action or proceeding brought in such court has been
brought in an inconvenient forum. Guarantor agrees that a final judgment in
any such suit, action or proceeding brought in such court shall be conclusive
and binding upon Guarantor. Guarantor hereby irrevocably appoints Purchaser as
authorized agent to accept, on behalf of Guarantor, service of any and all
process which may be served in any suit, action or proceeding of the nature
referred to above. Process may be served in any suit, action or proceeding of
the nature referred to above by any method permitted by law or by registered or
certified mail, postage prepaid, return receipt requested, to Purchaser.
Guarantor agrees that such service shall be deemed in every respect effective
service of process upon Guarantor in any such suit, action or proceeding and
shall, to the fullest extent permitted by law be taken and held to be a valid
personal service upon and personal delivery to Guarantor.
IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty as
of the date first above written.
ATTEST: XXXXXX SERVICES CORP.
By By
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Name: Name:
Title: Title:
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