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EXHIBIT 2.12
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made this 28th day
of March, 1999, by and between Protocol Holdings, Inc., a Delaware corporation
("Parent"), Protocol Communications, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent ("Buyer"), 3223574 Canada, Inc. a Canadian
corporation (the "Company"), Media Express, Inc., a Canadian corporation ("ME"),
METC Financial Services Inc., a Canadian corporation ("METC") (ME and METC are
collectively referred to as the "Affiliates"), and the stockholders of the
Company listed on the signature pages hereto (collectively, the "Sellers").
W I T N E S S E T H:
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WHEREAS, the Affiliates and the Company are principally engaged in the
business of supplying call center services (the "Business") and are the end user
subscribers for certain toll free telephone numbers listed on Schedule 2.1(r)
hereto (the "Toll Free Telephone Numbers");
WHEREAS, at the Closing (as hereinafter defined) the Sellers shall be
the owners of all of the issued and outstanding capital stock of the Company
(the "ME Stock"); and
WHEREAS, the Sellers desire to sell to Buyer, and Buyer desires to
purchase from the Sellers, all of the ME Stock, all in the manner and subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1.A. DEFINITIONS.
1.A.1. For the purposes of this Agreement the following terms shall
have the following meaning:
(a) "Permitted Encumbrances" means:
(i) liens for taxes, assessments or governmental
charges not due and payable;
(ii) liens reserved in or exercisable under any lease
and for compliance with the terms of such lease; and
(iii) security given in the ordinary course of
business to a public utility or any municipality or other governmental body in
connection with the operation of the Business; and
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In this Exhibit, "[***]" represents material omitted from this Exhibit and filed
separately with the Securities and Exchange Commission and for which
Confidential Treatment has been requested.
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(iv) any legal hypothec in favor of the Landlord
relating to the leased premises located at 0000 Xx. Xxxxxxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxx X0X 0X0.
(b) "Conversion Rate" means the mid-point between the buying
and selling spot rates of the Bank of Canada as of noon on the day before the
Closing Date for the purchase or sale of Canadian currency in exchange for
United States currency.
1.B. INTERPRETATION.
1.B.1 Any reference herein to "to the knowledge of" shall be deemed to
mean to the best of the information, knowledge and belief of Xxxxxx Xxxxx and
Xxxxx Xxxxx.
1. TERMS OF ACQUISITION.
1.1 STOCK PURCHASE. On the terms and subject to the conditions
of this Agreement, on the Closing Date (as hereinafter defined), each Seller
shall sell, convey, transfer, assign and deliver ("Transfer") to Buyer, and
Buyer shall purchase and acquire from such Seller, all right, title and interest
of such Seller, legal and equitable, beneficially and of record, in and to the
number of shares of ME Stock set forth opposite the name of such Seller on
Schedule 1.1 hereto. The certificates evidencing the ME Stock shall be delivered
at the Closing (as hereinafter defined) to Buyer, free and clear of all prior
claims, hypothecs, liens, claims, security interests and encumbrances,
accompanied by duly executed stock powers (endorsed in blank, with signatures
guaranteed), any necessary stock transfer tax stamps affixed thereto, and any
other documents useful or necessary to give effect to the Transfers contemplated
herein.
1.2 PURCHASE PRICE. (a) As the purchase price for all of the ME
Stock (the "Purchase Price"), the Buyer shall pay to the Sellers a sum which is
the aggregate of the following, subject to the adjustments referred to in
Section 1.4, Section 1.5 and Section 1.6 below:
(i) an amount of [******************************];
(ii) an amount of [******************************] ;
(iii) an amount of Canadian funds equivalent to
[******************************] converted at the Conversion Rate;
(iv) an amount of [*****************************
*****].
(b) The Purchase Price shall be satisfied as follows:
(i) subject to the adjustments referred to in
Section 1.2(a) above, the amounts mentioned in Sections 1.2(a)(i), (ii) and
(iii) (collectively, the "Cash Purchase Price") shall be paid at the times
hereafter mentioned;
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(ii) subject to the adjustments referred to in
Section 1.2(a) above, the amount mentioned in Section 1.2(a) (iv) shall be paid
by the issuance and allotment to the Sellers of [*} shares of Common Stock of
Parent (the "Parent Common Stock"). The Parent Common Stock shall be issued at
[*} per share (which the parties agree constitutes the fair market value of the
Parent Common Stock) as fully paid and non-assessable shares and shall be issued
to the Sellers as hereafter mentioned, the further transfer of which shall be
restricted by the Securities Act of 1933, as amended (the "Securities Act") and
as provided under Section 2.2(g) hereof.
(c) The Purchase Price shall be:
(i) allocated among and payable to, the Sellers
based upon the percentages set forth on Schedule 1.2 hereof; and
(ii) shall be allocated to the shares comprising the
ME Stock as follows:
(A) first to such of the ME Stock as
comprise the Class B, Class E, Class F and Class G shares, an amount equal to
the [*************************************************], less an aggregate
amount of [*****************];
(B) as to the portion of the Purchase Price
payable by way of allotment of Parent Common Stock, to such of the ME stock as
comprise the Class B, Class E, Class F and Class G shares, as and when payable
as herein provided;
(C) then to such of the ME Stock as comprise
Class A shares, the balance of the Purchase Price;
(D) any adjustments to the Purchase Price as
provided herein shall be allocated entirely to such of the ME Stock as comprise
Class A shares. To the extent that the adjustment in the Purchase Price is
represented by a reduction in the number of shares of Parent Common Stock to be
issued pursuant to the provisions hereof, the Cash Purchase Price allocated to
such of the ME Stock as comprise the Class B, Class E, Class F and Class G
shares shall be deemed to have been increased, and the Cash Purchase Price
allocated to such of the ME Stock as comprise the Class A shares shall be deemed
to have been reduced, by the amount of such adjustment, calculated at the rate
of the Canadian equivalent of [*********************] (converted at the
Conversion Rate) for each share of Parent Common Stock not issued as the result
of such adjustment.
(d) The Cash Purchase Price payable pursuant to Sections
1.2(a)(i) and 1.2(a)(ii) shall be payable in cash by wire transfer of
immediately available funds to a joint account of the Sellers designated by
Xxxxxx Xxxxx and Xxxxx Xxxxx ("Sellers' Rep") in writing prior to Closing and
shall be due as follows: (i) at Closing an amount equal to [************]; and
(ii)
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[**********] payable upon the final determination of FY99 EBITDA pursuant to
(and as defined in) Section 1.4 hereof, and subject to adjustment as therein
provided. The Cash Purchase Price payable pursuant to Section 1.2(a)(iii) shall
be payable as and to the extent set forth in Section 1.5 hereof, provided that
(i) [************] (the "Initial Escrow Deposit") shall be paid on the Closing
Date to Sellers to be paid immediately to the account of United States Trust
Company of New York, as escrow agent ("Escrow Agent") designated in the escrow
agreement referred to in Section 4.1(q) hereof (as the same may be amended from
time to time, the "Escrow Agreement") and (ii) the balance (the "Additional
Escrow Deposits") (together with the Initial Escrow Deposit, the "Escrow
Amounts") shall be paid to Sellers to be paid immediately to the Escrow Agent in
accordance with Section 1.5 hereof, such Escrow Amounts to be held and disbursed
by the Escrow Agent pursuant to the terms of the Escrow Agreement and Section
1.5 hereof. The Cash Purchase Price payable pursuant to Section 1.2(a)(iii)
shall be subject to adjustment as provided in Section 1.5 and the Sellers shall
be entitled to receive from the Escrow Agent the Escrow Amounts only to the
extent provided in Section 1.5 hereof.
(e) The Parent Common Stock shall be issued (i) [********]
shares in the aggregate at Closing; (ii) [*****] shares, in the aggregate, upon
the final determination of FY99 EBITDA pursuant to Section 1.4 hereof if the
condition set forth in Section 1.4(d) is met; (iii) [********] shares, in the
aggregate, upon the final determination of the FY00 EBITDA pursuant to (and as
defined in) Section 1.5 hereof and subject to adjustment as therein provided;
and (iv) [****] shares, in the aggregate, upon the final determination of the
FY01 EBITDA pursuant to (and as defined in) Section 1.6 hereof and subject to
adjustment as therein provided. The Sellers' Rep shall be entitled to direct the
Parent to issue up to [*****] shares of Parent Common Stock to employees of the
Business designated by the Sellers' Rep, in lieu of the Sellers (the "First
Designation"). The shares so designated shall be issued by the Parent to such
employees upon the execution by such employees of an investment letter whereby
such employees shall agree to be bound by the terms and conditions of the
Shareholders Agreement referred to in Section 4.1(h) hereof and the amount of
such Parent Common Stock so issued to such employees shall be deducted from the
Parent Common Stock otherwise issuable to the Sellers. The Parent shall, in
likewise manner, and for no consideration, also issue to employees of the
Business designated by the Sellers' Rep (who may be different employees than
those designated in the First Designation) the same number of shares of Parent
Common Stock as were issued in connection with the First Designation upon the
execution by such employees of an investment letter whereby such employees shall
agree to be bound by the terms and conditions of the Shareholders Agreement
referred to in Section 4.1(h) hereof.
1.3 CLOSING DATE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place either at the offices of Buyer's
counsel in Boston, Massachusetts or at the offices of Sellers' counsel in
Montreal, Quebec as agreed to by the parties, at 10:00 A.M., on April 21, 1999,
or at such other place and/or on such other date and time as shall be agreed
upon by Buyer and the Sellers' Rep. (the "Closing Date").
1.4 FY99 PURCHASE PRICE ADJUSTMENT.
(a) On or before May 31, 1999, Sellers shall, at their sole
expense, cause Messrs. Boisjoli, Sabban, Sabbag, Ziri and Malka (the "Sellers'
Accountants") to deliver to the representatives of the Buyer ("Buyer") an
audited balance sheet as of April 30, 1999 (the
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"April 30 Balance Sheet") and an audited balance sheet and related statements of
income, retained earnings and cash flows of the Company for the Company's fiscal
year ended January 31, 1999 (the "FY99 Financial Statements"), all of which
financial statements shall be prepared on a consolidated basis and in accordance
with generally accepted accounting principles in the United States ("GAAP")
consistently applied with the Seller's past practices, except to the extent such
past practices are inconsistent with GAAP. The parties acknowledge that the
foregoing documentation (collectively the "Financial Statements") may be
delivered IN SERIATIM, in which event the provisions hereafter mentioned shall
apply with respect to each of the documentation as and when the same are
delivered. The cost of the preparation of the Financial Statements shall be
borne by the Sellers.
(b) The Buyer shall be permitted to have its auditors KPMG
Peat Marwick LLP (the "Buyer's Accountants") review the Financial Statements and
ask questions to personnel of the Company, the Affiliates, the Sellers and the
Sellers' Accountants with respect to the preparation thereof. The Buyer's
Accountants shall have prompt access to the working papers of the Sellers'
Accountants with respect to the preparation of the Financial Statements.
If the Buyer wishes to dispute any matter in any of the Financial Statements, it
may do so by notice ("Notice of Dispute") to either Xxxxxx Xxxxx or Xxxxx Xxxxx
on behalf of the Sellers given within thirty (30) calendar days of the delivery
of the applicable Financial Statements to the Buyer and Buyer's having been
provided access to the related work papers of Sellers' Accountants. A Notice of
Dispute shall specify the basis for each objection. The parties shall use their
best efforts to amicably resolve any matters identified in a Notice of Dispute
as promptly as practicable. If any such dispute shall not have been resolved
within thirty (30) calendar days following the date on which the Notice of
Dispute is given, then such unresolved matters shall be referred to a major
independent accounting firm agreed to by the parties for resolution (the
"Independent Accountants"). In the event that the parties are not able to agree
on the Independent Accountants within five (5) days after the expiration of the
foregoing thirty (30) calendar day period, the Independent Accountants shall be
designated jointly by the Buyer's Accountants and the Sellers' Accountants
within five (5) business days thereafter. The Independent Accountants shall
resolve all disputes that have been submitted to them within thirty (30)
calendar days after the matter has been referred to them. The determination of
the Independent Accountants shall be in writing, delivered to Sellers' Rep and
Buyer, and shall be final and binding on the parties.
If no Notice of Dispute is given within the initial thirty (30) day period
prescribed above, then the Financial Statements as prepared by the Sellers'
Accountants shall be final and binding on the parties with respect to any
adjustments required to be made pursuant to the provisions of this agreement
relating to such Financial Statements. If a Notice of Dispute is given in
accordance with this Section 1.4(b), then the Financial Statements shall be
amended for all purposes of this agreement following the agreement of the
parties or failing such agreement, following the decision of the Independent
Accountants and such amended Financial Statements shall be final and binding on
the parties with respect to any adjustments required to be made hereunder
relating to such Financial Statements.
In the event of a dispute, the fees and disbursements of the Sellers'
Accountants shall be borne by the Sellers. In the event of a dispute, the fees
and disbursements of the Buyer's Accountants shall
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be borne by the Buyer. The fees and disbursements of the Independent
Accountants, if any, shall be shared equally by the Buyer on the one hand and
the Sellers, jointly and severally, on the other hand.
(c) The Cash Purchase Price shall be adjusted in each of the
following instances, based on the Financial Statements, as finally determined in
accordance herewith, by the amount (the "FY99 Adjustment Amount") determined as
follows:
(i) in the event that the sum of the Canadian dollar
equivalent of [**********************************************************] based
on the Conversion Rate shall exceed FY99 EBITDA (as defined below), the Cash
Purchase Price shall be reduced by an amount equal to [***] Canadian for each
$1.00 Canadian of the amount by which the sum of the Canadian dollar equivalent
of [**************************************************] based on the Conversion
Rate shall exceed FY99 EBITDA (rounded down to the nearest whole dollar),
provided, however, that such reduction shall only occur if the sum of the
Canadian dollar equivalent of [********] based on the Conversion Rate shall
exceed FY99 EBITDA;
(ii) in the event that the sum of [*********]
Canadian shall exceed Net Current Assets (as defined below), the Cash Purchase
Price shall be reduced by an amount equal to [****] Canadian for each $1.00
Canadian of such excess (rounded down to the nearest whole dollar) (the "NCA
Reduction");
(iii) in the event that Net Current Assets shall
exceed the sum of [********] Canadian, the Cash Purchase Price shall be
increased by an amount equal to [*****] Canadian for each $1.00 Canadian of such
excess (rounded down to the nearest whole dollar), provided, however, that such
increase shall not exceed [*******] Canadian (the "NCA Increase");
(iv) in the event that Net Current Assets shall
exceed April 30 Net Current Assets (as defined below), the Cash Purchase Price
shall be reduced as follows:
(A) If an NCA Increase is made pursuant to
(iii) above and if the amount by which Net Current Assets exceeds April 30 Net
Current Assets (the "Deficiency Amount") is less than or equal to the NCA
Increase, then the amount of the NCA Increase shall be reduced by the Deficiency
Amount;
(B) If an NCA Increase is made pursuant to
(iii) above and if the Deficiency Amount is greater than the NCA Increase, then
the amount of the NCA Increase shall be reduced to zero by a portion of the
Deficiency Amount and the Cash Purchase Price shall be (i) reduced by the
remainder of the Deficiency Amount (the "Deficiency Amount Remainder") and (ii)
increased by an amount, if any, equal to the amount of cash used by the Company
to purchase fixed assets during the period from January 31, 1999 to April 30,
1999 (the "Fixed Asset Amount"), provided, however, that the Fixed Asset Amount
shall not exceed the lesser of [********] Canadian or the Deficiency Amount
Remainder;
(C) If an NCA Reduction is made pursuant to
(ii) above, the Cash Purchase Price shall be (i) reduced by the Deficiency
Amount and (ii) increased by the
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Fixed Asset Amount, if any, provided, however, that the Fixed Asset Amount shall
not exceed the lesser of [********] Canadian or the Deficiency Amount.
(d) In the event that the FY99 EBITDA shall exceed the
Canadian dollar equivalent of the sum of [*********************************
***************] based on the Conversion Rate, Parent shall issue to the
Sellers, within three (3) business days of the final determination of the
Financial Statements in accordance with Section 1.4(b) above, in the aggregate
[******] shares of the Parent Common Stock.
(e) Within three (3) business days of the final
determination of the Financial Statements in accordance with Section 1.4(b)
above, (i) each Seller shall pay to Buyer (whether or not the sum of such FY99
Adjustment Amounts shall exceed the portion of the Cash Purchase Price received
by such Seller) his or her share (based on the percentages set forth on Schedule
1.2 hereto) of each FY99 Adjustment Amount calculated pursuant to Sections
1.4(c)(i), 1.4(c)(ii) and 1.4(c)(iv) above, it being understood that the Sellers
shall be jointly and severally responsible for the payment of such amounts; and
(ii) Buyer shall pay to the Sellers the aggregate FY99 Adjustment Amount
calculated pursuant to Section 1.4(c)(iii) above, by wire transfer of
immediately available funds to an account designated in writing by Sellers' Rep
or Buyer, as the case may be.
(f) For purposes hereof, (i) "FY99 EBITDA" shall mean the
earnings of the Company for its fiscal year ended January 31, 1999, as set forth
in the FY99 Financial Statements before deduction for interest, taxes,
depreciation and amortization, in each case, determined in accordance with GAAP,
as adjusted for non-recurring income, charges and adjustments set forth on
Schedule 1.4(f) hereto and with respect to non-recurring income, charges and
adjustments, to the extent actually earned or incurred on or before the Closing
Date and in accordance with those provisions set forth on Schedule 1.4(f). In
the calculation of FY99 EBITDA, governmental grants and subsidies received
(collectively, the "Grants") shall be accounted for in accordance with GAAP.
(ii) "Net Current Assets" shall be determined based on the FY99 Financial
Statements and shall mean the excess of (A) cash and cash equivalents as of
January 31, 1999 and (B) accounts receivable of the Company as of January 31,
1999 which have been incurred in the ordinary course of business for services
performed or products delivered and (C) any amounts not to exceed $100,000
Canadian owing as of January 31, 1999 on account of Grants and (D) advances
owing from Ruppman Express Company in the amount of $151,400 Canadian over (E)
such of the liabilities of the Company on January 31, 1999 as shall constitute
current liabilities under GAAP and (F) the liability of the Company in the
amount of $68,602.00 Canadian in respect of the Government of Canada loan
referenced in Schedules 2.1(e) and 2.1(w), (iii) "April 30 Net Current Assets"
shall be determined based on the April 30 Balance Sheet and shall mean the
excess of (A) cash and cash equivalents as of April 30, 1999 and (B) accounts
receivable of the Company as of April 30, 1999 which have been incurred in the
ordinary course of business for services performed or products delivered and (C)
any amounts not to exceed $100,000 owing as of April 30, 1999 on account of
Grants and (D) a dividend receivable owing from 3425321 Canada Inc. in the
amount of $108,924 Canadian over (E) such of the liabilities of the Company on
April 30, 1999 as shall constitute current liabilities under GAAP and (F) to the
extent that such liability has not been discharged as of April 30, 1999, the
liability of the Company in the amount of $68,602.00 Canadian in respect of the
Government of Canada loan referenced in Schedules 2.1(e) and 2.1(w).
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(g) Any accounts receivable of the Company which have been
incurred prior to the Closing Date and which are not collected on or before the
date which is one hundred twenty (120) days after April 30, 1999 shall be sold
by Buyer and purchased by Sellers for an aggregate purchase price equal to the
total face amount of the receivables being sold.
(h) For all purposes of this Agreement, all calculations of
earnings, EBITDA, profits, Net Current Assets and the like shall be calculations
of and shall be deemed to mean the aggregate earnings, EBITDA, profits, Net
Current Assets and the like of the Company and the Affiliates, notwithstanding
that such expressions in this Agreement may refer to the Company alone.
1.5 FY00 PURCHASE PRICE ADJUSTMENTS. (a) As part of the Purchase
Price payable pursuant to Section 1.2 above, in the event that FY00 EBITDA (as
defined below) shall (i) exceed fifteen (15%) percent of gross revenues for such
period and (ii) equal at least the Canadian dollar equivalent of [**************
********************] based upon the Conversion Rate (the "Target Amount"),
Buyer shall pay to the Sellers the amount mentioned in Section 1.2(a)(iii)
hereof subject to a reduction in such amount should the FY00 EBITDA be less than
the Target Amount such that the Sellers shall be entitled to receive, based upon
the actual FY00 EBITDA actually achieved, the amount correspondingly indicated
on Schedule 1.5 annexed hereto ("FY00 Purchase Price Amount"). In addition to
the foregoing, in the event that FY00 EBITDA shall exceed fifteen (15%) percent
of gross revenues for such period and if the Target Amount is achieved, there
shall be issued to the Sellers in the aggregate [*****] shares of the Parent
Common Stock subject to a reduction in the number of such shares should the FY00
EBITDA be less than the Target Amount such that the Sellers shall be entitled to
receive, based upon the actual FY00 EBITDA actually achieved, the amount of
shares correspondingly indicated on Schedule 1.5 annexed hereto.
Notwithstanding the foregoing, and subject to the provisions of the Escrow
Agreement, the Buyer shall, within thirty (30) days after the completion of the
Company's quarterly financial statements and, in any event, within sixty (60)
days after the end of the quarter, pay to the Sellers to be paid immediately to
the Escrow Agent, in addition to the Initial Escrow Deposit payable at Closing,
and the Escrow Agent shall pay to the Sellers, subject to adjustment, at the end
of each of the three (3), six (6) and nine (9) months of the Company's fiscal
year ending January 31, 2000, on account of the amount payable pursuant to
Section 1.2(a)(iii) hereof, an amount determined by Buyer on account of the FY00
EBITDA then achieved by the Company and determined as follows:
(i) At the end of the first three (3) months of the
Company's fiscal year ending January 31, 2000, the FY00 EBITDA then achieved by
the Company shall be multiplied by four (4). The corresponding payment to such
product as determined by reference to Schedule 1.5 annexed hereto shall be
determined and such payment shall be divided by two (2). The amount represented
by the resulting quotient shall be the "Q1 Escrow Amount". Buyer shall then pay
to the Sellers to be paid immediately to the Escrow Agent, or the Escrow Agent
shall then pay to the Buyer, as the case may be, an amount necessary so that the
balance of the Escrow Account equals the Q1 Escrow Amount, crediting towards the
balance Buyer's Initial Escrow Deposit (the "Q1 Escrow Adjustment").
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(ii) At the end of the first six (6) months of the
Company's fiscal year ending January 31, 2000, the FY00 EBITDA then achieved by
the Company shall be multiplied by two (2). The corresponding payment to such
product as determined by reference to Schedule 1.5 annexed hereto shall be
determined and such payment shall be divided by two (2). The amount represented
by the resulting quotient shall be the "Q2 Escrow Amount". Buyer shall then pay
to the Sellers to be paid immediately to the Escrow Agent, or the Escrow Agent
shall then pay to the Buyer, as the case may be, an amount necessary so that the
balance of the Escrow Account equals the Q2 Escrow Amount, crediting towards the
balance Buyer's Initial Escrow Deposit and the Q1 Escrow Adjustment, if any,
paid by Buyer to Escrow Agent (the "Q2 Escrow Adjustment"). The Escrow Agent
shall then pay to Sellers an amount equal to twenty-five percent (25%) of the Q2
Escrow Amount (the "Q2 Escrow Disbursement").
(iii) At the end of the first nine (9) months of the
Company's fiscal year ending January 31, 2000, the FY00 EBITDA then achieved by
the Company shall be multiplied by one and one-third (1.33). The corresponding
payment to such product as determined by reference to Schedule 1.5 annexed
hereto shall be determined and such payment shall be multiplied by 0.75. The
amount represented by the resulting product shall be the "Q3 Escrow Amount".
Buyer shall then pay to the Sellers to be paid immediately to the Escrow Agent,
or the Escrow Agent shall then pay to the Buyer, as the case may be, an amount
necessary so that the balance of the Escrow Account equals the Q3 Escrow Amount,
crediting towards the balance Buyer's Initial Escrow Deposit, the Q1 Escrow
Adjustment, if any, paid by Buyer to Escrow Agent and the Q2 Escrow Adjustment,
if any, paid by Buyer to Escrow Agent, and assuming for purposes of this
calculation that the Q2 Escrow Disbursement was not disbursed to the Sellers
(the "Q3 Escrow Adjustment"). The Escrow Agent shall then pay to Sellers, or the
Sellers shall then pay to the Escrow Agent, as the case may be, an amount
necessary so that the total amount received by the Sellers from the Escrow Agent
pursuant to Sections 1.5(a)(ii) and 1.5(a)(iii) hereof equals twenty-five
percent (25%) of the Q3 Escrow Amount (the "Q3 Escrow Disbursement").
(b) For purposes hereof, "FY00 EBITDA" shall mean the
earnings of the Company before deduction for interest, taxes, depreciation and
amortization, as set forth in the Company's financial statements for the twelve
month period ended January 31, 2000, prepared in accordance with GAAP and
calculated in the manner that the FY99 EDITDA was calculated, including Grants
received and accounted for in accordance with GAAP up to a limit of $425,000
Canadian, but subject to the adjustments and provisions hereinafter mentioned in
Section 1.5(c) hereof, LESS (i) any extraordinary gain, and (ii) any amounts
received or receivable in respect of any accounts receivable, claims or other
rights accrued prior to January 31, 1999 other than recoveries of amounts
previously written off, PLUS, but only to the extent that the following expenses
are actually charged or caused to be charged to the Company or any of the
Affiliates by Buyer or Parent or any party related or affiliated to either of
them, (iii) all expenses, including professional fees, incurred by the Buyer in
respect of the transaction contemplated hereby; (iv) charges to earnings in
respect of management, consulting, financial, legal or accounting fees, overhead
charges, administrative charges, national sales charges, support services, and
similar fees paid to or charged by Parent or Buyer or any party related or
affiliated to any of them to the Company or any of the Affiliates; (v) any
amounts paid by Sellers in respect of a warranty provided hereunder which, in
the absence of such payment, would affect FY00 EBITDA; (vi) all expenses
incurred by the Buyer
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or the Parent to the extent that the Sellers are obliged to indemnify against
such expenses pursuant to this agreement and are not in default in honoring such
indemnity and if there shall be a default of the Sellers in honoring such
indemnity, then a retroactive adjustment shall be made pursuant to this clause
(vi) to the extent that the Sellers subsequently remedy such default; (vii) all
expenses which the Buyer, the Parent, the Company or the Affiliates incur in
complying with this Agreement or in connection with disputes arising hereunder
which would not have incurred in the absence of this Agreement as well as all
expenses incurred in prosecuting or defending litigation with the Sellers, as
well as a payment of such expenses; (viii) all expenses for professional fees
and disbursements save for those incurred in the operation of the Business and
fair and reasonable fees for audits of the Company's annual consolidated
financial statements (but excluding from such fair and reasonable fees, for
certainty, professional fees and disbursements for performing all special
services which are performed in respect of the calculation of the FY00 EBIDTA or
otherwise in respect of this Agreement), as well as the payment of such
expenses; (ix) 27% of gross revenues derived from any customer contract that is
then currently being serviced by the Company, but which services are diverted by
Buyer or Parent or any of their affiliates to an affiliate of Buyer; and (x)
charges to earnings in respect of commissions paid by Buyer to any senior
executives of the Company attributable to any customer not served by the Company
and specifically including in any such earnings 27% of gross revenues derived
from any ME Eligible Customer Contract net of commissions paid to Xxxxxx Xxxxx
and Xxxxx Xxxxx attributable to such ME Eligible Customer Contract. "ME Eligible
Customer Contract" shall mean a customer contract initiated by Xxxxxx Xxxxx and
Xxxxx Xxxxx with respect to services which the Company has the capacity to
provide in the ordinary course of the Business, but which services are provided
by affiliates of Buyer and which contract the parties agree is a ME Eligible
Customer Contract within thirty (30) days of the time entered into.
(c) The Buyer and the Parent hereby jointly and severally
covenant and agree with the Sellers that, during the fiscal year of the Company
ending January 31, 2000:
(i) Xxxxxx Xxxxx and Xxxxx Xxxxx (collectively, the
"Senior Employees") will be employed by the Company or its Affiliates and will
together have responsibility for the day-to-day operations of the Business as
well as for all matters reasonably ancillary thereto; and
(ii) The employment of the Senior Employees shall not
be terminated other than for lawful cause as provided in Section 3.1.3 of their
respective employment agreements referred to in Section 4.1(i) hereof.
Any breach of any of the foregoing covenants and undertakings of the Buyer and
the Parent in Section 1.5(c)(i) or 1.5(c)(ii) hereof shall create a rebuttable
presumption that the Target Amount has been achieved. Buyer may offer evidence
to rebut this presumption.
(iii) It is the intention of Buyer to continue to
operate the Business in the manner in which it is currently being operated with
day-to-day responsibility therefor vested in the Senior Employees pursuant to
their employment agreements referred to in Section 4.1(i). In the event that
Buyer (which shall not include the Senior Employees or persons acting on behalf
of or on the direction of the Senior Employees) shall, without the consent of
either
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Xxxxxx Xxxxx or Xxxxx Xxxxx (it being the intention of the parties that the
consent of either Xxxxxx Xxxxx or Xxxxx Xxxxx shall be sufficient to authorize
Buyer to take the contemplated action), enter into a transaction outside of the
ordinary course of the Business or change the operation of the Business in a
manner which has a material adverse effect on the amount of the FY00 Purchase
Price Amount payable to the Sellers hereunder, the Sellers' Rep and Buyer shall
make an equitable adjustment to compensate for such material adverse effect. In
the event the Sellers' Rep and Buyer cannot agree on such equitable adjustment,
the Independent Accountants (to the extent previously selected, and to the
extent not previously selected, selected in accordance with Section 1.4(b)
above) will review the items or amounts in dispute and compute such adjustment.
Such determination shall be made in writing within thirty (30) days after the
date on which the Independent Accountants begin their review and shall be final
and binding on the parties. The fees, costs and expenses of the Independent
Accountants shall be paid by the party whose calculation of the equitable
adjustment is furthest from the Independent Accountants' calculation.
(d) Promptly upon receipt by the Buyer of the Company's
financial statements for the fiscal year ending January 31, 2000 (the "FY00
Financial Statements"), Buyer shall deliver a copy thereto to the Sellers' Rep
together with Buyer's written statement containing the Company's calculation of
FY00 EBIDTA in reasonable detail (the "FY00 EBITDA Statement"). Concurrently
with such delivery, the Escrow Agent shall pay to the Sellers the amount
referred to in Section 1.2(a)(iii) hereof or such lesser amount as the Buyer
determines the Sellers are entitled to receive pursuant to the provisions of
Section 1.5 hereof and shall issue to the Sellers 300,000 shares of the Parent
Common Stock or such lesser number of shares as the Buyer determines the Sellers
are entitled to receive pursuant to the provisions of Section 1.5 hereof, the
whole subject to the right of the Sellers to contest such amounts as hereafter
mentioned.
The Sellers shall be entitled for the period of thirty (30) days next following
the Sellers receipt of the FY00 EBIDTA Statement to advise the Buyer in writing
signed by Sellers' Rep that the Sellers object thereto, which notice shall
outline those items thereof which the Sellers are then of the view are not or
may not be correct, but such outline shall not preclude the Sellers from
subsequently raising other objections with respect to the FY00 EBIDTA Statement
(provided that such 30 day period has not expired). In the absence of a written
notice of objection within the said period of thirty (30) days, the Sellers
shall be deemed to have accepted as correct the amount of the FY00 EBIDTA. The
Sellers' Rep shall be entitled to make all such examinations and investigations
as such representatives consider to be necessary or appropriate in order to
arrive at an independent opinion as to the accuracy of, or so as to verify, the
calculations, or any of the amounts, contained in the FY00 EBIDTA Statement or
in the FY00 Financial Statements and the Buyer shall afford and cause the
Company and the Affiliates to afford all such cooperation to the Sellers' Rep as
reasonably is required so that such examinations and investigations may be
properly conducted by such representatives and, without limiting the generality
of the foregoing, for such purposes the Buyer upon the request of the Sellers'
Rep shall cause the Buyer's Accountants to make available for the inspection of
the Sellers' Rep all relevant working papers of the Buyer's Accountants and to
answer such relevant questions which the Sellers' Rep may have of the Buyer's
Accountants and shall also cause the Buyer's Accountants to provide copies of
such working papers to the Sellers' Rep as and to the extent that from time to
time they reasonably request. If the Buyer and the Sellers are unable to achieve
resolution on those matters to which the Sellers have objected, then, at the
request of either party, such unresolved matters shall be referred to the
Independent Accountants for
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resolution. Any decision made by the Independent Accountants shall be final and
binding on the parties and if such decision results in the determination that
the amount of the FY00 EBIDTA is greater than the amount provided for therefor
in the FY00 EBITDA Statement, the Buyer shall forthwith pay such additional
amounts and the Parent shall issue such additional shares of its common stock in
order that the amount and the shares that the Sellers are entitled to receive
pursuant to Schedule 1.5 hereof have been paid and received by the Sellers. If
such decision results in the determination that the amount of the FY00 EDITDA is
less than the amount provided for therefor in the FY00 EBITDA Statement, the
Sellers shall be jointly and severally liable to Buyer and shall forthwith repay
to Buyer such amounts and such shares that the Buyer is entitled to recoup
pursuant to Schedule 1.5 hereof.
1.6. FY01 PURCHASE PRICE ADJUSTMENTS. The Parent shall issue [*****]
shares of the Parent Capital Stock to the Sellers within thirty (30) days of the
delivery to the Buyer of the financial statements for the Company for the twelve
(12) month period ending January 31, 2001; provided, however, that the Parent
shall not be obligated to issue such capital stock to the Sellers in the event
that the EBIDTA (calculated according to GAAP and consistent with the
calculation of FY00 EBITDA) for the twelve (12) month period ending January 31,
2001 (the "FY01 EBITDA") is not at least twenty percent (20%) higher than the
FY00 EBIDTA. Grants received and accounted for in accordance with GAAP shall be
included in the calculation of FY01 EBITDA and the Sellers represent, warrant
and covenant that the amount of the Grants included in FY01 EBITDA shall be
equal to or greater than $200,000 Canadian. The provisions of Section 1.5(d)
hereof shall apply with respect to the financial statements for the year ended
January 31, 2001 and the rights of review and contestation provided hereunder in
favor of the Sellers and the Buyer, MUTATIS MUTANDIS.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY, THE
AFFILIATES AND THE SELLERS The Sellers hereby, jointly and severally, represent
and warrant to, and covenant and agree with, Buyer as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company and
the Affiliates are corporations duly organized, validly existing and in good
standing and authorized to exercise their corporate powers, rights and
privileges under the laws of Canada with full corporate power and authority to
own, lease and operate their properties and to carry on the Business as
presently conducted by them in each jurisdiction where they carry on business.
Schedule 2.1(a) hereto sets forth all provinces and other jurisdictions in which
the Company and the Affiliates are duly qualified and in good standing to do
business as a foreign corporation. There are no other states or jurisdictions in
which the character and location of the properties owned or leased by any of
them, or the conduct of the Business makes such qualification necessary, except
where the failure to be so qualified would not have a material adverse effect on
the business, results of operations, financial position or prospects of the
Company and the Affiliates, taken as a whole, or the value of their properties
or assets, taken as a whole ("Material Adverse Effect"). Copies of the Company's
and the Affiliates' Articles of Incorporation and all amendments thereto, and of
the Company's and Affiliates' By-Laws, as amended to date, are attached to
Schedule 2.1(a) and are complete and correct. The Company's and the Affiliates'
minute books contain complete and accurate records of all meetings and other
material corporate actions, including, without limitation,
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actions by unanimous written consent of their stockholders and their board of
directors (including all committees of their board of directors).
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of an unlimited number of Common, Class A, Class B, Class C,
Class D, Class E, Class F and Class G shares, of which 100 shares of Class A,
100 shares of Class B, 787,495 shares of Class E, 1,462,405 shares of Class F
and 9,000,000 shares of Class G are issued and outstanding and are owned by
Xxxxxx Xxxxx, Xxxxx Xxxxx, La Fiducie Familiale Xxxxx, La Fiducie Familiale
Xxxxx, and Xxxxxxx Xxxxx Canada Corporation. At the Closing, the authorized
capital stock of the Company will consist of an unlimited number of Common,
Class A, Class B, Class C, Class D, Class E, Class F and Class G shares of
which, at the Closing, 100 shares of Class A, 100 shares of Class B, 787,495
shares of Class E, 1,462,405 shares of class F and 9,000,000 shares of Glass G
will be issued and outstanding and shall be owned by the Sellers. The authorized
capital stock of ME consists of an unlimited number of Common, Class A, Class B,
Class C, Class D, Class E, Class F and Class G shares of which 100 shares of
Class A, 35 shares of Class D, 65 shares of Class E and 100 shares of Class F
are issued and outstanding and are owned by the Company. The authorized capital
stock of METC consists of an unlimited number of Common, Class A, Class B, Class
C, Class D, Class E, Class F and Class G shares, of which 200 Common shares are
issued and outstanding and are owned by the Company and ME. All issued shares of
ME Stock, as well as the stock of each of the Affiliates, have been duly
authorized and validly issued and are fully paid and nonassessable. All prior
offerings and sales of ME Stock have been made in accordance with all applicable
Federal and provincial laws of Canada. There are no outstanding obligations,
options, warrants, rights, calls, commitments, conversion rights, plans or other
agreements of any character to which the Company or any of the Affiliates is a
party or otherwise bound which provide for the purchase or issuance by the
Company or any of the Affiliates of any authorized but not outstanding, or
authorized and outstanding shares of capital stock of the Company or any of the
Affiliates. There is no personal liability attached to the ME Stock or to the
stock of any of the Affiliates. No person has any preemptive or similar rights
in respect of any securities of the Company or any of the Affiliates.
(c) AUTHORITY The execution and delivery by the Company, the
Affiliates and the Sellers of this Agreement and all of the agreements,
schedules, exhibits, documents and instruments specifically provided for
hereunder to be executed and/or delivered by any or all of them (all of the
foregoing, including this Agreement, being hereinafter sometimes collectively
referred to as the "Executed Agreements"), the performance by the Company, the
Affiliates and the Sellers (to the extent that they are parties thereto) of
their respective obligations under the Executed Agreements, and the consummation
of the transactions contemplated by the Executed Agreements, have been duly and
validly authorized by all necessary corporate and any other required action on
the part of the Company, the Affiliates and the Sellers, and the Company, the
Affiliates and the Sellers have all necessary corporate and any other required
power with respect thereto. The Executed Agreements are, or when executed and
delivered by the delivering parties shall be, the valid and binding obligations
of the delivering parties, enforceable in accordance with their respective
terms, except to the extent that enforceability may be limited by general
equitable principles or the operation of bankruptcy, insolvency, reorganization,
moratorium or similar laws. Neither the execution and delivery by the Company,
the Affiliates or any Seller (to the extent that they are parties thereto) of
the Executed Agreements, nor the consummation of the transactions
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contemplated thereby, nor the performance by the Company, the Affiliates or any
Seller (to the extent that they are parties thereto) of their respective
obligations under the Executed Agreements, shall (nor with the giving of notice
or the lapse of time or both would) (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or By-Laws of the Company or the
Affiliates or the constituting documents of any of the Sellers, (ii) except as
set forth on Schedule 2.1(c) hereto, give rise to a material default, or any
right of termination, cancellation or acceleration, or otherwise result in a
loss of contractual benefits to the Company or the Affiliates, under any of the
terms, conditions or provisions of any note, bond, hypothec, mortgage,
indenture, license, permit, grant, agreement or other instrument or obligation
to which the Company, the Affiliates or any Seller is a party or by which the
Company, the Affiliates or any Seller or any of their properties or assets may
be bound, where such default, termination, cancellation or acceleration could
reasonably be expected to have a Material Adverse Effect (iii) violate any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
the Company, the Affiliates or any Seller or any of their respective properties
or assets, (iv) result in the creation or imposition of any prior claim,
hypothec, lien, claim, restriction, charge or encumbrance upon any of the
properties or assets of the Company, the Affiliates or any Seller, or (v) to the
best knowledge of the Company, the Affiliates or any Seller, interfere with or
otherwise materially adversely affect the ability of the Company or the
Affiliates to carry on the Business as now conducted by them.
(d) INTERESTS IN OTHER ENTITIES. Except as set forth in
Schedule 2.1(d) hereto, and except for its interest in the Affiliates, the
Company and the Affiliates do not (i) own, directly or indirectly, of record or
beneficially, any shares of voting stock or other equity securities of any other
corporation or entity, (ii) have any ownership interest, direct or indirect, of
record or beneficially, in any entity, or (iii) have any obligation, direct or
indirect, present or contingent, to purchase or subscribe for any interest in,
advance or loan monies to, or in any way make investments in, any person or
entity, or to share any profits or capital investments in or with any other
persons or entities, or both.
(e) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS.
Except as set forth in Schedule 2.1(e) hereto, no approval, consent, compliance,
exemption, authorization or other action by, or notice to or filing with, any
governmental authority or any other entity, and no lapse of a waiting period, is
necessary or required to be obtained by the Company, the Affiliates or any
Seller in connection with the execution, delivery or performance by any of them,
of this Agreement, any of the Executed Agreements or the transactions
contemplated hereby.
(f) PROJECTIONS. The Sellers have delivered to Buyer a set
of projections (the "Projections"), a copy of which is attached hereto as
Schedule 2.1(f). The Projections are based on the reasonable estimates of the
Company, the Affiliates and the Sellers derived from reasonable expectations at
the time the Projections were made, and the Company, the Affiliates and the
Sellers believe that Buyer is justified in relying thereon, there being,
however, no representation, warranty or guarantee of the achievement of the
Projections. The parties acknowledge that, in the event that such projections
are not achieved and the FY00 EBITDA is affected as a consequence, then Buyer
will be compensated solely by the decrease in the amounts payable pursuant to
Section 1.5 in accordance with the provisions thereof relating to a reduction in
the Purchase Price if the result of FY00 EBITDA is less than the Target Amount.
No other right, recourse or remedy shall avail in favor of the Buyer as a result
of the failure of the projections to be achieved.
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(g) FINANCIAL STATEMENTS. The Sellers have delivered to
Buyer true and complete copies of the Company's audited (except for 1997)
balance sheet, and the related statements of income, retained earnings and
statement of change in financial position for its fiscal years ended January 31,
1997 and 1998 and its unaudited balance sheet and related statements of income,
retained earnings and statement of change in financial position for its fiscal
year ended January 31, 1999 ("Year End Financial Statements"). All of such
financial statements, including any notes thereto, were prepared on a
consolidated basis in accordance with GAAP applied on a consistent basis
throughout the periods involved and fairly present the financial position of the
Company at the dates thereof and the results of its operations for the periods
as indicated. Set forth on Schedule 2.1(g) hereto, is a description of the
Company's and each of the Affiliates accounting policies employed in the
preparation thereof, including, without limitation, policies in respect of bad
debt reserves, depreciation and fixed asset capitalization. The books and
records of the Company and of each of the Affiliates are in all material
respects complete and correct, have been maintained in accordance with good
business practices, and accurately reflect the basis for the financial condition
and results of operations of the Company and of each of the Affiliates as set
forth in the financial statements referred to herein.
(h) ABSENCE OF UNDISCLOSED LIABILITIES. The Company and the
Affiliates do not have any liabilities, commitments or obligations, whether
accrued, absolute, contingent or otherwise which have not been (i) in the case
of liabilities, commitments and obligations of a type customarily reflected on
the corporate balance sheet of the Company, reflected on the Year End Financial
Statements in accordance with GAAP, or incurred, consistent with past practice,
in the ordinary course of business since the date of the Year End Financial
Statements and which are not material, either individually or in the aggregate,
are properly reflected on the books of the Company and of each of the Affiliates
and do not involve liabilities for breach of contract, breach of warranty, tort,
infringement or similar claims ("Permitted Post Balance Sheet Liabilities") or
(ii) in the case of all other types of liabilities and obligations, described in
Schedule 2.1(h) hereto.
(i) ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth in Schedule 2.1(i) hereto or in the Year End Financial Statements,
since January 31, 1998, the Company and the Affiliates have not:
(i) suffered any material adverse change in their
working capital, condition (financial or otherwise), assets, liabilities,
businesses or operations;
(ii) incurred any material liabilities or obligations
except Permitted Post Balance Sheet Liabilities, none of which exceeds $10,000
(counting obligations or liabilities arising from one transaction or a series or
similar transactions, and all periodic installments or payments under any lease
or other agreement providing for periodic installments or payments, as a single
obligation or liability), or experienced any increase in, or change in any
assumption underlying or methods of calculating, any bad debt, contingency or
other reserves;
(iii) paid, discharged or satisfied any claim,
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities and
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obligations reflected or reserved against in the Year End Financial Statements
or Permitted Post Balance Sheet Liabilities;
(iv) permitted or allowed any of their property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
prior claim, hypothec, mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind;
(v) written off as uncollectible any notes or
accounts receivable, except for write-offs in the ordinary course of business
and consistent with past practice, none of which are material;
(vi) canceled any debts or waived or suffered to
lapse any claims or rights of substantial value, or sold, transferred, or
otherwise, except in the ordinary course of business and consistent with past
practice, disposed of any of their properties or assets (real, personal or
mixed, tangible or intangible);
(vii) disposed of or suffered to lapse any rights to
use any Toll Free Telephone Number listed on Schedule 2.1(r) hereto, or any
patent, trademark, trade name or copyright, or disposed of or disclosed (except
as necessary in the ordinary conduct of the Business) to any person any trade
secret, formula, process or know-how;
(viii) made any single capital expenditure or
commitment in excess of $10,000 for additions to property, plant, equipment or
intangible assets or made aggregate capital expenditures and commitments in
excess of $10,000 (on a consolidated basis), for additions to property, plant,
equipment or intangible assets;
(ix) redeemed or reduced the paid-up capital of any
shares of their capital stock or declared, paid or set aside for payment any
dividend or other distribution in respect of their capital stock;
(x) made any change in any method of accounting or
accounting practice;
(xi) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of their officers, directors, debtholders, stockholders or employees or any
"affiliate" or "associate" of any of their officers, directors, noteholders,
stockholders or employees (as such terms are defined in Rule 405 promulgated
under the Securities Act and as used herein "Affiliate" and "Associate"), except
for compensation to officers and employees at rates not materially exceeding the
rates of compensation paid during the year ended January 31, 1998;
(xii) paid any amount in respect of debt for borrowed
money except for regularly scheduled payments of principal and interest in
accordance with the terms thereof; or
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(xiii) agreed, whether in writing or otherwise, to take
any action described in this Section unless such action is specifically excepted
from this Section or described in Schedule 2.1(i).
(j) TAX MATTERS. The Company and the Affiliates have filed
with the appropriate governmental agencies all Federal, provincial, local or
foreign tax returns and reports required to be filed by them ("Returns"), have
paid in full or made adequate provision for the payment of, all taxes of every
nature, including, but not limited to, income, sales, franchise and withholding
taxes, Goods and Services Tax and the applicable provincial sales taxes,
provincial health insurance premiums, Canada and Quebec pension plan
contributions, employment insurance premiums, xxxxxxx compensation and other
payroll taxes, deductions at source, non-resident withholding, immovable or real
property, municipal, corporation, capital, sales, retail, excise, profits, gross
receipts, customs duties, transfer and business taxes ("Taxes"), together with
interest, penalties, assessments and deficiencies owed by them (whether or not
shown on any Returns). The Company and the Affiliates are not currently the
beneficiary of any extension of time within which to file any Returns. The
Company and the Affiliates have previously provided Buyer with true and complete
copies of all such Returns filed within the past 4 years. There are no filed or
other known tax liens, prior claims or hypothecs upon any assets of the Company
or the Affiliates. The Company and the Affiliates have not waived any statute of
limitations in respect of Taxes or executed or filed with any governmental
authority any agreement extending the period for the assessment or collection of
any Taxes, and they are not a party to any pending or, to the Company, the
Affiliates or any Seller's best knowledge, threatened action or proceeding by
any governmental authority for the assessment or collection of Taxes. There is
no unresolved written claim by a governmental authority in any jurisdiction
where the Company or the Affiliates do not file Returns that the Company or the
Affiliates are or may be subject to taxation by such jurisdiction. Except as set
forth on Schedule 2.1(j), there has been no examination or audit with respect to
Taxes with respect to any year. The Company and the Affiliates have withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(k) LITIGATION. Except as set forth on Schedule 2.1(k)
hereto, there are no suits or actions, or administrative, arbitration or other
proceedings or governmental investigations, pending, or to the best knowledge of
the Company, the Affiliates and the Sellers, threatened against or affecting, or
which is reasonably likely to affect, the Company or the Affiliates or any of
their properties, assets or businesses or the transactions contemplated hereby
which, if determined against the Company or any of its Affiliates, could
reasonably be expected to have a Material Adverse Effect. There are no
outstanding judgments, orders, stipulations, injunctions, decrees or awards
against the Company or the Affiliates which are not satisfied.
(l) COMPLIANCE WITH APPLICABLE LAW. Except as set forth on
Schedule 2.1(l) hereto, the Company and the Affiliates are in compliance with
all Federal, provincial and local laws, statutes, ordinances, regulations, and
administrative rulings (collectively "Laws"), promulgated by any governmental or
regulatory authority applicable to the Company or the Affiliates or to the
conduct of the business or operations of the Company or the Affiliates or to the
use of their properties and assets, including, without limitation, all
environmental Laws and all Laws relating to the Toll Free Telephone Numbers
where such non-compliance could reasonably be
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expected to have a Material Adverse Effect. Subject to the foregoing, the
conduct of the business or operations of the Company and the Affiliates complies
with all Laws of the foreign jurisdictions in which they operate. The Company
and the Affiliates have not received any written notices of violation or alleged
violation of any laws by the Company or the Affiliates. Neither the Company, the
Affiliates nor any Seller knows of any pending or proposed legislation
applicable to the Company or the Affiliates or to the conduct of the Business
which, if enacted, could have a Material Adverse Effect.
(m) ENVIRONMENTAL MATTERS. Except as set forth on Schedule
2.1(m) hereto:
(i) neither the Company, the Affiliates nor the
Sellers has received any written notice that their operations or the real
property owned or leased by the Company or the Affiliates as set forth in
Schedule 2.1(o) hereto (the "Facility") are subject to any outstanding written
order, consent decree or settlement agreement with any person relating to (A)
any Environmental Laws (as defined in below), (B) any Environmental Claim (as
defined below), or (C) any Hazardous Materials Activity (as defined below) that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(ii) there are no conditions, occurrences, or
Hazardous Materials Activities caused or conducted by the Company or the
Affiliates or, to the Company's, the Affiliates' and the Sellers' knowledge, any
other conditions, occurrences or hazardous activities which could reasonably be
expected to form the basis of an Environmental Claim against the Company or the
Affiliates or that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(iii) neither the Company nor the Affiliates nor, to
the Company's, the Affiliates' and the Sellers' knowledge, any predecessor of
the Company or the Affiliates, has filed at any time any notice under any
Environmental Law indicating past or present treatment of Hazardous Materials at
the Facility, and none of the Company or the Affiliates operations involves the
generation, transportation, storage, or disposal of Hazardous Materials; and
(iv) The following terms used in this Section 2.1(m)
shall have the following meanings:
(A) "Environmental Laws" shall mean any and
all statutes, ordinances, orders, rules, laws, regulations, guidance documents,
judgments, governmental authorizations, or any other requirements of
governmental authorities currently in force and having jurisdiction over the
Business relating to (1) environmental matters, including those relating to any
Hazardous Materials Activity (as defined below), (2) the generation, use,
storage, transportation or disposal of Hazardous Materials (as defined below),
or (3) occupational safety and health, industrial hygiene, land use or the
protection of human, plant, or animal health or welfare, in any manner
applicable to the Company, the Affiliates or the Facility, including Loi Sur La
Qualite de l'Environment L.R. Q C.Q-2 and the Canadian Environmental Protection
Act, R.S. 1985 C. 16 (4th Supp.) and their respective regulations, each as
amended or supplemented, any analogous provincial or local statutes or laws, and
any regulations promulgated pursuant to the foregoing.
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(B) "Environmental Claim" shall mean any
investigation, notice, notice of violation, claim, action, suit, proceeding,
demand, abatement order or other order or directive (conditional or otherwise),
by any governmental authority or any other person, arising (1) pursuant to or in
connection with any actual or alleged violation of any Environmental Laws, (2)
in connection with any Hazardous Materials or any actual or alleged Hazardous
Materials Activity, or (3) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.
(C) "Hazardous Materials" shall mean any of
following substances used by the Company or any of the Affiliates in the conduct
of the Business (1) any chemical, material or substance at any time defined as
or included in the definition in any Environmental Laws of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws), (2) any oil, petroleum,
petroleum fraction or petroleum derived substance, (3) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (4) any flammable
substances or explosives, (5) any radioactive materials, (6) any
asbestos-containing materials, (7) urea formaldehyde foam insulation, (8)
electrical equipment which contains oil or dielectric fluid containing
polychlorinated biphenyls, (9) pesticides, and (10) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by
governmental authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any other persons in the vicinity of the
premises occupied by the Company and its Affiliates or to the indoor or outdoor
environment.
(D) "Hazardous Materials Activity" shall
mean any current, proposed or threatened activity, event or occurrence involving
any Hazardous Materials, including the use, manufacture, possession, storage,
holding, presence, existence, location, Release (as defined below), threatened
Release, discharge, placement, generation, transportation, processing,
construction, treatment, abatement, removal, remediation, disposal, disposition
or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.
(E) "Release" shall mean any release, spill,
emission, leaking, pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), including the movement of any Hazardous
Materials through the air, soil, surface water or ground water.
(n) PERMITS. A list of all permits, approvals, licenses,
certificates, franchises, authorizations, consents and orders ("Permits")
necessary to the operation of the
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business of the Company and the Affiliates in the manner in which it is
presently conducted is set forth on Schedule 2.1(n) hereto. All such Permits are
valid and remain in full force and effect. The Company and the Affiliates have
not engaged in any activity which would cause revocation or suspension of any
such Permits and no action or proceeding looking to or contemplating the
revocation or suspension of any thereof is pending or, to the knowledge of the
Company and the Affiliates, is threatened.
(o) TITLE TO PROPERTIES. Except as set forth in Schedule
2.1(o) hereto, the assets set forth in the Year End Financial Statements
constitute all assets which have been used in the Business since January 31,
1998 other than those assets that may have been disposed of since January 31,
1998 or acquired since January 31, 1999 in each case in the ordinary course of
business, and which are necessary for the conduct of the Business as currently
conducted by the Company and the Affiliates. The Company and the Affiliates do
not own any real property. Except as set forth in Schedule 2.1(o) and except for
the Permitted Encumbrances, the Company and the Affiliates have good and
marketable title to all of the properties and assets (personal and mixed,
tangible and intangible) reflected on the Year End Financial Statements or
thereafter acquired or which they purport to own (except properties or assets
sold or otherwise disposed of in the ordinary course of business, consistent
with past practice, subsequent to the date of the Year End Financial Statements
which in the aggregate did not have a book value in excess of $10,000), free and
clear of all prior claims, hypothecs, mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever. Schedule 2.1(o) also contains an accurate
list setting forth, all (i) leases (whether by or to the Company or the
Affiliates) and contracts and commitments for the purchase or sale or lease
(whether as lessor or lessee) of the Company or the Affiliates with respect to
real property and (ii) leases (whether by or to the Company or the Affiliates)
title retention, trial sales, installment sales, sales with right of redemption
or conditional sales agreements and other security devices (whether as lessor or
lessee) of the Company or the Affiliates with respect to items of personal
property. All leases listed in Schedule 2.1(o) are valid, binding and
enforceable in accordance with their terms, and are in full force and effect,
except to the extent that enforceability may be limited by general equitable
principles or the operation of bankruptcy, insolvency, reorganization,
moratorium or similar laws; there are no existing defaults by the Company or the
Affiliates thereunder and no event of default has occurred which (whether with
or without notice, lapse of time or both) would constitute a default by the
Company or the Affiliates thereunder where such default could reasonably be
expected to have a Material Adverse Effect. All lessors under such leases shall
as a condition of Closing have consented (where such consent is necessary) to
the consummation of the transactions contemplated by this Agreement without
requiring modification of the rights and obligations of the Company or the
Affiliates thereunder. All of the tangible property (whether owned or leased) of
the Company and the Affiliates are located at the real property owned or leased
by the Company and the Affiliates as set forth in Schedule 2.1(o).
(p) ACCOUNTS RECEIVABLE; FIXED ASSETS.
(i) The accounts receivable reflected on the Year
End Financial Statements have been incurred in the ordinary course of business
for services performed or products delivered at the aggregate recorded amounts
thereof, less the amount of the reserve for bad accounts reflected therein, and
are not subject to any offsets. The accounts receivable of the Company and the
Affiliates which were thereafter added have been incurred in the ordinary course
of business for
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services performed or products delivered at the aggregate amounts recorded on
the books of account, less the amount of the reserve for bad accounts reflected
therein (which reserve has been established on a basis consistent with prior
practice and in accordance with GAAP) and are not subject to any offsets. Set
forth on Schedule 2.1(p) is a true and complete list of the Company's and the
Affiliates accounts receivable as of March 22, 1999, and aging with respect
thereto.
(ii) Schedule 2.1(p) hereto contains a complete and
accurate list of all machinery, equipment and other fixed assets of the Company
and the Affiliates (the "Equipment") having a book value in excess of $5,000.
Each such item of Equipment is in good operating condition and is adequate for
the use to which it is being put. Each such item has been maintained in
accordance with prudent business practice and no such maintenance has been
deferred.
(q) INTELLECTUAL PROPERTY. Schedule 2.1(q) hereto lists all
domestic and foreign licenses, patents, copyrights, trade names, service marks,
trademarks and trade secrets (and all applications therefor) and all other
proprietary intellectual property owned or used by the Company and the
Affiliates in the present and known future conduct of the Business (the
"Intellectual Property"). Except as set forth in Schedule 2.1(q), none of the
Intellectual Property is subject to any restriction, mortgage, lien, pledge,
charge, security interest, conditional sale agreement, encumbrance or material
rights of others of any kind or nature whatsoever, and no officer or director,
stockholder or employee of the Company or the Affiliates nor any of their
Affiliates or Associates has any ownership or other interest in any of the
Intellectual Property. None of the Intellectual Property infringes or, to the
best knowledge of the Company, the Affiliates and the Sellers, is being
infringed upon or misappropriated by any other person or entity. Except as set
forth in Schedule 2.1(q), the validity of the Intellectual Property and the
title thereto of the Company and the Affiliates have not been and cannot validly
be questioned in any litigation or governmental inquiry or proceeding to which
the Company or the Affiliates is a party, and, to the best knowledge of the
Company, the Affiliates and the Sellers, no such litigation, governmental
inquiry or proceeding is threatened. The conduct of the Business of the Company
and the Affiliates as presently conducted does not conflict with, infringe or
misappropriate valid licenses, trademarks, trademark rights, trade names, trade
name rights, service marks, trade secrets or patents or other proprietary rights
of others in any way likely to affect adversely, in any material respect, the
Intellectual Property, nor has any officer or director, stockholder or employee
of the Company or the Affiliates received any notice thereof.
(r) TOLL FREE TELEPHONE NUMBERS. Schedule 2.1(r) hereto sets
forth a complete list of all Toll Free Telephone Numbers owned or used by the
Company and the Affiliates in the conduct of the Business. No officer or
director, stockholder or employee of the Company or the Affiliates nor any of
their Affiliates or Associates has any ownership or other interest in the Toll
Free Telephone Numbers. The Company and the Affiliates have not warehoused,
brokered or hoarded (as those terms are defined in the Second Report and Order
and Further Notice of Proposed Rulemaking in CC Docket No. 95-155, Released
April 11, 1997, by the Federal Communications Commission ("FCC") any of the
Toll Free Telephone Numbers in violation of any applicable FCC rules or
regulations or equivalent Canadian (federal and provincial) laws and
regulations.
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(s) INSURANCE. Schedule 2.1(s) hereto contains a complete
and correct list of all policies of insurance in which the Company or the
Affiliates or their officers or directors (in such capacity) is an insured
party, beneficiary or loss payable payee. Copies of all such policies have been
previously provided to the Buyer. Such policies are in full force and effect.
(t) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 2.1(t)
hereto contains a complete and correct list showing (i) the name of each bank in
which the Company and the Affiliates have an account or safe deposit box and the
names of all persons authorized to draw thereon or have access thereto, and (ii)
the names of all persons, if any, holding powers of attorney from the Company or
the Affiliates.
(u) EMPLOYEE ARRANGEMENTS. Except as set forth on Schedule
2.1(u) hereto, the Company and the Affiliates have (i) no union, collective
bargaining, employment, management, severance or consulting agreements to which
the Company or the Affiliates is a party or is otherwise bound, and (ii) no
deferred compensation agreements, pension and retirement plans, profit-sharing
plans, stock purchase and stock option plans. Schedule 2.1(u) contains a true
and complete list of all compensation, incentive, bonus, severance, disability,
hospitalization, medical insurance, life insurance and other employee benefit
plans, programs or arrangements maintained by the Company and the Affiliates or
under which the Company or the Affiliates have any material obligations (other
than obligations to make current wage or salary payments) in respect of, or
which otherwise cover, any of the current or former officers, employees or
consultants of the Company or the Affiliates, or their beneficiaries (each an
"Employee Benefit Plan" and collectively the "Employee Benefit Plans"). Schedule
2.1(u) contains the policy of the Company and the Affiliates with respect to
increases in the compensation of their officers or employees. Schedule 2.1(u)
hereto also lists the names, compensation, years of service and all accrued and
unused vacation and sick time of all persons employed by the Company and the
Affiliates. All Employee Benefit Plans comply, in all material respects, in
form, operation and administration with their respective provisions and with the
applicable provisions of all applicable Laws. All contributions to and payments
from the Employee Benefit Plans which may have been required to be made in
accordance with the Employee Benefit Plans have been made or are properly
accrued and reflected on the balance sheets or the books and records of the
Company and the Affiliates.
(v) CERTAIN BUSINESS MATTERS. Except as set forth in
Schedule 2.1(v) hereto (i) the Company or any of the Affiliates is not a party
to or bound by any distributorship, dealership, sales agency, franchise or
similar agreement which relates to the sale, use, distribution or servicing of
the Toll Free Telephone Numbers or services related thereto, (ii) the Company or
any of the Affiliates does not have any sole-source supplier of significant
goods or services (other than utilities) with respect to which practical
alternative sources are not available on comparable terms and conditions, (iii)
there are not pending and, to the Company's, the Affiliates' and the Sellers'
best knowledge there are not threatened, any labor negotiations involving or
affecting the Company or the Affiliates and, to the Company's, the Affiliates'
and the Sellers' best knowledge, no organizing activities involving union
representation exist in respect of any of its employees, (iv) the Company or any
of the Affiliates neither gives nor is bound by any express warranties relating
to its services, other than such warranties as are provided by applicable law,
and, to the best knowledge of the Company, the Affiliates and the Sellers, there
has been no assertion of any breach of warranties and, to the best knowledge of
the Company, the Affiliates and the Sellers, there are no
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problems or potential problems with respect to any product sold or services
provided by the Company or the Affiliates, (v) the Company or any of the
Affiliates is not a party to or bound by any agreement which limits its freedom
to compete in any line of business or with any person or entity, (vi) the
Company or any of the Affiliates is not a party to or bound by any agreement
which based on current economic circumstances will result in a loss when
performed, and (vii) the Company or any of the Affiliates is not a party to or
bound by any agreement or involved in any transaction in which any officer,
director, debtholder or stockholder, or any Affiliate or Associate of any such
person has, or had when made, a direct or indirect material interest.
(w) CONTRACTS. Schedule 2.1(w) hereto contains a complete
and correct list and brief description of any and all material contracts,
grants, agreements, hypothecs, mortgages, notes, commitments, obligations and
undertakings to which the Company or any of the Affiliates is a party or
otherwise bound. True copies of all written contracts, grants, agreements,
hypothecs, mortgages, notes commitments, obligations and undertakings set forth
in Schedule 2.1(w) hereto have been furnished to Buyer in full, and except as
expressly stated in Schedule 2.1(w), each of them is in full force and effect,
no person or entity which is a party thereto or otherwise bound thereby is, to
the best knowledge of the Company, the Affiliates and the Sellers, in material
default thereunder, and no event, occurrence, condition or act exists which,
with the giving of notice or the lapse of time or both, would give rise to a
material default or right of cancellation thereunder where such default or right
of cancellation could reasonably be expected to have a Material Adverse Effect,
and the Company and the Affiliates are not in default thereunder and no event,
occurrence, condition or act exists by or on behalf of the Company or the
Affiliates which, with the giving of notice or the lapse of time or both would
give rise to a default by the Company or the Affiliates thereunder, and to the
Company's, the Affiliates' and the Sellers' best knowledge, there have been no
threatened cancellations thereof and there are no outstanding disputes
thereunder where such disputes, if determined against the Company or any
Affiliates, could reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 2.1(w) hereto, neither the Company, the
Affiliates nor the Sellers are aware of any reason why any of the contracts
listed on Schedule 2.1(w), could not be continued on the same terms and
conditions as currently apply after Closing. To the best of the Company's, the
Affiliates' and the Sellers' knowledge, there is no reason to believe that any
of the Company's or the Affiliates' contractual partners will terminate their
relationship with the Company or the Affiliates as a result of the consummation
of the transactions contemplated hereby.
(x) BROKERS. Except as set forth in Schedule 2.1(x) hereto,
no agent, broker, person or firm acting on behalf of the Company, the Affiliates
or any Seller or under the authority of any of the foregoing, is or shall be
entitled to a brokerage commission, finder's fee, or other like payment in
connection with any of the transactions contemplated hereby from the Company,
the Affiliates or any Seller. The payment of any such brokerage commission shall
be the sole responsibility of the Sellers and shall be paid by the Sellers
personally out of their proceeds from the sale.
(y) DISCLOSURE. No representation or warranty made by the
Company, the Affiliates or the Sellers herein or in any of the Executed
Agreements contains any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements therein
not misleading.
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(z) AFFILIATED TRANSACTIONS. Except as set forth in Schedule
2.1(z) hereto, no Seller (i) is a party to any agreement, transaction or
arrangement (oral or written) with or involving the Company, the Affiliates or
any Associate or affiliate of the Company or the Affiliates, or (ii) has no
claim, monetary or otherwise, of any sort against the Company or the Affiliates.
Notwithstanding anything to the contrary contained herein, each Seller hereby
releases and discharges the Company and the Affiliates from all claims, actions
or suits that such Seller now has or may hereafter have against the Company or
the Affiliates.
(aa) CLAIMS AGAINST THE COMPANY AND THE AFFILIATES. The
Company and the Affiliates have no debts, obligations or liabilities owing to
any Seller and nothing exists that could give rise to a claim by any Seller of
any such debts, obligation or liability.
(bb) INDEBTEDNESS. Schedule 2.1(bb) hereto contains a
complete and correct list of all of the Long Term Debt of the Company and the
Affiliates as of January 31, 1999. The amount of the Long Term Debt of the
Company and the Affiliates as of January 31, 1999 is $1,966,649.00 Canadian.
"Long Term Debt" shall have the meaning ascribed to the term according to GAAP.
(cc) DISCLOSURE SCHEDULES. All schedules to this Agreement
are integral parts to this Agreement. Nothing in a schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
unless the schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail, including by explicit
cross-reference to another schedule to this Agreement. The Sellers are solely
responsible for preparing and arranging the schedules corresponding to the
lettered and numbered paragraphs contained herein. Disclosure made in a specific
schedule shall not be deemed to have been disclosed with respect to any other
schedule unless an explicit cross-reference appears.
(dd) PRINCIPAL PLACE OF BUSINESS; RESIDENCE. The Company's
and the Affiliates' principal place of business is located at 0000 Xx. Xxxxxxxxx
Xx., X., Xxxxx 000, Xxxxxxxx, Xxxxxx, Xxxxxx H3B 1H4.
(ee) COLLECTION AND REMITTANCE. The Company and each of the
Affiliates has collected from each receipt from its past and present customers
(or other persons paying amounts to it) the amount of all Taxes required to be
collected and has paid such Taxes (including, for greater certainty, any amount
to be collected and remitted under the Excise Tax Act (Canada) and any sales Tax
under any applicable provincial Laws) when due, in the form required under the
appropriate legislation or made adequate provision for the payment of such
amounts to the proper receiving authorities.
(ff) RELATED PARTY TRANSACTIONS. The Company and each of the
Affiliates has not acquired or had the use of property for proceeds greater than
the fair market value thereof from, or disposed of property for proceeds less
than the fair market value thereof to, or received or performed services for
other than the fair market value from or to, or paid or received interest or any
other amount other than at a fair market rate to or from, any person with whom
it does not deal
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at arm's length within the meaning of the Income Tax Act (Canada), the result of
which caused the payment of any taxes by the Company or the Affiliates.
(gg) CCPC STATUS. Since its date of incorporation or
formation, the Company and each of the Affiliates has been a "Canadian
controlled private corporation" within the meaning of the Income Tax Act
(Canada).
(hh) DEBT FORGIVENESS. The Company and each of the Affiliates
has not at any time benefited from a forgiveness of debt or entered into any
transaction or arrangement (including conversion of debt into shares) which
would have resulted in the application of Sections 80 to 80.04 of the Income Tax
Act (Canada).
(ii) ELECTIONS. Except as set forth in Schedule 2.1(ii)
hereto, the Company and each of the Affiliates has not made any elections or
designations under Section 83 or 85 of the Income Tax Act (Canada) or any
relevant provincial taxing statute, or for purposes of any administrative ruling
or notices or administrative practices pursuant to the Income Tax Act (Canada)
or any such statute.
2.2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each Seller,
jointly and severally with the other Sellers, represents and warrants to, and
covenants and agrees with Buyer as follows:
(a) CAPACITY; VALIDITY. Such Seller has the legal capacity
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed by such
Seller and constitutes a valid and binding obligation of such Seller enforceable
against him in accordance with its terms.
(b) RIGHTS TO TOLL FREE TELEPHONE NUMBERS. Such Seller does
not own or possess any rights in or to the Toll Free Telephone Numbers listed on
Schedule 2.1(r) hereto.
(c) INVESTMENT INTENT. Such Seller acknowledges that none
of the shares of Parent Common Stock are registered under the Securities Act,
any state securities laws or any securities laws of Canada or of the provinces
therein. The shares of Parent Common Stock are being acquired by such Seller for
investment purposes only and not with a view to the distribution or resale
thereof and such Seller has no present intention to sell or otherwise dispose of
the Parent Common Stock, except in compliance with the provisions of all such
securities laws.
(d) INFORMATION. Such Seller (i) has such knowledge and
experience in financial and business affairs that he is capable of evaluating
the merits and risks involved in purchasing the Parent Common Stock, (ii) is
able to bear the economic risks involved in purchasing the Parent Common Stock,
and (iii) has had the opportunity to ask questions of, and receive answers from,
Parent and persons acting on Parent's behalf concerning the terms and conditions
of the Parent Common Stock and to obtain any additional information in
connection therewith.
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(e) ACCREDITATION. Such Seller is an accredited investor
within the meaning of Regulation D of the Securities Act.
(f) NO U.S. RESIDENTS; OFFERS. Such Seller permanently
resides at the address of such Seller specified on the signature pages hereto.
Such Seller is not a citizen or resident of the United States. Such Seller has
not received any offer to sell, or any solicitation of any offer to buy, any
securities of Parent in the United States.
(g) RESTRICTIONS ON TRANSFER.
(i) Such Seller agrees that he will not Transfer any
of the shares of Parent Common Stock (or any interest therein) except upon the
terms and conditions specified herein and such Seller will cause any subsequent
holder of such Seller's shares of Parent Common Stock to agree to take and hold
the shares of Parent Common Stock subject to the terms and conditions of this
Agreement, if such shares of Parent Common Stock are required to include a
legend pursuant to Section 2.2(g)(ii) hereof.
(ii) Each certificate representing the shares of
Parent Common Stock issued to such Seller or to any subsequent stockholder shall
include a legend in the following form; PROVIDED, HOWEVER, that such legend
shall not be required (and shall be removed) if a Transfer is being made in
connection with a sale of shares of Parent Common Stock registered under the
Securities Act, or in connection with a sale in compliance with Rule 144 under
the Securities Act, as such Rule may be amended from time to time (each a
"Public Sale"):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION THEREOF OR A VALID EXEMPTION
THEREFROM.
The Sellers also acknowledge that, under applicable securities laws of Canada,
the shares of Parent Common Stock may be subject to certain statutory hold
periods.
(iii) Notwithstanding anything to the contrary in this Section
2.2(g), such Seller shall not Transfer any of the shares of Parent Common Stock
except to the extent permitted, and in accordance with, the Shareholders
Agreement referred to in Section 4.1(h) hereof.
2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer and Parent hereby
represent and warrant, jointly and severally, to, and covenant and agree with,
the Sellers as follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own, lease and
operate its properties and to carry on the business as presently conducted by it
in each jurisdiction where it carries on business and is qualified in each other
jurisdiction in which qualification is required for it to own, lease and operate
its properties and carry on the business as presently conducted by it, except to
the extent that failure to so qualify
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would not have a material adverse effect on the financial condition, business or
operations of Buyer.
(b) AUTHORITY. The execution and delivery by Buyer of this
Agreement and of each of the other Executed Agreements to which it shall be a
party, the performance by Buyer of its obligations under this Agreement or such
Executed Agreements and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
and any other required action on the part of Buyer, and Buyer has all necessary
corporate and any other required power with respect thereto. This Agreement and
the Executed Agreements are, or when executed and delivered by Buyer shall be,
the valid and binding obligations of Buyer, enforceable in accordance with their
respective terms, except to the extent that enforceability may be limited by the
operation of bankruptcy, insolvency or similar laws. Neither the execution and
delivery by Buyer of the Executed Agreements, nor the consummation of the
transactions contemplated thereby, nor the performance by Buyer of its
obligations under the Executed Agreements, shall (nor with the giving of notice
or the lapse of time or both would) (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or By-Laws of Buyer, (ii) violate
any order, writ, injunction, decree, law, statute, rule or regulation or (iii)
interfere with or otherwise materially and adversely affect the ability of Buyer
to carry on the Business as now conducted.
(c) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS. Other
than the approval of Buyer's lenders ("Bank Lenders"), no approval, consent,
compliance, exemption, authorization or other action by, or notice to or filing
with, any governmental authority or any other entity, and no lapse of a waiting
period, is necessary or required to be obtained by Buyer in connection with the
execution, delivery or performance by it of this Agreement, any of the Executed
Agreements or the transactions contemplated hereby, other than the filing of a
notification of the acquisition with the Director of Investments pursuant to the
Investment Canada Act which the Buyer covenants to file after Closing. Buyer
does have an available credit facility with its Bank Lenders that will enable
Buyer to finance the transactions contemplated hereby.
(d) BROKERS. No agent, broker, person or firm acting on
behalf of Buyer or under its authority is or shall be entitled to a brokerage
commission, finder's fee, or other like payment in connection with any of the
transactions contemplated hereby.
(e) RELIANCE ON REPRESENTATIONS AND WARRANTIES. Except for
the specific representations and warranties contained in Sections 2.1 and 2.2
hereof, the Company, the Affiliates and the Sellers have not provided the Buyer
and the Buyer is not relaying upon any other representation, warranty,
undertaking or covenant of the Company, the Affiliates or the Sellers including,
without limitation, any representation, warranty, undertaking or covenant in
respect to projected revenues or earnings, the Buyer having made its own
inquires and investigations in respect to such projections.
2.4 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to the Sellers as follows:
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(a) CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 15,000,000 shares of Common Stock, par value $.001 per share, of
which 100,000 shares are designated Class B Common Stock which are non-voting
stock ("Class B Stock"), of which 90,500 shares of Class B Stock are issued and
outstanding and (ii) 7,000,000 shares of Series A Preferred Stock, par value
$.001 per share, of which 6,520,000 shares are issued and outstanding. No more
than 11,000,000 shares of capital stock of Parent are issued and outstanding or
are reserved for issuance against outstanding options and warrants and
conversions of Class B Stock and Series A Preferred Stock. The shares of Parent
Common Stock being transferred to each Seller in accordance herewith, upon
consummation of the transactions contemplated hereby, shall, when issued, be
duly and validly issued and fully paid and non-assessable. The transfer of such
shares of Parent Common Stock to such Seller as provided herein shall upon
consummation of the transactions contemplated hereby, and subject to any
adjustments contained herein, vest such Seller with good and marketable title to
the Parent Common Stock, free and clear of all liens, charges, claims and
encumbrances.
(b) ORGANIZATION, STANDING AND POWER. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own, lease
and operate its properties and to carry on its business as presently conducted
by it and is qualified in each other jurisdiction in which qualification is
required for it to own, lease and operate its properties and carry on its
business as presently conducted by it, except to the extent that failure to so
qualify would not have a material adverse effect on the financial condition,
business or operations of Parent.
(c) AUTHORITY. The execution and delivery by Parent of this
Agreement and of each of the other Executed Agreements to which it shall be a
party, the performance by Parent of its obligations under this Agreement or such
Executed Agreements and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Parent, and Parent has all necessary corporate power with
respect thereto. This Agreement and the Executed Agreements to which Parent
shall be a party are, or when executed and delivered by Parent shall be, the
valid and binding obligations of Parent, enforceable in accordance with their
respective terms, except to the extent that enforceability may be limited by the
operation of bankruptcy, insolvency or similar laws. Neither the execution and
delivery by Parent of such Executed Agreements, nor the consummation of the
transactions contemplated thereby, nor the performance by Parent of its
obligations under such Executed Agreements, shall (nor with the giving of notice
or the lapse of time or both would) (i) conflict with or result in a breach of
any provision of the Certificate of Incorporation or By-Laws of Parent, (ii)
violate any order, writ, injunction, decree, law, statute, rule or regulation or
(iii) interfere with or otherwise materially and adversely affect the ability of
Parent to carry on its business as now conducted.
(d) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS. Other
than the approval of the Bank Lenders, no approval, consent, compliance,
exemption, authorization or other action by, or notice to or filing with, any
governmental authority or any other entity, and no lapse of a waiting period, is
necessary or required to be obtained by Parent in connection with the execution,
delivery or performance by it of this Agreement, any of the Executed Agreements
or the transactions contemplated hereby.
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(e) BROKERS. No agent, broker, person or firm acting on
behalf of Parent or under its authority is or shall be entitled to a brokerage
commission, finder's fee, or other like payment in connection with any of the
transactions contemplated hereby.
3. COVENANTS. The Sellers, jointly and severally, covenant and
agree to, and to cause the Company and each of the Affiliates to, perform or
take any and all such actions to effectuate the following from the date hereof
until the Closing Date:
3.1 INVESTIGATION BY BUYER. Subject to the confidentiality agreement
dated November 1, 1998, as amended by a rider thereto dated March 8, 1999, Buyer
may, prior to the Closing Date, through its representatives (including its
counsel, accountants and consultants) make such investigations of the
properties, offices and operations of the Company and of the Affiliates and such
audit of the financial condition of the Company and the Affiliates as it deems
necessary or advisable in connection with the transactions contemplated hereby,
including, without limitation, any investigation enabling it to familiarize
itself with such properties, offices, operations and financial condition; such
investigation shall not, however, affect the Sellers' representations,
warranties and agreements hereunder. The Company, the Affiliates and the Sellers
shall permit Buyer and its authorized representatives to have, after the date
hereof, full access to the premises and to all books and records and Returns of
the Company and the Affiliates, and Buyer shall have the right to make copies
thereof and excerpts therefrom. The Company and the Sellers' shall furnish Buyer
with such financial and operating data and other information with respect to the
Company and the Affiliates as Buyer may from time to time reasonably request.
3.2 CARRY ON IN ORDINARY COURSE. Except with Buyer's prior written
consent, the Company and the Affiliates shall, and the Sellers shall cause the
Company and the Affiliates to, carry on the Business diligently and
substantially in the same manner as heretofore conducted, and shall not (i)
enter into or agree to enter into any extraordinary transaction, contract, lease
or commitment, (ii) except as disclosed hereunder, declare any dividends, nor
make any distributions or payments to any Seller, other than employment
compensation at rates not materially higher than rates paid for the Company's
fiscal year ended January 31, 1999, (iii) redeem any shares of the capital stock
of the Company or of any of the Affiliates or issue any capital stock or enter
into any agreement which grants a right to acquire any of the capital stock of
the Company or of any of the Affiliates, except as set forth on Schedule 3.2
hereof; provided, however, that nothing herein shall prevent the Sellers from
completing, prior to the Closing Date, certain corporate reorganization measures
relating to the Company and the Affiliates described on Schedule 3.2 hereof,
provided that, following such reorganization, the Buyer shall still acquire all
of the issued and outstanding shares of the capital stock of the Company and
provided that the Buyer shall not be adversely affected in consequence thereof;
(iv) increase the compensation of any employee of the Company or of any of the
Affiliates, other than ordinary year-end increases or enter into any severance
agreement or employment agreement with any employee of the Company or of any of
the Affiliates; (v) loan or advance any amounts to any officer, director,
stockholder or employee of the Company or of any of the Affiliates or enter into
any agreement with any of the foregoing or any person related to any of the
foregoing, (vi) acquire or dispose of any assets, other than in the ordinary
course of business, and (vii) encumber or commit to encumber any of its assets,
(viii) take any action, or suffer any action to be taken, which could cause any
of the representations or warranties of the Company, the Affiliates or the
Sellers contained herein not to be true and correct on and as of
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the Closing Date, (ix) repay (including by way of offset) any indebtedness,
except for regularly scheduled payments thereof in accordance therewith, or (x)
enter into any agreement to take any of the foregoing actions.
3.3 OTHER TRANSACTIONS. The Sellers shall not, and shall cause the
Company, the Affiliates and each of their directors, officers, stockholders,
employees, agents and affiliates or Associates not to, directly or indirectly,
at any time prior to the Closing, or should the Closing not occur, until the
date which is five (5) business days after the Closing Date, solicit or initiate
the submission of proposals from, or solicit, encourage, entertain or enter into
any arrangement, agreement or understanding with, or engage in any negotiations
with, or furnish any information to, any person, other than Buyer or a
representative thereof, with respect to the acquisition of all or any
substantial part of the business or assets of the Company or any of its
securities. Should the Company or any of its Affiliates or Associates or any
Seller, during such period, receive any offer or inquiry relating to such
acquisition, or obtain information that such an offer is likely to be made, they
will provide Buyer with immediate written notice thereof.
3.4 CONSENTS. The Sellers shall cause the Company and each of the
Affiliates to, and the Seller shall, use its best efforts to obtain in writing,
prior to the Closing Date, all consents, approvals, waivers, authorizations and
orders listed on Schedule 2.1(e) hereto which are not otherwise noted as waived
by Buyer (collectively, "Consents"). All such Consents will be in writing and
copies thereof will be delivered to Buyer promptly after the Company's receipt
thereof but no later than immediately prior to Closing.
3.5 SUPPLEMENTAL DISCLOSURE. The Sellers agree that, with respect to
their representations and warranties made in this Agreement, they will have a
continuing obligation to promptly supplement or amend the schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement and on the Closing Date, would have been
required to be set forth or described in the schedules hereto.
3.6 PUBLIC ANNOUNCEMENTS. The Sellers, the Company, the Affiliates
and Buyer agree that they will consult with each other before issuing any press
releases or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and any press release or any
public statement shall be subject to mutual agreement of the parties, except as
may be required by the disclosure obligations of Buyer under applicable
securities laws.
4. CONDITIONS TO CLOSING.
4.1 CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligation of
Buyer to close under this Agreement is subject to the satisfaction of the
following conditions any of which may be waived by Buyer in writing at or prior
to Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the Closing
Date, the Sellers shall have complied with and duly performed in all material
respects all agreements and conditions on their part to be complied with and
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
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(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained in this Agreement, or otherwise made in
connection with the transactions contemplated hereby, shall be true and correct
in all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
(c) NO LEGAL PROCEEDINGS. No court or governmental action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby, and on the Closing Date there will be no court
or governmental actions or proceedings pending or threatened against or
affecting the Company which involve a demand for any judgment or liability,
whether or not covered by insurance, and which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of the Company or any of the Affiliates.
(d) ABSENCE OF MATERIAL CHANGES. The Company and each of the
Affiliates shall have not suffered any material adverse change in its working
capital, condition (financial or otherwise), assets, liabilities, business,
operations or prospects since the date hereof.
(e) CERTIFICATE. Buyer shall have received a certificate
dated the Closing Date and executed by each Seller and an authorized officer of
the Seller to the effect that the conditions expressed in Sections 4.1(a),
4.1(b), 4.1(c) and 4.1(d) have been fulfilled and which shall constitute
representations and warranties of the Sellers, jointly or severally, as to the
matters stated therein.
(f) GOVERNMENTAL APPROVALS. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement and the operation of the Business of the Company and of each Affiliate
by Buyer shall have been consented to, authorized, permitted or approved such
transactions.
(g) CONSENTS. Buyer shall have received all consents
necessary to effectuate this Agreement and to consummate the transactions
contemplated hereby.
(h) SHAREHOLDER AGREEMENT. Each Seller shall have entered
into a Shareholder Agreement, in form and substance attached as Exhibit A
hereto.
(i) EMPLOYMENT AGREEMENT. Buyer shall have entered into an
Employment Agreement with each of Xxxxxx Xxxxx and Xxxxx Xxxxx, in form and
substance attached as Exhibit B hereto.
(j) CERTIFICATES OF STATUS. Buyer shall have received
certificates from Industry Canada, the Inspector General of Financial
Institutions and of each jurisdiction set forth in Schedule 2.1(a) hereto,
providing that each of the Company and the Affiliates has filed its most recent
annual report, has not filed articles of dissolution and is in good standing in
each such jurisdiction.
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(k) OPINION OF COUNSEL. The Sellers shall have furnished
Buyer with a favorable opinion of Xxxxxxxxxx Rosentzveig Xxxxxxx, counsel for
the Sellers and the Company, dated as of the Closing Date, and in form and
substance satisfactory to counsel for Buyer.
(l) APPROVAL OF BANK LENDERS. Buyer shall have received the
approval of the Bank Lenders to effectuate this Agreement and to consummate the
transactions contemplated hereby.
(m) CLOSING DELIVERIES. Buyer shall have received at or
prior to the Closing such other documents, instruments, or certificates as Buyer
may reasonably request, including, without limitation, a certificate signed by
an authorized representative of the Company attesting to the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement.
(n) LONG TERM DEBT. The Sellers shall have caused the Long
Term Debt to be restructured, on terms and conditions satisfactory to the Buyer,
such that, as a result, the security granted therefor shall be limited to
specific fixed assets acceptable to the Buyer. The long term portion of the Long
Term Debt of the Company and the Affiliates shall consist of (i) no more than
[***********] Canadian of indebtedness in the form of capitalized lease
obligations and equipment financing, (ii) indebtedness in the form of deferred
tax liabilities, and (iii) any other indebtedness agreed to by the parties prior
to Closing, provided, however, that the sum of the indebtedness in (i) and (ii)
shall not exceed [***********] Canadian.
(o) TRADE-XXXX UTILIZATION AGREEMENT. The Buyer shall be
satisfied with the terms and conditions of the Trade-Xxxx Utilization Agreement.
(p) CONSENT OF LESSORS. The consents of the lessors referred
to in Schedule 2.1(e) hereof shall have been obtained.
(q) ESCROW AGREEMENT. The parties shall have entered into an
Escrow Agreement in form and substance mutually satisfactory to the parties.
(r) DUE DILIGENCE. Buyer shall have completed, to its
satisfaction, its business, legal, tax and accounting due diligence, including,
but not limited to, its due diligence with respect to the Company's Year 2000
compliance program.
(s) ORGANIZATION AND CAPITALIZATION. The Sellers shall cure,
to the satisfaction of the Buyer, certain technical deficiencies in the
organizational and capitalization structure of the Company and the Affiliates as
contained in the minute books of the Company and the Affiliates.
(t) PAYOFF OF GOVERNMENT OF CANADA LOAN. The Company shall
have paid off in full the balance of the Government of Canada loan referenced in
Schedules 2.1(e) and 2.1(w).
(u) COMPLETION OF THE COMPANY REORGANIZATION. The Sellers
and the Company shall have completed the reorganization of the Company,
including, but not limited to,
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the transfer of all of the Company's interest in 3425321 Canada Inc. to Xxxxxx
Xxxxx and Xxxxx Xxxxx.
(v) COMPLETION OF THE RUPPMAN TRANSACTION. The Sellers, the
Company and the Affiliates shall have completed the sale of their interest in
Ruppman Express more fully described in Schedule 3.2 and shall have obtained a
release of the guarantee securing certain loan obligations of Ruppman Express
furnished by the Company, the Affiliates and/or any of the Sellers in favor of
the National Bank of Canada.
4.2 CONDITIONS OF THE SELLERS' OBLIGATIONS TO CLOSE. The obligations
of the Sellers to close under this Agreement are subject to the following
conditions any of which may be waived by the Sellers' Rep in writing at or prior
to Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the Closing
Date, Buyer shall have complied with and duly performed in all material respects
all agreements and conditions on its part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement, shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
(c) NO LEGAL PROCEEDINGS. No court or governmental action or
proceeding shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby.
(d) CLOSING CERTIFICATE. The Sellers' Rep shall have
received a certificate dated the Closing Date and executed by an authorized
officer of Buyer to the effect that the conditions contained in Sections 4.2(a),
4.2(b) and 4.2(c) have been fulfilled and which shall constitute representations
and warranties of Buyer as to the matters stated therein.
(e) CLOSING DELIVERIES. The Sellers' Rep shall have received
at or prior to the Closing such other documents, instruments, or certificates as
the Sellers' Rep may reasonably request, including, without limitation, a
certificate signed by an authorized representative of Buyer attesting to the
authenticity of the resolutions authorizing the transactions contemplated by
this Agreement.
(f) OPINION OF COUNSEL. The Buyer and the Parent shall have
furnished Sellers with a favorable opinion of counsel of the Buyer and Parent,
dated as of the Closing Date, and in form and substance satisfactory to counsel
for Sellers.
(g) ABSENCE OF MATERIAL ADVERSE CHANGE. The Parent or any of
its affiliates shall have not suffered any material adverse change in its
working capital, condition (financial or otherwise), assets, liabilities,
business, operations or prospects since the date hereof.
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(h) [intentionally omitted].
(i) RELEASE OF GUARANTIES. Buyer shall have secured the
release of any guarantees furnished by any of the Sellers in favor of the
bankers of the Company or any of the Affiliates. (j) OPINION OF SELLERS' U.S.
COUNSEL. Sellers shall have obtained an opinion from their United States counsel
that the provisions in this Agreement that are related to laws of the United
States are reasonable and standard in a transaction of this nature.
5. FURTHER ASSURANCES. From time to time after the Closing, and
without further consideration, the Sellers shall execute and deliver such other
instruments of conveyance, assignment, transfer and delivery and take such other
actions as Buyer may reasonably request in order more effectively to Transfer to
Buyer, to place Buyer in possession or control of the ME Stock and all of the
rights, properties, assets and businesses intended to be Transferred hereunder,
to assist in the collection of any and all such rights, properties and assets,
and to enable Buyer to exercise and to enjoy all of the rights and benefits of
the Sellers with respect thereto.
6. TRANSFER TAXES. The Sellers shall pay all income, gains,
transfer, sales and excise taxes, if any, incurred in connection with the
transactions contemplated by this Agreement.
7. INDEMNIFICATION.
7.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties
of the Sellers in this Agreement or in any document delivered pursuant hereto
shall survive the Closing Date for a period of two (2) years and shall then
terminate; PROVIDED, HOWEVER, that (i) any such representation and warranty
shall survive the time it would otherwise terminate only with respect to claims
of which notice has been given as provided in this Agreement prior to such
termination and (ii) such time limitation shall not apply to the representations
and warranties set forth in Section 2.2(b) hereof, which shall survive
indefinitely, and Sections 2.1(b), 2.1(j), 2.1(l), 2.1(m) and 2.1(o) hereof,
which shall survive until the expiration of the applicable statute of
limitations. The representations and warranties of the Buyer in this Agreement
or in any document delivered pursuant hereto shall survive the Closing Date
until the expiration of the applicable statute of limitations and shall then
terminate.
7.2 INDEMNITORS; INDEMNIFIED PERSONS. For purposes of this Section
7, each party which, pursuant to this Section 7, shall agree to indemnify any
other person or entity shall be referred to, as applicable, as the "Indemnitor",
and each such person and entity who is entitled to be indemnified by any
Indemnitor shall be referred to as the "Indemnified Person" with respect to such
Indemnitor.
7.3 INDEMNITY OF THE SELLERS. The Sellers hereby jointly and
severally agree to indemnify, hold harmless and reimburse Buyer and Parent and
their respective directors, officers, agents and employees from and against any
and all claims, liabilities, losses, damages and expenses incurred by such
Indemnified Persons (including reasonable attorneys' fees and disbursements)
which shall be caused by or related to or shall arise out of (a) any material
breach (or alleged breach in connection with a claim asserted by a third party)
of any representation or warranty of the Sellers
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contained in this Agreement, except those contained in Section 2.1(f) hereof,
and (b) any breach of any covenant or agreement of the Sellers contained in the
Agreement and (c) the corporate reorganizations implemented by the Sellers prior
to the Closing with respect to the shareholders of the Company and with respect
to the transactions relating to the sale by the Company of its interests in
3425321 Canada, Inc. The Sellers further agree that they shall not, without the
prior written consent of Buyer and Parent settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder unless
such settlement, compromise or consent shall include an unconditional release of
each Indemnified Person under this Section 7.3 from all liability arising out of
such claim, action, suit or proceeding.
7.4 INDEMNITY OF BUYER AND PARENT. Buyer and Parent hereby jointly
and severally agree to indemnify, hold harmless and reimburse the Company and
the Sellers and the Company's directors, officers, agents and employees from and
against any and all claims, liabilities, losses, damages and expenses incurred
by them (including reasonable attorneys' fees and disbursements) which shall be
caused by or related to or shall arise out of (a) any material breach (or
alleged breach in connection with a claim asserted by a third party) of any
representation or warranty of Buyer or Parent contained in this Agreement and
(b) any breach of any covenant or agreement of Buyer or Parent contained in the
Agreement. Buyer and Parent further agree that they shall not, without the prior
written consent of the Sellers' Rep, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder unless
such settlement, compromise or consent shall include an unconditional release of
the Sellers under this Section 7.4 from all liability arising out of such claim,
action, suit or proceeding.
7.5 PROCEDURES FOR INDEMNIFICATION; DEFENSE. Promptly after receipt
by an Indemnified Person of notice of the commencement of any action or
proceeding with respect to which indemnification may be sought hereunder, such
Indemnified Person shall notify the Indemnitor of the commencement of such
action or proceeding, but failure to so notify the Indemnitor shall not relieve
the Indemnitor from any liability which the Indemnitor may have hereunder or
otherwise, unless the Indemnitor shall be materially prejudiced by such failure.
If the Indemnitor shall so elect, the Indemnitor shall assume the defense of
such action or proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall pay the fees and
disbursements of such counsel. In the event, however, that such Indemnified
Person shall determine based on the written opinion of its counsel that having
common counsel would present such counsel with a conflict of interest or if the
Indemnitor shall fail to assume the defense of the action or proceeding in a
timely manner, then such Indemnified Person may employ separate counsel to
represent or defend it in any such action or proceeding and the Indemnitor shall
pay the reasonable fees and disbursements of such counsel; PROVIDED, HOWEVER,
that the Indemnitor shall not be required to pay the fees and disbursements of
more than one separate counsel for all Indemnified Persons in any jurisdiction
in any single action or proceeding. In any action or proceeding the defense of
which the Indemnitor shall assume, the Indemnified Person shall have the right
to participate in (but not control) such litigation and to retain its own
counsel at such Indemnified Person's own expense except as otherwise provided
above in this Section 7.5, so long as such participation does not interfere with
the Indemnitor's control of such litigation.
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7.6 RELATIONSHIP WITH PURCHASE PRICE ADJUSTMENT. Notwithstanding any
payment which may be due to Buyer under the Purchase Price Adjustments set forth
in Sections 1.4 and 1.5 hereof, the indemnity provisions of this Section 7 shall
remain in full force and effect without any modification or diminution thereof;
provided, however, that Buyer and Parent shall not be entitled to any indemnity
under this Section 7 in respect of any damage, cost, liability, refund or
expense as a result of any condition or event which is reflected, and only to
the extent so reflected, in the calculation of any adjustment to the Purchase
Price provided in this agreement. Notwithstanding any provisions of this
agreement to the contrary and in addition to the proviso mentioned in the
preceding sentence:
(a) neither the Buyer nor the Parent shall be entitled to
make any claim hereunder if (i) any of Xxxxxxx XxXxxx, Xxxxxxx Xxxxxx or Xxxxxx
Xxxx has actual knowledge (the Buyer's due diligence investigation alone being
insufficient to establish actual knowledge although such actual knowledge may
result from such investigation) prior to the Closing Date of the
non-performance, non-fulfillment or breach which is the basis for such warranty
claim, and (ii) the person with actual knowledge in (i) does not advise Sellers
of the non-performance, non-fulfillment or breach prior to completing the
purchase of the Purchased Business.
(b) the amount of any damages which may be claimed by the
Buyer or the Parent pursuant to any claim hereunder shall be calculated to be
the cost or loss to the Buyer or Parent after giving effect to any insurance
proceeds available to the Buyer or Parent in relation to the matter which is the
subject of such claim, plus the cost of any deductible.
(c) except for a claim pursuant to Section 7.7 hereof or a
claim arising out of a misrepresentation or breach of warranty contained in
Section 2.1(bb) hereof, neither the Buyer nor the Parent shall be entitled to
make any claim against the Sellers and the Sellers shall have no obligation to
indemnify either the Buyer or the Parent in respect of any claim until the
aggregate amount of all damages, losses, liabilities and costs incurred by the
Buyer and the Parent as the result of all misrepresentations and breaches of
warranties contained in this agreement or the breach of any covenants and
undertakings of the Sellers contained herein or any document or certificate
given in order to carry out the transactions contemplated hereby exceeds a
threshold of [**********************************] , at which point the Sellers
shall be obliged to indemnify the Buyer and the Parent in respect of any claims
hereunder to the extent that such claims exceed the said amount of
[*******************************] , except any claims in connection with Section
2.1(bb) hereof which shall not be subject to any such threshold requirement; and
(d) the maximum aggregate liability of the Sellers in
respect to all claims that may be made by the Buyers and the Parent against the
Sellers hereunder shall not exceed the Purchase Price, as the same may be
adjusted pursuant to the provisions hereof.
7.7 LITIGATION INDEMNITY OF THE SELLERS. The Sellers hereby jointly
and severally agree to indemnify, hold harmless and reimburse Buyer, Parent, the
Company and the Affiliates and their respective directors, officers, agents and
employees from and against any and all claims, liabilities, losses, damages and
expenses incurred by such Indemnified Persons (including reasonable attorneys'
fees and disbursements) which shall be caused by or related to or shall arise
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out of any and all of the three litigation matters described in Schedule 2.1(k)
(the "Litigation Matters"). The Sellers further agree that they shall not,
without the prior written consent of Buyer and Parent, settle or compromise or
consent to the entry of any judgment in any of the Litigation Matters unless
such settlement, compromise or consent shall include an unconditional release
from all liability arising out of such Litigation Matter in favor of the party
or parties that were sued in such Litigation Matter, provided, however, that, to
the extent that such settlement, compromise or consent shall not include an
unconditional release of each and every Indemnified Person under this Section
7.7, the indemnity provided under this Section 7.7 by the Sellers shall continue
in full force and effect with respect to those Indemnified Persons not expressly
included in the aforementioned release. The Indemnitor shall assume and control
the defense of such actions or proceedings, including the employment of counsel
chosen by the Indemnitor, and shall pay the fees and disbursements of such
counsel. In the event, however, that such Indemnified Person shall determine
based on the written opinion of its counsel that having common counsel would
present such counsel with a conflict of interest or if the Indemnitor shall fail
to assume the defense of the Litigation Matters in a timely manner, then such
Indemnified Person may employ separate counsel to represent or defend it in any
such Litigation Matter and the Indemnitor shall pay the reasonable fees and
disbursements of such counsel; PROVIDED, HOWEVER, that the Indemnitor shall not
be required to pay the fees and disbursements of more than one separate counsel
for all Indemnified Persons in any Litigation Matter. In any such Litigation
Matter, the Indemnified Person and the Company and the Affiliates shall
cooperate with the Indemnitor by making available any documents and records that
the Indemnitor may require. The Indemnified Person shall have the right to
participate in (but not control) such litigation and to retain its own counsel
at such Indemnified Person's own expense except as otherwise provided above in
this Section 7.7, so long as such participation does not interfere with the
Indemnitor's control of such litigation.
8. NON-COMPETITION; CONFIDENTIALITY.
8.1 NON-COMPETITION. Following the Closing Date and for a period
of three (3) years thereafter (the "Non-Competition Period"), each of the
Sellers shall not, directly or indirectly, (a) engage in any business or
activity that competes with the Company or any of the Affiliates, anywhere in
the United States or Canada; (b) enter the employ of any person or entity
engaged in any business or activity that competes with the Company or any of the
Affiliates or render any consulting or other services to any person or entity
for use in or with the effect of competing with the Company or any of the
Affiliates; or (c) have an interest in any business or activity that competes
with the Company or any of the Affiliates, in any capacity, including, without
limitation, as an investor, partner, stockholder, officer, director, principal,
agent, employee, or creditor; PROVIDED, HOWEVER, that nothing herein shall
prevent the purchase or ownership by a Seller of less than 3% of the outstanding
equity securities of any class of securities of a company registered under
Section 12 of the Securities and Exchange Act of 1934, as amended.
8.2 NO COMPETING INTERESTS. Each Seller hereby represents and
warrants to Buyer that such Seller has no ownership or other interest in any
business or activity that competes, directly or indirectly, with the Company or
any of the Affiliates.
8.3 NON-SOLICITATION. Following the Closing Date and for a period of
three (3) years thereafter, the Sellers agree, jointly and severally, not to,
directly or indirectly, hire, offer to
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hire, divert, entice away, solicit or in any other manner persuade or attempt to
persuade ("Solicitation") any person who is, or was, at any time within the
twelve (12) months prior to such Solicitation, an officer, director, employee,
agent, licensor, licensee, customer, or supplier of the Company or any of the
Affiliates to discontinue, cease or alter his, her or its relationship
therewith.
8.4 NON-DISRUPTION. Following the Closing Date and for a period of
three (3) years thereafter, the Sellers agree, jointly and severally, not to,
directly or indirectly, interfere with, disrupt or attempt to disrupt any
present or prospective relationship, contractual or otherwise, between the
Business, on the one hand, and any of its customers, suppliers or employees, on
the other hand.
8.5 CONFIDENTIALITY. The Sellers agree, jointly and severally, not
to at any time, directly or indirectly, use communicate, disclose or disseminate
any Confidential Information in any manner whatsoever (except to his personal
financial or legal advisors and as may be required under legal process by
subpoena or other court order; provided that, the Sellers will take reasonable
steps to give the Buyer sufficient prior written notice in order to contest such
requirement or order). "Confidential Information" means any and all information
(oral or written) relating to the Buyer or Parent or any person controlling,
controlled by, or under common control with the Buyer or Parent or any of their
respective activities, including, but not limited to, information relating to
trade secrets, proprietary information, software, software codes, advertising,
sales, marketing and other materials customers and supplier lists, data
processing reports, customer sales analyses, invoice, price lists or
information, and information pertaining to any governmental investigation,
except such information which is generally known in the industry or in the
public domain (such information not being deemed to be in the public domain
merely because it is embraced by more general information which is in the public
domain), other than as a result of a breach of the provisions hereof.
8.6 REMEDIES UPON BREACH. The Sellers, jointly or severally,
acknowledge and agree that (a) Buyer shall be irreparably injured in the event
of a breach by a Seller of any of the obligations under this Section 8; (b)
monetary damages shall not be an adequate remedy for such breach; (c) Buyer
shall be entitled to injunctive relief, in addition to any other remedy which it
may have, in the event of any such breach; and (d) the existence of any claims
which the Sellers may have against Buyer, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Buyer of any of its
rights under this Agreement, other than the non-payment by Buyer of the Purchase
Price. The obligations of the Sellers under this Section 8 are made absolutely
conditional upon the payment by the Buyer of the Purchase Price (as the same may
be adjusted pursuant to the provisions hereof) and the performance by the Buyer
and the Parent of all of their respective obligations under the Executed
Agreements.
8.7 RECOGNITION. The Sellers hereby expressly recognize that:
(a) The provisions of Section 8 are of the essence of this
Agreement and Buyer would not have entered into this Agreement without the
inclusion of such Section;
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(b) The Parent and the Buyer would be subject to irreparable
prejudice should one or several of the provisions of such Section be infringed,
or should the Sellers be in breach of any of its obligations thereunder;
(c) The provisions of Section 8 grant only such reasonable
protection as is admittedly necessary to preserve the legitimate interests of
the Parent and the Buyer; and
(d) without intending to limit the remedies available to the
Parent and the Buyer, a breach of any of the covenants contained in Section 8
may result in material irreparable injury to the Parent, the Buyer, the Company
and the Affiliates, for which there is no adequate remedy at law, that it may
not be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Parent, the Buyer, the Company and
the Affiliates shall be entitled to obtain any or all of a temporary restraining
order and a preliminary or permanent injunction restraining the Sellers from
engaging in activities prohibited by such Section or such other relief as may be
required to enforce specifically any of the covenants in such Section.
9. GUARANTY.
9.1 GUARANTEED OBLIGATIONS. Parent ("Guarantor") does hereby
irrevocably and unconditionally guarantee the due and punctual payment and
performance by Buyer of all of the obligations and undertakings of the Buyer
hereunder and the Executed Agreements and all reasonable costs and expenses,
legal or otherwise (including reasonable legal fees) as shall have been expended
or incurred by any of the Sellers in the enforcement of any right or privilege
under this Agreement and the Executed Agreements (collectively, the "Guaranteed
Obligations").
9.2 DEMAND BY SELLERS. The Sellers shall not be bound to exercise or
exhaust their recourses against the Buyer or others or any securities or other
guaranties it may at any time hold before being entitled to payment from the
Guarantor and the Guarantor renounces all benefits of discussion and division,
provided, however, that Sellers shall have no greater rights against the
Guarantor than they had against the Buyer and provided further that the
Guarantor shall be able to claim and assert the same defenses to payment as the
Buyer could have claimed and asserted.
9.3 WAIVER OF DEMANDS, NOTICES, DILIGENCE, ETC. The Guarantor hereby
assents to all the terms and conditions of the Guaranteed Obligations and waives
(a) demand for the payment of the Guaranteed Obligations (other than a demand
required as a condition to the Guaranteed Obligations becoming due or pursuant
to Section 9.2 above); (b) notice of the occurrence of a default of any event of
default under the Guaranteed Obligations; (c) protest of the nonpayment of the
Guaranteed Obligations or any part thereof; (d) notice of presentment, demand
and protest; (e) notice of acceptance of any guaranty hereon provided for or of
the terms and provisions thereof or hereof by the Seller; (f) notice of any
indulgence of extensions granted to Buyer or any partnership or corporate
successor to Buyer or any person or party which shall have assumed the
obligations of Buyer; (g) any requirement of diligence or promptness on the part
of the Sellers to the extent not required by the provisions of the Guaranteed
Obligations or this Section 9; (h) any enforcement of the Guaranteed
Obligations; (i) any right which the Guarantor might have to require the Sellers
to proceed against any collateral security therefor; and (j) any and all notices
of every kind and description which may be required to be given by any statute
or rule of law in any
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jurisdiction. The waivers set forth in this section shall be effective
notwithstanding the fact that the Sellers cease to exist by reason of their
liquidation, merger, consolidation or otherwise. The Guarantor's liability to
make a payment under this guaranty shall arise forthwith after demand for
payment has been made in writing on the Guarantor and such demand shall be
deemed to have been effectively made upon receipt of such demand by the
Guarantor.
9.4 OBLIGATIONS OF THE GUARANTOR UNCONDITIONAL. Upon the Guaranteed
Obligations becoming unconditionally due and payable against Buyer, such
Guaranteed Obligations shall become likewise unconditionally due and payable by
Guarantor under this Section 9, and shall not be affected by any action taken
under the Guaranteed Obligations in the exercise of any right or remedy therein
conferred, or by any failure or omission on the part of the Sellers to enforce
any right given thereunder or hereunder or any remedy conferred thereby or
hereby, or by any release of any security or any other guaranty at any time
existing for the benefit of the Guaranteed Obligations, or by the merger or
consolidation of the Sellers, or by sale, lease, or transfer by the Sellers to
any person of any or all of its properties, or by any action of the Sellers
granting indulgence or extension to, or acquiescing in any default by, Buyer, or
any successor or successors to Buyer or by any other party which shall have
assumed any of its obligations, or by and modification, alteration, or by any
circumstance whatsoever (with or without notice to or knowledge of the
Guarantor) which may or might in any manner or to any extent vary the risk of
the Guarantor hereunder, it being the purpose and intent of the Guarantor that
the obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances in which such Guaranteed Obligations shall be
absolute and unconditional as against Buyer and shall not be discharged except
by payment or performance as herein provided, and then only to the extent of
such payment or performance. Notwithstanding the foregoing, the Guarantor shall
have the right to assert any defenses and any rights of set-off against the
Sellers that Buyer could have asserted against the Sellers. If for any reason
Buyer has no legal existence or is under no legal (as opposed to contractual)
obligation to discharge the Guaranteed Obligations, or if the Guaranteed
Obligations shall be due and payable but shall have become irrecoverable from
Buyer, by operation of law or for any other reason, or if any security or other
guaranty shall be found invalid, the Guarantor shall nonetheless be and remain
bound by this Section 9.
9.5 OTHER REQUIREMENTS. The Guarantor hereby agrees that, without
notice to or further assent from the Guarantor, the time of payment of any of
the Guaranteed Obligations or any other provision of the Guaranteed Obligations
may be extended, changed, modified, waived, discharged, settled or compromised
and the Guarantor will remain bound under this guaranty notwithstanding one or
more such extensions, changes, modifications, waivers, discharges, compositions
or settlements. The obligations of the Guarantor shall not be impaired,
diminished or discharged by any course of dealing between any of the Sellers and
Guarantor, or by any event or circumstance which might operate to discharge a
guarantor or which might otherwise constitute a defense to this guaranty.
This guaranty shall not be discharged or otherwise affected by any change in the
name of the Buyer or in the objects, capital structure or constitution of the
Buyer or by the sale of the Buyer's business or any part thereof or by the Buyer
being amalgamated with a corporation, but shall, notwithstanding any such event,
continue to apply to all Guaranteed Obligations whether
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theretofore or thereafter incurred; and in the case of the Buyer being
amalgamated with a corporation, this guaranty shall constitute a liability of
the resulting corporation, and a term "Buyer" shall include each such resulting
corporation.
The Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Buyer and of all other circumstances bearing upon the
risk of non-payment of the Guaranteed Obligations and agrees that the Sellers
shall have no duty to advise the Guarantor of information known to any of them
regarding such condition or circumstances.
The Guarantor agrees that the Sellers are not obliged in any manner to inquire
into the powers of the Buyer or any director, officer or agent acting or
purporting to act on its behalf.
If any payment of the Guaranteed Obligations is made by or for the benefit of
the Buyer and its subsequently repaid by a Seller to the Buyer or any other
party pursuant to any federal, state or other law, including those relating to
bankruptcy, insolvency, preference or fraudulent transfer, then to the extent of
such repayment the liability of the Guarantor with respect to such Guaranteed
Obligations shall continue in full force and effect.
Any claim or other right which the Guarantor may have or hereafter acquire
against the Buyer or any other person primarily or contingently liable on any of
the Guaranteed Obligation that arises from the existence or performance of the
Guarantor's Obligations under this guaranty including, without limitation, any
right of subrogation, reimbursements, exoneration, contribution or
indemnification will be suspended until the Guaranteed Obligations have been
paid in full.
THE GUARANTOR WAIVES THE RIGHT TO TRIAL BY JURY IN ALL ACTIONS BROUGHT BY OR
AGAINST THE SELLERS OR ANY ONE OR MORE OF THEM.
Any demand under this guaranty, any proceedings or actions with respect thereto
and any other matter relating to this guaranty may be made, instituted or taken
by any of the Sellers, provided, however, that the Guarantor shall only be
responsible for the payment of attorney's fees to one single counsel.
This guaranty will not be impaired, diminished or discharged as a result of the
death or incapacity of any of the Sellers and the Guarantor confirms that this
guaranty will ensure to the benefit of each of the Sellers and their respective
successors, assigns, executors and legal representatives.
10. POST-CLOSING COVENANTS. The Buyer covenants and agrees to
perform or take any and all such actions to effectuate the following from the
Closing Date:
10.1 CONTINUED USE OF NAME. Buyer shall continue to operate the
Business under the name "Media Express" until the end of the Company's fiscal
year ending January 31, 2000 and shall not change the name of the Business
during the Company's fiscal year ending January 31, 2000, except with Sellers'
prior written consent, which may be withheld for any reason.
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10.2 TRANSFER OF NAME.Upon the cessation of the usage by the Buyer or
its affiliates of the name "Media Express", Buyer shall grant to Sellers a
fully-paid, royalty-free license to use the name "Media Express", provided that
Sellers shall only use the name "Media Express" in connection with a business
that is not related to or in competition with Buyer, the Business, the Company
or the Affiliates.
11. MISCELLANEOUS PROVISIONS.
11.1 CONFIDENTIALITY. The Sellers, the Company, the Affiliates and
Buyer agree not to, directly or indirectly, without the prior written consent of
the other, use or disclose to any person, firm or corporation, any materials or
information obtained in Buyer's due diligence investigation of the Company, or
any of the terms of this Agreement, except as may be required by the disclosure
obligations of Buyer under applicable securities laws or as may be required to
be disclosed to the attorneys and/or accountants of the parties hereto in
connection with the transactions contemplated hereby.
11.2 NOTIFICATION. Each party hereto shall give the other party or
parties hereto prompt written notice of (a) the existence of any fact or the
occurrence of any event which constitutes, or with the giving of notice or the
passage of time or both would constitute, a breach of any representation or
warranty of the party giving such notice made herein or pursuant hereto and (b)
the taking of any action by the party giving such notice that would breach or
violate, or constitute a default under, any agreement or covenant of such party
made herein or pursuant hereto. The giving of any such notice shall not affect,
modify or limit in any way any representation, warranty, agreement or covenant
of the parties made herein or pursuant hereto.
11.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
11.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed duly given when delivered by hand, or posted
in the mail by registered or certified mail with postage pre-paid, return
receipt requested, (a) if to Buyer or Parent, to Protocol Communications, Inc.,
00 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx,
facsimile number: (000) 000-0000; copy to Xxxxxxxxxxx & Xxxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx X.
Xxxxxxx, Esq., facsimile number: (000) 000-0000, and (b) if to a Seller, to
Sellers' Rep c/o Media Express Inc., 0000 Xx. Xxxxxxxxx Xx., X., Xxxxx 000,
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0, facsimile number: (000) 000-0000; copy to
Xxxxxxxxxx Rosentzveig Xxxxxxx, 0000 Xxxxxxxxxx Xxxxxx West, 27th Floor,
Montreal, Quebec H3A 3G4, Attention: Xxxxxxx Xxxxxxx or Xxxxxxx Xxxxx, facsimile
number: (000) 000-0000, or to such other address(es) as shall be specified by
like notice to the other parties.
11.5 RIGHT TO OFFSET. The Sellers hereby acknowledge and agree that
Buyer and Parent shall have the right to offset against any amounts due from
Buyer or Parent to the Sellers hereunder, any amounts due from any Sellers to
Buyer under this Agreement.
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11.6 AMENDMENTS. This Agreement may be amended or modified at any
time prior to the Closing Date, but only by a written instrument executed by all
of the parties hereto.
11.7 ENTIRE AGREEMENT. This Agreement (together with the other
agreements, certificates, instruments and documents delivered pursuant hereto)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
11.8 APPLICABLE LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with the
internal laws of the State of New York.
11.9 HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
11.10 FEES AND DISBURSEMENTS. Buyer shall pay its own expenses, and
the fees and disbursements of the counsel, accountants or auditors retained by
it in connection with the preparation, execution and delivery of this Agreement.
The fees and expenses and disbursements of the counsel to the Sellers shall be
paid by the Sellers, jointly and severally.
11.11 ASSIGNMENT. This Agreement may not be assigned by any party
without the prior written consent of the other party, except that this Agreement
may be assigned by Buyer to any entity controlled by Parent or Buyer without the
prior written consent of the Sellers. In the event of such an assignment, Buyer
and the assignee shall remain jointly and severally liable for the obligations
of the Buyer under this Agreement.
11.12 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
11.13 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.14 LANGUAGE. The Parties have requested that all documents
evidencing or relating in any way to the foregoing be drawn up in the English
language only. Les Parties ont exige que tous les documents faisant foi ou se
rapportant de quelque maniere aux presentes soient rediges en anglais seulement.
[NEXT PAGE IS SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement the day and year first above written.
PROTOCOL HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
Vice President - Finance
PROTOCOL COMMUNICATIONS, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
Vice President - Finance
3223574 CANADA, INC.
By: /s/ XXXXXX XXXXX
-----------------------------------
Xxxxxx Xxxxx
President
MEDIA EXPRESS INC.
By: /s/ XXXXXX XXXXX
-----------------------------------
METC FINANCIAL SERVICES, INC.
By: /s/ XXXXX XXXXX
-----------------------------------
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STOCKHOLDERS:
/s/ XXXXXX XXXXX
--------------------------------------
Xxxxxx Xxxxx
/s/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx
LA FIDUCIE FAMILIALE XXXXX
By: /s/ XXXXXX XXXXX
-----------------------------------
Name:
LA FIDUCIE FAMILIALE XXXXX
By: /s/ XXXXX XXXXX
-----------------------------------
Name:
FONDATION XXXXXX XXXXXXX XXXXX
By: /s/ XXXXXX XXXXX
-----------------------------------
Name:
FONDATION XXXXXX XXXXX
By: /s/ XXXXX XXXXX
-----------------------------------
Name:
XXXXXXX XXXXX CANADA CORPORATION
By: /s/ XXXXXX XXXXX
-----------------------------------
Name:
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