Execution Copy ASSET PURCHASE AGREEMENT FOR THE PURCHASE OF THE ASSETS OF WILLER ENGINEERING LIMITED March 11, 2008
Execution
Copy
ASSET
PURCHASE AGREEMENT
FOR
THE PURCHASE OF THE ASSETS OF
XXXXXX
ENGINEERING LIMITED
March 11,
2008
TABLE
OF CONTENTS
1
|
.
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INTERPRETATION
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1
|
|
1.1
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DEFINITIONS
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1
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||
1.2
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HEADINGS
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8
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||
1.3
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EXTENDED
MEANINGS
|
8
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||
1.4
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WORDS
OF INCLUSION
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8
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||
1.5
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SCHEDULES
AND EXHIBITS
|
8
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1.6
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STATUTORY
REFERENCES
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8
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1.7
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ACCOUNTING
PRINCIPLES
|
8
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1.8
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CURRENCY
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8
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2
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.
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PURCHASE
AND SALE
|
9
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2.1
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OPERATING
ASSETS
TO BE SOLD
AND PURCHASED
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9
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2.2
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EXCLUDED
ASSETS
|
10
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2.3
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PURCHASE
PRICE
|
11
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2.4
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PAYMENT
OF PURCHASE
PRICE
AND ADJUSTMENTS
|
11
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2.5
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ACCOUNTS
RECEIVABLE
ADJUSTMENT
|
13
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2.6
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OBLIGATIONS
AND LIABILITIES
ASSUMED
|
14
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2.7
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OBLIGATIONS
AND LIABILITIES
NOT
ASSUMED
|
14
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2.8
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ELECTIONS
|
15
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||
2.9
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PURCHASER’S
HOLDING
SHARES
|
15
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||
3
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.
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SELLER’S
REPRESENTATIONS AND WARRANTIES
|
16
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3.1
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ORGANIZATION
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16
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3.2
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AUTHORITY
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16
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3.3
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FINANCIAL
|
17
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3.4
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TAX
MATTERS
|
18
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3.5
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ABSENCE
OF CHANGES
|
18
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||
3.6
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CONDUCT
OF SELLER’S
BUSINESS
|
19
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||
3.7
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OPERATING
ASSETS
|
20
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3.8
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LEASED
PREMISES
|
20
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||
3.9
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CONTRACTS,
AGREEMENTS
AND COMMITMENTS
|
21
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3.10
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INTEREST
IN CUSTOMERS,
SUPPLIERS
AND COMPETITORS
|
22
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3.11
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EMPLOYEES
|
22
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3.12
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EMPLOYEE
BENEFITS
|
23
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3.13
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COMPETITIVE
BUSINESS
|
24
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3.14
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INTELLECTUAL
PROPERTY
RIGHTS
|
24
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3.15
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PRODUCT
WARRANTY
|
25
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3.16
|
PRODUCTS
|
25
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3.17
|
PRODUCT
LIABILITY
|
26
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||
3.18
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ENVIRONMENTAL
AND HEALTH
AND SAFETY
MATTERS
|
26
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3.19
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LITIGATION
|
27
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3.20
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PRIVACY
LAWS
|
27
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3.21
|
FEES
|
28
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3.22
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NO
MISREPRESENTATION
|
28
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4
|
.
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SELLER'S
HOLDING REPRESENTATIONS AND WARRANTIES
|
28
|
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4.1
|
ORGANIZATION
|
28
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4.2
|
AUTHORITY
|
28
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4.3
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ACCREDITED
XXXXXXXX
|
00
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||
0
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.
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XXXXXXXXX’S
REPRESENTATIONS AND WARRANTIES
|
29
|
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5.1
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ORGANIZATION
|
29
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5.2
|
AUTHORITY
|
29
|
i
5.3
|
FEES |
30
|
|||
6
|
.
|
PURCHASER’S
HOLDING REPRESENTATIONS AND WARRANTIES
|
30
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||
6.1
|
ORGANIZATION |
30
|
|||
6.2
|
AUTHORITY |
30
|
|||
6.3
|
FEES |
31
|
|||
7
|
.
|
COVENANTS
|
31
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7.1
|
EMPLOYEES |
31
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7.2
|
COVENANTS OF THE SELLER AND THE SELLER’S HOLDING |
32
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7.3
|
INTERIM PERIOD |
32
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7.4
|
EXAMINATION OF RECORDS AND OPERATING ASSETS |
32
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7.5
|
COVENANTS OF THE PURCHASER AND THE PURCHASER’S HOLDING |
33
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|||
8
|
.
|
CONDITIONS
OF CLOSING
|
33
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||
8.1
|
CLOSING |
33
|
|||
8.2
|
CONDITIONS FOR THE BENEFIT OF THE PURCHASER |
33
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8.3
|
CONDITIONS FOR THE BENEFIT OF THE SELLER |
35
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9
|
.
|
INDEMNIFICATION
|
37
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9.1
|
SURVIVAL |
37
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9.2
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INDEMNIFICATION BY SELLER AND SELLER’S HOLDING |
37
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9.3
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INDEMNIFICATION BY THE PURCHASER |
38
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9.4
|
THIRD PARTY INDEMNIFICATION |
38
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9.5
|
EXCLUSIVE REMEDY |
39
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|||
9.6
|
AFTER TAX BASIS |
40
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9.7
|
ADJUSTMENT TO PURCHASE PRICE |
40
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10.
|
GENERAL
|
40
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10.1
|
FURTHER ASSURANCES |
40
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|||
10.2
|
TIME OF THE ESSENCE |
40
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10.3
|
COMMISSIONS |
40
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10.4
|
PROFESSIONAL FEES |
40
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10.5
|
PUBLIC ANNOUNCEMENTS |
41
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10.6
|
ENTIRE AGREEMENT |
41
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|||
10.7
|
AMENDMENTS AND WAIVER |
41
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10.8
|
SUCCESSORS AND ASSIGNS |
41
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10.9
|
NOTICES |
41
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10.10
|
GOVERNING LAW |
42
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10.11
|
JURISDICTION |
43
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10.12
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COUNTERPARTS |
43
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10.13
|
DELIVERY AND ACCEPTANCE |
43
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10.14
|
LANGUAGE |
43
|
ii
Asset
Purchase Agreement
made as
of March 11, 2008.
Between:
|
Avensys
Inc.,
(“Purchaser”)
a company incorporated under Part 1A of the Companies
Act
(Quebec), having its head office at 000, Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxx, X0X 0X0, herein acting and represented by its duly authorized
representative as he so declares;
|
and:
|
Xxxxxx
Engineering Limited,
(“Seller”)
a company incorporated under the laws of the Province of Ontario,
having
its head office at 000 Xxxxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx, X0X 0X0,
herein acting and represented by its duly authorized representative
as he
so declares;
|
And:
|
Xxxxxx
Holdings Inc.,
(“Seller’s Holding”)
a company incorporated under the laws of the Province of Ontario,
having
its head office at 000 Xxxxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx
X0X 0X0, herein acting and represented by its duly authorized
representative as he so declares;
|
And:
|
Avensys
Corporation, (“Purchaser’s
Holding”)
a
corporation incorporated under the laws of the state of Nevada, having
a
place of business at 000, Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxx,
X0X
0X0, herein acting and represented by its duly authorized representative
as he so declares;
|
Whereas
the
Seller carries on a business of providing professional instrumentation
solutions, products and service to the industrial, process and scientific
communities in order to process measurement and control applications (the
“Seller’s
Business”);
And
whereas the
Seller desires
to sell
and the Purchaser desires to purchase all of the Operating Assets of the
Seller’s Business and the Seller desires to assign and the Purchaser to assume
the operating liabilities of the Seller’s Business upon and subject to the terms
and conditions hereinafter set forth;
And
whereas the
Seller’s Holding, which owns all of the issued and outstanding capital of the
Seller, consents to the sale of Operating Assets and, among other things, agrees
to indemnify the Purchaser as set out herein.
And
whereas the
Purchaser’s Holding, which owns all of the issued and outstanding capital of the
Purchaser, agrees to the registration obligations in respect of the Purchaser’s
Holding Shares as set out herein.
Now
therefore,
in
consideration of the premises and the covenants and agreements herein contained,
the parties hereto agree as follows:
1. |
Interpretation
|
1.1 |
Definitions
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith:
-
1 -
1.1.1 |
“2009
Payment”
has the meaning set forth in Section 2.4.2;
|
1.1.2 |
“2010
Payment”
has the meaning set forth in Section 2.4.3;
|
1.1.3 |
“2009
Release Date”
has the meaning set forth in Section 2.4.2.2;
|
1.1.4 |
“2010
Release Date”
has the meaning set forth in Section 2.4.3.2;
|
1.1.5 |
“2009
Share Price”
has the meaning set forth in Section 2.4.2.3;
|
1.1.6 |
“2010
Share Price”
has the meaning set forth in Section 2.4.3.3;
|
1.1.7 |
“2009
Statement”
has the meaning set forth in Section 2.4.2.2;
|
1.1.8 |
“2010
Statement”
has the meaning set forth in Section 2.4.2.2;
|
1.1.9 |
“Adverse
Consequences”
means all actions, suits, proceedings, hearings, investigations,
charges,
complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, interest, fines, costs, amounts
paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses,
and
fees, including court costs and reasonable legal and accounting fees
and
expenses;
|
1.1.10 |
“Affiliate”
means, with respect to any Person, any other Person who directly
or
indirectly controls, is controlled by, or is under direct or indirect
common control with, such Person, and includes any Person in like
relation
to an Affiliate. A Person shall be deemed to “control”
another Person if such Person possesses, directly or indirectly,
the power
to direct or cause the direction of the management and policies of
such
other Person, whether through the ownership of voting securities,
by
contract or otherwise; and the term “controlled”
shall have a similar meaning;
|
1.1.11 |
“Agreement”
means this agreement and all amendments made hereto by written agreement
between the Purchaser, the Seller, the Purchaser’s Holding and the
Seller’s Holding;
|
1.1.12 |
“Applicable
Law”
|
(i)
|
any
applicable domestic or foreign law including any statute, subordinate
legislation or treaty, and
|
(ii)
|
any
applicable guideline, directive, rule, standard, requirement, policy,
order, judgment, injunction, award or decree of a Governmental Authority
having the force of law.
|
1.1.13 |
“Assumed
Liabilities”
has the meaning set forth in Section 2.5;
|
1.1.14 |
“Balance
Sheet”
means the balance sheet of the Purchased Business as at February 29,
2008 included in the Financial
Statements;
|
-
2 -
1.1.15 |
“Business
Day”
means a day other than a Saturday, Sunday or statutory holiday in
Toronto
(Ontario);
|
1.1.16 |
“Business
Intellectual Property”
has the meaning set forth in Section 3.14.1;
|
1.1.17 |
“Claim”
means any demand, action, suit, proceeding, claim, assessment, damage,
loss, fines, penalties, liabilities, cost or expenses (including,
without
limitation, interest, penalties and reasonable attorneys’ and experts’ fee
and disbursements), judgment or settlement or compromise relating
thereto;
|
1.1.18 |
“Closing”
has the meaning set forth in Section 8.1;
|
1.1.19 |
“Closing
Date”
has the meaning set forth in Section 8.1;
|
1.1.20 |
“Contaminants”
means any substance, matter, waste, pollutant, hazardous, toxic or
deleterious substance, dangerous goods or contaminant of any kind
defined
or regulated under any Environmental
Law;
|
1.1.21 |
“Current
Assets”
means the following assets of the Seller as at February 29,
2008:
|
(a) Cash
and
cash equivalents;
(b) Accounts
receivable net of any allowance for doubtful accounts;
(c) Inventory;
(d) Prepaid
expenses.
all
as
reflected on the Balance Sheet;
1.1.22 |
“Current
Liabilities”
means the following liabilities of the Seller as at February 29,
2008:
|
(a) Accounts
payable and accruals, including accrued vacation pay, commissions, bonuses,
and
severance payments of any employees terminated prior to the Effective Date,
but
excluding income taxes payable and receivable; and
(b) All
amounts owing under the Seller’s operating line of credit with its
bank.
all
as
reflected on the Balance Sheet;
1.1.23 |
“Effective
Date”
means March 1,
2008 or such other date as may be agreed to by the
parties;
|
1.1.24 |
“Encumbrance”
in respect of any property or asset, means any encumbrance of whatever
kind or nature, regardless of form, whether or not registered or
registrable and whether or not consensual or arising by law (statutory
or
otherwise), including any mortgage, lien, charge, pledge, title retention
agreement or security interest, whether fixed or floating, or any
assignment, lease, option, right of pre-emption, privilege, encumbrance,
restrictive covenant, right of use or other right or claim of any
kind or
nature whatsoever which affects ownership of, title to, or the right
to
possess, use or occupy, such property or assets or any part thereof
or
interest therein;
|
-
3 -
1.1.25 |
“Employee
Benefit Plan”
has the meaning set forth in Section 3.12.1;
|
1.1.26 |
“Employees”
means the employees of the Seller as of the Effective
Date;
|
1.1.27 |
“Environmental
Laws”
means all applicable laws, regulations or orders relating to the
environment or its protection;
|
1.1.28 |
“Equipment
Leases”
has the meaning set forth in Section 2.1.6.3;
|
1.1.29 |
“Excluded
Liabilities”
has the meaning set forth in Section 2.7.1;
|
1.1.30 |
“Financial
Statements”
means the unaudited financial statements
of
the Seller for
the twelve-month period ended as of December 31, 2007 including the
balance sheet as at December 31, 2007, the statement of operations
and the statement of cash flows and the review engagement letter
of Shore
Xxxxxx & Xxxx LLP, chartered accountants,
a
copy of which is attached to Section 1.1.30
of
the Seller’s Disclosure Schedule;
|
1.1.31 |
“Fiscal
Year”
means the fiscal year of the Purchaser’s Holding, currently
June 30;
|
1.1.32 |
“Fiscal
Year 2009”
means the 2009 Fiscal Year of the Purchaser’s
Holding.;
|
1.1.33 |
“Fiscal
Year 2010”
means the 2010 Fiscal Year of the Purchaser’s
Holding.;
|
1.1.34 |
“Fiscal
Year 2009 Budget”
means Merged Division’s budget which will incorporate all remaining
transition costs and all the Merged Division’s revenues and costs
objectives, for Fiscal Year 2009;
|
1.1.35 |
“Fiscal
Year 2010 Budget”
means Merged Division’s budget which will incorporate the Merged
Division’s revenues and costs objectives for Fiscal Year
2010;
|
1.1.36 |
“Fixed
Assets”
has the meaning set forth in Section 2.1.1;
|
1.1.37 |
“Free
Date”
has the meaning set forth in Section 2.9.3;
|
1.1.38 |
“GAAP”
has the meaning set forth in Section 1.7;
|
-
4 -
1.1.39 |
“Governmental
Authority”
means any domestic or foreign legislative, executive, judicial or
administrative body or person having or purporting to have jurisdiction
in
the relevant circumstances;
|
1.1.40 |
“Health
and Safety Laws”
means all applicable Laws relating to health and safety in the workplace
including the Occupational
Health and Safety Act (Ontario);
|
1.1.41 |
“Intellectual
Property Rights”
means all foreign and domestic intellectual property rights and the
subject matter thereof, including or arising from, (i) all patents
and pending applications for patents throughout the world
(ii) Technical Information; (iii) trademarks and trademark
rights, trade names, business names, corporate names, including,
without
restriction, the names “Xxxxxx Engineering Limited” and “Xxxxxx”, service
marks, brand names, certification marks, and other indications of
origin,
whether registered or not, and the goodwill associated therewith;
(iv)
copyrights, whether registered or not, including without limitation,
computer programs and computer software and all source and object
code,
algorithms, architecture, structure, display screens, layouts and
development tools related thereto, promotional materials and databases;
(v) industrial designs, whether registered or not; (vi) trade secrets
and
other confidential or non-public information, including inventions,
designs, samples, schematics, customer lists, supplier and dealer
lists
and marketing research; (vii) internet protocol addresses and domain
names, whether or not used or currently in service; (viii) any similar
intellectual or industrial property or proprietary rights; (ix)
registrations of, and applications to register or for any of the
foregoing, and any renewal, extension, reissue, division, continuation
or
modification thereof; (x) all documentation and media constituting,
describing or relating to the foregoing, including without limitation
manuals, memoranda and records and the right to register any of the
foregoing; and “Intellectual
Property Right”
shall mean any one of them;
|
1.1.42 |
“Knowledge”
with regard to any particular matter relating to a party means the
actual
knowledge of the officers of said party regarding such matter, after
having conducted a diligent inquiry about such facts or circumstances
with
any relevant person or other resource, as a prudent and diligent
administrator would perform under such
circumstances;
|
1.1.43 |
“Leased
Premises”
has the meaning set forth in Section 3.8.1;
|
1.1.44 |
“Leases”
has the meaning set forth in Section 2.1.6.4;
|
1.1.45 |
“Licenses”
has the meaning set forth in Section 2.1.6.5;
|
1.1.46 |
“Material
Adverse Effect”
means an event, occurrence, fact, condition, change or effect that
has or
will have a material adverse effect on the operations, results of
operations, financial condition, properties (including intangible
properties), assets (including intangible assets) or liabilities
of the
Seller’s Business taken as a whole or the Operating
Assets;
|
-
5 -
1.1.47 |
“Merged
Division”
means the business combination of the Operating Assets into the
Purchaser’s Business;
|
1.1.48 |
“Net
Working Capital”
means the amount calculated by subtracting the Current Liabilities
from
the Current Assets on the Balance
Sheet;
|
1.1.49 |
“Open
Source License”
has the meaning set forth in Section 3.14.5;
|
1.1.50 |
“Operating
Assets”
means the undertaking and all of the Operating Assets of the Seller’s
Business of every kind and description and wheresoever situated,
save and
except those assets listed in Section 2.2.1;
|
1.1.51 |
“Ordinary
Course of Business”
means substantially the same manner in which the Seller has previously
carried on the Seller’s Business;
|
1.1.52 |
“OTCBB”
has the meaning set forth in Section 2.9.1.3;
|
1.1.53 |
“Owned
Intellectual Property”
has the meaning set forth in Section 3.14.1;
|
1.1.54 |
“Permits”
has the meaning set forth in Section 2.1.6.7;
|
1.1.55 |
“Person”
whether or not capitalized, shall mean any natural person, corporation,
unincorporated organization, partnership, limited or unlimited liability
company, association, joint venture, trust or government, or any
agency or
political subdivision of any government or any other
entity;
|
1.1.56 |
“Personal
Information”
means the type of information regulated by Privacy Laws and collected,
used, disclosed or retained by the Seller including information regarding
the customers, suppliers, employees and agents of the Seller’s Business,
such as an individual’s name, address, age, gender, identification number,
income, family status, citizenship, employment, assets, liabilities,
source of funds, payment records, credit information, personal references
and health records;
|
1.1.57 |
“Personnel”
has the meaning set forth in Section 9.1;
|
1.1.58 |
“Privacy
Laws”
means all applicable federal, provincial, state, municipal or other
laws
governing the collection, use, disclosure and retention of Personal
Information including the Personal
Information Protection and Electronic Documents Act
(Canada);
|
1.1.59 |
“Privacy
Policies”
means all privacy, data protection and similar policies adopted or
used by
the Seller in respect of Personal Information, including any complaints
process;
|
1.1.60 |
“Products”
means any products (including custom made products), as well as all
software, source codes, object codes and any related documentation
or
manuals, developed, manufactured or owned by the Seller and which
may be
necessary or useful in the conduct of the Seller’s
Business;
|
-
6 -
1.1.61 |
“Purchase
Price”
has the meaning set forth in Section 2.3;
|
1.1.62 |
“Purchased
Agreements”
has the meaning set forth in Section 2.1.6.2;
|
1.1.63 |
“Purchaser’s
Business”
means the business carried on by the Purchaser’s environment division
namely the business of environmental monitoring of air, water, soil,
buildings and materials;
|
1.1.64 |
“Purchaser’s
Holding Shares”
shall mean the common shares of the Purchaser’s
Holding;
|
1.1.65 |
“Seller’s
Business”
has the meaning set out in the
preamble;
|
1.1.66 |
“Seller’s
Disclosure Schedule”
means the disclosure schedule dated as of the date hereof addressed
by the
Seller to the Purchaser;
|
1.1.67 |
“Seller’s
Key Suppliers”
means the suppliers listed in Section 1.1.67
of
the Seller’s Disclosure Schedule;
|
1.1.68 |
“Seller’s
Key Employees”
means the employees listed in Section 1.1.68
of
the Seller’s Disclosure Schedule;
|
1.1.69 |
“Shareholders
of Seller’s Holding”
means, collectively, Xx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxxxxxx,
Xxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx D’Eon, Xxxxx Xxxxxxxx, and Xxxxx
Lagogianis ;
|
1.1.70 |
“Taxes”
means any federal, provincial, local, foreign and other income, profits,
franchise, capital, withholding, employment insurance, social security,
occupational, production, severance, gross receipts, value added,
sales,
use, excise, real and personal property, ad
valorem,
occupancy, transfer, employment, disability, workers' compensation
or
other similar tax, duty or other governmental charge (including all
interest and penalties thereon and additions
thereto);
|
1.1.71 |
“Technical
Information”
means work in progress, data, information, know-how, descriptions
of
unpatented technology, techniques, systems, product roadmaps, layouts
and
development tools related thereto, bills of material, experience
and other
technical information used in or relating to the Seller’s Business,
including proprietary processes, specifications, formulae, algorithms,
models, user interfaces, concepts, ideas, techniques, methods, source
codes, object codes and
methodologies;
|
1.1.72 |
“Third
Party Claim”
means a claim or demand made against any person entitled to
indemnification under this Agreement by any person who is not a party
to
this Agreement.
|
-
7 -
1.2 |
Headings
|
The
division of this Agreement into Articles and Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms “this
Agreement”,
“hereof”,
“hereunder”
and
similar expressions refer to this Agreement and not to any particular Article,
Section or other portion hereof and include any amendment hereto. Unless
something in the subject matter or context is inconsistent therewith, references
herein to Articles or Sections are to Articles or Sections of this
Agreement.
1.3 |
Extended
Meanings
|
In
this
Agreement, words importing the singular number only shall include the plural
and
vice versa, words importing the masculine gender shall include the feminine
and
neuter genders and vice versa and words importing persons shall include
individuals, partnerships, limited liability companies, associations, trusts,
unincorporated organizations and corporations.
1.4 |
Words
of Inclusion
|
Wherever
the words “include”, “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation” and the words
following “include”, “includes” or “including” shall not be considered to set
forth an exhaustive list.
1.5 |
Schedules
and Exhibits
|
The
Schedules and Exhibits attached to the present Agreement are incorporated in
this Agreement by reference and deemed to be a part hereof.
1.6 |
Statutory
References
|
In
this
Agreement, unless something in the subject matter or context is inconsistent
therewith or unless otherwise herein provided, a reference to any statute is
to
that statute as now enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.7 |
Accounting
Principles
|
Wherever
in this Agreement reference is made to a calculation to be made in accordance
with generally accepted accounting principles (“GAAP”),
such
reference shall be deemed to be to the generally accepted accounting principles
in Canada from time to time approved by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable as at the date on which
such
calculation is made or required to be made in accordance with generally accepted
accounting principles and applied in a manner consistent with prior periods
of
the Seller.
1.8 |
Currency
|
All
references to currency herein are to lawful money of Canada.
-
8 -
2. |
Purchase
And Sale
|
2.1 |
Operating
Assets to be Sold and
Purchased
|
Upon
and
subject to the terms and conditions hereof, the Seller sells to the Purchaser
and the Purchaser purchases from the Seller as a going concern, as of and with
effect from the opening of business on the Effective Date, all of the right,
title, benefit and interest of the Seller in and to the Operating Assets of
the
Seller’s Business. Without limiting the generality of the foregoing, the
Operating Assets sold and purchased under this Agreement include:
2.1.1 |
all
fixed assets listed in Section 2.1.1
of
the Seller’s Disclosure Schedule used by the Seller in connection with the
Seller’s Business as of the Effective Date (the “Fixed
Assets”).
|
2.1.2 |
all
inventories listed in Section 2.1.2
of
the Seller’s Disclosure Schedule used by the Seller in connection with the
Seller’s Business as of the Effective Date, including all supplies,
finished goods, work in progress and raw material, subject to changes
in
the Ordinary Course of Business (the “Inventories”);
|
2.1.3 |
all
of the accounts receivable of the Seller relating to the Seller’s
Business, net of any allowance for doubtful accounts (the “Receivables”);
|
2.1.4 |
all
cash, cash equivalents and short-term
investments;
|
2.1.5 |
all
prepaid expenses and deposits, prepaid charges, sums and fees related
to
the Seller’s Business;
|
2.1.6 |
all
of the following intangible assets of the Seller as of the Effective
Date
relating to the Seller’s Business;
|
2.1.6.1 |
all
records of sales for the customers and suppliers, including those
listed
in Section 2.1.6.1
of
the Seller’s Disclosure Schedule;
|
2.1.6.2 |
all
of the right, title and interest of the Seller in the agreements,
pending
and executory contracts, arrangements (whether oral or written) related
to
the Seller’s Business, including all the agreements listed in Section
2.1.6.2
of
the Seller’s Disclosure Schedule (the “Purchased
Agreements”);
|
2.1.6.3 |
all
of the right, title and interest of the Seller in the equipment leases,
conditional sales contracts, and other similar agreements used in
the
Ordinary Course of Business, listed in Section 2.1.6.3
of
the Seller’s Disclosure Schedule (the “Equipment
Leases”);
|
2.1.6.4 |
all
of the right, title and interest of the Seller in the real estate
leases
listed in Section 2.1.6.4
of
the Seller’s Disclosure Schedule (the “Leases”);
|
-
9 -
2.1.6.5 |
all
licence, permit, authorization, or approval issued to the Seller,
and all
of the right, title and interest of the Seller in the software licenses,
related to the Seller’s Business and listed in Section 2.1.6.5
of
the Seller’s Disclosure Schedule (the “Licenses”);
|
2.1.6.6 |
all
of the right, title and interest of the Seller in the unfilled orders
received by the Seller in connection with the Seller’s Business and in the
commitments in favour of the Seller for supply of goods and services
entered into in the Ordinary Course of Business for use in the Seller’s
Business whether or not there are any written contracts in respect
thereto, including without limiting the generality of the foregoing,
the
contracts and commitments described in Section 2.1.6.6
of
the Seller’s Disclosure Schedule, in each case to the extent remaining
unfilled at the Effective Date;
|
2.1.6.7 |
all
of the right, title and interest of the Seller in the licenses,
registrations and permits required to carry on the Seller’s Business in
its Ordinary Course of Business listed or described in
Section 2.1.6.7
of
the Seller’s Disclosure Schedule (the “Permits”);
|
2.1.6.8 |
all
of the right, title and interest of the Seller in personnel records
and
other records, books, documents, sales and advertising materials,
trade
association files, and data bases recorded or stored by means of
any
device, including in electronic form, relating to the Seller’s Business,
the Operating Assets and the Employees, as are in the possession
or under
the control of the Seller;
and
|
2.1.6.9 |
all
goodwill related to the Seller’s
Business.
|
2.2 |
Excluded
Assets
|
2.2.1 |
Notwithstanding
anything to the contrary herein contained, the “Operating
Assets”
being sold, assigned and conveyed hereunder shall exclude the following
assets of Seller as of the Effective
Date:
|
2.2.1.1 |
all
income taxes recoverable or refundable, and any governmental rebates
or
refunds;
|
2.2.1.2 |
all
of the right, title and interest of the Seller in all insurance policies
maintained by the Seller with respect to the Seller’s
Business;
|
2.2.1.3 |
all
of the right, title and interest of the Seller in all life insurance
policies maintained by the Seller with respect to any shareholder
or
Employee of the Seller; and
|
2.2.1.4 |
all
tax loss carry forwards and other tax deferral assets of the
Seller.
|
-
10 -
2.3 |
Purchase
Price
|
The
purchase price payable to the Seller for the Operating Assets
(the “Purchase
Price”)
shall
be $725,000,
subject
to adjustment and payable as provided in Section 2.4.
2.4 |
Payment
of Purchase Price and
Adjustments
|
2.4.1 |
$125,000 shall
be paid by the Purchaser to the Seller by certified cheque, bank
draft or
wire transfer on the Closing Date.
|
2.4.2 |
Up
to $500,000
(the “2009
Payment”)
shall be payable as follows, calculated based on the results of the
Merged
Division for Fiscal Year 2009, subject to the minimum amount in
Section 2.4.2.1
and subject to adjustment as
follows:
|
2.4.2.1 |
a
minimum of $100,000 shall be paid on January 30, 2009.
For greater certainty, notwithstanding the actual amount of the Merged
Division’s net income in the 2009 Statement, in no event will the 2009
Payment be an amount less than
$100,000.
|
2.4.2.2 |
The
balance of the 2009 Payment, if any, shall be paid within 30 days
following the delivery (the “2009 Release
Date”)
of audited consolidated statement of operations (“2009 Statement”)
of the Purchaser’s
Holding
for Fiscal Year 2009, and shall be determined as
follows:
|
2.4.2.2.1 |
if
the Merged Division’s revenues as reflected on the 2009 Statement for
Fiscal Year 2009 equal $15.1 million (the “2009
Target”),
$200,000 shall be paid;
|
2.4.2.2.2 |
a)if
the Merged Division’s revenues as reflected on the 2009 Statement are
above or below the 2009 Target, the 2009 Payment will be based on
the
following formula:
|
[$200,000
+ (($300,000 x revenues/2009 Target) - $300,000)] - adjustments for any
liabilities of the Purchased Business paid during Fiscal Year 2008 and 2009
but
not assumed by the Purchaser under this Agreement (the “Adjusted
Amount”)
b) the
Adjusted Amount will be further adjusted as follows: (i) the amount of
$15,000 shall be added to the Adjusted Amount if the Merged Division’s net
income as reflected in the 2009 Statement exceeds the net income objective
number in the Fiscal Year 2009 Budget by 15% or more; (ii) if the Merged
Division’s net income in the 2009 Statement exceeds the net income objective
number calculated in accordance with GAAP by less than 15%, the Adjusted Amount
shall be increased by an amount determined by the following formula: $15,000
X
(percentage by which the net income objective is exceeded/15%); (iii) the amount
of $15,000 shall be subtracted from the Adjusted Amount if the Merged Division’s
net income in the 2009 Statement is below the net income objective number in
the
Fiscal Year 2009 Budget by 15% or more; (iv) if the Merged Division’s net income
in the 2009 Statement is 85% to 99.99% of the net income objective in the Fiscal
Year 2009 Budget, the Adjusted Amount shall be reduced by an amount determined
by the following formula: $15,000 X (percentage by which the net income is
below
the net income objective/15%); (v) the amount of $15,000 shall be added to
the
Adjusted Amount if contractual agreements with all the Seller’s Key Suppliers
are in force and effect at the end of Fiscal Year 2009; (vi) the amount of
$15,000 shall be subtracted from the Adjusted Amount if contractual agreements
with the Seller’s Key Suppliers agreed between the parties is terminated before
the end of Fiscal year 2009; and (vii) the amount of $5,000 shall be subtracted
from the Adjusted Amount if any of the Seller’s Key Employees are not in the
employ of the Purchaser before June 30, 2009.
-
11 -
2.4.2.3 |
The
2009 Payment shall be paid by certified cheque, bank draft or wire
transfer. In lieu of cash at the option of the Seller, the 2009 Payment
may be paid by the issuance of Purchaser’s Holding Shares to the Seller‘s
Holding. The number of Purchaser’s Holding Shares to be issued shall be
calculated by dividing the 2009 Payment by US$0.15 per share
(“2009
Share Price”).
To exercise the option, the Seller shall send a notice to the Purchaser
within 15 days following the 2009
Release.
|
2.4.3 |
Up
to $500,000
(the “2010
Payment”)
shall be payable as follows based on the results of the Merged Division
for Fiscal Year 2010, subject to the minimum amount in
Section 2.4.3.1
and subject to adjustment as
follows:
|
2.4.3.1 |
a
minimum of $100,000 shall be paid on January 29, 2010.
For greater certainty, notwithstanding the actual amount of the Merged
Division’s net income in the 2010 Statement, in no event will the 2010
Payment be an amount less than
$100,000.
|
2.4.3.2 |
The
balance of the 2010 Payment shall be paid within 30 days following
the delivery (the “2010
Release Date”)
of audited consolidated statement of operations (the “2010
Statement”)
of the Purchaser’s
Holding
for Fiscal Year 2010, and shall be determined as
follows:
|
2.4.3.2.1 |
if
the Merged Division’s revenues as reflected in the 2010 Statement equal
$16 million, (the “2010 Target”)
$200,000 shall be paid;
|
2.4.3.2.2 |
a)if
the Merged Division’s revenues, as reflected in the 2010 Statement, are
above or below the 2010 Target, the 2010 Payment will be based on the
following formula:
|
-
12 -
[$200,000
+ (($300,000 x revenues/2010 Target) - $300,000)] - adjustments for any
liabilities of the Purchased Business paid during Fiscal Year 2010 but not
assumed by the Purchaser under this Agreement (the “Adjusted
Amount”)
b) the
Adjusted Amount will be further adjusted as follows: (i) the amount of $30,000
shall be added to the Adjusted Amount if the Merged Division’s net income in the
2010 Statement exceeds by 15% or more the net income objective number calculated
in accordance with GAAP in the Fiscal Year 2010 Budget; (ii) if the Merged
Division’s net income in the 2010 Statement exceeds the net income objective
number in the Fiscal Year 2010 Budget by less than 15%, the Adjusted Amount
shall be increased by an amount determined by the following formula:
$30,000 X (percentage by which the net income objective is exceeded/15%);
(iii) the amount of $30,000 shall be subtracted from the Adjusted Amount if
the
Merged Division’s net income in the 2010 Statement is 15% or more below the net
income objective number in the Fiscal Year 2010 Budget; (iv) if the Merged
Division’s net income in the 2010 Statement is 85% to 99.99% of the net income
objective number in the Fiscal Year 2010 Budget, the Adjusted Amount shall
be
reduced by an amount determined by the following formula: $30,000 X
(percentage by which the net income is below the net income objective/15%);
c) the
Adjusted Amount will further be reduced by $50,000, to reflect the omission
of
an accrued vacation pay provision in the first draft of the December 31, 2007
Financial Statements.
2.4.3.3 |
The
2010 Payment shall be paid by certified cheque, bank draft or wire
transfer. In lieu of cash at the option of the Seller, the 2010 Payment
may be paid by the issuance of Purchaser’s Holding Shares to the Seller’s
Holding. The number of Purchaser’s Holding Shares to be issued shall be
calculated by dividing the 2010 Payment by US$0.20 per share (the
“2010
Share Price”).
To exercise the option, the Seller shall send a notice to the Purchaser
within 15 days following 2010 Release
Date.
|
2.4.4 |
The
Seller and the Purchaser, in filing their respective income tax returns,
will use the allocations of the Purchase Price as shall be mutually
agreed
at the Effective Date.
|
2.5 |
Accounts
Receivable Adjustment
|
If,
after
reasonable efforts by the Purchaser to collect, any of the Accounts Receivable
purchased by the Purchaser under this Agreement and not listed in section 2.5
of
the Seller’s Disclosure Schedule remain outstanding 90 days after the Closing
Date, the Seller will pay to the Purchaser by way of an adjustment to the
Purchase Price the amount of such outstanding Accounts Receivable and the
Purchaser will, if requested by the Seller, assign to the Seller such
outstanding Accounts Receivable. The Seller, after such assignment, may take
such proceedings as it deems advisable to collect the Accounts Receivable so
assigned, but the Seller will indemnify and save harmless the Purchaser from
and
against all Claims incurred by the Purchaser directly or indirectly by reason
of
such proceedings.
-
13 -
2.6 |
Obligations
and Liabilities
Assumed
|
The
Purchaser shall assume, and shall fulfill and perform the following liabilities
of the Seller (collectively, the “Assumed
Liabilities”)
as of
the Effective Date:
2.6.1 |
the
Current Liabilities;
|
2.6.2 |
the
obligations and liabilities of the Seller accruing on or after the
Effective Date under the agreements of the Seller relating to the
Seller’s
Business listed in Section 2.1.6.2
of
the Seller’s Disclosure Schedule; and
|
2.6.3 |
all
standard product warranties of the Seller related to the Products
sold in
connection with the Seller’s Business both before the Effective Date and
afterwards.
|
2.7 |
Obligations
and Liabilities Not
Assumed
|
2.7.1 |
Except
as explicitly and specifically provided for in Section 2.5
and Section 7.1,
the Purchaser shall not assume and shall not be liable or responsible
for
any obligations, commitments or liabilities, contingent or otherwise,
of
any nature whatsoever and whether disclosed or undisclosed (i) related
to
the Seller, or (ii) related to the Operating Assets or the Seller’s
Business and arising after the Effective Date in respect of any fact,
condition or circumstance existing or occurring on or prior to the
Effective Date (the “Excluded
Liabilities”),
including:
|
2.7.1.1 |
any
income taxes under the Income
Tax Act
(Canada) or any other income taxes whatsoever that may be or become
payable by the Seller including any income or corporation taxes resulting
from or arising as a consequence of the sale by the Seller to the
Purchaser of the Operating Assets
hereunder;
|
2.7.1.2 |
any
indebtedness of the Seller to the Seller’s Holding, its shareholders,
directors or officers;
|
2.7.1.3 |
any
liabilities or obligations of the Seller related to defective products
distributed by the Seller, or arising out of services provided by
the
Seller prior to the Effective Date that do not result from warranty
repair
occurring in the Ordinary Course of
Business;
|
2.7.1.4 |
any
liabilities or obligations of the Seller in respect of the Leased
Premises
which occurred or was occurring or which is a result of any actions
of the
Seller prior to the Effective Date;
and
|
-
14 -
2.7.1.5 |
any
Liability arising out of or resulting from the Seller’s compliance or
non-compliance with any Applicable Law prior to the Effective
Date.
|
2.8 |
Elections
|
2.8.1 |
The
Seller and the Purchaser will, on or before the Closing Date, jointly
execute an election under section 167(1.1) of the Excise
Tax Act
(Canada) and equivalent provincial legislation on the forms prescribed
for
such purposes along with any documentation necessary or desirable
in order
to effect the transfer of the Operating Assets without payment of
any GST
or equivalent provincial sales tax. The Purchaser will timely file
within
the statutory delay such election forms, along with any documentation
necessary or desirable to give effect thereto, together with such
party’s
GST and equivalent provincial sales tax returns for the reporting
period
in which the transactions contemplated herein are
consummated.
|
2.8.2 |
The
Seller and the Purchaser will execute and file, on a timely basis
and
using the prescribed form, a joint election under section 22 of the
Income
Tax Act (Canada) as to the sale of the accounts receivable of the
Seller
to be purchased under this Agreement, and prepare their respective
tax
returns in a manner consistent with such joint election.
|
2.9 |
Purchaser’s
Holding Shares
|
2.9.1 |
After
the 2009 Release Date or 2010 Release Date, as applicable, and within
120 days following receipt of a written notice from Seller’s Holding
(a “Registration
Notice”),
Purchaser’s Holding shall, at its
expense:
|
2.9.1.1 |
file
the required registration statement with the U.S. Securities and
Exchange
Commission (the “SEC”)
to register the Purchaser’s Holding Shares so as to permit the offer, sale
and distribution to the public on a continuous basis all and not
less than
all of the Purchaser’s Holding Shares received pursuant to
Section 2.4.2.3
or
2.4.3.3
as
freely tradable and shall use commercially reasonable efforts to
cause
such registration to become effective;
|
2.9.1.2 |
prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the United States Securities
Act of 1933, as amended (the “Securities
Act”)
in order to enable the disposition of all securities covered by such
registration statement; and
|
2.9.1.3 |
use
commercially reasonable efforts to cause all Purchaser’s Holding Shares to
be listed on the OTC Bulletin Board of Nasdaq (“OTCBB”);
|
2.9.2 |
The
Seller shall be permitted to sell in every three-month period following
the date on which the Purchaser’s Holding Shares become freely tradable
(the “Free
Date”)
the lesser of (i) a tranche of 25% of the Purchaser’s Holding Shares
received pursuant to Section 2.4.2.3
or
2.4.3.3
and (ii) the average weekly reported volume of trading in Purchaser’s
Holding common shares on the OTCBB in the previous three-month period.
Notwithstanding the foregoing, the Seller shall be permitted to sell
any
number of the Purchaser’s Holding Shares in any three-month period through
the facilities of the OTCBB if the closing price of shares of common
stock
of Purchaser’s Holding on the OTCBB on the date of the sale of the
Purchaser’s Holding Shares is higher than the 2009 Share Price or 2010
Share Price, as applicable. The Seller shall also be permitted to
transfer
all or any of the Purchaser’s Holding Shares at any time at any price by
private sale to a bona fide third-party
purchaser.
|
-
15 -
2.9.3 |
In
the event that all or part of Purchaser’s Holding Shares are not freely
tradable on the OTCBB within 180 days
after receipt of a Registration Notice, the Purchaser’s Holding shall pay
to the Seller’s Holding an amount in cash equal to the number of
Purchaser’s Holding Shares which are not freely tradable multiplied by the
2009 Share Price or 2010 Share Price, as applicable, upon surrender
by the
Seller’s Holding to the Purchaser’s Holding of those Purchaser’s Holding
Shares which are not freely tradable.
|
3. |
Seller’s
Representations And
Warranties
|
Except
as
otherwise indicated,
the
Seller hereby
represents and warrants to the Purchaser as follows, it being acknowledged
by
the Seller that
the
Purchaser is relying upon such representations and warranties in purchasing
the
Operating Assets.
3.1 |
Organization
|
The
Seller is duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with the full corporate power to
own
or lease or use all of the Operating Assets and to carry on the Seller’s
Business, and is duly qualified as a corporation to do business in each
jurisdiction in which the Seller’s Business is carried on and the Seller has
made all necessary material filings under all applicable corporate, securities
and taxation laws or any other laws to which the Seller is subject.
3.2 |
Authority
|
3.2.1 |
The
Seller has the corporate power, authority and right to enter into
and
deliver this Agreement and to perform its obligations hereunder and
full
right to transfer the legal and beneficial title and ownership of
the
Operating Assets to the Purchaser free and clear of all Encumbrances
and
any other rights of third parties, and all requisite director, shareholder
or other corporate approval on the part of the Seller have been obtained
to permit the execution and delivery of this Agreement and the
consummation of the transactions contemplated
hereby.
|
3.2.2 |
This
Agreement constitutes a valid and legally binding obligation of the
Seller
enforceable against the Seller in accordance with its terms, subject,
however, to limitations with respect to enforcement imposed by law
in
connection with bankruptcy or similar proceedings and to the extent
that
equitable remedies such as specific performance and injunction are
in the
discretion of the court from which they are
sought.
|
-
16 -
3.2.3 |
There
is no contract, option or any other right of another binding upon,
or
which at any time in the future may become binding upon the Seller
to
sell, transfer, assign, pledge, charge, mortgage or in any other
way
dispose of or encumber any of the Operating Assets other than pursuant
to
the provisions of this Agreement, or that would restrain or prevent
the
consummation of the transactions contemplated by this
Agreement.
|
3.2.4 |
Neither
the entering into nor the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Seller will result
in:
|
3.2.4.1 |
the
violation of any of the provisions of the charter documents or by-laws
of
the Seller;
|
3.2.4.2 |
the
violation of any agreement or other instrument to which the Seller
is a
party or by which it or the Operating Assets are
bound;
|
3.2.4.3 |
the
violation of any Applicable Laws;
|
3.2.4.4 |
the
creation of any Encumbrance upon the Operating Assets;
or
|
3.2.4.5 |
a
conflict with, breach of or creation of an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute
an event of default) under, or an event which would give any party
the
right to accelerate any obligation under, any agreement, mortgage,
license, lease, indenture, instrument, order, arbitration award,
judgment
or decree to which the Seller is a party or by which the Seller,
the
Seller’s Business or the Operating Assets are bound or
affected.
|
3.2.5 |
No
consent, approval, waiver or authorization is required to be obtained
by
the Seller from, and no notice or filing is required to be given
by the
Seller to, or made by the Seller with, any Person in connection with
the
execution, delivery and performance by the Seller of this
Agreement.
|
3.3 |
Financial
|
3.3.1 |
The
Financial Statements:
|
3.3.1.1 |
are
in accordance with the books and accounts of the Seller as at and
for the
twelve-month period ended on December 31, 2007, and the
;
|
3.3.1.2 |
are
true, complete and correct and present fairly the assets, liabilities,
financial position and results of operations, as applicable, including,
without limiting the generality of the foregoing, all contingent
liabilities of the Seller’s Business as at and for the twelve-month period
ended on December 31, 2007;
and
|
-
17 -
3.3.1.3 |
have
been prepared in accordance with GAAP applied in a manner consistent
with
past practices.
|
3.3.2 |
The
books and records of the Seller relating to the Seller’s Business are true
and correct and present fairly and disclose in all material respects
the
financial position of the Seller’s Business and all material financial
transactions of the Seller relating to the Seller’s Business have been
accurately recorded in such books and records and, to the extent
possible,
such books and records have been prepared in accordance with GAAP
consistently applied.
|
3.4 |
Tax
Matters
|
3.4.1 |
The
Seller is not a non-resident person within the meaning of section
116 of
the Income
Tax Act
(Canada).
|
3.5 |
Absence
of Changes
|
3.5.1 |
With
respect to the Seller’s Business, since the
Effective Date
|
3.5.1.1 |
there
has been no changes in the affairs, business, operations or condition
of
the Seller’s Business, financial or otherwise (whether arising as a result
of any legislative or regulatory change, revocation of any license
or
right to do business, fire, explosion, accident, casualty, labour
dispute,
flood, drought, riot, storm, condemnation, act of God, public force
or
otherwise, whether or not covered by insurance) that has a Material
Adverse Effect, except changes occurring in the Ordinary Course of
Business which do not have a Material Adverse Effect;
|
3.5.1.2 |
the
Seller’s Business has been carried on in the Ordinary Course of Business
and the Seller has not entered into any transaction out of the Ordinary
Course of Business;
|
3.5.1.3 |
the
Seller has not disposed of any capital assets or incurred or authorized
any capital expenditures in excess of $25,000 in the aggregate in
connection with or having an effect on the Seller’s
Business;
|
3.5.1.4 |
the
Seller has not made any purchase, sale or disposition of any asset
or
property other than in the Ordinary Course of Business, nor mortgaged,
pledged or subjected to lien, charge or Encumbrance of any kind,
any of
the Operating Assets other than in the Ordinary Course of
Business;
|
3.5.1.5 |
there
has been no change in the accounting methods or tax practices or
elections
used by the Seller;
|
-
18 -
3.5.1.6 |
no
party (including the Seller) has accelerated, terminated, modified,
or
cancelled any agreement, contract, lease or license (or series of
related
agreements, contracts, leases, and licenses) involving more than
$10,000
to which the Seller is a party or by which it is bound;
|
3.5.1.7 |
the
Seller has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing employment contract or agreement other than for hourly workers
hired or given wage increases by oral
agreement;
|
3.5.1.8 |
the
Seller has not granted any bonuses or other increase in the compensation
of any of the Employees and has not increased the compensation to
any
other employees or independent contractors outside the Ordinary Course
of
Business;
|
3.5.1.9 |
the
Seller has not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its Employees;
|
3.5.1.10 |
the
Seller has not made any other change in employment terms for any
of its
Employees outside the Ordinary Course of
Business;
|
3.5.1.11 |
the
Seller has not entered into any contract or agreement relating to
the
construction of tenant improvements with respect to any of the Leased
Premises;
|
3.5.1.12 |
the
Seller has not granted any license or sublicense of any rights under
or
with respect to any Intellectual Property
Rights;
|
3.5.1.13 |
the
Seller has not concluded any transaction which could have a Material
Adverse Effect; and
|
3.5.1.14 |
the
Seller has not made any commitments with respect to any of the
foregoing.
|
3.6 |
Conduct
of Seller’s Business
|
3.6.1 |
The
Seller is duly licensed or qualified to do business and is in good
standing in the jurisdictions set forth in Section 3.6.1
of
the Seller’s Disclosure Schedule which jurisdictions are the only
jurisdictions wherein the character or location of the properties
owned or
leased or the nature of the conduct of the Seller’s Business by the Seller
makes such qualification necessary. Set forth in Section 3.6.1
of
the Seller’s Disclosure Schedule is each location where the Seller (a) has
a place of business, and (b) owns or leases property, with respect
to the
Seller’s Business.
|
3.6.2 |
The
Seller is conducting and has conducted the Seller’s Business in compliance
with all Applicable Laws of the provinces of Ontario, Quebec, Nova
Scotia
and of Canada and all municipalities thereof in which the Seller’s
Business is carried on, is not in breach of any such Applicable Laws
and
duly possesses all permits and quotas, in such province and all
municipalities thereof in which the Seller carries on the Seller’s
Business to enable the Seller’s Business to be carried on as now conducted
and its assets to be owned, leased and operated, and all such licences,
registrations, qualifications and permits are valid and subsisting
and in
good standing and none of the same contains or is subject to any
term,
provision, condition or limitation which has or may have a Material
Adverse Effect or which may adversely change or terminate such licence,
registration, qualification or permit by virtue of the completion
of the
transactions contemplated hereby.
|
-
19 -
3.6.3 |
The
Permits listed in Section 3.6.3 of the Seller’s Disclosure Schedule is a
true and complete list of all licences, registrations and permits
necessary or required to enable the Seller’s Business to be carried on as
now conducted and its assets to be owned, leased and operated, and
all
such licences, registrations and permits are transferable by the
Seller to
the Purchaser with effect as of the Effective
Date.
|
3.7 |
Operating
Assets
|
3.7.1 |
The
Seller is the owner of all of the Operating Assets with good and
marketable title. Except as disclosed in Section 3.7.1 of the
Seller’s Disclosure Schedule, the Operating Assets are free and clear of
all Encumbrances.
|
3.7.2 |
The
assets, properties and rights reflected in the Financial Statements
comprise and, subject to changes in the Ordinary Course of Business,
will,
together with the Business Intellectual Property, comprise all of
the
assets, properties and rights of every type and description, real,
personal and intangible used by the Seller and necessary for the
operations of the Seller’s Business as currently
conducted.
|
3.7.3 |
All
Fixed Assets, including all equipment owned or used by the Seller
in
connection with the Seller’s Business, have been properly maintained and
are in reasonable working order for the purposes of ongoing operation,
subject to ordinary wear and tear for equipment of comparable age
or use
in the Ordinary
Course of Business.
|
3.7.4 |
No
notice has been received by the Seller of any outstanding orders,
notices
or similar requirements relating to the Seller’s Business issued by any
building, environmental, fire, health, labour or police authorities
or
from any other federal, provincial or municipal authority and there
are no
matters under discussion between the Seller and any such authorities
relating to orders, notices or similar
requirements.
|
3.8 |
Leased
Premises
|
3.8.1 |
With
respect to the Seller’s Business, the Seller does not own or lease,
directly or indirectly, any interest in real property,
other than the premises being the object of the Leases (the “Leased
Premises”).
Except as disclosed in Section 3.8.1 of the Seller’s Disclosure
Schedule, the Seller has not assigned, sublet, transferred, conveyed
or
encumbered any interest in the Leases. The Leased Premises have received
all approvals of governmental authorities (including licenses and
permits)
required in connection with the operation thereof and have been operated
and maintained in accordance with Applicable
Laws.
|
-
20 -
3.8.2 |
The
Leased Premises have been properly maintained and are in good order
and
condition, subject to ordinary wear and tear for premises of comparable
nature, use and age.
|
3.8.3 |
Except
as disclosed in Section 3.8.3 of the Seller’s Disclosure Schedule, no
consent, authorization or approval is required from any person pursuant
to
the Leases or from any authority pursuant to any Laws or otherwise
in
relation to the consummation of the transactions contemplated in
this
Agreement.
|
3.8.4 |
The
Leases are valid and in full force, unamended, and each of the Leases
constitutes the entire agreement between the parties thereto in relation
to the Leased Premises.
|
3.8.5 |
The
transactions contemplated in this Agreement will not result in a
default
or early termination of any of the
Leases.
|
3.8.6 |
There
is no default or event which with notice or lapse of time, or both,
under,
and no outstanding notice of default has been given in respect of,
and no
claim, action or demand or other proceeding has been made or, to
the
Knowledge of the Seller is pending or threatened by or against the
Leased
Premises or the Leases.
|
3.8.7 |
The
Seller has not received notice of, and, to the Knowledge of the Seller,
there is no contravention of or non-compliance with any Laws arising
from
the occupancy, leasing or use of the Leased Premises or otherwise
relating
to or in connection with the Leased
Premises.
|
3.8.8 |
The
Leased Premises are supplied with utilities and other services reasonably
necessary for the operation of the Leased Premises for the Business
as
presently conducted.
|
3.9 |
Contracts,
Agreements and Commitments
|
3.9.1 |
The
Seller has disclosed and identified all contracts, agreements or
commitments (written or oral) to which the Seller is a party or by
which
it is bound with respect to the Seller’s Business, involving aggregate
payments in excess of $10,000, copies of which have been provided
or made
available to the Purchaser. All of the Purchased Agreements, the
Equipment
Leases and the Leases are legal, binding, valid, enforceable, and
in full
force and effect.
|
3.9.2 |
Except
as disclosed in Section 3.9.2
of
the Seller’s Disclosure Schedule, no consent, authorization or approval is
required from any person pursuant to the Purchased Agreements, the
Equipment Leases and the Leases or from any authority pursuant to
any Laws
or otherwise in relation to the consummation of the transactions
contemplated in this Agreement.
|
-
21 -
3.9.3 |
The
Seller is not in default (or will be in default with the passage
of time
or notice or otherwise) under any of the Purchased Agreements, the
Equipment Leases and the Leases.
|
3.10 |
Interest
in Customers, Suppliers and
Competitors
|
None
of
the Seller or, to the Knowledge of the Seller, any director, officer or
shareholder of the Seller or the Seller’s Holding has any direct or indirect
controlling interest in any competitor or supplier of the Seller’s Business, or
in any Person with whom the Seller is doing business.
3.11 |
Employees
|
3.11.1 |
The
Seller has identified for the Purchaser all of the employees, consultants
and subcontractors employed or who provide services to the Seller’s
Business. Section 3.11.1
of
the Seller’s Disclosure Schedule sets out (i) the names of the Employees,
(ii) their status (part-time, full time, long term disability, short
term
disability, other types of leaves) and (iii) their hiring date and
term of employment. The employee files of the Seller contain each
Employee’s social insurance numbers, correct and complete details of each
Employee’s annual and hourly wages and any other remuneration as well as
other terms and conditions of employment, age, each Employee’s total
length of employment as well as their eligibility to any Employee
Benefit
Plan.
|
3.11.2 |
The
Seller is in full compliance with all Laws including with respect
to
employment and employment practices, terms and conditions of employment,
wages and hours, non-discrimination in employment, pay equity,
occupational health and safety and is not engaged in any unfair labour
practice.
|
3.11.3 |
The
Seller is not involved in or, to the Knowledge of the Seller, threatened
with any labour dispute, arbitration, grievance, law suit or
administrative proceeding relation to labour matters involving any
of the
employees of the Seller.
|
3.11.4 |
The
Seller is not, and never has been, bound by or a party to any collective
bargaining agreement, or other agreement with labour unions or
associations representing employees of the Seller and there are no
actual
or, to the Knowledge of the Seller, threatened or pending organizing
activities by any trade union, council of trade unions, employee
bargaining agency or affiliated bargaining
agent.
|
3.11.5 |
No
trade union, council of trade unions, employee bargaining agency
or
affiliated bargaining agent:
|
-
22 -
3.11.5.1 |
holds
or has ever held bargaining rights with respect to any of the Seller’s
employees by way of certification, interim certification, voluntary
recognition, designation or successor rights;
or
|
3.11.5.1 |
to
the Knowledge of the Seller, has applied to be certified as the bargaining
agent of the Seller’s employees.
|
3.11.6 |
All
accruals for, premiums for employment insurance, health premiums,
Canada
and Quebec Pension Plan premiums, accrued wages, salaries and commissions,
unpaid vacation pay and Employee Benefit Plan payments for any period
prior to the Effective Date are reflected on the Balance Sheet and
after
the Effective Date have been reflected in the books and records of
the
Seller.
|
3.11.7 |
Except
for remuneration (including severance) paid to employees in the Ordinary
Course of Business and made at current rates of remuneration, no
payments
have been made or authorized since the Effective Date by the Seller
to
officers, directors or Employees.
|
3.12 |
Employee
Benefits
|
3.12.1 |
Except
for the arrangements set forth in Section 3.12.1
of
the Seller’s Disclosure Schedule, the Seller neither maintains nor
contributes to, nor has ever maintained or contributed to, any pension,
profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental,
medical, disability life insurance, survivor benefit, or similar
plan,
policy or arrangement, whether formal or informal, written or oral,
for
the benefit of any director, officer, consultant or employee, whether
active or terminated. Each of the arrangements set forth in
Section 3.12.1
of
the Seller’s Disclosure Schedule is hereinafter referred to as an
“Employee
Benefit Plan”.
|
3.12.2 |
The
Seller has heretofore delivered to the Purchaser true, correct, complete
and up-to-date copies of each Employee Benefit Plan of the
Seller.
|
3.12.3 |
Except
as set forth in Section 3.12.3
of
the Seller’s Disclosure Schedule,
|
3.12.3.1 |
there
is no pending or, to the Knowledge of the Seller, threatened legal
action,
proceeding or investigation, other than routine claims for benefits,
concerning any Employee Benefit Plan or, to the Knowledge of the
Seller, any
fiduciary or service provider thereof and, to the Knowledge of the
Seller,
there is no basis for any such legal action or proceeding;
|
3.12.3.2 |
no
liability (contingent or otherwise) to any multi-employer plan has
been
incurred by the Seller or any affiliate thereof (other than insurance
premiums satisfied in due course);
|
-
23 -
3.12.3.3 |
no
communication, report or disclosure has been made which, at the time
made,
did not accurately reflect the terms and operations of any Employee
Benefit Plan;
|
3.12.3.4 |
no
Employee Benefit Plan provides welfare benefits subsequent to termination
of employment to employees or their
beneficiaries;
|
3.12.3.5 |
no
benefits due under any Employee Benefit Plan have been forfeited
subject
to the possibility of reinstatement (which possibility would still
exist
at or after the Effective Date);
and
|
3.12.3.6 |
the
Seller has not undertaken to maintain any Employee Benefit Plan for
any
period of time and each such Plan may be terminated at the sole discretion
of the sponsor thereof, subject only to such constraints as may be
imposed
by applicable Laws.
|
3.13 |
Competitive
Business
|
The
Seller has not been made aware of any supervisory, managerial or executive
employee of the Seller intending to resign, to establish a competitive business
or to take employment with a competitor of the Seller’s Business.
3.14 |
Intellectual
Property Rights
|
3.14.1 |
The
Business Intellectual Property constitutes all of the Intellectual
Property Rights (excluding any Intellectual Property Rights that
are in
the public domain) that are used in or necessary for the conduct
of the
Seller’s Business as presently conducted. For the purpose of Section
3
only, “Business
Intellectual Property”
shall mean collectively all
Intellectual Property Rights owned by the Seller (the “Owned
Intellectual Property”)
or of which the Seller is the licensee or in which the Seller has
any
right (other than with respect to “off-the-shelf” software which is
generally commercially available to the public at retail in which
the
Seller is the licensee of such software) (the
“Inbound
Licensed Intellectual Property”).
|
3.14.2 |
The
Seller is the sole legal and beneficial owner, unencumbered by any
liens,
charges or encumbrances of any kind, of all Owned Intellectual
Property. The
Seller lawfully possesses all technical information and know-how
used in
the creation, development, support and maintenance of the Products
and has
not disclosed any such confidential information and know-how to any
third
party, except as necessary in the conduct of the Seller’s Business and
such third parties always having been bound by written, contractual
confidentiality obligations with respect to such confidential
information.
|
3.14.3 |
The
Business Intellectual Property is freely transferable by the Seller
to the
Purchaser as of the Effective Date.
|
3.14.4 |
To
the Seller’s Knowledge, the Seller is not making unauthorized use of any
confidential information or trade secrets of any Person and, to the
Seller’s Knowledge, no employee or contractor of the Seller is violating
or has violated any third party Intellectual Property Rights or any
confidentiality obligations toward third parties undertaken by them
or any
of the Seller.
|
-
24 -
3.14.5 |
No
source code of any software owned by the Seller that has been incorporated
or embedded in any Products that comprise the Seller’s Business has been
licensed or otherwise disclosed to another Person other than an escrow
agent pursuant to the terms of a source code escrow agreement in
customary
form. No software that has been incorporated or embedded in any Products
that comprise the Seller’s Business contains any code that is owned by any
third party, including any code that is licensed pursuant to the
provisions of any “open source” license agreement, or any other license
agreement that requires source code be distributed or made available
in
connection with the distribution of the licensed software in object
code
form or that limits the amount of fees that may be charged in connection
with sublicensing or distributing such licensed software.
|
3.14.6 |
(i) the
Seller has not received any notice alleging that the conduct of the
Seller’s Business infringes any third party Intellectual Property Rights;
(ii) the Seller has not at any time been sued or been the subject
of a
Claim, or been a defendant in any Claim (other than one which has
been
finally settled prior to the date hereof with no ongoing obligations)
that
involves the infringement or alleged infringement of any third party
Intellectual Property Rights, and no such Claims are pending or,
to the
Knowledge of the Seller, threatened; (iii) the Seller has not made
any
Claim of infringement of any of the Owned Intellectual Property against
any other Person; and (iv) to the Knowledge of the Seller, there
is no
infringement by any other Person of any Business Intellectual Property.
None of the Owned Intellectual Property is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the
use
thereof by the Seller or restricting the licensing thereof by the
Seller
to any Person. With the exception of those agreements entered into
with
its customers, distributors and system integrators, the Seller has
not
entered into any agreement to indemnify any other Person against
any
charge of infringement of any Owned Intellectual
Property.
|
3.15 |
Product
Warranty
|
No
Product or service sold or delivered by the Seller with respect to the Seller’s
Business is subject to any guaranty, warranty or other indemnity beyond the
Seller’s applicable standard terms and conditions of sale and all applicable
statutory or common law rules, regulations and laws in connection with the
Seller’s Business.
3.16 |
Products
|
Subject
to warranty claims in the Ordinary Course of Business, all Products previously
or presently supplied, licensed or otherwise made available by the Seller in
connection with the Seller’s Business to any third party:
3.16.1 |
perform
substantially in accordance with their specifications and user manuals
and
other descriptions, warranties or representations applied in respect
of
such Products, including the Products’ specifications. Section
3.16.1
of
the Seller’s Disclosure Schedule sets forth all standard product
warranties of the Seller related to the
Products;
|
-
25 -
3.16.2 |
are
and have at all times been properly and promptly maintained and updated
by
the Seller; and
|
3.16.3 |
the
Seller has not agreed to and is not obliged to replace or repair
any
defective Products free of charge or to refund or to issue any credit
note
or to write off or reduce indebtedness in respect of any Products
it has
licensed or sold.
|
3.17 |
Product
Liability
|
The
Seller has no liability (and, to the Knowledge of the Seller, there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against the Seller giving rise to any
liability) arising out of any injury to individuals or property as a result
of
the ownership, possession or use of any Product or service sold or delivered
by
the Seller in the connection with the Seller’s Business.
3.18 |
Environmental
and Health and Safety Matters
|
3.18.1 |
The
Seller, its operations, activities, equipment and, to the Knowledge
of the
Seller, the properties, buildings and immoveables it leases, occupies
or
has the custody of, including the Leased Premises, have at all time
been
and are in compliance with all applicable Environmental Laws and
Health
and Safety Laws.
|
3.18.2 |
The
Seller, and to the Knowledge of the Seller, in connection with its
work,
its employees, agents, shareholders, directors and officers has never
been
declared guilty of committing an offence for a violation of Environmental
Laws or Health and Safety Laws and has never been imposed a fine
or has
never otherwise settled such a
prosecution.
|
3.18.3 |
There
are no Contaminants in, on or under the equipment, buildings, immoveables
or properties owned, leased, occupied by or under the custody of
the
Seller, including the Leased Premises, the presence of which constitutes
a
violation of applicable Environmental Laws or Health and Safety
Laws.
|
3.18.4 |
The
Seller has not received any written or verbal notice or request for
information in the context of any environmental or health and safety,
federal, provincial, regional or municipal investigation or
inspection.
|
3.18.5 |
There
is no action, order, decision, directive, declaration, decree, judgment,
suit or proceeding, pending or threatened, against the Seller, or
to the
Knowledge of the Seller, its employees, agents, shareholders, directors
and officers, or involving the Seller or the Seller’s Business, by or
before any tribunal, commission, agency or any governmental entity,
and to
the Knowledge of the Seller, there is no event or fact based on which
such
action, order, decision, directive, declaration, decree, judgment,
suit or
proceeding may be instituted.
|
-
26 -
3.19 |
Litigation
|
3.19.1 |
There
are no Claims (including without limitation any derivative proceeding
on
behalf of the Seller) pending or, to the Knowledge of the Seller,
threatened against the Seller or the Seller’s Business, or the ability of
the Seller to consummate the transactions contemplated hereunder,
before
or by any federal, state, provincial, municipal or other governmental
court, department, commission, board, bureau, agency or instrumentality,
domestic or foreign, whether or not insured, or which might involve
the
possibility of any judgment or liability against the Seller or the
Seller’s Business.
|
3.19.2 |
There
are no (i) outstanding judgments, orders, injunctions or decrees
of any
governmental authority or arbitration tribunal against the Seller
or any
of its affiliates or the Seller’s Business, or (ii) investigations by any
governmental authority which are, to the Knowledge of the Seller,
pending
or threatened against the Seller’s Business, the Seller or any of its
affiliates, and which have or could have an adverse effect on the
ability
of the Seller to consummate the transactions contemplated hereby
or to
perform the obligations of the Seller under this
Agreement.
|
3.20 |
Privacy
Laws
|
3.20.1 |
The
collection, use and retention, if any, of the Personal Information
by the
Seller, the disclosure or transfer of the Personal Information by
the
Seller to any third parties and transfer of the Personal Information
by
the Seller to the Purchaser as part of the Purchaser’s due diligence and
as contemplated by this Agreement or any ancillary agreement comply
with
all Privacy Laws and is consistent with the Seller’s own Privacy Policies,
if any.
|
3.20.2 |
There
are no restrictions on the Seller’s collection, use, disclosure and
retention of the Personal Information except as provided by Privacy
Laws
and the Seller’s own Privacy
Policies.
|
3.20.3 |
There
are no investigations, inquiries, actions, suits, claims, demands
or
proceedings, whether statutory or otherwise, pending, ongoing, or
to the
Seller’s Knowledge, threatened, with respect to the Seller’s collection,
use, disclosure or retention of the Personal
Information.
|
3.20.4 |
No
decision, judgment or order, whether statutory or otherwise, is pending
or
has been made, and no notice has been given pursuant to any Privacy
Laws,
requiring the Seller to take (or to refrain from taking) any action
with
respect to the Personal
Information.
|
3.20.5 |
The
Seller has identified for the Purchaser the following information
in
respect of the Personal Information:
|
3.20.5.1 |
all
Privacy Policies, if any;
|
-
27 -
3.20.5.2 |
a
copy of all publications, if any, describing the Privacy Policies,
including all versions of the Privacy Policy appearing on the Seller’s Web
sites, if any; and
|
3.20.5.3 |
a
copy of all the forms of consent used by the Seller in respect of
the
Personal Information, if any;
|
3.21 |
Fees
|
The
Seller does not have any liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated
by
this Agreement for which the Purchaser could become liable or
obligated.
3.22 |
No
Misrepresentation
|
No
representation or warranty or other statement made by the Vendor in this
Agreement contains any untrue statement or omits to state a material fact
necessary to make any of them, in light of the circumstances in which it was
made, not misleading.
4. |
Seller's
Holding Representations And
Warranties
|
The
Seller’s Holding represents and warrants to the Purchaser that:
4.1 |
Organization
|
The
Seller’s Holding is duly incorporated, organized and validly existing and in
good standing under the laws of its jurisdiction of incorporation.
4.2 |
Authority
|
4.2.1 |
The
Seller’s Holding has good and sufficient power, authority and right to
enter into and deliver this Agreement and to complete the transactions
contemplated hereby.
|
4.2.2 |
This
Agreement has been duly executed and delivered by the Seller’s Holding,
and is a valid and binding obligation of Seller’s Holding enforceable in
accordance with its terms.
|
4.2.3 |
Neither
the entering into, the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by Seller’s Holding will result
in:
|
4.2.3.1 |
the
violation of any of the provisions of the charter documents or by-laws
of
Seller’s Holding ;
|
4.2.3.2 |
the
violation of any agreement or other instrument to which Seller’s Holding
is a party or by which it is bound;
|
4.2.3.3 |
the
violation of any applicable law, rule, regulation, judgment, order
or
decree; or
|
-
28 -
4.2.3.4 |
a
conflict with, breach of or creation of an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute
an event of default) under, or an event which would give any party
the
right to accelerate any obligation under, any agreement, mortgage,
license, lease, indenture, instrument, order, arbitration award,
judgment
or decree to which Seller’s Holding is a party or by which Seller’s
Holding is bound or affected.
|
4.3 |
Accredited
Investor
|
4.3.1 |
The
Seller’s Holding is an “accredited investor” within the meaning of
National Instrument 45-106 - Prospectus
& Registration Exemptions.
|
5. |
Purchaser’s
Representations And
Warranties
|
The
Purchaser represents and warrants to the Seller that:
5.1 |
Organization
|
The
Purchaser is duly incorporated, organized and validly existing and in good
standing under the laws of its jurisdiction of incorporation.
5.2 |
Authority
|
5.2.1 |
The
Purchaser has good and sufficient power, authority and right to enter
into
and deliver this Agreement and to complete the transactions contemplated
hereby.
|
5.2.2 |
This
Agreement has been duly executed and delivered by the Purchaser,
and is a
valid and binding obligation of the Purchaser enforceable in accordance
with its terms.
|
5.2.3 |
Neither
the entering into, the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by the Purchaser will result
in:
|
5.2.3.1 |
the
violation of any of the provisions of the charter documents or by-laws
of
the Purchaser ;
|
5.2.3.2 |
the
violation of any agreement or other instrument to which the Purchaser
is a
party or by which it is bound;
|
5.2.3.3 |
the
violation of any applicable law, rule, regulation, judgment, order
or
decree; or
|
5.2.3.4 |
a
conflict with, breach of or creation of an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute
an event of default) under, or an event which would give any party
the
right to accelerate any obligation under, any agreement, mortgage,
license, lease, indenture, instrument, order, arbitration award,
judgment
or decree to which the Purchaser is a party or by which the Purchaser
is
bound or affected.
|
-
29 -
5.2.4 |
No
consent, approval, waiver or authorization is required to be obtained
by
the Purchaser from, and no notice or filing is required to be given
by the
Purchaser to, or made by the Purchaser with, any Person in connection
with
the execution, delivery and performance by the Purchaser of this
Agreement.
|
5.3 |
Fees
|
The
Purchaser does not have any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become liable or
obligated.
6. |
Purchaser’s
Holding Representations And
Warranties
|
The
Purchaser’s Holding represents and warrants to the Seller that:
6.1 |
Organization
|
Purchaser’s
Holding is duly incorporated, organized and validly existing and in good
standing under the laws of its jurisdiction of incorporation.
6.2 |
Authority
|
6.2.1 |
Purchaser’s
Holding has good and sufficient power, authority and right to enter
into
and deliver this Agreement and to complete the transactions contemplated
hereby.
|
6.2.2 |
This
Agreement has been duly executed and delivered by Purchaser’s Holding, and
is a valid and binding obligation of Purchaser’s Holding enforceable in
accordance with its terms.
|
6.2.3 |
Neither
the entering into, the delivery of this Agreement nor the completion
of
the transactions contemplated hereby by Purchaser’s Holding will result
in:
|
6.2.3.1 |
the
violation of any of the provisions of the charter documents or by-laws
of
Purchaser’s Holding ;
|
6.2.3.2 |
the
violation of any agreement or other instrument to which Purchaser’s
Holding is a party or by which it is
bound;
|
6.2.3.3 |
the
violation of any applicable law, rule, regulation, judgment, order
or
decree; or
|
6.2.3.4 |
a
conflict with, breach of or creation of an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute
an event of default) under, or an event which would give any party
the
right to accelerate any obligation under, any agreement, mortgage,
license, lease, indenture, instrument, order, arbitration award,
judgment
or decree to which the Purchaser is a party or by which the Purchaser’s
Holding is bound or affected.
|
-
30 -
6.2.4 |
No
consent, approval, waiver or authorization is required to be obtained
by
the Purchaser’s Holding from, and no notice or filing is required to be
given by the Purchaser’s Holding to, or made by the Purchaser’s Holding
with, any Person in connection with the execution, delivery and
performance by the Purchaser’s Holding of this Agreement except as set out
in Sections 2.7
and 8.2.1.17.
|
6.3 |
Fees
|
The
Purchaser’s Holding does not have any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become liable or
obligated.
7. |
Covenants
|
7.1 |
Employees
|
7.1.1 |
Notwithstanding
the sale and purchase of the Operating Assets as of and with effect
from
the opening of business on the Effective Date, except as disclosed
in
Section 7.1.1
of
the Seller’s Disclosure Schedule, the Seller will employ all of the
Employees until the close of business on the day immediately preceding
the
Closing Date on the same terms and conditions as are
in effect on the date hereof;
|
7.1.2 |
The
Purchaser undertakes to continue the employment on and after the
Closing
Date of the Employees on
substantially the same terms and conditions of employment as are
in effect
on the date hereof;
|
7.1.3 |
Subject
to the provisions of Section 7.1.1,
in respect of all Employees, the Seller will continue to be responsible
for and will discharge all obligations and liabilities for wages,
severance pay, termination pay, notice of termination of employment
or pay
in lieu of such notice, damages for wrongful dismissal or other employee
benefits or claims, including accrued vacation pay to the extent
due and
payable prior to the close of business on the date immediately preceding
the Effective Date. The Purchaser assumes and will discharge all
such
obligations and liabilities that become due or payable after the
close of
business on the day immediately preceding the Effective Date in respect
of
all Employees;
|
7.1.4 |
All
items in respect of Employees that require adjustment including premiums
for unemployment insurance, Canada or Quebec Pension Plan, employer
health
tax, applicable statutory hospitalization insurance, workers’ compensation
assessments, accrued wages, salaries and commissions and employee
benefit
plan payments will be appropriately adjusted in the Financial Statements.
To the extent that the Seller makes any payments to the Purchaser
on
account of such adjustments, the Purchaser agrees to indemnify and
save
harmless the Seller from and against all Claims in connection
therewith;
|
-
31 -
7.2 |
Covenants
of the Seller
and the Seller’s Holding
|
7.2.1 |
Each
of the Seller and the Seller’s Holding shall ensure that the
representations and warranties of the Seller set forth in Articles
3
and 4 are true and correct at the Effective Date and that the conditions
of closing for the benefit of the Purchaser set forth in Section
8.1
have been performed or complied with by the Effective
Date.
|
7.3 |
Interim
Period
|
7.3.1 |
Except
as otherwise contemplated by this Agreement or consented to in writing
by
the Purchaser, from the date of this Agreement until Closing, the
Seller
will :
|
7.3.1.1 |
carry
on the Seller’s Business in the usual and ordinary course, consistent with
past practice, provided that all acts and proceedings involving a
commitment in excess of $10,000will be subject to the prior approval
of
the Purchaser, which approval will not be unreasonably
withheld;
|
7.3.1.2 |
use
all reasonable commercial efforts to preserve intact the Seller’s
Business, organization and goodwill, to keep available the employees
of
the Seller’s Business as a group an to maintain satisfactory relationships
with suppliers, distributors, customers and other with whom the Seller’s
Business has business
relationships;
|
7.3.1.3 |
use
all reasonable commercial efforts to cause its current insurance
policies
with respect to the Seller’s business not to be cancelled or terminated or
any other coverage thereunder to lapse, unless simultaneously with
such
terminations, cancellation or lapse, replacement policies underwritten
by
insurance companies of nationally recognized standing providing coverage
equal to or greater than the coverage under the cancelled, terminated
or
lapsed policies, and where possible, for substantially similar premiums,
are in full force and effect;
|
7.3.1.4 |
promptly
advise the Purchaser in writing of the occurrence of any Material
Adverse
Effect in respect of the Seller’s Business or of any facts that come to
their attention which would cause any of the Seller’s representations and
warranties herein contained to be untrue in any respect; and
|
7.3.1.5 |
maintain
the books, records and accounts of the Seller’s Business in the usual and
ordinary course, consistent with past practice and record all transactions
on a basis consistent with that
practice.
|
7.4 |
Examination
of Records and Operating
Assets
|
7.4.1 |
The
Seller will forthwith make available to the Purchaser and its authorized
representatives all data bases recorded or stored by means of any
device,
including in electronic form, title documents, abstracts of title,
deeds
surveys, leases, certificates of trade marks and copyrights, contracts
and
commitments in its possession or under its control relating to any
of the
Operating Assets or the Seller’s Business. The Seller will forthwith make
available to the Purchaser and its authorized representatives for
examination all books of account and accounting records relating
to the
Seller’s Business. The Seller will, if reasonably requested, provide
copies, at the cost of the Purchaser, of the following records maintained
in connection with the Seller’s Business: financial statements, records of
past sales, customer lists, supplier lists, payroll records, inventory
data, inventory master records and accounts receivable data. The
Seller
will give the Purchaser and its authorized representatives every
reasonable opportunity to have access to and to inspect the Operating
Assets. The exercise of any rights of access or inspection by or
on behalf
of the Purchaser under this Section 7.4.1
will not affect or mitigate the covenants, representations and warranties
of the Seller in this Agreement which will continue in full force
and
effect.
|
-
32 -
7.5 |
Covenants
of the
Purchaser and the Purchaser’s Holding
|
7.5.1 |
Each
of the Purchaser and Purchaser’s Holding shall ensure that the
representations and warranties set out in Articles 5
and 6
are true and correct at the Effective Date and that the conditions
of
closing for the benefit of the Seller set out in Section 8.3
have been performed or complied with by the Closing
Date.
|
8. |
Conditions
of Closing
|
8.1 |
Closing
|
8.1.1 |
The
sale and purchase of the Operating Assets and the other transactions
contemplated by this Agreement shall be closed (the “Closing”)
at the office of Xxxxx LLP, 000 Xxxx Xxxxxx Xxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx at 9 a.m. on March 31, 2008 or
on such other date or at such other place as may be mutually agreed
upon
in writing by the parties (the “Closing
Date”).
|
8.2 |
Conditions
for the benefit of the
Purchaser
|
8.2.1 |
The
sale by the Seller and the purchase by the Purchaser of the Operating
Assets is subject to the following conditions which are for the exclusive
benefit of the Purchaser to be performed or complied with at or prior
to
the Closing Date:
|
8.2.1.1 |
the
representations and warranties of each of the Seller and the Seller’s
Holding set forth in Article 3
and 4 shall be true and correct at the Closing Date with the same
force
and effect as if made at and as of such
date;
|
8.2.1.2 |
the
Seller and the Seller’s Holding shall have performed or complied with all
of the terms, covenants and conditions of this Agreement to be performed
or complied with by the Seller and the Seller’s Holding at or prior to the
Closing Date;
|
-
33 -
8.2.1.3 |
the
Purchaser shall be furnished with a copy of the Balance Sheet;
|
8.2.1.4 |
the
Purchaser shall have executed an employment contract with the president
of
the Seller;
|
8.2.1.5 |
the
Seller, the Seller’s Holding and the Shareholders of Seller’s Holding
shall have executed a non-competition undertaking in favour of the
Purchaser and the Purchaser’s
Holding;
|
8.2.1.6 |
the
Purchaser shall be furnished with such certificates of the Seller
and the
Seller’s Holding or of officers of the Seller and the Seller’s Holding as
the Purchaser or the Purchaser’s counsel may reasonably think necessary in
order to establish that the terms, covenants and conditions contained
in
this Agreement to have been performed or complied with by the Seller
and
the Seller’s Holding, at or prior to the Closing Date have been performed
and complied with and that the representations and warranties (including
the representation and warranty set out in Section 3.3.1,
mutatis mutandi, as to the financial statements described in
Section 8.2.1.14)
of the Seller and the Seller’s Holding herein given are true and correct
at the Closing Date;
|
8.2.1.7 |
there
will have been obtained from all appropriate federal, provincial,
municipal or other governmental or administrative bodies such other
approvals or consents as are required to permit the change of ownership
of
the Operating Assets contemplated hereby and to permit the Seller’s
Business to be carried on by the Purchaser as now
conducted;
|
8.2.1.8 |
the
Purchaser will have been furnished with a signed and executed Indemnity
Agreement by the Seller and the Seller’s Holding, dated as of the Closing
Date, for any Claims incurred by the Purchaser directly or indirectly
by
reason of the non-compliance by the Seller with the Bulk
Sales Act
(Ontario);
|
8.2.1.9 |
all
necessary steps and proceedings will have been taken to permit the
Operating Assets to be duly and regularly transferred to and registered
in
the name of the Purchaser;
|
8.2.1.10 |
the
absence of any material adverse change in the Seller’s Business, financial
conditions, prospects, assets or
operations;
|
8.2.1.11 |
the
absence of any material pending or threatened litigation involving
the
Seller, the Seller’s Business or the transactions contemplated
hereby;
|
8.2.1.12 |
the
Purchaser, at its sole and absolute discretion, shall be satisfied
with
its due diligence investigation of the Seller and Seller’s
Holding;
|
8.2.1.13 |
the
Purchaser shall have been provided with unaudited financial statements
for
the period ended January 31, 2008, as well as the balance sheet as
at
February 29, 2008 and a statement of operations for the period from
January 1, 2008 to February 29, 2008 to its entire satisfaction
at least three Business Days prior to the Closing
Date;
|
-
34 -
8.2.1.14 |
the
Purchaser shall be provided with evidence of the release of any
Encumbrance on the Operating
Assets;
|
8.2.1.15 |
the
Purchaser shall be provided with evidence that the execution and
delivery
of this Agreement and the completion of the transactions contemplated
hereby have been duly authorized by all necessary corporate action
on the
part of the Seller and the Seller’s
Holding;
|
8.2.1.16 |
the
Purchaser shall be provided with evidence that the term “Xxxxxx” and
“Xxxxxx Engineering” has been removed from the Seller and the Seller’s
Holding name, and that both the Seller and the Seller’s Holding will no
longer use the name “Xxxxxx” or “Xxxxxx Engineering” to identify their
respective businesses;
|
8.2.1.17 |
the
board of directors of the Purchaser’s Holding shall have approved this
Agreement; and
|
8.2.1.18 |
the
Purchaser shall be provided with an opinion of counsel to the Seller
and
Seller’s Holding to the satisfaction of the
Purchaser.
|
8.2.2 |
In
case any term or covenant of the Seller or condition to be performed
or
complied with for the benefit of the Purchaser at or prior to the
Closing
Date has not been performed or complied with at or prior to the Closing
Date, the Purchaser, without limiting any other right that the Purchaser
have, may at its sole option
either:
|
8.2.2.1 |
rescind
this Agreement by notice to the Seller, and in such event the Purchaser
will be released from all obligations hereunder;
or
|
8.2.2.2 |
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of its
rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
and,
if
the Purchaser rescinds this Agreement pursuant to Section 8.2.2,
the
Seller will also be released from all obligations hereunder unless the term,
covenant or condition for which the Purchaser have rescinded this Agreement
was
one that the Seller had covenanted, pursuant to this Agreement, to ensure had
been performed or complied with, in which event the Seller and
the
Seller’s Holding will
be
liable to the Purchaser for any Claims incurred by the Purchaser directly or
indirectly as a result of such breach.
8.3 |
Conditions
for the Benefit of the
Seller
|
8.3.1 |
The
sale by the Seller and the purchase by the Purchaser of the Operating
Assets is subject to the following conditions which are for the exclusive
benefit of the Seller to be performed or complied with at or prior
to the
Closing Date:
|
-
35 -
8.3.1.1 |
the
representations and warranties of each of the Purchaser and the
Purchaser’s Holding set forth in Articles 5
and 6
shall be true and correct at the Closing Date with the same force
and
effect as if made at and as of such date;
|
8.3.1.2 |
the
Purchaser and Purchaser’s Holding shall have performed or complied with
all of the terms, covenants and conditions of this Agreement to be
performed or complied with by the Purchaser and Purchaser’s Holding at or
prior to the Closing Date;
|
8.3.1.3 |
the
Seller shall be furnished with such certificates of the Purchaser
and the
Purchaser’s Holding or of officers of Purchaser and the Purchaser’s
Holding as the Seller or the Seller’s counsel may reasonably think
necessary in order to establish that the terms, covenants and conditions
contained in this Agreement to have been performed or complied with
by the
Purchaser and Purchaser’s Holding, at or prior to the Closing Date have
been performed and complied with and that the representations and
warranties of the Purchaser and Purchaser’s Holding herein given are true
and correct at the Closing Date;
|
8.3.1.4 |
the
Seller shall be provided with evidence that the execution and delivery
of
this Agreement and the completion of the transactions contemplated
hereby
have been duly authorized by all necessary corporate action on the
part of
the Purchaser and the Purchaser’s
Holding;
|
8.3.1.5 |
the
Purchaser shall have delivered to the Seller the amount specified
in
Section 2.4.1;
|
8.3.1.6 |
the
Purchaser shall have executed an employment contract with the president
of
the Seller;
|
8.3.1.7 |
the
personal guarantees in favour of the Seller’s bank shall have been
released to the satisfaction of the
Seller.
|
8.3.2 |
In
case any term or covenant of the Purchaser or Purchaser’s Holding or
condition to be performed or complied with for the benefit of the
Seller
at or prior to the Closing Date has not been performed or complied
with at
or prior to the Closing Date, the Seller, without limiting any other
right
that the Seller has, may at its sole option
either:
|
8.3.2.1 |
rescind
this Agreement by notice to the Purchaser and Purchaser’s Holding, and in
such event the Seller will be released from all obligations hereunder;
or
|
8.3.2.2 |
waive
compliance with any such term, covenant or condition in whole or
in part
on such terms as may be agreed upon without prejudice to any of its
rights
of rescission in the event of non-performance of any other term,
covenant
or condition in whole or in part;
|
-
36 -
and,
if
the Seller rescinds this Agreement pursuant to Section 8.3.2,
the
Purchaser will also be released from all obligations hereunder unless the term,
covenant or condition for which the Seller has rescinded this Agreement was
one
that the Purchaser or Purchaser’s Holding had covenanted, pursuant to this
Agreement, to ensure had been performed or complied with, in which event the
Purchaser and Purchaser’s Holding will be liable to the Seller for any Claims
incurred by the Seller directly or indirectly as a result of such
breach.
9. |
Indemnification
|
9.1 |
Survival
|
All
covenants, representations and warranties of each party contained in this
Agreement will survive the Closing and will continue in full force and effect,
subject to the provisions of this Article 9.
9.2 |
Indemnification
by Seller and Seller’s
Holding
|
9.2.1 |
Subject
to the provisions of this Article 9,
the Seller and the Seller’s Holding will jointly and generally indemnify
and save harmless the Purchaser and the Purchaser’s Holding and the
directors, officers, employees and agents of the Purchaser and the
Purchaser’s Holding (collectively, the “Purchaser
Indemnitees”)
from and against all Claims incurred by or asserted against any of
them
directly or indirectly arising out of or resulting from:
|
9.2.1.1 |
any
inaccuracy or misrepresentation in any representation or warranty
of the
Seller or the Seller’s Holding in this
Agreement;
|
9.2.1.2 |
any
breach or any covenant of the Seller or the Seller’s Holding in this
Agreement or in the Seller’s Disclosure Schedule;
and
|
9.2.1.3 |
any
Excluded Liability.
|
9.2.2 |
Notwithstanding
any other provisions of this Agreement, the Seller and the Seller’s
Holding will not be liable to any Purchaser Indemnitee
unless:
|
9.2.2.1 |
in
the case of any claim or demand arising out of or resulting from
a claim
other than a Third Party Claim, notice of any claim or demand by
the
Purchaser Indemnitee against the Seller or Seller’s Holding with respect
thereto is given to the Seller or Seller’s Holding by the Purchaser
Indemnitee within two years after the Closing Date;
or
|
9.2.2.2 |
in
the case of any claim or demand arising out of or resulting from
a Third
Party Claim, notice of any claim or demand by the Purchaser Indemnitee
against the Seller or Seller’s Holding with respect thereto is given to
the Seller or Seller’s Holding by the Purchaser Indemnitee within three
years after the Closing Date
|
whether
or not any Purchaser Indemnitee has discovered or could have discovered such
inaccuracy or misrepresentation before such time but excluding any claim or
demand arising out of or resulting from any fraud by the Seller or Seller’s
Holding in which case there will be not time limit for the Purchaser Indemnitee
to make a claim or demand against the Seller or Seller’s Holding with respect
thereto.
-
37 -
9.3 |
Indemnification
by the Purchaser
|
9.3.1 |
Subject
to the provisions of this Article 9,
the Purchaser and the Purchaser’s Holding will jointly and severally
indemnify and save harmless the Seller and the Seller’s Holding and the
directors, officers, employees and agents of the Seller and the Seller’s
Holding (collectively, the “Seller
Indemnitees”)
from and against all Claims incurred by or asserted against any of
them
directly or indirectly arising out of or resulting from:
|
9.3.1.1 |
any
inaccuracy or misrepresentation in any representation or warranty
of the
Purchaser or the Purchaser’s Holding in this
Agreement;
|
9.3.1.2 |
any
breach of any covenant of the Purchaser or the Purchaser’s Holding in this
Agreement.
|
9.3.2 |
Notwithstanding
any other provisions of this Agreement, the Purchaser and Purchaser’s
Holding will not be liable to any Seller Indemnitee
unless:
|
9.3.2.1 |
in
the case of any claim or demand arising out of or resulting from
a claim
other than a Third Party Claim, notice of any claim or demand by
the
Seller Indemnitee against the Purchaser or Purchaser’s Holding with
respect thereto is given to the Purchaser or Purchaser’s Holding by the
Seller’s Indemnitee within two years after the Closing Date;
or
|
9.3.2.2 |
in
the case of any claim or demand arising out of or resulting from
a Third
Party Claim, notice of any claim or demand by the Seller’s Indemnitee
against the Purchaser or Purchaser’s Holding with respect thereto is given
to the Purchaser or Purchaser’s Holding by the Seller’s Indemnitee within
three years after the Closing Date
|
whether
or not any Seller Indemnitee has discovered or could have discovered such
inaccuracy or misrepresentation before such time but excluding any claim or
demand arising out of or resulting from any fraud by the Purchaser or the
Purchaser’s Holding in which case there will be not time limit for the Seller
Indemnitee to make a claim or demand against the Purchaser or the Purchaser’s
Holding with respect thereto;
9.4 |
Third
Party Indemnification
|
Promptly
after the assertion by any third party of any Third Party Claim (a “Third Party
Proceeding”) against any person entitled to indemnification under this Agreement
(the “Indemnitee”) that results or may result in the incurrence by such
Indemnitee of any Claims for which such Indemnitee would be entitled to
indemnification pursuant to this Agreement, such Indemnitee will promptly notify
the party from whom such indemnification is or may be sought (the “Indemnitor”)
of such Third Party Proceeding. Such notice will also specify with reasonable
detail (to the extent the information is reasonably available) the factual
basis
for the Third Party Proceeding, the amount of the Third Party Claim, or if
such
amount is not then determinable, a reasonable estimate of the likely amount
of
the Third Party Claim. The failure to promptly provide such notice will not
relieve the Indemnitor of any obligation to indemnify the Indemnitee, except
to
the extent such failure prejudices the Indemnitor. Thereupon, the Indemnitor
will have the right, upon written notice (the “Defence Notice”) to the
Indemnitee within 30 days after receipt by the Indemnitor of notice of the
Third
Party Proceeding (or sooner if such Third Party Proceeding so requires) to
conduct, at its own expense, the defence against the Third Party Proceeding
in
its own name or, if necessary, in the name of the Indemnitee provided that:
(a)
the Indemnitor acknowledges and agrees in the Defence Notice that as between
the
Indemnitor and the Indemnitee, it is liable to pay for all Claims arising from
or relating to such Third Party Proceeding and (b) the Indemnitor provides
to
the Indemnitee adequate security (approved by the Indemnitee acting reasonably)
from time to time in respect of such Claims. The Defence Notice will specify
the
counsel the Indemnitor will appoint to defend such Third Party Proceeding (the
“Defence Counsel”), and the Indemnitee will have the right to approve the
Defence Counsel, which approval will not be unreasonably withheld. Any
Indemnitee will have the right to employ separate counsel in any Third Party
Proceeding and/or to participate in the defence thereof, but the fees and
expenses of such counsel will not be included as part of any Claims incurred
by
the Indemnitee unless (i) the Indemnitor failed to give the Defence Notice,
including the acknowledgement and agreement to be set out therein within the
prescribed period, (ii) such Indemnitee has received an opinion of counsel,
reasonably acceptable to the Indemnitor, to the effect that the interests of
the
Indemnitee and the Indemnitor with respect to the Third Party Proceeding are
sufficiently adverse to prohibit the representation by the same counsel of
both
parties under applicable ethical rules, or (iii) the employment of such counsel
at the expense of the Indemnitor has been specifically authorized by the
Indemnitor. The party conducting the defence of any Third Party Proceeding
will
keep the other party apprised of all significant developments and will not
enter
into any settlement, compromise or consent to judgment with respect to such
Third Party Proceeding unless the Indemnitor and the Indemnitee consent, which
consent will not be unreasonably withheld.
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9.5 |
Exclusive
Remedy
|
From
and
after the completion of the sale and purchase of the sale and purchase of the
Assets herein contemplated, except in the case of a breach of
Section 10.5,
the
rights of indemnity set forth in this Article 9
are the
sole and exclusive remedies of each party in respect of any inaccuracy or
misrepresentation in any representation or warranty, or breach of covenant
or
other obligation by another party under this Agreement. Accordingly, the parties
waive, from and after the Closing, any and all rights, remedies and claims
that
one party may have against another party, whether at law, under any statute
or
in equity (including but not limited to claims for contribution or other rights
of recovery arising under any Environmental Law, claims for breach of contract,
breach of representation and warranty, negligent representation and all claims
for breach of duty), or otherwise, directly or indirectly, relating to the
provisions of this Agreement or the transaction contemplated by this Agreement
other than equitable remedies in the case of a breach of
Section 10.5
and
other than those arising with respect to any fraud. This
Article 9
will
remain in full force and effect in all circumstances and will not be terminated
by any breach (fundamental, negligent or otherwise) by any party of its
representations, warranties, covenants or other obligations under this Agreement
or under any document delivered at the Time of Closing or by any termination
or
rescission of this Agreement by any party.
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39 -
9.6 |
After
Tax Basis
|
In
determining the amount of any Claim under this Article 9,
such
Claim will be increased (or decreased) to take into account any net Tax cost
(or
net current or future tax benefit) incurred or enjoyed by the Indemnitee as
a
result of the matter giving rise to such Claim and the receipt of an indemnity
payment hereunder. For greater certainty, any net tax cost will include any
further cost resulting from such increased payment.
9.7 |
Adjustment
to Purchase Price
|
All
amounts payable by the Seller or the Seller’s Holding to a the Purchaser
Indemnitee pursuant to Article 9
will be
deemed to be a decrease to the Purchase Price. All amounts payable by the
Purchaser or the Purchaser’s Holding to a Seller Indemnitee pursuant to
Article 9
will be
deemed to be an increase in the Purchase Price.
10. |
General
|
10.1 |
Further
Assurances
|
The
Seller and the Purchaser shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as the other party
may, either before or after the Effective Date, reasonably require to
effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.
10.2 |
Time
of the Essence
|
Time
shall be of the essence of this Agreement.
10.3 |
Commissions
|
The
Seller and the Purchaser agree to indemnify and save harmless one another from
and against any claims whatsoever for any commission or other remuneration
payable or alleged to be payable to any person in respect of the transactions
contemplated herein, whether such person purports to act or have acted for
the
Seller or the Purchaser in connection with the transactions contemplated
herein.
10.4 |
Professional
Fees
|
Each
of
the parties hereto shall pay their respective legal and accounting and other
professional costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto and any other costs and expenses whatsoever and
howsoever incurred, including in connection with any post-closing
matters.
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40 -
10.5 |
Public
Announcements
|
No
public
announcement or press release concerning the existence of this Agreement, the
contents hereof or the transactions contemplated hereby shall be made by the
Seller or the Purchaser without the prior written consent and joint approval
of
the Seller, the Seller’s Holding, the Purchaser, and the Purchaser’s Holding
(except as required pursuant to Applicable Laws including the Purchaser’s
Holding disclosure obligations under securities legislation).
10.6 |
Entire
Agreement
|
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto,
including the Term Sheet dated December 5, 2007. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements, express,
implied or statutory, between the parties other than as expressly set forth
in
this Agreement.
10.7 |
Amendments
and Waiver
|
No
modification of or amendment to this Agreement shall be valid or binding unless
set forth in writing and duly executed by the parties hereto and no waiver
of
any breach of any term or provision of this Agreement shall be effective or
binding unless made in writing and signed by the parties entitled to waive
the
same.
10.8 |
Successors
and Assigns
|
This
Agreement shall enure to the benefit of, and be binding on, the Parties and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns of the parties hereto. Neither Party may assign
or transfer, whether absolutely, by way of security or otherwise, all or any
part of its respective rights or obligations under this Agreement without the
prior written consent of the other Party.
10.9 |
Notices
|
Any
demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and shall be given by personal delivery,
by
registered mail or by electronic means of communication addressed to the
recipient as follows:
a) To
the Purchaser and Purchaser’s Holding:
AVENSYS
INC.
000
Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxx,
Xxxxxx, X0X 0X0
Attention:
Xxxx X.
Xxxxxx
Fax: (000)
000-0000
with
a
required copy to (but which shall not constitute notice to the Purchaser or
the
Purchaser’s Holding):
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41 -
XxXxxxxx
Xxxxxxxx LLP
Suite
2500
1000
de
La Gauchetière Street West
Montreal,
Quebec
H3B
0A2
Attention:
Xxxxx
Xxxxxxxxx
Fax: (000)
000-0000
b) To
the Seller and Seller’s Holding at the respective addresses set out
below.
XXXXXX
ENGINEERING LIMITED
000
Xxxxxxxxx Xxxx,
Xxxxx
Xxxx, XX, X0X 0X0
Attention:
Xx Xxxxx
Fax: (000)
000-0000
with
a
required copy to (but which shall not constitute notice to the Seller or the
Seller’s Holding):
XXXXX
LLP
0
Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 0000
XX
Xxx
000
100
King
Street West
Toronto,
ON M5X 1E2
Attention:
Xxxxxx Xxxxxxxx
Fax: (000)
000-0000
or
to
such other address, individual or electronic communication number as may be
designated by notice given by a party to the others. Any demand, notice or
other
communication given by personal delivery shall be conclusively presumed to
have
been given on the day of actual delivery thereof and, if given by registered
or
certified mail, on the third Business Day following the deposit thereof in
the
mail and, if given by electronic communication, on the day of successful
transmittal thereof if given during the normal business hours of the recipient
and on the Business Day during which such normal business hours next occur
if
not given during such hours on any day. If the party giving any demand, notice
or other communication knows or ought reasonably to have known of any
difficulties with the postal system which might affect the delivery of mail,
any
such demand, notice or other communication shall not be mailed but shall be
given by personal delivery or by electronic communication.
10.10 |
Governing
Law
|
This
Agreement shall be governed by and construed in accordance with the laws of
the
Province of Ontario and the laws of Canada applicable therein, and this
Agreement shall be treated, in all respects as an Ontario contract.
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42 -
10.11 |
Jurisdiction
|
The
courts of the Province of Ontario have exclusive jurisdiction with respect
to
any action or dispute arising under this Agreement. The Seller, the Purchaser,
the Purchaser’s Holding and the Seller’s Holding each attorns to the exclusive
jurisdiction of the courts of the Province of Ontario.
10.12 |
Counterparts
|
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed and original but all of which together shall constitute one and the
same
instrument. To evidence its execution of an original counterpart of this
Agreement, a Party may send a copy of its original signature on the execution
page hereof to the other Party by facsimile transmission and such transmission
shall constitute delivery of an executed copy of this Agreement to the receiving
Party.
10.13 |
Delivery
and Acceptance
|
The
parties shall be entitled to rely on delivery by facsimile machine of an
executed copy of this Agreement and acceptance by a party of such facsimile
copy
shall be equally effective to create a valid and binding agreement between
each
of the parties in accordance with the terms hereof.
10.14 |
Language
|
The
Parties have required that this Agreement and all deeds, documents and notices
relating to this Agreement be drawn up in the English language. Les parties
aux
présentes ont exigé que le présent contrat et tous autres contrats, documents ou
avis afférents aux présentes soient rédigés en langue anglaise.
[The
remainder of this page has been left intentionally blank]
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43 -
IN
WITNESS WHEREOF
the
Parties have executed this Agreement as of the date first above
written.
|
|
|
|
XXXXXX
ENGINEERING LIMITED
|
|
|
|
|
|
By:
|
|
|
Name:
Xx Xxxxx
|
|
|
Title:
President
|
|
|
|
|
XXXXXX
HOLDINGS INC.
|
|
|
|
|
|
By:
|
|
|
Name:
Xx Xxxxx
|
|
|
Title:
President
|
|
|
|
|
AVENSYS
CORPORATION
|
|
|
|
|
|
By:
|
|
|
Name:
Xxxx X. Xxxxxx
|
|
|
Title:
President and Chief Executive Officer
|
|
|
AVENSYS
INC.
|
|
|
|
|
|
By:
|
|
|
Name: Xxxx X. Xxxxxx |
|
|
Title:
President
|
|
[Signature
Page to Asset Purchase Agreement]
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