MEMORANDUM OF AGREEMENT made in quintuplicate on the 10th day of January, 2006
A M O N G
XXXXXX XXXXXX and XXXXXX XXXXXXXXX
(hereinafter collectively referred to as the "Vendor")
OF THE FIRST PART
- and -
ON THE GO HEALTHCARE, INC., a corporation incorporated under the laws
of Delaware (hereinafter referred to as the "Purchaser")
OF THE SECOND PART
- and -
2FILM TECHNOLOGIES INC., a corporation incorporated under the laws of
the Province of Ontario (hereinafter called the "Corporation")
OF THE THIRD PART
- and -
ISLAND CORPORATION (hereinafter referred to as "Island")
OF THE FOURTH PART
WHEREAS the authorized capital of the Corporation consists of an unlimited
number of non-voting Class "A" Preference Shares, an unlimited number of
non-voting Class "B" Preference Shares, an unlimited number of Special Shares
and an unlimited number of Common Shares without par value of which 928
Common Shares have been issued and are outstanding as fully paid and
non-assessable;
AND WHEREAS Vendors are the beneficial owners and are entitled to sell the
aforesaid issued and outstanding common shares;
AND WHEREAS the Purchaser has agreed with the Vendors to purchase the
issued and outstanding shares controlled by the Vendors in the capital stock
of the Corporation;
THIS AGREEMENT WITNESSETH that in consideration of the covenants,
agreements, warranties and payments herein set out and provided for,
the parties hereto hereby respectively covenant and agree as follows:
1. INTERPRETATION
(1) Definitions
Whenever used in this Agreement, unless there is something in the
subject matter or context inconsistent therewith, the following words
and terms shall have the respective meanings ascribed to them in this
Section 1(1):
(a) "Affiliate", "Associate", "Body Corporate", "Subsidiary" and
"Voting Securities" shall have the respective meanings ascribed
to those terms by the Business Corporations Act (Ontario) on the
date hereof;
(b) "Agreement" means this share purchase agreement and all
instruments supplemental to or in amendment or confirmation of
this share purchase agreement, and all references to this
Agreement shall include the attached Schedules and "Article",
"Section", "Subsection", or "Paragraph" means and refers to the
specified article, section, subsection, or paragraph of this
share purchase agreement;
(c) "Assets" means the undertaking, property and assets of the
Corporation relating to the Business as going concern, of
every kind and description and wheresoever situated;
(d) "Accountants" means collectively, the Corporation's Accountants,
the Vendors' Accountants and the Purchaser's Accountants;
(f) "Business Day" means any day, other than a Saturday, Sunday or
any other day on which the principal chartered banks located in
the City of Toronto are not open for business during normal
banking hours;
(g) "Claim" means any claim, demand, action, suit, litigation,
charge, complaint, prosecution or other proceeding for which one
Party can seek indemnification from the other Party pursuant to
this agreement;
(h) "Closing" means the completion of the sale to, and the purchase
by the Purchaser of, the Shares and the completion of the
transactions contemplated by this Agreement including the
transfer and delivery of all documents of title to the Shares
and the payment of the Purchase Price;
(i) "Closing Date" means January 9, 2006, or such other date as the
Parties may agree in writing as the date upon which the Closing
shall take place;
(j) "Closing Documents" has the meaning ascribed in Article;
(k) "Closing Time" means 10:00 o'clock in the forenoon on the
Closing Date or such other time on such date as the Parties may
agree as the time at which the Closing shall take place;
(l) "Corporation's Accountants" means Xxxxxxxx & Xxxxxxxx, Chartered
Accountants;
(m) "Corporation's Bank" means the Toronto-Dominion Bank;
(n) "Contracts" means those contracts, agreements, commitments,
entitlements and engagements of the Corporation relating to the
Business and the Assets (and, for greater certainty, not
including Collective Agreements, Leases and Equipment Leases)
whether with suppliers, customers or otherwise and including all
unfilled orders from customers; all forward commitments for
supplies or materials; all orders for new machinery and
equipment as yet undelivered; all equipment and construction
guarantees and warranties; negative covenants with employees;
and all other contracts described in Schedule "C";
(o) "Effective Date" means October 31, 2005, or such other date
as the parties may agree in writing as the date the Auditors
prepare the Effective Date Financial Statement;
(p) "Effective Date Financial Statements" means the consolidated
financial statements of the Corporation for the fiscal period
ended on the Effective Date, prepared in accordance with
generally accepted accounting principles consistently applied,
consisting of balance sheet as at such date, and statements of
earnings and retained earnings and of changes in financial
position for such period, together with notes thereto as at
such date of the Corporation's Auditors thereon addressed to
the Corporation;
(q) "Employees" has the meaning ascribed in Section 4 ( );
(r) "Equipment Leases" means those equipment leases, conditional
sales contracts, title retention agreements and other agreements
between the Corporation and third Persons relating to equipment
used by the Corporation including those that are listed in
Schedule "C";
(s) "GST" means the Goods and Services Tax payable under the Excise
Tax Act;
(t) "Intellectual Property Rights" means all patents and inventions,
trade-marks, including those described in Schedule "D", all
trade names and styles, including the trade names or styles
__________, __________, and __________, logos and designs,
trade secrets, technical information, engineering procedures,
designs, know-how and processes (whether confidential or
otherwise), software, and other industrial property (including
applications for any of these) in each case used or reasonably
necessary to permit satisfactory operation of the Business as
presently constituted;
(v) "Inventories" means all inventories of every kind and nature
and wheresoever situate owned by the Corporation and pertaining
to the Business including, without limitation, all inventories
of raw materials, work-in-progress, finished goods, operating
supplies and packaging materials of or pertaining to the
Business;
(w) "Leases" means all leases of Leasehold Properties including
those listed in Schedule "E"
(x) "Licences" means all transferable licences, registrations,
qualifications, permits and approvals, issued by any government
or governmental unit, agency, board, body or instrumentality,
whether federal, provincial or municipal, relating to the
Business, including those listed in Schedule "F", together with
all applications for such licences or permits;
(y) "Non-Competition Agreement" means the non-competition agreement
in the form of Schedule "G"
(z) "Parties" means the Vendors, the Purchaser and the Corporation,
collectively, and "Party" means any one of them;
(aa) "Person" includes an individual, corporation, partnership, joint
venture, trust, unincorporated organization, the Crown or any
agency or instrumentality thereof or any other juridical entity;
(ab) "Purchase Price" means the purchase price to be paid by the
Purchaser to the Vendors for the Shares, all as provided in
Section;
(ac) "Purchaser's Accountants" means Xxxxxxxx Xxxxxxx, Chartered
Accountants;
(ad) "Real Properties" means all freehold, leasehold, and other
interests in real and immoveable properties owned or used by
the Corporation in connection with the Business, including,
without limitation,
(i) the freehold lands and premises described in Schedule "I",
and all plants, buildings, sidings, parking lots,
roadways, structures, erections, improvements, fixed
machinery, fixed equipment, appurtenances, and fixtures
situate on or forming part of such lands and premises
(collectively the "Owned Properties");
(ii) the leasehold and other interest described in Schedule "J"
including all fixtures and improvements owned by the
Corporation relating to those leaseholds and other
interests (collectively the "Leasehold Properties");
(ae) "Restricted Shares" means
(af) "Shares" means all of the issued and outstanding common shares
in the capital of the Corporation, to be sold by the Vendors
to the Purchaser pursuant to the terms of this Agreement;
(ag) "Statements" has the meaning ascribed in Section;
(ah) "to the best of the knowledge" when used in reference to:
(i) the Vendors mean the knowledge of the Vendors; and
(ii) the Purchaser means the knowledge of the senior officers
of the Purchaser;
(ai) "Vendors' Accountants" means Xxxxxxxx & Xxxxxxxx, Chartered
Accountants.
(aj) "Vendors' Bank" means the Toronto-Dominion Bank.
(2) Gender and Number
In this Agreement, words importing the singular include the plural
and vice versa and words importing gender include all genders.
(3) Entire Agreement
This Agreement, including Schedules "A" to "J", together with the
agreements and other documents to be delivered under this Agreement
constitute the entire agreement between the Parties pertaining to the
subject matter of this Agreement and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written,
of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter of
this Agreement except as specifically set forth in this Agreement.
No supplement, modification or amendment to this Agreement and no
waiver of any provision of this Agreement shall be binding on any
Party unless executed by such Party in writing. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
(4) Article and Section Headings
Article and Section headings contained in this Agreement are included
solely for convenience, are not intended to be full or accurate
descriptions of the content of any Article or Section and shall not
be considered to be part of this Agreement.
(5) Schedules
The following Schedules are an integral part of this Agreement:
Schedule "A" - Financial Statements as at
Schedule "B" - Assets and Liens and Encumbrances
Schedule "C" - Contracts and Equipment Leases
Schedule "D" - Intellectual Property Rights
Schedule "E" - Leases
Schedule "F" - Licenses
Schedule "G" - Non-Competition Agreement
Schedule "H" - Litigation Matters
Schedule "I" - Employment Matters
Schedule "J" - Leasehold Properties
(6) Applicable Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada
applicable in the Province of Ontario and shall be treated, in all
respects, as an Ontario contract. Each Party to this Agreement
irrevocably attorns to and submits to the jurisdiction of the Courts
of Ontario with respect to any matter arising under or relating to
this Agreement.
(7) Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in Canadian funds.
(8) Accounting Terms
All accounting terms not otherwise defined have the meanings assigned
to them, and all calculations are to be made and all financial data
to be submitted are to be prepared, in accordance with the generally
accepted accounting principles ("GAAP") approved from time to time by
the Canadian Institute of Chartered Accountants, or any successor
institute applied on a consistent basis.
(9) Arm's Length
For purposes of this Agreement, Persons are not dealing "at arm's
length" with one another if they would not be dealing at arm's length
with one another for purposes of the Income Tax Act.
(10) Business Days
Whenever any action or payment to be taken or made under this Agreement
shall be stated to be required to be taken or made on a day other than
a Business Day, any payment shall be made or such action shall be
taken on the next succeeding Business Day.
(11) Statutory Instruments
Unless otherwise specifically provided in this Agreement any reference
in this Agreement to any law, by-law, rule, regulation, order, act or
statute of any government, governmental body or other regulatory body
shall be construed as a reference to those as amended or re-enacted
from time to time or as a reference to any successor to those.
(12) Materiality
In this Agreement "Material" means, when used as an adjective, that any
breach, default or deficiency in the satisfaction of any covenant,
representation or warranty so described might reasonably:
(a) give rise to an aggregate remedial cost (including consequential
loss and loss of profit) of more than $10,000.00, in any individual
instance, or more than $20,000.00 collectively in any greater number of
instances, where all such instances arise pursuant to multiple breaches
of the same covenant, representation or warranty; or
(b) where no adequate remedy is reasonably available, result in
disturbance in the ordinary conduct of the Business of an aggregate
cost properly attributable to such disturbance (including consequential
loss and loss of profit) of more than $50,000.00, and "Materially"
shall have the corresponding meaning.
2. Purchased Shares
Subject to the terms and conditions hereof, the Vendors covenant and
agree to sell, assign, and transfer to the Purchaser and the Purchaser
covenants and agrees to purchase from the Vendors all (and not less
than all) of the issued and outstanding shares in the capital stock of
the Corporation controlled by the Vendors (the "Purchased Shares") for
the purchase price (the "Purchase Price") payable as set out in
Article 2 hereof.
3A. Purchase Price
(1) The Purchase Price shall be the sum of Two Million Three Hundred
Eleven Thousand Five Hundred Thirty Six dollars ($2,311,536.00) of
lawful money of Canada.
(2) The Purchase Price shall be payable as follows:
a) the sum of $1,000,000.00 by way of certified cheque or bank
draft on Closing to the order of the Vendors in proportion
to their shareholdings, as they direct in writing;
b) An additional $200,000 in cash will be paid by the
Corporation out of the first collected accounts receivable
provided that the balance in the Corporation's banking
accounts is greater than $200,000.00 as at Closing or
thereafter, subject to adjustment. An additional $300,000
will be paid in 12 equal installments of $25,000 commencing
March 31st, 2006. The Balance of the purchase price due
after closing shall be secured by way of security to the
vendors.
c) the Purchaser issues and delivers on Closing One Million
(1,000,000) Restricted Shares to the Vendors be credited to
the Purchaser on closing at the issue price of $0.66 (US)
per share; the Purchaser warrants that all shares received
by the Vendors shall become unrestricted one year form the
date of issue under rule 144.
d) the Purchaser issues and delivers on Closing Sixty Thousand
(60,000) Restricted Shares to the employees of the Vendor as
directed by the Vendor and the Indemnifiers;
e) the Purchaser has issued, as a refundable good faith
deposit, to each of the Indemnifiers Twenty-Five Thousand
(25,000) Restricted Shares (50,000 Restricted Shares in all)
which deposit is to be credited to the Purchase Price on
Closing; and
f) INTENTIONALLY DELETED.
(3) The Parties agree to make the necessary adjustments to the
Purchase Price based on any discrepancy between the amount of
$538,880.00 and the amount of "Net Equity" on the balance sheet of
Island as at the Effective Date,defined herein as the excess of all
assets over liabilities of Island, as at the Effective Date and
disclosed by the Effective Date Financial Statements, to be
delivered to the Purchaser within 15 days of Closing.
(4) The Parties hereto acknowledge that at the time of Closing the
Parties shall have entered into certain employment agreements as
contemplated by Section 7(d)(vii) hereto. The Parties agree that,
notwithstanding any covenant in this Agreement which provides for
any delay or schedule of payment of any part or parts of the
Purchase Price, if the employment of the Vendors by the Purchaser
is terminated by the Purchaser with or without cause prior to the
payment of the full amount of the Purchase Price, any outstanding
balance of the Purchase price remaining unpaid shall then
immediately become due and payable.
(5) The Purchaser acknowledges that the Corporation is the owner of
real property municipally described as 000 Xxxxxxx Xxxxxxxxx,
Xxxx 00, Xxxx xx Xxxxxxx (the "Property"). The Corporation shall
within a reasonable time after Closing take steps to have the
Property listed for sale and then sold. The Purchase Price shall
be adjusted by an amount which equals the proceeds of the sale of
the Property net of all expenses of listing and closing and legal
and accounting expenses relating to same and of all expenses of
every nature or kind, including, without limitation, mortgage
payments of principal and interest, a promissory note in favour
of Lyne Xxxxx Xxxxxx in the sum of $58,000.00 with interest at
a rate of 5% due June 30, 2006, a promissory note in favour of
Xxxxxx Xxxxxx in the sum of $26,000.00 with interest at a rate
of 5% due June 30, 2006, a promissory note in favour of Xxxxxx
Xxxxxxxxx in the sum of $26,000.00 with interest at a rate of
5% due June 30, 2006, realty taxes, insurance payments and
common expense and utility payments.
3B. Closing Arrangements
(1) The closing of this transaction shall take place at the offices
of the Purchaser's' solicitor, Xxxx Xxxxxxxxxxx, Barrister and
Solicitor, on January 10, 2006 or at such other date(s) as the
parties hereto may agree (the "Closing Date").
(2) On the Closing Date, upon fulfilment of all the conditions set
out herein, the Vendors shall deliver to the Purchaser the
certificates representing all the Purchased Shares duly
endorsed in favour of the Purchaser.
4. Representations and Warranties of the Vendors
(1) The Vendors covenant, represent and warrant as follows as of
the date hereof and as of the Closing Date and it acknowledges that
the Purchaser is relying upon such covenants, representations and
warranties in connection with the purchase by the Purchaser of the
Purchased Shares:
(2) The authorized capital of the Corporation consists of an unlimited
number of non-voting Class "A" Preference Shares, an unlimited
number of non-voting Class "B" Preference Shares, an unlimited
number of Special Shares and an unlimited number of Common Shares
without par value of which 928 Common Shares have been issued for
an aggregate purchase price of Dollars and are outstanding as
fully paid and non-assessable.
(3) The shareholders of record are as follows:
XXXXXX XXXXXX - 464 common shares
XXXXXX XXXXXXXXX - 464 common shares
and such shares are owned by the Vendors, are held with good and
marketable title, free and clear of all mortgages, liens, charges,
security interests, adverse claims, pledges, encumbrances and
demands whatsoever.
(4) No person, firm or corporation has any agreement or option or any
right (whether by law, pre-emptive or contractual and including
convertible securities, warrants or convertible obligations of any
nature) for the purchase or the issue of either the Purchased
Shares or any un-issued shares in the capital stock of the
Corporation or of Island.
(5) The entering into of this agreement and the transactions
contemplated hereby will not result in the violation of any of the
terms and provisions of the constating documents or by-laws of
the Vendors or of any indenture or other agreement, written or
oral, to which the Vendors may be a party.
(6) This agreement has been duly executed and delivered by the Vendors
and is a valid and binding obligation of the Vendors enforceable in
accordance with its terms.
(7) The Vendors are not non-residents within the meaning of s.116 of
the Income Tax Act.
(8) To the Vendors' knowledge, there are no existing or threatened
legal actions or claims against the Corporation save as set out
in Schedule "H" hereto.
(9) As at January 9, 2006, there will be approximately Cdn $200,000.00
in Island's bank accounts and no monies in the Corporation's bank
accounts.
(10) There are no liens, charges or encumbrances of any kind whatsoever
on the assets of the Corporation, save and except as are listed
in Schedule "B" annexed hereto.
(11) All material tangible Assets of the Corporation used in or in
connection with the Business are in good condition and repair and,
where applicable, in good working order, having regard to the use
and age thereof. A list of all material fixed assets is shown
in Schedule "B".
(12) The unaudited financial statements of Island dated October 31,2005
a copy of which is attached hereto as Schedule "A", prepared by
Xxxxxxxx Xxxxxxx, Chartered Accountants, fairly represent the
financial position of the Corporation as at October 31, 2005..
(13) Organization and Good Standing-The Corporation is a corporation
duly incorporated, organized and validly existing in good standing
under the laws of Ontario.
(14) Bankruptcy, etc.-No bankruptcy, insolvency or receivership
proceedings have been instituted or are pending against the
Corporation and the Corporation is able to satisfy its
liabilities as they become due.
(15) Capacity to Carry on Business-The Corporation has all necessary
corporate power, authority and capacity to own its property and
assets and to carry on the Business as presently owned and
carried on by it, and the Corporation is duly licensed,
registered and qualified as a corporation to do business and
is in good standing in each jurisdiction in which the nature
of the Business make such qualification necessary, and all such
licences, registrations and qualifications are valid and
subsisting and in good standing and none of them contains any
burdensome term, provision, condition or limitation which has
or may have an adverse effect on the Corporation
(16) Due Authorization, Corporation etc.-The Corporation has all
necessary corporate power, authority and capacity to enter into
this Agreement and to perform its obligations under this
Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
the Corporation.
(17) Absence of Conflicting Agreements-Except for the Contracts, the
Equipment Leases, and the Leases, the consent to the consent to
the change of control of the Corporation which may be required
from lessors or other third parties thereunder in connection with
the completion of the transactions contemplated by this Agreement
and except for various financing and security agreements with the
Vendors' Bank all of which will be terminated before Closing or
all of which will be waived by the Vendors' Bank in respect of the
transactions contemplated by this Agreement, neither the Vendors
nor the Corporation is not a party to, bound or affected by or
subject to any indenture, mortgage, lease, agreement, instrument,
statute, regulation, arbitration award, charter or by-law
provisions, order or judgment which would be violated,
contravened, breached by, or under which any default would
occur as a result of the execution and delivery of this Agreement
or the consummation of any of the transactions contemplated under
this Agreement.
(18) Absence of Guarantees-The Corporation has not given or agreed to
give, nor is it a party to or bound by, any guarantee of
indebtedness or other obligations of third parties nor any other
commitment by which the corporation is, or is contingently,
responsible for such indebtedness or other obligations, save and
except such guarantees to the Business Development Bank of Canada
and the promissory note due and owing to Lyne Xxxxx Xxxxxx and a
line of credit with the Toronto-Dominion Bank, which line has not
been utilized as has been disclosed in writing to the Purchaser.
(19) Enforceability of Obligations-This Agreement constitutes a valid
and binding obligation of the Vendors and the Corporation
enforceable against both in accordance with its terms, provided
that enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar laws
generally affecting enforceability of creditors' rights and that
equitable remedies such as specific performance and injunction
are in the discretion of the court from which they are sought.
(20) Books and Records-The books and records of the Corporation fairly
and correctly set out and disclose in all material respects, in
accordance with GAAP, the financial position of the Corporation
as at the date of this Agreement and all material financial
transactions of the Corporation relating to the Business have
been accurately recorded in such books and records.
(21) Employment Contracts and Government Withholdings-Subject to
applicable statutory rights, the Corporation is not a party to any
written contracts of employment with any of its or any oral
contracts of employment which are not terminable on the giving of
reasonable notice and/or severance pay in accordance with
applicable law and no inducements to accept employment with the
Corporation were offered to any such employees which have the
effect of increasing the period of notice of termination to which
any such employee is entitled. The Corporation has deducted and
remitted to the relevant governmental authority or entity all
income taxes, unemployment insurance contributions, Canada Pension
Plan contributions, provincial employer health tax remittances
and any taxes or deductions or other amounts which it is required
by statute or contract to collect and remit to any governmental
authority or other entities entitled to receive payment of such
deduction.
(22) Employment Payments by the Corporation to Date of Closing-The
Corporation has paid to the date of this Agreement all amounts
payable on account of salary, bonus payments and commission to
or on behalf of any and all Employees;
(23) Workers' Compensation-All levies under the Workplace Safety and
Insurance Act, 1997 (Ontario), or under the workers' compensation
legislation of any other jurisdiction where the Corporation
carries on the Business, have been paid by the Corporation.
(24) Labour Matters-There is no:
(i) unfair labour practice complaint under The Ontario
Labour Relations Act against the Corporation pending
before provincial labour tribunals or any similar agency
or body having jurisdiction therefor;
(ii) labour strike threatened against or involving the
Corporation;
(iii) certification application outstanding respecting the
Employees;
(iv) grievance or arbitration proceeding or governmental
proceeding relating to the Employees pending, nor is
there any such proceeding threatened against the
Corporation which might have a material adverse effect
on the Corporation or on the conduct of the Business;
(v) collective bargaining agreement currently being
negotiated by the Corporation; and
(vi) Employee in receipt of or who has claimed benefits under
any weekly indemnity, long term disability or workers'
compensation plan or arrangement or any other form of
disability benefit programme, save and except as is set
out in Schedule I.
(25) Material Contracts-the Corporation is not a party to or bound
by any material contract or commitment relating to the Business
whether oral or written, save and except as disclosed in
Schedules "C", "E" and "F" hereto. All leases and licences to
which the Corporation is a party are set out and described in
Schedules "E" and "F" hereto and are in good standing and
subject only to the equities and claims as set out in the said
Schedules.
(26) Insurance- INTENTIONALLY DELETED
(27) Litigation-Except as provided in Schedule "H" there is no suit,
action, litigation, arbitration, proceeding, governmental
proceeding, including appeals and applications for review in
progress, pending or threatened against or involving the
Corporation, and there is not presently outstanding against
the Corporation any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency,
instrumentality or arbitrator.
(28) Accounts Receivable-All accounts receivable, bills receivable
and book debts and other debts due or accruing to the Corporation
are bona fide and good and subject to an allowance for doubtful
accounts taken in accordance with GAAP are collectible without
set-off or counterclaim.
(29) Inventories-The Inventories are in good and merchantable condition
and are usable or saleable in the ordinary course of business for
the purposes for which they are intended and are carried on the
books of the Corporation at the lower of cost and net realizable
value.
(30) Tax Matters-Except to the extent reflected in or reserved against
in the unaudited Financial Statements or the Effective Date
Financial Statements, to the best of the Vendor's and the
Indemnifiers' knowledge the Corporation is not liable for any
taxes, levies, duties, assessments, charges, penalties, interest,
fines or other imposts of any nature or kind due and unpaid at the
date hereof in respect of its income, business or property or for
the payment of any tax instalment due in respect of its current
taxation year and, except as aforesaid, no such taxes,
assessments, imposts, levies, charges, fines or penalties are
required to be reserved against. If any such reservation has been
made or taken, it is adequate to provide for taxes payable by the
Vendors for its current period for which tax returns are not yet
required to be filed. The Corporation is not in default in filing
any returns or reports covering any Canadian federal, provincial,
municipal or local taxes, levies, duties, assessments or other
reports in respect of its income, business or property. The
Corporation has filed all reports or returns with respect to
income, capital, sales (including goods and services and Ontario
employer health tax reports), excise, business and property taxes
and all other taxes and customs duties which are required to be
filed by it up to the date of this Agreement (and all such returns
and reports are correct and complete in all material respects)
and has paid, or where permitted by law, provided security for,
all taxes and duties as shown on such reports or returns to the
extent such taxes or duties are payable or have or may become
due and has paid, or where permitted by law, provided security
for, all assessments received by it. The Corporation has withheld
from any amounts payable, including without limiting the
generality of the foregoing, from any salaries, bonuses or
dividends paid by it all deductions required by law to be made
therefrom and has remitted the same to the proper tax or other
authorities. Federal Canadian income tax assessments have been
issued to the Corporation covering all past periods through the
fiscal year ended (and such assessments, if any amounts were owing
in respect thereof, have been paid or, where permitted by law,
security therefor has been provided.). There are no currently
outstanding reassessments, suits, actions, proceedings,
investigations, claims or questions which have been issued or
raised by an governmental authority relating to any such reports
or tax returns except for those provided in the Audited Financial
Statements or the Effective Date Financial Statements and the
Corporation does not have any negotiations or discussions in
progress with respect to any eventual assessment or reassessment
with any such authority. The Corporation has not executed or filed
with any taxing authority any waiver or agreement extending the
period for assessment or collection of any income or other taxes.
(31) Subsidiaries:
(i) The only Subsidiary of the Vendor is Island Corporation;
(ii) The authorized capital of Island Corporation consists of
200,100 common voting shares without par value, of which
200,100 are validly issued to the Vendor and are
outstanding as fully paid and non-assessable and are the
only outstanding shares of Island Corporation;
(iii) There is not any agreement or option existing pursuant to
which Island Corporation is or might be required to issue
any further shares of its capital;
(iv) Each of the representations and warranties contained in
this Article 4 is applicable, mutatis mutandis, to
Island Corporation Inc. and is given herein by both the
Vendor and by Island
5. Representations And Warranties Of The Purchaser
As part of the transaction contemplated by this Agreement, the Purchaser hereby
represents and warrants to the Vendor that:
(1) Corporate Status - The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has full power and authority to own its properties
and to carry on the business presently conducted by it.
(2) Corporate Authority - Prior to the Closing Date, the board of
directors of the Purchaser shall have duly authorized and approved
the execution and deliver of this Agreement and the performance of
the transactions provided for herein. No other corporate action is
required in connection herewith. Upon receipt of such board
approval, this Agreement shall constitute a legal and binding
obligation of the Purchaser and is enforceable against the
Purchaser in accordance with its terms, subject, however, to
limitations on enforcement imposed by laws affecting the rights
of creditors generally, including, without limitation, applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws and to the extent that equitable remedies, such as specific
performance and injunctions, are available in the discretion of
the court from which they are sought.
(3) Regulatory Approvals.- No governmental authorization, approval,
order, consent or filing is required to be obtained on the part of
the Purchaser in connection with the execution, delivery and
performance of this Agreement or any other documents and agreements
to be delivered hereunder or the performance of the obligations of
the Purchaser hereunder or thereunder.
(4) Bankruptcy - The Purchaser has not committed an act of bankruptcy,
is not insolvent, has not proposed a compromise or arrangement to
its creditors generally, has not had any petition for a receiving
order in bankruptcy filed against it, has not made a voluntary
assignment in bankruptcy, has not taken any proceeding with respect
to a compromise or arrangement, has not taken any proceeding to
have itself declared bankrupt or wound-up, has not taken any
proceeding to have a receiver appointed or any part of its assets,
has not had any encumbrancer take possession of any of its property
and has not had any execution or distress become enforceable or
become levied upon any of its property. The transaction
contemplated herein will not result in the Purchaser becoming
insolvent.
(5) Survival of Representations and Warranties - The representations
and warranties of the Purchaser contained herein shall survive the
Closing, and notwithstanding such Closing shall continue in full
force and effect for the benefit of the Vendors for a period
commencing on the Closing Date and ending on the second anniversary
of the Closing Date, after which time the Purchaser shall be
released from all obligations and liabilities hereunder in respect
of such representations and warranties, except with respect to any
claims made by the Vendors in writing prior to the expiration of
such period.
(6) No Other Representations and Warranties - Except for the
representations and warranties set out in this Article 5, the
Purchaser makes no representations and warranties of any kind.
6. Covenants of the Vendors
(1) The Vendors covenant and agree with the Purchaser that on or before
the Closing Date, they will do or will cause to be done the
following:
(2) Take all necessary steps and proceedings to permit all of the
Purchased Shares to be duly and regularly transferred to the
Purchaser.
(3) Xxxxxx Xxxxxx and Xxxxxx Xxxxxxxxx shall resign as directors and
officers of the Corporation and of Island in favour of nominees
of the Purchaser, such resignations to be effective as at the
Closing Date.
7. Closing
The obligation of the Purchaser to complete the transactions
contemplated by this Agreement shall be subject to the satisfaction
of, or compliance with, at or before the Closing Time, each of the
following conditions precedent (each of which is hereby acknowledged
to be inserted for the exclusive benefit of the Purchaser and may be
waived by it in whole or in part):
(a) Truth and Accuracy of Representations of the Vendors and Island at
the Closing Time - All of the representations and warranties of the
Vendorsand of Island made in or under this Agreement, shall be true
and correct in all material respects as at the Closing and with
the same effect as if made at and as of the Closing (except as such
representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted by this
Agreement) and the Purchaser shall have received a statutory
declaration from the Vendors confirming the truth and correctness
in all material respects of the representations and warranties of
the Vendors and of Island.
(b) Performance of Obligations - The Vendors shall have performed or
complied with, in all material respects, all their obligations,
covenants and agreements under this Agreement.
(c) Receipt of Closing Documentation - All instruments of conveyance
and other documentation and assurances relating to the sale and
purchase of the Shares including, without limitation, share
certificates (the "Closing Documents") and all actions and
proceedings taken on or prior to the Closing in connection with
performance by the Vendors of their obligations under this
Agreement shall be satisfactory to the Purchaser and its counsel,
acting reasonably, and the Purchaser shall have received copies of
all such documentation or other evidence as it may reasonably
request in order to establish the consummation of the transactions
contemplated under this Agreement and the taking of all corporate
proceedings in connection with those transactions in compliance
with this agreement, in form and substance satisfactory to the
Purchaser and its counsel.
(d) Closing Documentation - Without limiting the generality of the
foregoing, the Purchaser shall have received at or before the
Closing sufficient duly executed original copies of the following:
(i) certified copy of a resolution of the board of
directors of the Corporation approving this Agreement
and the transactions contemplated under this Agreement;
(ii) statutory declaration of the Vendors concerning
residence of the Vendors, and confirming that all
conditions under this Agreement in favour of the
Vendors have been either fulfilled or waived;
(iii) certificate of incumbency of the Corporation;
(iv) certificate of status of the Corporation;
(v) share certificates representing the Shares;
(vi) books and records of the Corporation;
(vii) Employment Agreements;
(viii) Non-competition Agreements in the form of
Schedule "G" hereto
(e) Opinion of Counsel for the Vendors and of Island - The Purchaser
shall have received an opinion dated the Closing Date from counsel
for the Vendors, and from counsel for Island Corporation,
confirming the matters warranted in subsections 4(2), (3), (4),
(5) (10), (13) - (21), and (27). with respect to matters of law
in those jurisdictions. In giving such opinion, counsel to the
Vendors may rely on certificates of the Vendors as to factual
matters.
(f) Consents to Assignment - All consents or approvals from or
notifications to any lessor or other third Person required under
the terms of any Equipment Leases, Leases or Licences with respect
to the acquisition of control of the Corporation by the Purchaser,
or otherwise in connection with the consummation of the
transactions contemplated under this Agreement, shall have been
duly obtained or given, as the case may be, on or before the
Closing Time.
The obligations of the Vendor to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on
or prior to the Closing Date, of each of the following conditions,
any or all of which the Vendor may waive.
(1) Representations and Warranties.
Each of the representations and warranties of the Purchaser set
forth in this Agreement shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date.
(2) Compliance with Agreement.
All of the terms, covenants and agreements set forth in this
Agreement to be complied with or performed by the Purchaser on or
before the Closing Date shall have been complied with or performed
by the Purchaser on or before the Closing Date.
(3) Receipt of Closing Documents.
All documents required to be delivered by the Purchaser pursuant to
this Agreement prior or at Closing shall have been delivered to the
Vendors prior to or at Closing.
(4) No Actions, Etc.
No action, suit, proceeding or investigation by or before any
court, administrative agency or other governmental authority
shall have been instituted or threatened, the effect of which
would restrain, prohibit or invalidate the transactions
contemplated by this Agreement.
(5) Termination By the Vendors.
In the event that any condition in Article 7 shall not have
been performed or fulfilled on or prior to Closing, the Vendors
may terminate this Agreement by notice in writing to the Purchaser
without prejudice to any other rights which the Vendors may have,
including those rights which may have accrued prior to the exercise
of the right of termination, and in such event, the Vendors shall
be released from their obligations hereunder; provided however
that the Vendors shall be entitled to waive compliance with any
of such conditions, obligations or covenants in whole or in part
if they see fit to do so without prejudice to any of their rights
of termination in the event of non-performance of any other
condition, obligation or covenant in whole or in part. The
termination of this Agreement pursuant to this Section 7 shall
not affect the liability of the Purchaser for the breach or
non-fulfillment of any provision of this Agreement.
At the Closing Time, upon fulfilment of all the conditions under this
Agreement which have not been waived in writing by the Purchaser or the
Vendors respectively:
(a) Purchase and Sale of Purchased Assets - The Vendors shall
sell and the Purchaser shall purchase the Shares for the
Purchase Price payable under this Agreement.
(b) Delivery of Closing Documents - The Parties shall
respectively deliver the Closing Documents.
(c) Actual Possession - The Vendors shall deliver actual
possession of the Shares to the Purchaser.
(d) Payment of Purchase Price - On the fulfilment of the
foregoing terms of this Article Six, the Purchaser shall
pay and satisfy the Purchase Price as provided in
Section 2.
8. Survival of Representations and Warranties
The representations and warranties of the Vendors, of Island and of the
Purchaser contained in this agreement and contained in any document or
certificate given pursuant hereto shall survive the closing of the
purchase and sale of the Purchased Shares herein provided for, for a
period of two years from the Closing Date.
9. Indemnification
(1) The Vendors and Island hereby jointly and severally indemnify and
save the Corporation, and the Purchaser harmless of and from any
cause or claim arising with respect to the Corporation or its
activities prior to the Closing Date. Vendors shall remain liable
to defend at their expense any such actions or claims that may
arise with respect to the Corporation or its activities, concerning
the time period prior to the Closing Date. Such indemnity is
conditional upon Purchaser not entering into any claim or action
in an adverse position to Vendors. The Purchaser hereby indemnifies
and saves the Vendor harmless of and from any cause or claim
arising with respect to the Corporation or its activities
subsequent to the Closing Date. Purchaser shall defend at its
expense any such actions or claims that may arise with respect
to the Corporation or its activities, concerning the time period
subsequent to the Closing Date. Such indemnity is conditional
upon Vendor not entering into any claim or action in an adverse
position to Purchaser.
(2) General Indemnity by the Purchaser - The Purchaser agrees to
indemnify and save harmless the Vendor from any against all Claims
which the Vendor may directly or indirectly suffer or incur as a
result of or in connection with any breach of, incorrectness or
misrepresentation in any representation or warranty made by the
Purchaser in this Agreement or in any other agreement or instrument
executed or delivered by the Purchaser pursuant to this Agreement;
any breach of or non-fulfilment of any covenant or agreement of
the Purchaser contained in this Agreement or any other agreement
or instrument executed and delivered by the Purchaser to this
Agreement; and any and all acts, suits, proceedings, demands,
assessments, judgments, legal fees, costs and expenses incidental
to any of the foregoing.
(3) General Indemnity by the Vendors and Island - The Vendors and
Island jointly and severally agree to indemnify and save harmless
the Purchaser from any against all Claims which the Purchaser may
directly or indirectly suffer or incur as a result of or in
connection with any breach of, incorrectness or misrepresentation
in any representation or warranty made by the Vendor and/or Island
in this Agreement or in any other agreement or instrument executed
or delivered by the Vendor and/or Island pursuant to this
Agreement; any breach of or non-fulfilment of any covenant or
agreement of the Vendors and/or Island contained in this Agreement
or any other agreement or instrument executed and delivered by the
Vendor and/orIsland to this Agreement; and any and all acts, suits,
proceedings, demands, assessments, judgments, legal fees, costs and
expenses incidental to any of the foregoing.
(4) Adjustment for Tax Effect - To the extent that a party (the
"Indemnifying Party") becomes liable to pay any amount for which
any other person (the "Indemnified Party") can claim
indemnification hereunder, and such expense is deductible by the
Indemnified Party for income tax purposes, the Indemnifying Party
shall, notwithstanding any other provision hereof, be obligated to
pay to the Indemnified Party only the loss which the Indemnified
Party actually suffered after having regard to the effect of such
tax deductions.
(5) Indemnification Procedure -
(a) In the event that any claim shall be asserted by any party
which, if sustained, would result in a right of a party to
indemnification hereunder (a "Loss") the person entitled to
indemnification hereunder (the "Indemnitee"), within a
reasonable time after learning of such claim, shall notify
the person obligated to provide indemnification hereunder
with respect to such claims (the "Indemnitor") and shall
extend to the Indemnitor a reasonable opportunity to defend
against such claim, at the Indemnitor's sole expense and
through legal counsel reasonably acceptable to the
Indemnitee, provided that the Indemnitor proceeds in good
faith, expeditiously and diligently. No determination
shall be made pursuant to subsection (b) below while such
defense is being made until the earlier of (i) the
resolution of said claim by the Indemnitor with the
claimant or (ii) the termination of the defense by the
Indemnitor against such claim or the failure of the
Indemnitor to prosecute such defense in good faith and
in an expeditious and diligent manner. The Indemnitee
shall be entitled to rely upon the reasonable opinion of
its counsel as to the occurrence of either of said events.
The Indemnitee shall, at its option and expense, have the
right to participate in any defense undertaken by the
Indemnitor with legal counsel of its own selection. No
settlement or compromise of any claim which may result
in a Loss may be made by the Indemnitor without the prior
written consent of the Indemnitee unless (i) prior to such
settlement or compromise the Indemnitor acknowledges in
writing its obligation to pay in full the amount of the
settlement or compromise and all associated expenses and
(ii) the Indemnitee is furnished with security reasonably
satisfactory to the Indemnitee that the Indemnitor will
in fact pay such amount and expenses.
(b) In the event that an Indemnitee asserts the existence of
any Loss, the Indemnitee shall give written notice to the
Indemnitor of the nature and amount of the Loss asserted.
If the Indemnitor, within a period of fifteen (15) days
after the giving of the Indemnitee's notice, shall not
give written notice to the Indemnitee announcing its
intention to contest such assertion of the Indemnitee
(such notice by the Indemnitor being hereinafter called
the "contest notice"), such assertion of the Indemnitee
shall be deemed accepted and the amount of the Loss shall
be deemed established. In the event, however, that a
contest notice is given to the Indemnitee within said
fifteen (15) day period, then the contested assertion of
a Loss shall be settled by arbitration in accordance
with Sectionhereof. The determination of the
arbitrator(s) shall be delivered in writing to the
Indemnitor and the Indemnitee and shall be final,
binding and conclusive upon all of the parties hereto,
and the amount of the Loss, if any, determined to exist,
shall be deemed established. Notwithstanding anything
herein contained to the contrary, each party shall pay
its own legal fees, costs and expenses incident to any
arbitration proceeding brought under this subsection 9(5).
(6) The Indemnitee and the Indemnitor may agree in writing, at any
time, as to the existence and amount of a Loss, and upon the
execution of such agreement, such Loss shall be deemed
established.
(7) Payments of any Loss shall be paid to the person entitled thereto
within ten (10) business days following the establishment of the
Loss.
10. Notices
Any notice, direction or other instrument required or permitted to be
given to the Vendors hereunder shall be in writing and may be given by
mailing the same postage prepaid or delivering the same addressed to
the Vendors at:
Any notice, direction or other instrument required or permitted to be
given to the Purchaser or the Corporation hereunder shall be in writing
and may be given by mailing the same postage prepaid or delivering the
same addressed to the Purchaser or the Corporation at:
Any notice, direction or other instrument aforesaid if delivered, shall
be deemed to have been given or made on the date on which it was
delivered or if mailed, shall be deemed to have been given or made on
the fifth business day following the day on which it was mailed.
11. Costs
(1) The parties hereto agree that there are no broker's or finder's
fees due or payable with respect to this transaction.
(2) Each of the parties hereto shall pay its own legal, accounting and
other costs and expenses associated with this transaction and this
agreement.
(3) The Purchaser shall be responsible for all expenses and costs in
connection with the Corporation from and after the Closing Date,
and to legal actions and claims as set forth in section hereof,
for which the Vendors have assumed liability hereunder.
12. Public Annoucements
Except as required by law or any applicable stock exchange, no
disclosure, including disclosure to employees generally, or public
announcement with respect to this Agreement or any of the transactions
contemplated hereby shall be made by any party without the prior
written consent of the parties hereto.
13. Waiver
Any of the terms or conditions of this Agreement may be waived at any
time by the party entitled to the benefit thereof, but only by written
signed by the party waiving such terms or conditions.
14. Arbitration
If any dispute or question shall arise between the parties out of this
Agreement (a "Dispute"), the parties shall attempt, in good faith, to
resolve the dispute. If the parties have not agreed to a settlement of
the Dispute within thirty (30) days from the date on which the Dispute
first became known to the parties, and this Agreement does not contain a
specific dispute resolution mechanism for the Dispute in question, then
the parties agree that the Dispute shall be submitted to arbitration
pursuant to the Arbitration Act, 1991 (Ontario). Such Dispute shall
not be made the subject matter of any action in any court by any party
unless the Dispute has been first submitted to arbitration and finally
determined by the arbitrator(s). In any such action, the decision of
the arbitrator shall conclusively determine the rights and liabilities
as between the parties to the arbitration in respect of the matter in
dispute
15. Entire Agreement
This agreement constitutes the entire agreement between the parties
hereto. There are not and shall not be any verbal statements,
representations, warranties, undertakings or agreements between the
parties hereto and this agreement may not be amended or modified in
any respect except by written instrument signed by the parties hereto.
16. Proper Law of Contract
This agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the
Province of Ontario.. Each of the parties hereto hereby irrevocably
submits and attorns to the jurisdiction of the courts of the Province
of Ontario..
17. Benefit and Binding Nature of the Agreement
This agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF this agreement has been executed by the parties
hereto on the date first above written.
2FILM TECHNOLOGIES INC.
per: /s/XXXXXX XXXXXXXXX
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XXXXXX XXXXXXXXX
ON THE GO HEALTHCARE, INC.
per: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
ISLAND CORPORATION
per: /s/ XXXXXX XXXXXX
--------------------------
XXXXXX XXXXXX
/s/ XXXXXX XXXXXX
--------------------------
XXXXXX XXXXXX
/s/XXXXXX XXXXXXXXX
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XXXXXX XXXXXXXXX
