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EXHIBIT 2.2
TRANSFER AND ASSUMPTION AGREEMENT
TD SECURITIES INC.
(AS TDSI TRANSFEROR)
- AND -
TD WATERHOUSE INVESTOR SERVICES (CANADA), INC.
(AS TRANSFEREE)
DATED JUNE o, 1999
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION..................................................... 2
1.1 Definitions............................................. 2
1.2 Article, Section and Schedule References................ 7
1.3 Interpretation Not Affected by Headings................. 7
1.4 Included Words.......................................... 7
1.5 Schedules............................................... 7
ARTICLE 2 PURCHASE AND SALE.................................................. 7
2.1 Transfer................................................ 7
2.2 Assumption of Assumed Liabilities, Etc.................. 8
2.3 Purchase Price.......................................... 8
2.4 Allocation of the TDSI Purchase Consideration........... 8
2.5 GST..................................................... 8
2.6 Bulk Sales Act Legislation.............................. 9
ARTICLE 3 TRANSFERS.......................................................... 9
3.1 Specific Conveyances and Specific Assumptions........... 9
ARTICLE 4 TAXES.............................................................. 9
4.1 Section 85.............................................. 9
4.2 Accounts Receivable..................................... 9
4.3 Unearned Amounts........................................10
4.4 Transfer Taxes..........................................10
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.....................................10
5.1 Representations and Warranties of TDSI Transferor.......10
5.2 Representations and Warranties of the Transferee........11
5.3 Limitation..............................................11
5.4 Survival of Representations, Warranties and Covenants...12
ARTICLE 6 INDEMNITIES........................................................12
6.1 General Indemnity of Transferee.........................12
6.2 General Indemnity of TDSI Transferor....................12
6.3 Conduct of Third Party Claims...........................13
ARTICLE 7 CERTAIN RIGHTS AND OBLIGATIONS.....................................13
7.1 Third Party Consents....................................13
7.2 Absence of Consent......................................14
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7.3 Commitments.............................................14
7.4 Letters to Suppliers....................................16
7.5 Release of the Assurances...............................16
7.6 Employees and Independent Contractors...................16
7.7 Amounts Received in Respect of the TDSI Assets..........17
7.8 Transfer of Legal Title.................................17
ARTICLE 8 GENERAL............................................................18
8.1 Further Assurances......................................18
8.2 No Merger...............................................18
8.3 Entire Agreement........................................18
8.4 Governing Law...........................................18
8.5 Assignment, Enurement, Etc..............................18
8.6 Time of Essence.........................................19
8.7 Notices.................................................19
8.8 Invalidity of Provisions................................20
8.9 Waiver..................................................20
8.10 Remedies Generally......................................20
8.11 Amendment...............................................21
8.12 Counterpart Execution...................................21
8.13 Access to Books, Records and Personnel..................21
8.14 Agency For Indemnities..................................21
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TRANSFER AND ASSUMPTION AGREEMENT
THIS AGREEMENT made effective as of o day of June, 1999,
BETWEEN:
TD SECURITIES INC., a corporation
incorporated under the laws of Ontario
(hereinafter referred to as "TDSI Transferor")
OF THE FIRST PART,
- and -
TD WATERHOUSE INVESTOR SERVICES (CANADA), INC.,
a corporation incorporated under the laws of
Ontario (hereinafter referred to as the "Transferee")
OF THE SECOND PART.
WHEREAS TDSI Transferor wishes to transfer the Transferred Business and the
Transferee wishes to acquire the Transferred Business, subject to and in
accordance with the terms and conditions hereof;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises,
the mutual covenants and agreements hereinafter set forth and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties have agreed as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Schedules, unless the
context otherwise requires:
(a) "ACCOUNTS PAYABLE" mean the payables owing at the Effective
Time by TDSI Transferor to creditors for the purposes of, or in
connection with, the Transferred Business (including the trade
payables, other payables, accrued expenses and arrears);
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(b) "ACCOUNTS RECEIVABLE" mean the receivables owing at the
Effective Time by debtors of TDSI Transferor for the purposes of, or
in connection with, the Transferred Business (including trade
receivables, other receivables, accrued income, and prepayments);
(c) "ASSURANCE" means any warranty, representation, statement,
assurance, comfort letter, covenant, agreement, undertaking,
indemnity, guarantee or commitment of any nature whatsoever;
(d) "BALANCE SHEET ASSETS" mean all assets which are owned, used
or held, by TDSI Transferor which exclusively relate to the
Transferred Business but which as of the Effective Time are carried
in TDSI Transferor's accounting or financial books or records at a
value greater than "nil" and which are not carried on the accounting
or financial books or records of the Transferred Business;
(e) "BOOKS AND RECORDS" mean all books and records of TDSI
Transferor containing Transferred Business Information or other
media on which any such information is recorded, including all forms
of computer or machine readable material but excluding all books and
records relating to Excluded Assets or Excluded Liabilities;
(f) "BUSINESS DAY" means any day which is not a Saturday, Sunday
or statutory holiday in Toronto, Ontario;
(g) "COMMITMENTS" mean contracts, arrangements, indentures,
mortgages, licence agreements, commitments and engagements,
including the master services agreement dated January 1, 1996
between the TDSI Transferor and The Toronto-Dominion Bank to the
extent that such agreement relates to the Transferred Business, any
quotation, order or tender for any of the foregoing which remains
open for acceptance and any manufacturers' or suppliers' warranty,
guarantee or commitment (express or implied);
(h) "DIRECTION AND ESCROW AGREEMENT REGARDING THE 1999 GREEN LINE
REORGANIZATION" means the agreement entered into among The
Toronto-Dominion Bank, TD Waterhouse Group, Inc., TDSI Transferor
and the Transferee, dated the date hereof setting out with respect
to the transactions contemplated therein, the list of documents to
be exchanged, the parties to whom such documents are to be
delivered, the participants in the closing and the terms of escrow
and release of escrow, including the times at which the various
deliveries of documents are made and the transactions contemplated
thereby become effective;
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(i) "EFFECTIVE TIME" means 00:01 a.m. on the first day of the
month in which the IPO Closing Date occurs;
(j) "ELIGIBLE PROPERTY" means eligible property within the
meaning of subsection 85(1.1) of the Tax Act or its applicable
provincial counterpart, in respect of which an election has been or
will be made as provided in Section 4.1 of this Agreement;
(k) "EMPLOYEES" mean those persons whose names are set out in
Schedule "A" hereto;
(l) "EMPLOYEE TRANSFER DATE" means the date designated by notice
given by TDSI Transferor to the Transferee as the date for the
transfer of the Employees to the Transferee; provided that the date
so designated shall be on the same day as or after the Effective
Time and prior to the first anniversary of the Effective Time;
(m) "ENCUMBRANCES" mean liens, charges, security interests,
rights of others or other encumbrances;
(n) "EXCLUDED ASSETS" mean: (i) amounts recoverable in respect of Taxes
relating to the Transferred Business arising or relating to a period
of time ending prior to the Effective Time, (ii) the rights of TDSI
Transferor under the Reorganization Agreements, (iii) the Balance
Sheet Assets, (iv) all stock exchange seats other than one seat on
the Winnipeg Stock Exchange, and (v) the rights and benefits of TDSI
Transferor under the master service agreement between The
Toronto-Dominion Bank and TDSI Transferor dated as of January 1, 1996
to the extent that they do not relate to the Transferred Business;
(o) "EXCLUDED LIABILITIES" mean: (i) all Taxes relating to the
Transferred Business arising or relating to a period of time ending
prior to the Effective Time, (ii) the obligations of TDSI Transferor
under the Reorganization Agreements, and (iii) the obligations of
TDSI Transferor under the master service agreement between The
Toronto-Dominion Bank and TDSI Transferor dated as of January 1,
1996 to the extent that they do not relate to the Transferred
Business;
(p) "INDEPENDENT CONTRACTORS" mean those Persons whose names are
set out in Schedule "B" hereto;
(q) "INTELLECTUAL PROPERTY RIGHTS" mean patents, trade marks,
service marks, trade names, business names, rights in design,
copyright (including rights in computer software and moral rights),
database rights, rights in domain names and all other intellectual
property rights, in each case whether registered or
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unregistered and including applications for the grant of any of the
foregoing rights, and all rights or forms of protection having
equivalent or similar effect to any of the foregoing but excluding
Transferred Business Information;
(r) "IPO CLOSING DATE" means the date of the initial offering to
the public of common shares in the capital stock of TD Waterhouse
Group, Inc.;
(s) "LOSSES AND LIABILITIES" mean, in relation to a Person,
claims, demands, causes of action, liabilities, losses, costs,
damages and expenses which such Person suffers, sustains, pays or
incurs including legal fees on a "solicitor and his own client"
basis;
(t) "MASTER SERVICES AGREEMENT" means the master services
agreement between The Toronto-Dominion Bank and TD Waterhouse Group,
Inc. dated o , 1999 as such may be amended, restated or supplemented
from time to time;
(u) "MATERIAL CONSENT" means a regulatory approval or consent
which if not obtained would preclude the Transferee from carrying on
the business of a dealer in any Province or Territory of Canada;
(v) "PARTIES" mean the parties to this Agreement and "PARTY"
means any one of them;
(w) "PERSON" shall include any individual, heir, executor,
administrator or other legal representative of an individual, firm,
company, corporation, other body corporate, association,
unincorporated organization, partnership, trust, government and
governmental or regulatory department or agency (whether or not
having separate legal personality);
(x) "RELEASE TIME" means the time of the release of this
Agreement from the escrow constituted by the Direction and Escrow
Agreement Regarding the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ (as specified
in the Direction and Escrow Agreement Regarding the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇);
(y) "REORGANIZATION AGREEMENTS" mean this Agreement and all other
agreements, Specific Conveyances or Specific Assumptions to be
entered into pursuant to this Agreement;
(z) "SALES TAXES" includes all federal, provincial, and other
sales, goods and services, value added, use or other transfer taxes,
and all other taxes whatsoever, including, without limitation, any
goods and services tax and harmonized sales tax payable under the
Excise Tax Act (Canada), and tax
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payable under An Act Respecting Quebec Sales Tax and any retail
sales tax imposed by any Province in Canada;
(aa) "SPECIFIC ASSUMPTIONS" mean all assumption instruments,
novations and other documents or instruments that are reasonably
required to effectively cause the Transferee to assume the TDSI
Assumed Liabilities, to make the Transferee, in the place and stead
of the TDSI Transferor, liable to satisfy the TDSI Assumed
Liabilities to the Third Parties to whom they are owed, and to
effect a release of the TDSI Transferor from the TDSI Assumed
Liabilities;
(bb) "SPECIFIC CONVEYANCES" mean all conveyances, assignments,
transfers, novations and other documents or instruments that are
reasonably required to convey, assign and transfer the TDSI Assets
to the Transferee;
(cc) "TAX" means: (a) taxes on income, profit or gains and (b) all
other taxes, levies, duties, imposts, charges and withholdings of
any nature, including any Sales Taxes, any excise, property,
capital, franchise and payroll taxes and any national or provincial
insurance or social security contributions, together with all
penalties, charges and interest relating to any of the foregoing or
to any late or incorrect return in respect of any of them,
regardless of whether such taxes, levies, duties, imposts, charges,
withholdings, penalties and interest are chargeable directly or
primarily against or attributable directly or primarily to the
Transferred Business or any other Persons and of whether any amount
in respect of them is recoverable from any other Person;
(dd) "TAX ACT" means the Income Tax Act (Canada) 1985 R.S.C. (5th
Supp.), c.1, as amended;
(ee) "TDSI ASSETS" mean all of the assets, properties and
undertakings owned, used or held by TDSI Transferor which
exclusively relate to the Transferred Business, including but not
limited to, to the extent they are owned, used or held by TDSI
Transferor and exclusively relate to the Transferred Business, the
Transferred Business Goodwill, the Transferred Business Information,
the Transferred Business IPR, Tangible Assets, Books and Records,
the Accounts Receivable, cash and cash equivalents and the benefits
of Commitments (including the rights and benefits of the TDSI
Transferor under the master service agreement dated January 1, 1996
between The Toronto-Dominion Bank and TDSI Transferor), but
excluding the Excluded Assets;
(ff) "TDSI ASSUMED LIABILITIES" mean all liabilities and
obligations of TDSI Transferor relating to or in respect of the
Transferred Business, whether direct or indirect, existing or
contingent, accrued on or prior to, or accruing subsequent to, the
Effective Time, including but not limited to liabilities relating to
or incurred in connection with the TDSI Assets or the use thereof,
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Assurances, Commitments (including all payment obligations
thereunder), Accounts Payable, causes of action, claims and
lawsuits presently or hereafter in existence whether known or
unknown which relate to or are in respect of the Transferred
Business (including without limitation causes of action, claims and
lawsuits made by Employees) but excluding the Excluded Liabilities;
(gg) "TDSI EXCHANGEABLE SHARES" mean o exchangeable preferred
shares of the Transferee having the share conditions set forth in
Schedule "C" hereto;
(hh) "TDSI PROMISSORY NOTE" means the promissory note in the
principal amount of $o made and delivered by the Transferee in
favour of TDSI Transferor;
(ii) "TDSI PURCHASE CONSIDERATION" has the meaning ascribed
thereto in Section 2.3;
(jj) "TDSI PURCHASE PRICE" has the meaning ascribed thereto in
Section 2.3;
(kk) "THIRD PARTY" means any Person other than a Party;
(ll) "THIS AGREEMENT", "HEREIN", "HERETO", "HEREOF" and similar
expressions refer to this Transfer and Assumption Agreement as
amended from time to time; and
(mm) "TRANSFEREE INDEMNIFIED PARTIES" has the meaning ascribed
thereto in Section 6.2 hereof;
(nn) "TRANSFEROR INDEMNIFIED PARTIES" has the meaning ascribed
thereto in section 6.1 hereof;
(oo) "TRANSFERRED BUSINESS" means the Canadian discount brokerage
business presently or heretofore carried on by TDSI Transferor
through its division known as "Green Line Investor Services" and
(ii) the Canadian brokerage clearing business presently and/or
heretofore carried on by TDSI Transferor;
(pp) "TRANSFERRED BUSINESS GOODWILL" means the goodwill of TDSI
Transferor in relation to the Transferred Business, together with
the right of the Transferee to represent itself as carrying on the
Transferred Business in succession to TDSI Transferor;
(qq) "TRANSFERRED BUSINESS INFORMATION" means all information that
is used exclusively in the Transferred Business and is owned or the
rights in which are owned by TDSI Transferor; and
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(rr) "TRANSFERRED BUSINESS IPR" means all Intellectual Property
Rights owned by or on behalf of TDSI Transferor which is used
exclusively in the Transferred Business.
1.2 ARTICLE, SECTION AND SCHEDULE REFERENCES
Except as otherwise expressly provided, a reference in this Agreement to
an "Article", "section", "subsection", "paragraph" or "Schedule" is a
reference to an article, section, subsection, paragraph or schedule of or
to this Agreement.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS
The headings in this Agreement are for convenience only and shall not
affect the construction or interpretation of this Agreement.
1.4 INCLUDED WORDS
When the context reasonably permits, words suggesting the singular shall
be construed as suggesting the plural and vice versa, and words
suggesting one gender shall be construed as suggesting other genders.
1.5 SCHEDULES
The following Schedules are attached to and form a part of this Agreement:
Schedule "A" - List of Employees;
Schedule "B" - List of Independent Contractors; and
Schedule "C" - Share Conditions of Transferee's Exchangeable Shares.
ARTICLE 2
PURCHASE AND SALE
2.1 TRANSFER
As of the Effective Time, TDSI Transferor hereby transfers, assigns,
sells and conveys all of its right, title and interest in and to the TDSI
Assets to the Transferee and the Transferee hereby purchases and accepts
from TDSI Transferor all of TDSI Transferor's right, title and interest
in and to the TDSI Assets subject to and in accordance with this
Agreement including Section 7.8. The Transferee acknowledges that the
TDSI Assets may be subject to Encumbrances and it accepts the TDSI Assets
in the condition in which they exist at the Effective Time.
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2.2 ASSUMPTION OF ASSUMED LIABILITIES, ETC.
The Transferee hereby assumes, and agrees to duly and fully perform,
satisfy, pay and discharge the TDSI Assumed Liabilities.
2.3 PURCHASE PRICE
The purchase price for the TDSI Assets shall be equal to the aggregate
fair market value of the TDSI Assets (such price being herein referred to
as the "TDSI Purchase Price"). TDSI Transferor hereby acknowledges the
receipt from the Transferee, and the sufficiency of, the consideration
for the TDSI Assets (the "TDSI Purchase Consideration") being the TDSI
Exchangeable Shares, the assumption of the TDSI Assumed Liabilities and
the TDSI Promissory Note.
2.4 ALLOCATION OF THE TDSI PURCHASE CONSIDERATION
(a) The TDSI Purchase Price shall be allocated among each of the
TDSI Assets as to an amount equal to the fair market value of each
of the TDSI Assets.
(b) The TDSI Assumed Liabilities and the TDSI Promissory Note
shall be allocated as follows:
(i) to each of the TDSI Assets which is an Eligible
Property, to the extent of the amount agreed to by the TDSI
Transferor and the Transferee in their joint election under
subsection 85(1) of the Tax Act, in respect of the transfer of
the particular property; and
(ii) to each of the TDSI Assets which is not an
Eligible Property, pro rata based on the fair market value of
each such property but in no event shall the amount so
allocated to a particular property exceed the fair market
value of the property.
(c) The TDSI Exchangeable Shares shall be allocated to each of
the TDSI Assets to the extent that the fair market value of the
particular property exceeds the principal amount of the liabilities
allocated to the particular property as set out in Section 2.4(b)
above.
2.5 GST
(a) The TDSI Purchase Price does not include any Sales Taxes,
which are or may become exigible in connection with the transfer of
the TDSI Assets.
(b) The Transferee shall pay to the TDSI Transferor any
applicable goods and services tax or harmonized sales tax payable
under the Excise Tax Act
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(Canada) and any applicable tax payable under An Act Respecting
Quebec Sales Tax in connection with the transfer of the TDSI
Assets.
2.6 BULK SALES ACT LEGISLATION
The Parties hereto waive compliance with any and all applicable bulk
sales legislation.
ARTICLE 3
TRANSFERS
3.1 SPECIFIC CONVEYANCES AND SPECIFIC ASSUMPTIONS
The Transferee shall bear all costs incurred in preparing and entering
into and, if necessary, registering any Specific Conveyances or Specific
Assumptions and registering any further assurances required pursuant to
this Agreement. The Transferee shall register all such Specific
Conveyances and Specific Assumptions promptly.
ARTICLE 4
TAXES
4.1 SECTION 85
TDSI Transferor and the Transferee will jointly elect under subsection
85(1) of the Tax Act and under any similar provincial legislation, in
prescribed form and within the time provided, with respect to the
transfer of each of the TDSI Assets which is an eligible property within
the meaning of subsection 85(1.1) of the Tax Act and in respect of which
TDSI Transferor designates, and the agreed amount for purposes of
paragraph 85(1)(a) of the Tax Act and any similar provincial legislation
in respect of each such property will be the amount as determined by TDSI
Transferor.
4.2 ACCOUNTS RECEIVABLE
At the option of TDSI Transferor, the Transferee will jointly elect with
TDSI Transferor under section 22 of the Tax Act and any similar
provincial tax legislation, in prescribed form and within the time
provided, with respect to the transfer of Accounts Receivable by the TDSI
Transferor and will designate therein the applicable portion of the TDSI
Purchase Price as the consideration paid by the Transferee therefor and
will each file an election with Revenue Canada and the relevant
provincial tax authority forthwith after the Effective Time.
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4.3 UNEARNED AMOUNTS
TDSI Transferor agrees with the Transferee that TDSI Transferor is
transferring assets with a fair market value equal to the amount of TDSI
Transferor's obligations in respect of undertakings which arise from the
operations of the Transferred Business and to which paragraph 12(1)(a) of
the Tax Act applies and, in respect of such transfer by TDSI Transferor
to the Transferee at TDSI Transferor's option, the Transferee will
jointly elect with TDSI Transferor under subsection 20(24) of the Tax
Act, and any similar provision of any provincial legislation, to have the
rules in subsection 20(24) apply.
4.4 TRANSFER TAXES
All Sales Taxes that may be imposed or assessed solely in connection with
the transfer of TDSI Assets shall, subject to Section 2.5(b) hereof, be
paid by the Transferee directly to the relevant governmental authority.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF TDSI TRANSFEROR
TDSI Transferor represents and warrants to the Transferee that:
(a) TDSI Transferor Standing: TDSI Transferor is a corporation,
duly organized and validly existing under the laws of Ontario, and
now has all the requisite corporate power and authority to perform
its obligations in accordance with this Agreement;
(b) No Conflicts: the consummation of the transactions
contemplated herein will not violate, nor be in conflict with, any
of the constating documents, by-laws or governing documents of TDSI
Transferor;
(c) Execution of Documents: this Agreement has been duly executed
and delivered by TDSI Transferor and all other documents (including
the Specific Conveyances) executed and delivered by TDSI Transferor
pursuant hereto will be duly executed and delivered by TDSI
Transferor, and this Agreement does, and such documents will,
constitute legal, valid and binding obligations of the TDSI
Transferor, enforceable in accordance with their respective terms;
(d) Encumbrances: to the best of its knowledge, immediately after
the transfer provided for in Section 2.1, any Encumbrances
applicable to the TDSI Assets will not in any material way prevent
the Transferee from carrying on the
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Transferred Business in the manner in which it was conducted
immediately prior to such time. Furthermore, TDSI Transferor has
not created or permitted the creation of any Encumbrance on the
TDSI Assets, except in connection with the conduct of the
Transferred Business;
(e) Residency: TDSI Transferor is not a non-resident of Canada
within the meaning of the provisions of the Tax Act; and
(f) Registration Numbers: TDSI Transferor is registered under the
Excise Tax Act (Canada) and An Act Respecting Quebec Sales Tax and
its respective registration numbers are 89865749 and 1018634925.
5.2 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE
The Transferee represents and warrants TDSI Transferor, that:
(a) Standing: the Transferee is a taxable Canadian corporation as
defined in subsection 89(1) of the Tax Act, duly organized and
validly existing under the laws of Ontario and now has the
requisite corporate power and authority to perform its obligations
in accordance with this Agreement;
(b) No Conflicts: the consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict
with, the constating documents, by-laws or governing documents of
the Transferee;
(c) Execution of Documents: this Agreement has been duly executed
and delivered by the Transferee and all other documents (including
the Specific Conveyances) executed and delivered by the Transferee
pursuant hereto will be duly executed and delivered by the
Transferee, and this Agreement does, and such documents will,
constitute legal, valid and binding obligations of the Transferee
enforceable in accordance with their respective terms; and
(d) Exchangeable Shares: the TDSI Exchangeable Shares are validly
created, allotted and issued as fully-paid and non-assessable
shares, are registered in the name of TDSI Transferor, except for o
, are the only issued and outstanding shares of the Transferee and
are free and clear of any Encumbrance.
5.3 LIMITATION
No claim under this Article 5 shall be made or be enforceable by the TDSI
Transferor or by the Transferee, unless written notice of such claim,
with reasonable particulars, is given by such Party to the Party against
whom the claim is made.
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5.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties set forth in Sections 5.1 and 5.2
shall survive the completion of the Transfer of the TDSI Assets herein
provided for and, notwithstanding such completion, shall continue in full
force and effect for a period of three (3) years from the Release Time.
(b) The covenants and indemnities of a Party set forth in this Agreement
shall survive the transfer of the TDSI Assets herein provided for and,
notwithstanding such completion, shall continue in full force and effect
in accordance with the terms thereof.
ARTICLE 6
INDEMNITIES
6.1 GENERAL INDEMNITY OF TRANSFEREE
The Transferee covenants and agrees with TDSI Transferor to indemnify and
save harmless TDSI Transferor, its directors, officers, agents, employees
and their respective executors, heirs, administrators, successors and
permitted assigns (collectively the "Transferor Indemnified Parties")
from and against all Losses and Liabilities that any of the Transferor
Indemnified Parties may suffer or incur directly or indirectly as a
result of, or in connection with: (a) the TDSI Assumed Liabilities, (b)
the use of any Transferred Business IPR in the Transferred Business,
whether before or after the Effective Time, (c) the operation of the
Transferred Business from and after the Effective Time, (d) any breach of
the Transferee's representations and warranties and covenants set out
herein, (e) Sales Taxes payable in connection with the transfer of the
TDSI Assets, or (f) any misstatement or omission relating to the
Transferred Business in the prospectus of TD Waterhouse Group, Inc. dated
o , 1999.
6.2 GENERAL INDEMNITY OF TDSI TRANSFEROR
TDSI Transferor covenants and agrees with the Transferee to indemnify and
save harmless the Transferee, its directors, officers, agents, employees
and their respective executors, heirs, administrators, successors and
permitted assigns (collectively the "Transferee Indemnified Parties")
from and against all Losses and Liabilities that any of the Transferee
Indemnified Parties may suffer or incur directly or indirectly as a
result of, or in connection with:
(a) the operation by TDSI Transferor of any business or
operations other than the Transferred Business, whether before or
after the Effective Time; or
(b) any breach of TDSI Transferor's representations warranties
and covenants set out herein.
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6.3 CONDUCT OF THIRD PARTY CLAIMS
(a) Unless otherwise notified by the beneficiary of an indemnity
herein granted (an "Indemnified") in connection with any claim,
demand or cause of action of, or asserted by a Third Party in
respect of which a Party has given an indemnity under this Agreement
(the "Indemnifier"), the Indemnifier shall take control of the
defence or settlement of such claim, demand or cause of action;
provided that the Indemnifier may not settle or make any admission
of liability without having first obtained the Indemnified's written
consent, which consent shall not be unreasonably withheld.
(b) An Indemnifier shall not be entitled to exercise and hereby
waives any rights or remedies the Indemnifier may now or in the
future have against an Indemnified in respect of matters in respect
of which it has indemnified the Indemnified, whether such rights and
remedies are pursuant to the common law or statute or otherwise,
including without limitation, the right to name the Indemnified as a
third party to any action commenced by any Third Party against the
Indemnifier.
ARTICLE 7
CERTAIN RIGHTS AND OBLIGATIONS
7.1 THIRD PARTY CONSENTS
The Transferee acknowledges and agrees that it has been responsible for
ascertaining and obtaining prior to the Release Time all licenses,
permits, consents and giving all notices necessary to permit the
effective transfer of the TDSI Assets from TDSI Transferor to the
Transferee, to ensure that no Commitments or Assurances relating to the
Transferred Business are breached and that the Transferee may operate the
Transferred Business. In the event that it has failed to do so, the
Transferee shall promptly use its commercially reasonable efforts to do
so. The Transferee hereby indemnifies and saves harmless the Transferor
Indemnified Parties from and against all Losses and Liabilities that any
of the Transferor Indemnified Parties may suffer as a result of, or in
connection with, its failure to have obtained such licences, permits,
consents and given such notices prior to the Release Time. After the
Release Time, TDSI Transferor shall provide reasonable co-operation and
assistance to the Transferee to obtain any outstanding licences, permits
and consents. Each of the TDSI Transferor and the Transferee shall be
responsible for their internal and professional costs in carrying out
their respective obligations under this section. The Transferee shall be
liable for and shall pay all fees, charges, costs and expenses levied by
a Person in granting, or as a condition to grant a license, permit or its
consent or including assignment fees.
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7.2 ABSENCE OF CONSENT
(a) Where any consent or agreement of any Third Party is required to the
transfer of any of the TDSI Assets (other than in relation to the
transfer of any Commitment (which is dealt with in Section 7.3)),
and such consent or agreement has not been obtained at or before the
Release Time, the transfer of the relevant asset shall not take
effect, until that consent or agreement has been obtained.
(b) After the Release Time, and until such time as any consent
or agreement referred to in Section 7.2 (a) is obtained, TDSI
Transferor shall be deemed to hold the benefit of such asset for
the Transferee.
7.3 COMMITMENTS
(a) Where any consent or agreement of any Third Party is required to
enable the Transferee to enjoy or perform any Commitment or to
enable TDSI Transferor to transfer the benefit or burden of any
Commitment to the Transferee, then the following provisions shall
apply:
(i) this Agreement shall not constitute an assignment or an
attempted assignment of the relevant Commitment if, or to
the extent that, such an assignment or attempted assignment
would constitute a breach of such Commitment;
(ii) the Parties shall use all reasonable efforts to obtain the
consent or agreement of the Third Party to whatever
assignment, transfer or novation is necessary to enable the
Transferee to perform such Commitment after the Effective
Date or as the case may be to transfer the benefit and
burden of such Commitment to the Transferee;
(iii) until the consent or agreement referred to in Section 7.3(a)
is obtained, the Transferee shall, unless the relevant
Commitment prohibits it, perform all the obligations of TDSI
Transferor under such Commitment, as agent for or
sub-contractor to TDSI Transferor and indemnify the
Transferor Indemnified Parties in respect of such
performance or, if the relevant Commitment prohibits the
Transferee from so acting as agent and sub-contractor or the
Transferee cannot be permitted to act as agent and
sub-contractor because of confidentiality obligations, the
Transferor Indemnified Parties shall, at the cost of the
Transferee and to the extent that the TDSI Transferor is
reasonably able, do all such acts and things as the
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Transferee may reasonably require to enable due performance
of the Commitment and to provide for the Transferee the
benefits, subject to the burdens, of the Commitment and the
Transferee shall indemnify the Transferor Indemnified
Parties in respect of all such acts and things.
(b) Until such time as the consent or agreement referred to in
Section 7.3(a) is obtained, TDSI Transferor shall be deemed to hold
the benefit of the relevant Commitment referred to in Section
7.3(a) for the Transferee.
(c) If the rights or obligations under the Commitment to which TDSI
Transferor is a party extend to both the Transferred Business and
any other operation or business of TDSI Transferor (in this Section
7.3(c) a "Retained Business"), TDSI Transferor and the Transferee
agree that:
(i) the Commitment shall remain with the TDSI Transferor which
shall hold all rights under such Commitment to the extent
they relate to the Transferred Business for the benefit of
the Transferee;
(ii) to the extent that any rights under such Commitment are
held by TDSI Transferor for the benefit of the Transferee,
TDSI Transferor and the Transferee shall cooperate with
each other to ensure that:
(A) the Transferee obtains the benefit of any such
rights and satisfies any associated or commensurate
obligations;
(B) the Transferee's rights under such Commitment are
enforced against the issuer thereof or the other
party or parties thereto;
(C) all such actions are taken and all such things are
done by TDSI Transferor as may reasonably be
requested by the Transferee, to the extent TDSI
Transferor can do so without prejudice to its own
rights under such Commitment;
(D) all such actions are taken and all such things are
done by the Transferee as may reasonably be
requested by TDSI Transferor which are necessary to
ensure that all associated or commensurate
obligations are satisfied by the Transferee; and
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(E) all monies and properties collected by or paid or
transferred to TDSI Transferor in respect of such
rights are paid over or transferred to the
Transferee as appropriate, and all monies and
properties payable or transferable by the TDSI
Transferor, as applicable, in respect of such
obligations are first paid over or transferred to
TDSI Transferor by the Transferee, as appropriate;
and.
(iii) the Transferee shall indemnify and save harmless TDSI
Transferor from and against any claims in respect of any
such Commitments in connection with or arising as a
result of any action reasonably taken by TDSI Transferor
in its capacity as holder of the Commitment (including,
any such actions taken by TDSI Transferor in accordance
with this Section 7.3).
7.4 LETTERS TO SUPPLIERS
The Transferee shall promptly following the Release Time send out
notices and letters to all suppliers and customers of the Transferred
Business and other business contacts relating to the Transferred
Business informing them of the transfer of the Transferred Business and
the Transferee's assumption of the TDSI Assumed Liabilities.
7.5 RELEASE OF THE ASSURANCES
The Transferee covenants that, at the written request of TDSI Transferor
made from time to time after the Release Time, the Transferee will use
best efforts to execute and deliver all such instruments of assumption
and acknowledgements in order to effect the release and discharge in
full of any Assurance given by TDSI Transferor to any Person in respect
of any obligation or liability of the Transferred Business, and shall
procure the assumption of, and the substitution of the Transferee as the
primary obligor in respect of, each such Assurance on a non-recourse
basis to TDSI Transferor. Pending such release and discharge, the
Transferee hereby agrees with the TDSI Transferor that the Transferee
will assume and pay and discharge when due, and indemnify each
Transferor Indemnified Person against, all such Assurances.
7.6 EMPLOYEES AND INDEPENDENT CONTRACTORS
(a) The Transferee will, effective as of the Employee Transfer
Date and on terms and conditions (including remuneration and
benefits, if any) which in the aggregate are similar to those which
they presently enjoy, (i) employ from and after such time the
Employees and (ii) retain from and after the Employee Transfer Date
the Independent Contractors.
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(b) The Transferee will recognize, to the extent previously
recognized by the TDSI Transferor, accrued vacation, and other
similar entitlements of Employees and the past service of the
Employees with the TDSI Transferor and any prior service for which
the TDSI Transferor has given the Employees service credit for all
purposes, including eligibility to participate and extent of
participation in all benefit plans and entitlement to notice of
termination of employment or pay in lieu thereof or severance pay.
(c) The Transferee will indemnify and save harmless the
Transferor Indemnified Parties against any Losses and Liabilities
arising from or relating to: (i) the employment by the TDSI
Transferor or Transferee of an Employee or termination thereof by
the TDSI Transferor or Transferee, except that the TDSI Transferor
shall bear any termination costs owing as a direct result of the
transfer of the Transferred Business, other than those termination
costs attributable to an Employee's refusal to accept employment
with the Transferee; or (ii) the retainer by TDSI Transferor or the
Transferee of an Independent Contractor or termination of that
retainer by TDSI Transferor or the Transferee.
(d) Without limiting Section 7.6(a), the Transferee shall also
employ or retain persons on short or long term disability or
workers compensation leave, child care leave or any other approved
paid or unpaid leave of absence who at the time of their
disability, injury or the commencement of their leave were employed
or retained in the Transferred Business.
7.7 AMOUNTS RECEIVED IN RESPECT OF THE TDSI ASSETS
Where after the Effective Date any amount is paid to TDSI Transferor in
respect of a TDSI Asset, TDSI Transferor shall forthwith (and in any event,
within 30 days of the receipt of such amount) remit such amount to the
Transferee.
7.8 TRANSFER OF LEGAL TITLE
All Parties acknowledge and agree that the legal transfer of the TDSI
Assets will occur on the later of immediately after the IPO Closing Date
and the date on which the last Material Consent is obtained, but in any
event the Parties acknowledge that the TDSI Transferor is entitled to
receive the net economic benefit derived from the operation of the
Transferred Business from and after the Effective Time, as provided in
Section 2.1.
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ARTICLE 8
GENERAL
8.1 FURTHER ASSURANCES
Each Party will, from time to time and at all times after the Effective
Time, without further consideration, do such further acts and deliver
all such further assurances, deeds and documents as shall be reasonably
required in order to fully perform and carry out the terms of this
Agreement.
8.2 NO MERGER
Subject to any limitations set forth herein, the covenants,
representations, warranties and indemnities contained in this Agreement
shall survive the execution and delivery hereof and shall not merge in
any assignments, conveyances, transfers or other documents executed and
delivered at or after the date hereof, notwithstanding any rule of law,
equity or statute to the contrary and such rules are hereby waived.
8.3 ENTIRE AGREEMENT
The provisions contained in any and all documents and agreements
collateral hereto shall at all times be read subject to the provisions
of this Agreement and, in the event of conflict, the provisions of this
Agreement shall prevail.
8.4 GOVERNING LAW
This Agreement shall be subject to and interpreted, construed and
enforced in accordance with the laws of Ontario and the laws of Canada
applicable therein and shall be treated as a contract made in Ontario.
The Parties irrevocably attorn and submit to the jurisdiction of the
courts of Ontario and courts of appeal therefrom in respect of all
matters arising out of this Agreement.
8.5 ASSIGNMENT, ENUREMENT, ETC.
Neither the obligations nor the benefits under this Agreement shall be
assignable unless:
(a) The assignor has given notice to the other party hereto;
(b) The assignment is an assignment of all of the assignor's
rights, benefits and obligations hereunder; and
(c) The assignment is made in connection with or as part of a
corporate reorganization of the assignor, a merger or amalgamation
of the assignor
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with one or more other corporations or the sale by the
assignor of all or substantially all of its assets.
Notwithstanding any such assignment, the assignor shall continue to
remain liable for its obligations hereunder jointly and severally with
the assignee, and the assignee's rights and benefits hereunder shall be
subject to any rights of set-off and equities existing as between the
assignor and the other party hereto. Any purported assignment in
contravention of this section shall be void. This Agreement shall be
binding upon and enure to the benefit of the Transferee, TDSI
Transferor, the Transferor Indemnified Parties, the Transferee
Indemnified Parties and their respective heirs, executors,
administrators, successors and permitted assigns.
8.6 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
8.7 NOTICES
The addresses and fax number of each Party for notices shall be as follows:
TDSI Transferor: ▇/▇ ▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇, 12th Floor
Toronto-Dominion Centre
Toronto, Ontario
M5K 1A2
Attention:Senior Vice-President, Compliance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Transferee: c/o TD Waterhouse Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇
Attention:Executive Vice-President and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice, communication or statement (a "notice") required, permitted
or contemplated hereunder shall be in writing and shall be delivered as
follows:
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(a) by delivery to a Party between 8:00 a.m. and 4:00 p.m.
local time on a Business Day at the address of such Party for
notices, in which case the notice shall be deemed to have been
received by that Party when it is delivered; or
(b) by telecopier to a Party to the telecopier number of such
Party for notices, in which case, if the notice was telecopied
prior to 4:00 p.m. local time on a Business Day the notice shall be
deemed to have been received by that Party when it was telecopied
and if it was faxed on a day which is not a Business Day or is
faxed after 4:00 p.m. local time on a Business Day, it shall be
deemed to have been received on the next following Business Day.
A Party may from time to time change its address for service or its fax
number for service by giving written notice of such change to the other
Party.
8.8 INVALIDITY OF PROVISIONS
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, that shall not affect or impair:
(a) the legality, validity or enforceability in that
jurisdiction of any other provision of this Agreement; or
(b) the legality, validity or enforceability under the law of
any other jurisdiction of that or any other provision of this
Agreement.
8.9 WAIVER
No waiver by any Party of any breach (whether actual or anticipated) of
any of the terms, conditions, representations or warranties contained
herein shall take effect or be binding upon that Party unless the waiver
is expressed in writing under the authority of that Party. Any waiver
so given shall extend only to the particular breach so waived and shall
not limit or affect any rights with respect to any other or future
breach.
8.10 REMEDIES GENERALLY
No failure on the part of any Party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy in
law or in equity or by statute or otherwise conferred.
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8.11 AMENDMENT
This Agreement shall not be varied in its terms or amended by oral
agreement or by representations or otherwise other than by an instrument
in writing dated subsequent to the date hereof, executed by a duly
authorized representative of each Party.
8.12 COUNTERPART EXECUTION
This Agreement may be executed in counterpart and all executed
counterparts together shall constitute one agreement.
8.13 ACCESS TO BOOKS, RECORDS AND PERSONNEL
After the Effective Time, the Transferee shall permit TDSI Transferor
and its representatives to continue to have full and complete access to
the books and records of the Transferred Business and its personnel as
TDSI Transferor may require for the purpose of complying with all laws
as well as its legitimate business purposes, including without
limitation in connection with any claims, demands or litigation. The
Transferee shall provide TDSI Transferor with its full co-operation
(including testimony if requested) in connection with such purposes.
The Transferee shall preserve and maintain its books and records for the
greater of: (i) 15 years or (ii) such other time as they may be
relevant.
8.14 AGENCY FOR INDEMNITIES
The Parties acknowledge and agree that TDSI Transferor has entered into
the Agreement on its own behalf and as agent for and on behalf of the
Transferor Indemnified Parties (whether or not formally appointed as
agent on or before the date of this Agreement) and it is the express
intention of the Parties that TDSI Transferor on behalf of the
Transferor Indemnified Parties or the Transferor Indemnified Parties
themselves may exercise and enforce all their rights and remedies
provided herein in the same manner as if each were a signatory hereto.
The Transferee shall be generally entitled to deal with TDSI Transferor
on behalf of the Transferor Indemnified Parties in respect of all
matters concerning this Agreement without any obligation whatsoever to
investigate the authority of the TDSI Transferor and notwithstanding
anything contained herein, TDSI Transferor will continue to be bound by
all of its obligations under this Agreement as if no such agency
relationship existed and shall remain liable to perform the obligations
of the Transferor Indemnified Parties hereunder to the extent that such
persons fail to do so. The foregoing also applies mutatis mutandis to
the Transferee in respect of the Transferee Indemnified Parties.
IN WITNESS WHEREOF the Parties have executed this Agreement.
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TD SECURITIES INC. TD WATERHOUSE INVESTOR SERVICES (CANADA), INC.
Per:____________________________ Per:__________________________________
Per:____________________________ Per:__________________________________