EXHIBIT 4.1
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
DATED AS OF NOVEMBER 4, 2000,
BY AND AMONG
EXFO ELECTRO-OPTICAL ENGINEERING INC.,
EXFO SUB, INC.,
BURLEIGH INSTRUMENTS, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. MAY, JR,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER ..........................................................2
1.1 The Merger...................................................2
1.2 Effect of Merger.............................................2
1.3 Effective Time...............................................2
1.4 Directors and Officers.......................................3
1.5 Articles of Incorporation, Bylaws............................3
1.6 Taking of Necessary Action, Further Action...................3
1.7 The Closing..................................................3
1.8 Merger Consideration, Conversion of Securities...............4
1.9 Escrow Arrangements..........................................6
1.10 Stock Purchase...............................................6
1.11 Redemption of ▇▇▇ ▇▇▇▇▇ and Purchase of Fishers' Assets......6
1.12 Transfer Taxes...............................................7
1.13 Payment of Expenses..........................................7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS...7
2.1 Organization and Authority...................................7
2.2 Subsidiaries.................................................8
2.3 Capitalization...............................................9
2.4 No Breach....................................................9
2.5 Share Ownership.............................................10
2.6 Consents and Approvals......................................10
2.7 Litigation; Proceedings.....................................11
2.8 Financial Statements........................................11
2.9 No Undisclosed Liabilities..................................12
2.10 Absence of Certain Changes or Events........................13
2.11 Compliance with Laws........................................13
2.12 Taxes.......................................................13
2.13 Intellectual Property.......................................15
2.14 Title to and Condition of Properties........................16
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TABLE OF CONTENTS
(continued)
PAGE
2.15 Contracts and Agreements....................................16
2.16 Insurance...................................................18
2.17 Employees...................................................18
2.18 Employee Benefits...........................................19
2.19 Securities Matters..........................................21
2.20 Facilities..................................................23
2.21 Environmental Matters.......................................23
2.22 Transaction with the Shareholders...........................26
2.23 Capital Expenditures........................................26
2.24 Use of Name.................................................26
2.25 Brokers, Finders or Financial Advisors......................26
2.26 Exclusivity of Representations..............................26
2.27 Full Disclosure.............................................27
ARTICLE 3 REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB.............27
3.1 Organization and Qualifications.............................27
3.2 Capitalization..............................................28
3.3 Authorization...............................................28
3.4 Non-contravention...........................................29
3.5 Consents and Approvals......................................29
3.6 Litigation; Proceedings.....................................30
3.7 Authorization for Buyer Shares..............................30
3.8 Canadian Documents..........................................30
3.9 No Undisclosed Liabilities..................................31
3.10 Absence of Certain Changes or Events........................31
3.11 Investment Intent...........................................31
3.12 Experience of the Buyer.....................................31
3.13 Brokers, Finders or Financial Advisors......................31
3.14 Full Disclosure.............................................32
ARTICLE 4 COVENANTS OF THE PARTIES............................................32
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TABLE OF CONTENTS
(continued)
PAGE
4.1 Conduct of Business by the Company..........................32
4.2 Public Announcements........................................34
4.3 Non-Solicitation; Non-Negotiation...........................35
4.4 Commercially Reasonable Efforts.............................35
4.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and Foreign Regulatory Requirements...35
4.6 Covenants of Parties........................................36
4.7 Modification of Disclosure Schedules........................37
4.8 Contact with Customers and Suppliers........................37
4.9 Secondary Offering..........................................37
4.10 Other Actions...............................................40
4.11 Tax Return Filing...........................................40
4.12 Assistance and Cooperation..................................41
4.13 Subchapter S relief.........................................42
4.14 Tax Covenants...............................................42
ARTICLE 5 CONDITIONS TO CLOSING...............................................42
5.1 Conditions to Each Party's Obligations......................42
5.2 Conditions to Obligations of the Buyer......................43
5.3 Conditions to Obligations of the Shareholders and
the Company ................................................46
ARTICLE 6 OTHER AGREEMENTS....................................................48
6.1 Confidentiality.............................................48
6.2 Cooperation After the Closing...............................48
6.3 Registration of Buyer Shares................................48
6.4 Reorganization..............................................55
6.5 Expenses....................................................56
6.6 Non-Competition.............................................56
ARTICLE 7 SURVIVAL AND INDEMNIFICATION........................................56
7.1 Survival Notwithstanding Investigation......................56
7.2 General Indemnification by the Shareholders.................56
7.3 Indemnification by the Buyer................................57
7.4 Indemnification Against Third Party Claims..................58
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TABLE OF CONTENTS
(continued)
PAGE
7.5 Tax Indemnification.........................................59
7.6 Indemnification to be after Tax, Insurance, Etc.............59
7.7 Expiry and Limits of Liability..............................59
7.8 Procedure...................................................61
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................63
8.1 Termination.................................................63
8.2 Effect of Termination.......................................63
8.3 Waiver......................................................63
ARTICLE 9 MISCELLANEOUS.......................................................64
9.1 Entire Agreement; Amendments................................64
9.2 Notices.....................................................64
9.3 Amendments; Waivers.........................................66
9.4 Headings....................................................66
9.5 Successors and Assigns......................................66
9.6 No Third-Party Beneficiaries................................66
9.7 Governing Law; Consent to Jurisdiction; Language............66
9.8 Execution...................................................66
9.9 Severability................................................67
9.10 Interpretation..............................................67
9.11 Currency....................................................67
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INDEX OF DEFINED TERMS
AGREEMENT......................................................................1
ARTICLES OF MERGER.............................................................2
AUDITED FINANCIAL STATEMENTS..................................................12
BCL............................................................................1
BUILDING.......................................................................6
BUYER..........................................................................1
BUYER BALANCE SHEET DATE......................................................31
BUYER FINANCIAL STATEMENTS....................................................30
BUYER INDEMNIFIED PERSON......................................................57
BUYER INDEMNIFIED PERSONS.....................................................57
BUYER MATERIAL ADVERSE EFFECT.................................................27
BUYER SHARES...................................................................4
BUYER STOCK OPTION PLANS......................................................28
BUYER SUB......................................................................1
BUYER SUBORDINATE VOTING SHARES................................................1
CANADIAN DOCUMENTS............................................................30
CASH CONSIDERATION.............................................................4
CLOSING........................................................................3
CLOSING PRICE..................................................................4
COBRA.........................................................................21
CODE...........................................................................2
COMPANY........................................................................1
COMPANY COMMON STOCK...........................................................1
COMPANY CONTRACTS.............................................................17
COMPANY INTELLECTUAL PROPERTY.................................................15
COMPANY MATERIAL ADVERSE EFFECT................................................7
COMPANY PLANS.................................................................19
COPYRIGHTS....................................................................15
COUNTY.........................................................................6
DEMAND REGISTRATION...........................................................38
EFFECTIVE TIME.................................................................3
ENVIRONMENT...................................................................25
ENVIRONMENTAL CONDITION.......................................................25
ENVIRONMENTAL LAW.............................................................25
ENVIRONMENTAL PERMITS.........................................................25
ERISA.........................................................................19
ERISA AFFILIATE...............................................................19
ESCROW AGREEMENT...............................................................6
ESCROW FUND....................................................................6
EXCHANGE RATIO.................................................................5
EXPENSES.......................................................................7
FACILITIES....................................................................23
▇▇▇▇▇▇▇........................................................................1
FINANCIAL STATEMENTS..........................................................12
FISHERS........................................................................6
FISHERS' ASSETS................................................................6
GAAP..........................................................................12
▇▇▇▇▇▇▇........................................................................1
GOVERNMENTAL ENTITY...........................................................10
HAZARDOUS SUBSTANCES..........................................................25
HSR ACT.......................................................................11
▇▇▇ ▇▇▇▇▇......................................................................6
INDEMNIFIED PARTY.............................................................61
INDEMNITEE....................................................................58
INDEMNITOR....................................................................58
INTERIM FINANCIAL STATEMENTS..................................................12
KLIMASEWSKI....................................................................1
KNOWLEDGE.....................................................................67
LIENS.........................................................................16
MAY............................................................................1
MERGER.........................................................................1
MERGER CONSIDERATION...........................................................4
NON-COMPETE PERIOD............................................................56
ORDER.........................................................................36
PATENTS.......................................................................15
PERMITS.......................................................................13
PERSON........................................................................11
PLAN OF MERGER.................................................................2
PROSPECTUS....................................................................52
REDEMPTION.....................................................................6
REGISTRATION STATEMENT........................................................49
RELEASE.......................................................................25
RESTRICTED SECURITIES.........................................................51
SEC FINANCIAL STATEMENTS......................................................45
SECONDARY OFFERING............................................................37
SECONDARY REGISTRATION STATEMENT..............................................37
SECURITIES ACT................................................................21
SHAREHOLDER AFFILIATE.........................................................52
SHAREHOLDERS...................................................................1
SHAREHOLDERS INDEMNIFIED PERSONS..............................................57
SIGNING PRICE..................................................................4
SOFTWARE......................................................................15
STOCK CONSIDERATION............................................................4
STOCK PURCHASE.................................................................6
STOCK PURCHASE CONSIDERATION...................................................6
STRADDLE PERIOD...............................................................59
SUBSIDIARIES...................................................................2
SURVIVING CORPORATION..........................................................1
SURVIVING CORPORATION COMMON STOCK.............................................1
TAX CLAIMS....................................................................59
TAX LOSSES....................................................................59
TAX RETURNS...................................................................14
TAXES.........................................................................14
TECHNOLOGY....................................................................15
TRADEMARKS....................................................................15
TRANSFER TAXES.................................................................7
WITHDRAWN SHARES...............................................................6
LIST OF EXHIBITS
Exhibit A Articles of Merger
Exhibit B Officers of Surviving Corporation
Exhibit C Buyer Shares
Exhibit D Form of Escrow Agreement
LIST OF SCHEDULES
Schedule 2.2 Subsidiaries
Schedule 2.3 Capitalization and share restriction agreements
Schedule 2.4 Conflicts with agreements
Schedule 2.5 Share ownership
Schedule 2.10 Certain changes or events
Schedule 2.12 S Corporation election
Schedule 2.13(A) Intellectual property
Schedule 2.13(B) Intellectual property
Schedule 2.13(E) Conflicts with agreements dealing in intellectual
property
Schedule 2.14 Liens
Schedule 2.15 Company contracts
Schedule 2.15(A) Breaches of company contracts and contracts
restricting sales territory
Schedule 2.15(B) Embedded software licenses
Schedule 2.16 Insurance
Schedule 2.17 List of employees
Schedule 2.18 Company plans
Schedule 2.20 Current leases and property previously owned within
the last five years
Schedule 2.21(C) Environmental permits
Schedule 2.22 Transactions with the Shareholders
Schedule 2.23 Capital expenditures
Schedule 2.24 Use of name
Schedule 4.1 Conduct of business by the Company
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "AGREEMENT")
is dated as of November 4, 2000 among EXFO Electro-Optical Engineering Inc.,
incorporated pursuant to the CANADA BUSINESS CORPORATIONS ACT (the "BUYER"),
EXFO Sub, Inc., a corporation organized under the laws of the State of New York
("BUYER SUB"), Burleigh Instruments, Inc., a corporation organized under the
laws of the State of New York (the "COMPANY"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
("▇▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. May, Jr., ("MAY"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and, together with Klimasewski, May and ▇▇▇▇▇▇▇,
the "SHAREHOLDERS").
RECITALS
WHEREAS, the respective Boards of Directors of Buyer and the Company,
and Buyer, as the sole shareholder of Buyer Sub have determined that it is
advisable and in the best interests of the respective corporations and their
shareholders that Buyer Sub be merged with and into the Company in accordance
with the New York Business Corporation Law (the "BCL" ) and the terms of this
Agreement, pursuant to which the Company will be the surviving corporation (the
"MERGER");
WHEREAS, in furtherance thereof, the respective Boards of Directors of
Buyer, Buyer Sub and the Company have approved the merger of Buyer Sub with and
into the Company, with the Company to be the surviving corporation in such
Merger (the "SURVIVING CORPORATION"), upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which each outstanding share
of common stock, par value $0.02 per share, of Company ("COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (as defined in
Section 1.3), will be converted into the right to receive cash and Buyer
Subordinate Voting Shares, without par value, (all such shares to be issued in
the Merger ("BUYER SUBORDINATE VOTING SHARES") based upon the Exchange Ratio (as
defined in Section 1.8);
WHEREAS Buyer will receive at the Effective Time full equity ownership
of the outstanding stock of the Surviving Corporation through the simultaneous
conversion at the Effective Time of the issued and outstanding common stock of
Buyer Sub into common stock of the Surviving Corporation and cancellation of
Company Common Stock;
WHEREAS the holders of shares of Company Common Stock immediately prior
to the Effective Time have the right to receive cash and Buyer Subordinate
Voting Shares in the Merger and, in consideration of Buyer's agreeing to deliver
such Buyer Subordinate Voting Shares to the Shareholders, as set forth in
Section 2.1, and in exchange for their issuance, Buyer is entitled to subscribe
and will subscribe to a number of shares of common stock, par value $0.02 per
share, of the Surviving Corporation ("SURVIVING CORPORATION COMMON STOCK")
equivalent to the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time;
WHEREAS, the Shareholders own 100% of the Company Common Stock;
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WHEREAS, the Company has two majority-owned subsidiaries, Burleigh
Instruments, Ltd. and Burleigh Instruments GmbH (the "SUBSIDIARIES");
WHEREAS, Klimasewski and May are the sole minority shareholders of the
Subsidiaries and desire to sell their full interests in the Subsidiaries to
Buyer;
WHEREAS, the Company and the Shareholders desire to make certain
representations, warranties, covenants, and agreements in connection with, and
establish various conditions precedent to, the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section
368(a)(1)(A) and 368(a)(2)(E) of the United States Internal Revenue Code of
1986, as amended (the "CODE").
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, the parties hereto hereby
agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER
At the Effective Time (as defined in Section 1.3 hereof), subject to
the terms and conditions of this Agreement and the Articles of Merger
(as defined in Section 1.3 hereof), Buyer Sub shall be merged with and
into the Company, the separate existence of Buyer Sub shall cease, and
the Company shall continue as the Surviving Corporation.
1.2 EFFECT OF MERGER
The effect of the Merger shall be as set forth in Section 906 of the
BCL, and the Surviving Corporation shall succeed to and, without
limiting the generality of the foregoing, shall possess all the
properties, rights, privileges, immunities, powers, franchises and
purposes, and be subject to all the duties, liabilities, debts,
obligations, restrictions and disabilities, of the Company, all without
further act or deed.
1.3 EFFECTIVE TIME
The consummation of the Merger shall be effected as promptly as
practicable, but in no event more than three business days after the
satisfaction or waiver of the conditions set forth in ARTICLE 5 of this
Agreement (other than those conditions which by their nature are to be
satisfied at the Closing, but subject to satisfaction of those
conditions), and the parties hereto will cause a copy of the Articles
of Merger attached hereto as Exhibit A (the "ARTICLES OF MERGER") and
including a Plan of Merger (the "PLAN OF MERGER") to be executed,
delivered and filed with
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the Secretary of State of the State of New York in accordance with the
BCL. The Merger shall become effective at the later to occur of the
filing of the Articles of Merger with the Secretary of State of the
State of New York. The date and time on which the Merger shall become
effective is referred to herein as the "EFFECTIVE TIME" .
1.4 DIRECTORS AND OFFICERS
From and after the Effective Time, the directors of the Surviving
Corporation shall be the persons who were the directors of Buyer Sub
immediately prior to the Effective Time and the officers of the
Surviving Corporation shall be the persons who are set forth on Exhibit
B attached hereto. The directors and officers of the Surviving
Corporation shall hold office for the term specified in, and subject to
the provisions contained in, the Articles of Incorporation and Bylaws
of the Surviving Corporation and applicable law. If, at or after the
Effective Time, a vacancy shall exist on the Board of Directors or in
any of the offices of the Surviving Corporation, such vacancy shall be
filled in the manner provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation.
1.5 ARTICLES OF INCORPORATION, BYLAWS
From and after the Effective Time and until further amended in
accordance with applicable law, the Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation. From and
after the Effective Time and until further amended in accordance with
law, the Bylaws of the Company as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation.
1.6 TAKING OF NECESSARY ACTION, FURTHER ACTION
Buyer, Buyer Sub, the Company and the Shareholders, respectively, shall
each use all commercially reasonable efforts to take all such action as
may be necessary or appropriate to effectuate the Merger under the BCL
at the time specified in Section 1.3 hereof. If, at any time after the
Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all properties,
rights, privileges, immunities, powers and franchises of the Company,
the officers of the Surviving Corporation are fully authorized in the
name of the Company or otherwise to take, and shall take, all such
lawful and necessary action.
1.7 THE CLOSING
(a) The closing of the transactions contemplated by this Agreement
(the "CLOSING") will take place at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ and will be effective as of the Effective Time.
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(b) At the Closing, parties shall deliver or shall cause to be
delivered to each other the documents required to be delivered
pursuant to this Agreement, including the following:
(i) Buyer shall deliver to each Shareholder: (i) the
aggregate amount of the Cash Consideration payable to
such Shareholder in United States dollars in
immediately available funds by wire transfer to one
or more accounts designated prior to the Effective
Time in writing by each such Shareholder for said
purpose, subject to Section 1.13; (ii) stock
certificates representing the Buyer Shares (other
than Escrow Shares) registered in each Shareholder's
name and in such denominations as set forth on
Exhibit C, which shall be agreed upon by the parties
at the Closing and which shall be determined by
reference to the Closing Price; and (iii) all
documents, instruments and writings required to have
been delivered at or prior to the Effective Time by
the Buyer or by Buyer Sub pursuant to this Agreement;
(ii) Buyer shall deliver to the Escrow Agent stock
certificates representing the Escrow Shares;
(iii) Each Shareholder shall deliver and surrender to the
Buyer his certificate or certificates representing
shares of Company Common Stock, and the Company and
the Shareholders shall deliver to the Buyer and Buyer
Sub all other documents, instruments and writings
required to have been delivered at or prior to the
Effective Time by the Company or the Shareholders
pursuant to this Agreement.
1.8 MERGER CONSIDERATION, CONVERSION OF SECURITIES
The total consideration to be paid by Buyer in the Merger shall be
$275,000,000 (the "MERGER CONSIDERATION") consisting of (a) $40,000,000
payable in cash (the "CASH CONSIDERATION") and (b) $235,000,000 (the
"STOCK Consideration") payable in the form of Buyer Subordinate Voting
Shares (the "BUYER SHARES"). The aggregate number of Buyer Shares
payable shall be determined by dividing the Stock Consideration by the
Closing Price. The "CLOSING Price" shall be the average closing price
of Buyer Subordinate Voting Shares for the five trading days ending
with the day immediately preceding the Closing, as reported by the
Nasdaq National Market; provided, however, that for purposes of this
Agreement, if the Closing Price is less than 90% of the Signing Price,
the Closing Price shall be 90% of the Signing Price, and if the Closing
Price is greater than 110% of the Signing Price, the Closing Price
shall be 110% of the Signing Price. The "SIGNING PRICE" is $38.125,
representing the closing price of the Buyer Subordinate Voting Shares,
as reported by the Nasdaq National Market, at closing of trading on
October 31, 2000. If, prior to the Closing, there is any stock
dividend, stock split or other change in the character or amount of the
outstanding
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Buyer Subordinate Voting Shares, then in such event any and all new,
substituted or additional securities to which the Shareholders would
have been entitled by reason of their ownership of the Buyer Shares had
the Closing occurred prior to such event shall be considered Buyer
Shares for purposes of this Agreement and the consideration to be
received by each Shareholder shall be adjusted accordingly. At the
Effective Time, by virtue of the Merger and without further action on
the part of Buyer, Buyer Sub or the Company, the shares of Company
Common Stock issued and outstanding immediately prior to Closing shall
be conceded and extinguished and shall be converted into the right to
receive the Merger Consideration, such that each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive eight hundred dollars
($800), plus a pro-rata portion of the Stock Consideration
(collectively, the "EXCHANGE RATIO"). Each share of common stock, par
value of $0.001 per share of Buyer Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and
shall become one validly issued fully paid and non-assessable share of
Surviving Corporation Common Stock as of the Effective Time, and the
Surviving Corporation shall become a wholly-owned subsidiary of Buyer.
In exchange for and in consideration of the issuance of the Merger
Consideration, Buyer will be entitled to subscribe and undertakes and
agrees to subscribe, at the Effective Time, for the Surviving
Corporation Common Stock. The Surviving Corporation Common Stock will
at the Effective Time have been duly authorized and, when issued to
Buyer, will be validly issued and outstanding as fully paid and
non-assessable. The number of shares of Company Common Stock held by
each Shareholder and to be converted into the right to receive the
Merger Consideration is set forth opposite each Shareholder's name on
Exhibit C. Subject to the escrow provisions of Section 1.9, the Merger
Consideration shall be payable to the Shareholders pro rata, determined
by multiplying such Merger Consideration by a fraction, the numerator
of which is the number of shares of Company Common Stock owned by the
Shareholder and the denominator of which is the total number of issued
and outstanding shares of Company Common Stock. No fraction of a share
of Buyer Subordinate Voting Shares shall be issued, and each fractional
share thereof shall be rounded up to the nearest whole number. Until
surrendered and exchanged, each outstanding certificate which, prior to
the Effective Time, represented shares of Company Common Stock shall be
deemed to represent and evidence only the right to receive the Merger
Consideration to be paid therefore as set forth in this Section 1.8. No
interest shall accrue or be payable with respect to any Cash
Consideration which any Shareholder shall be entitled to receive. Buyer
shall be authorized to pay Merger Consideration attributable to any
certificate theretofore issued which has been lost or destroyed, upon
receipt of satisfactory evidence of ownership of the shares of Company
Common Stock represented thereby and of appropriate indemnification. It
being agreed that the Merger Consideration received by Messrs. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ shall be reduced on a dollar for dollar basis equal to six
(6) months their respective annual remuneration in the event that
Messrs. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ terminate unilaterally
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their respective employment agreement with the Surviving Corporation
prior to the second anniversary of the Effective Time.
1.9 ESCROW ARRANGEMENTS
Simultaneously with the Merger and at the Effective Time, an aggregate
15% of the Stock Consideration will be delivered to the Escrow Agent
(as such term is defined in the Escrow Agreement attached hereto as
Exhibit D (the "ESCROW AGREEMENT")). Such shares of Buyer Shares shall
constitute an escrow fund (the "ESCROW FUND") to be governed by the
terms set forth in the Escrow Agreement. The portion of the Escrow Fund
contributed on behalf of each of the Shareholders shall be in
proportion to the Merger Consideration which such holder would
otherwise be entitled under Section 1.8. The Escrow Fund shall
terminate in accordance with the terms of the Escrow Agreement. The
provisions of the Escrow Agreement shall govern in the event of any
conflict between the Escrow Agreement and this Section 1.9. The
Shareholders may withdraw shares of Buyer Shares (the "WITHDRAWN
SHARES") and substitute cash in lieu thereof at any time, provided that
the amount deposited in substitution for the Withdrawn Shares is equal
to the product of (i) the Closing Price, and (ii) the number of
Withdrawn Shares.
1.10 STOCK PURCHASE
At the Closing, May and Klimasewski shall sell to the Surviving
Corporation, and the Surviving Corporation shall purchase from May and
Klimasewski, all of their right, title and interest in and to the
shares of the Subsidiaries held by them (the "STOCK PURCHASE"). The
price for the shares to be acquired in the Stock Purchase shall be one
dollar (the "STOCK PURCHASE CONSIDERATION").
1.11 REDEMPTION OF ▇▇▇ ▇▇▇▇▇ AND PURCHASE OF FISHERS' ASSETS
Immediately after the Closing, May and Klimasewski shall cause the
Fishers Development Company, a New York general partnership, all of the
equity which is owned by Klimasewski and May ("FISHERS") to require the
Ontario County Industrial Development Agency ("COUNTY") to redeem (the
"REDEMPTION") the $1,350,000 Ontario County Industrial Development
Agency Multi-Mode Variable Rate Demand Industrial Development Revenue
Bonds, Series 2000 (the "▇▇▇ ▇▇▇▇▇") in full in accordance with the
terms of such ▇▇▇ ▇▇▇▇▇. Concurrently upon the Redemption, May and
Klimasewski shall cause Fishers to sell the land, building (the
"BUILDING") and equipment (collectively referred to as "FISHERS'
Assets"), situated at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 42, in the town of Fishers in
the State of New York, to be sold to the Surviving Corporation at an
aggregate purchase price of $2,300,000. Such Building shall be
renovated in accordance with the capital expenditures plan described in
Section 2.23 hereof.
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1.12 TRANSFER TAXES.
All stamp, transfer, documentary, sales, use, registration, recordation
and other such taxes and fees incurred in connection with this
Agreement (collectively, "TRANSFER TAXES") shall be paid by the
Shareholders and the Shareholders shall, at their own expense, prepare
and properly file accurate tax returns and other documentation with
respect to the Transfer Taxes on a timely basis.
1.13 PAYMENT OF EXPENSES.
At the Closing, the Buyer hereby agrees to pay directly, on behalf of
the Shareholders, the investment banking and legal fees incurred by or
on behalf of the Shareholders in connection with the transactions
contemplated hereby (collectively, the "EXPENSES"). At the Closing, the
Buyer shall pay the Expenses in cash, in the currency requested by the
service provider, by wire transfer of immediately available funds. Such
payment of Expenses made by the Buyer shall be deducted from the Cash
Consideration payable hereunder. The Shareholders shall, at least two
business days prior to the Closing Date, advise the Buyer in writing of
the amount of the Expenses, together with wire transfer instructions
for such payments.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders hereby jointly and severally represent and
warrant to Buyer, as of the date hereof (except as to any representation or
warranty which specifically relates to an earlier date) as follows:
2.1 ORGANIZATION AND AUTHORITY
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
New York. The Company has the requisite corporate power and
authority: (a) to carry on its business as currently
conducted; (b) to own and use the properties owned and used by
it; and (c) to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Company
is duly qualified to do business as a foreign corporation and
in good standing in each jurisdiction where the nature of its
business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be
so qualified or in good standing could not reasonably be
expected to have a Company Material Adverse Effect. For
purposes of this Agreement, "COMPANY MATERIAL ADVERSE EFFECT"
means any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to
have any change or effect) that is materially adverse to the
business, financial condition or results of operations of the
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Company, taken as a whole, provided, however, any adverse
change, effect or circumstance (a) primarily arising out of or
resulting primarily from actions contemplated by the parties
hereto in connection with this Agreement, (b) resulting from
economic factors affecting the economy as a whole or (c)
resulting from factors generally affecting the specific
markets in which the Company competes shall not be deemed in
themselves, either alone or in combination, to constitute, and
shall not be taken into account in determining whether there
has been, a Company Material Adverse Effect. The execution and
delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate
action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so
contemplated by this Agreement. This Agreement has been duly
and validly executed and delivered by the Company and the
Shareholders, and assuming this Agreement constitutes a valid
and binding obligation of the Buyer and Buyer Sub, this
Agreement constitutes a valid and binding agreement of the
Company and the Shareholders enforceable against the Company
and the Shareholders in accordance with its terms, subject,
however, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditor's rights and to general principles of equity,
regardless of whether such enforceability is considered in
equity or at law. The Company is not in violation of any of
the provisions of its Certificate of Incorporation, by-laws or
other organizational documents or laws applicable to it,
except for violations which could not reasonably be expected
to have a Company Material Adverse Effect.
2.2 SUBSIDIARIES
Schedule 2.2 sets forth, for each Subsidiary: (a) its name and
jurisdiction of incorporation; (b) the number of shares of authorized
capital stock of each class of its capital stock or other equity
interests; (c) the number of issued and outstanding shares of each
class of its capital stock or other equity interests, the names of the
holders thereof and the number of shares held by each such holder; (d)
the number of shares of its capital stock held in treasury; and (e) its
directors and officers. Each Subsidiary is an entity duly organized,
validly existing and, to the extent legally applicable, in good
standing under the laws of the jurisdiction of its organization. Each
Subsidiary is duly qualified to conduct business and is in corporate
good standing under the laws of each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes
such qualification necessary, except for any such failures to be
qualified that would not reasonably be expected to have a Company
Material Adverse Effect. Neither of the Subsidiaries currently has any
active business operations, nor have had any active business operations
in the previous three years. No Subsidiary is in default under
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or in violation of any provision of its organizational documents or
under any statutes or regulations. All of the issued and outstanding
shares of capital stock of each Subsidiary are duly authorized, validly
issued, fully paid, non-assessable and free of pre-emptive rights. All
shares of each Subsidiary that are held of record or owned beneficially
by the Company are held or owned free and clear of any Liens or other
restrictions on transfer (other than restrictions under applicable
securities laws). There are no outstanding or authorized options,
warrants, rights, agreements or commitments to which the Company or any
Subsidiary is a party or which are binding on any of them providing for
the issuance, disposition or acquisition of any capital stock of any
Subsidiary. There are no outstanding stock appreciation, phantom stock
or similar rights with respect to any Subsidiary. There are no voting
trusts, proxies or other agreements or understandings with respect to
the voting of any capital stock of any Subsidiary to which the Company
or any Subsidiary is a party. Neither the Subsidiaries nor the Company,
except for the Subsidiaries, own any stock, partnership interest, joint
venture interest or any other security or ownership interest issued by
any other corporation, organization, limited liability company or
entity. All issued and outstanding shares of capital stock or other
equity interest of the Subsidiaries are owned by the Company,
Klimasewski or May, free and clear of all liens, charges, encumbrances,
claims and options of any nature. The Company, Klimasewski and May each
have full right power and authority to sell, transfer, assign and
deliver the respective shares of capital stock or other equity interest
of the Subsidiaries being sold by each of them to the Buyer. All of the
outstanding shares of capital stock or other equity interests of the
Subsidiaries have been duly and validly authorized and issued and are
fully paid and non-assessable.
2.3 CAPITALIZATION
The authorized, issued and outstanding shares of capital stock of the
Company are as set forth on Schedule 2.3. The outstanding shares of
Company Common Stock are duly and validly authorized and issued, fully
paid and non-assessable and are owned of record by the Shareholders as
set forth on Schedule 2.3 and represents 100% of the issued and
outstanding share capital of the Company. The Company does not have
outstanding any options, warrants or other rights to acquire, directly
or indirectly, capital stock from the Company, and the Company does not
have any obligation to repurchase or redeem any capital stock of the
Company. Except as set forth on Schedule 2.3, the Company is not party
to any agreement, and, to the Shareholders' Knowledge, there is no
agreement between any Persons, which grants any rights of first refusal
or pre-emptive rights or relates to the voting or giving of written
consents with respect to any security or by a director of the Company
or its Subsidiaries.
2.4 NO BREACH
Except as set forth on Schedule 2.4, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement
will not conflict with, or
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result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, any provision of: (i)
the Certificate of Incorporation or By-laws of the Company or any
provision of the comparable organizational documents of any of its
Subsidiaries; (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company, the Subsidiaries or
their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in Section 2.6, any
statute, law, rule, regulation, judgment, order or decree applicable to
the Company or its Subsidiaries or the properties or assets of the
Company or its Subsidiaries, other than, with respect to any of the
matters described above, any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not
reasonably be expected to have a Company Material Adverse Effect, or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
2.5 SHARE OWNERSHIP
Except as set forth on Schedule 2.5, each Shareholder has full right,
power and authority to sell, transfer, assign and deliver the shares of
Company Common Stock being sold by such Shareholder hereunder.
Immediately prior to the delivery of the shares of Company Common
Stock, such Shareholder was the sole registered and beneficial owners
of the shares of Company Common Stock listed opposite his name on
Schedule 2.3 and, except as set forth on Schedule 2.5, had good and
valid title to such shares, free and clear of all Liens and
restrictions on transfer (other than restrictions on transfer imposed
by applicable securities laws). There are no outstanding options,
warrants, convertible securities, calls, rights, commitments,
pre-emptive rights or agreements or instruments or understandings of
any character to which such Shareholder is a party, obligating such
Shareholder to deliver or sell, or cause to be delivered or sold,
contingently or otherwise, such shares of Company Common Stock. There
are no voting trust agreements or other contracts, agreements,
arrangements, commitments, plans or understandings to which such
Shareholder is a party restricting or otherwise relating to voting,
dividend or other rights with respect to such shares.
2.6 CONSENTS AND APPROVALS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local government or
any court, administrative agency, commission or other governmental
authority or agency, domestic or foreign (each, a "GOVERNMENTAL
ENTITY"), is required by or with respect to the Company and its
Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company and its
Subsidiaries of the transactions contemplated by this Agreement, except
for (a) the filing of a pre-merger notification and report form by the
Company under
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the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") and applicable filings under foreign antitrust and
competition laws, (b) such filings, consents, approvals, orders,
registrations and declarations as may be necessary as a result of the
facts or circumstances relating solely to the Company and its
Subsidiaries, and (c) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by any Shareholder nor the consummation of
the transactions contemplated hereby by any Shareholder will (1)
conflict with, result in a breach or violation of or constitute (or
with notice or lapse of time or both constitute) a default under any
law, statute, regulation, order, judgment or decree or any instrument,
contract or other agreement to which any Shareholder is a party or by
which any Shareholder is bound, or (2) require such Shareholder to
obtain any authorization, consent, approval or waiver from, give
notification to, or make any filing with, any Governmental Entity, or
to obtain the approval or consent of any other Person, except for such
conflicts, breaches, violations or defaults, or any authorization,
consent, approval, waiver, notification or filing the failure of which
to obtain or make, will not (x) impair in any material respect the
ability of such Shareholder to perform such Shareholder's obligations
under this Agreement or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
For purposes of this Agreement, "PERSON" means an individual or
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
2.7 LITIGATION; PROCEEDINGS
There is no action, suit or proceeding, governmental or otherwise,
pending or, to the Company's Knowledge, threatened against the Company
or the Subsidiaries or any of their respective properties or business
that questions the validity of this Agreement, or the right of the
Company to enter into this Agreement or to consummate the transactions
contemplated hereby or that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect. There
is no judgment, decree, injunction, rule or order of any Governmental
Entity outstanding against the Company or the Subsidiaries having or
reasonably likely to have, in the future, any such effect.
2.8 FINANCIAL STATEMENTS
The Shareholders have delivered to the Buyer (a) complete and correct
copies of the Company's audited consolidated balance sheet as of
December 31, 1999 and 1998, and the related statements of operations,
shareholders' equity and cash flows (together with the auditors' report
thereon) for the year ended December 31, 1999 and 1998, together with
notes to such financial statements (the "AUDITED
- 12 -
FINANCIAL STATEMENTS"), and (b) complete and correct copies of the
Company's unaudited consolidated balance sheet as at September 30,
2000, and the related statements of operations, stockholders' equity
and cash flows for the nine month periods ended September 30, 2000 (the
"INTERIM FINANCIAL STATEMENTS") (the Audited Financial Statements and
Interim Financial Statements are herein collectively referred to as the
"FINANCIAL STATEMENTS"). The Financial Statements are in accordance
with the books and records of the Company and have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods covered thereby and present
fairly in all material respects, as of their respective dates, the
financial condition and results of operations of the Company (subject,
in the case of Interim Financial Statements, to normal, recurring
year-end adjustments that may be required upon audit). No information
has become available to the Company that would render the Financial
Statements materially and adversely incomplete or inaccurate.
2.9 NO UNDISCLOSED LIABILITIES
(a) None of the Company and its Subsidiaries has any liability
(whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated and whether due or to
become due) which is material to the Company and its
Subsidiaries, taken as a whole, except for: (i) liabilities
shown on the latest balance sheet included in the Financial
Statements; (ii) liabilities which have arisen since the date
of the latest balance sheet included in the Financial
Statements in the ordinary course of business consistent with
past practices and that do not violate any covenants or
representations and warranties contained in this Agreement; or
(iii) contractual liabilities incurred in the ordinary course
of business which are not required by GAAP to be reflected on
a balance sheet.
(b) The Shareholders may not evade their liability under the
warranty undertakings made under the terms of this Agreement
or the resulting financial liability by pleading ignorance of
the facts in question.
(c) Any enquiry carried out by the Buyer and/or by representatives
or advisers of the Buyer, or anyone whomsoever from the
Company or the Subsidiaries within the Buyer's group,
including the verification of the schedules hereto, shall not
exempt the Shareholders from their obligations in respect of
this agreement or its commitments.
(d) The Shareholders represent that nothing can limit their
capacity to subscribe and perform the undertakings taken in
respect of this Agreement and in particular they represent
there is no legal or contractual obstacle or restriction to
the performance of the warranty obligations subscribed in
connection with this Agreement.
- 13 -
2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as set forth on Schedule 2.10, since September 30, 2000, each of
the Company and its Subsidiaries has conducted its business only in the
ordinary course and has used its best efforts to preserve its business
and assets and (a) there has not occurred any events or changes that
have had, or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect and (b) there has not
been any change in the accounting principles, policies, practices or
procedures of the Company and its Subsidiaries or their application to
the Company and (c) neither the Company or its Subsidiaries has taken
any action that would have been prohibited under Section 4.1 hereof.
2.11 COMPLIANCE WITH LAWS
The Company and its Subsidiaries are in compliance with all applicable
statutes, laws, ordinances, regulations, rules, judgments, decrees and
orders of any Governmental Entity applicable to their respective
businesses or operations, except for matters which, individually or in
the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect. Each of the Company and its Subsidiaries has
in effect all federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("PERMITS") necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit,
except for the lack of any Permits and for defaults under Permits
which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
2.12 TAXES
Except to the extent that the failure to comply with the following
representations would not reasonably be expected to have, in the
aggregate, a Company Material Adverse Effect: each of the Company and
its Subsidiaries has timely filed all Tax Returns required to be filed
by it, or requests for extensions to file such Tax Returns have been
timely filed and granted and have not expired, and all such filed Tax
Returns are complete and accurate in all respects; the Company and each
of its Subsidiaries have timely paid (or the Company has paid on its
behalf) all Taxes due or claimed to be due whether by proposed
assessment or otherwise by any taxing authority; the most recent
financial statements contained in the Financial Statements reflect an
adequate reserve for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements; no deficiencies for any
Taxes have been proposed, asserted or assessed against the Company or
any of its Subsidiaries that are not adequately reserved for on the
Company's financial statements in accordance with GAAP; all Taxes that
the Company or any of its Subsidiaries is or was required by law to
withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Entity; the
Company does not have any liability for Taxes of any
- 14 -
other person or entity; the Company has made all required estimated Tax
payments sufficient to avoid any underpayment penalties; there are no
outstanding agreements, waivers or arrangements extending the statutory
period of limitations applicable to any claim for, or the period of the
collection or assessment of, Taxes due with respect to the Company for
any taxable period; no closing agreement that could affect the Taxes of
the Company for periods ending after the date of the Closing pursuant
to Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local or foreign law has been entered
into by or with respect to the Company; the Company has not agreed to
and is not required to make any adjustment with respect to the taxable
periods ending after the date of the Closing pursuant to Section 481(a)
of the Code (or any predecessor provision) by reason of any change in
any accounting method, there is no application pending with any taxing
authority requesting permission for any such change in any accounting
method of the Company, and the IRS has not proposed any such adjustment
or change in accounting method; the Company has not filed, and will not
file through the date of the Closing, any state or local Tax Returns on
a unitary or combined basis with any other person; the Company has made
no material elections, other than an election to be an S corporation
pursuant to Section 1362 of the Code (or pursuant to a comparable state
or local tax provision); and there is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible by the Company by reason of Section 280G of the Code. For
purposes of this Agreement, "TAXES" means all taxes, including without
limitation income, gross receipts, ad valorem, value-added, excise,
real property, personal property, sales, use, transfer, withholding,
employment, payroll and franchise taxes imposed by the United States of
America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof. For purposes
of this Agreement, "TAX RETURNS" means all reports, returns,
declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
The Company (i) timely elected to be treated as an S corporation for
federal tax purposes and, except as set forth on Schedule 2.12, for the
tax purposes of each state in which the Company is subject to tax,
effective on October 1, 1988, and (ii) where applicable has properly
maintained its status as an S corporation for all taxable periods since
October 1, 1988 and, accordingly, the Shareholders will pay when due
federal income taxes or state income taxes with respect to any taxable
period beginning on October 1, 1988 and through its taxable year (or
portion thereof) ending on the date of the Closing. Schedule 2.12 sets
forth each state with respect to which the Company has made an election
to be treated as an S corporation. Neither the Shareholders nor the
Company is aware of any event that exists or has existed that presents
any risk that the status of the Company as an S corporation is or has
been at any time subject to termination or revocation. There are no
liens for Taxes upon any of the assets of the Company, except Liens
- 15 -
for current Taxes not yet due and payable. To the Company's Knowledge,
there is no pending dispute with any taxing authority relating to any
of the Company's Tax Returns and there is no tax audit of any Tax
Return of the Company pending or currently in process.
2.13 INTELLECTUAL PROPERTY
(a) Schedule 2.13(a) includes a list of all Patents, Trademarks,
Copyrights and Software owned or licensed by the Company and
its Subsidiaries. "COMPANY INTELLECTUAL PROPERTY" shall mean
all (i) United States and foreign patents, patent
applications, and other patent rights ("PATENTS"); (ii) United
States and foreign trademarks, service marks, trade dress,
trade names, brand names, Internet domain names, designs,
logos, or corporate names, whether registered or unregistered,
and all registrations and applications for registration
thereof ("TRADEMARKS"); (iii) United States and foreign
copyrights, including all renewals and extensions thereof,
copyright registrations and applications for registration
thereof, and non-registered copyrights ("Copyrights"); (iv)
trade secrets, concepts, ideas, designs, research, processes,
procedures, techniques, methods, know-how, data, mask works,
discoveries, inventions, modifications, extensions,
improvements, and other proprietary rights (whether or not
patentable or subject to copyright, mask work, or trade secret
protection) ("TECHNOLOGY"); and (v) computer software
programs, including, without limitation, all source code,
object code, and documentation related thereto ("SOFTWARE"),
but not including mass-marketed software with a price of less
than $1,500 per copy. The Company and its Subsidiaries own or
are licensed or otherwise possess legally enforceable rights
to use, sell, and license, free and clear of any and all Liens
or material restrictions, any and all Company Intellectual
Property, except where any failure to own, license or
otherwise possess legally enforceable rights to use such
Company Intellectual Property would not reasonably be expected
to have a Company Material Adverse Effect.
(b) Schedule 2.13(b) sets forth all material licenses,
sublicenses, and other agreements or permissions under which
the Company and its Subsidiaries are a licensor of Company
Intellectual Property.
(c) Except as may be evidenced by patents issued after the date
hereof, neither the Company nor its Subsidiaries have been
named in any suit, action or proceeding which involves a claim
of infringement of any Patents, Trademarks, Copyrights,
Technology or Software of any third party. To the Company's
Knowledge, the manufacturing, marketing, licensing or sale of
the products of the Company and its Subsidiaries as presently
conducted do not infringe any valid Patents, Trademarks,
Copyrights, Technology or Software of any third party, except
for any such infringement that would not reasonably be
expected to have a Company Material Adverse Effect. Each of
the Company and its Subsidiaries has
- 16 -
taken all necessary and reasonable action to maintain and
protect each item of Company Intellectual Property.
(d) All material Sofware used, sold, or licensed by the Company
and its Subsidiaries is free from any material software
defect, performs materially in conformance with its
documentation, and does not contain any code or mechanism that
could be used to interfere with the operation of the Software.
(e) Except as set forth on Schedule 2.13(e), the Company is not
and its Subsidiaries are not, nor, as a result of the
execution and delivery of this Agreement or the performance of
its obligations hereunder, will be, in violation of any
agreement relating to any Company Intellectual Property.
2.14 TITLE TO AND CONDITION OF PROPERTIES
Each of the Company and its Subsidiaries has good and marketable title
to or a valid leasehold interest under a capitalized lease in all
assets recorded on the Company's balance sheet as of September 30,
2000, free and clear of all pledges, claims, liens, charges,
encumbrances or security interests of any kind or nature whatsoever
(collectively, "LIENS"), except for (a) assets no longer used or useful
in the conduct of the business or disposed of in the ordinary course of
business since such date, (b) Liens disclosed in the Financial
Statements and in Schedule 2.14, (c) Liens or imperfections of title
which are not, individually or in the aggregate, material in character,
amount or extent and which do not materially detract from the value or
materially interfere with the present or presently contemplated use of
the assets subject thereto or affected thereby, and (d) Liens for
current Taxes not yet due and payable. Each of the Company and its
Subsidiaries has a valid leasehold or other interest in all other
assets used by it in its business, other than exceptions that would not
reasonably be expected to have a Company Material Adverse Effect. All
of the machinery, equipment and other tangible personal property and
assets owned or used by the Company and its Subsidiaries are in good
condition and repair, except for ordinary wear and tear, and are fit
for their present use and usable in the ordinary course of business,
except for any matter otherwise covered by this sentence which would
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
2.15 CONTRACTS AND AGREEMENTS
Schedule 2.15 sets forth a list of:
(a) each contract, agreement or commitment of the Company or its
Subsidiaries which requires total payments to or by the
Company or any of its Subsidiaries of at least $50,000
annually;
(b) each contract, agreement or commitment of the Company or its
Subsidiaries or any of its Subsidiaries which has a remaining
term longer
- 17 -
than one hundred and eighty (180) days, which requires total
payments to or by the Company or any of its Subsidiaries of at
least $100,000 during the remaining term and which is not
terminable on thirty (30) or fewer days' notice without
penalty;
(c) each contract, agreement or commitment to which the Company or
any of its Subsidiaries is a party or by which any of its
assets are bound relating to indebtedness for borrowed money,
including capital leases and security agreements relating
thereto and any amendment or waiver thereof;
(d) each lease of real property by the Company or any of its
Subsidiaries;
(e) any collective bargaining agreement, union agreement,
employment agreement, consulting agreement, management service
agreement or substantially similar type of contract or
agreement to which the Company or any of its Subsidiaries is a
party;
(f) any consent decree and other judgment, decree or order,
settlement agreement or other agreement limiting the ability
of the Company or any of its Subsidiaries to compete in any
line of business or with any Person in any geographic areas;
(g) any joint venture agreement or other contract, agreement or
commitment to which the Company or any of its Subsidiaries is
a party involving a sharing of profits or expenses; and
(h) any outstanding loan (other than pursuant to a plan intended
to satisfy the requirements of Section 401(c) of the Code) or
advance by the Company or any of its Subsidiaries to, or
investment by the Company or any of its Subsidiaries in, any
Person, or any agreement, contract, commitment or
understanding relating to the making of any such loan, advance
or investment (excluding trade receivables).
All of the contracts, agreements, leases, licenses, arrangements,
commitments and documents listed on Schedule 2.15 (collectively, the
"COMPANY CONTRACTS") are valid obligations of the Company or any of its
Subsidiaries and, to the Company's Knowledge, each other party thereto,
and are binding and in full force and effect in accordance with their
terms and conditions. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect, there is no existing default thereunder or breach thereof by
the Company or any of its Subsidiaries or by any other party thereto,
or any conditions which, with the passage of time or the giving of
notice or both, might reasonably constitute such a default by the
Company, such Subsidiaries, or by any other party to a Company Contract
and, except as set forth in Schedule 2.15(a), none of the Company
Contracts will be breached by or give any other party a right of
termination as a result of the transaction contemplated by this
Agreement. There
- 18 -
are no pending or, to the Company's Knowledge, threatened disputes with
respect to the Company Contracts.
Except as set forth on Schedule 2.15(b), neither the Company nor the
Subsidiaries, pursuant to any contract, agreement, franchise, licence
or permit, holds, possesses, uses or has access to, or has the right to
hold, possess, use or have access to, any property or right of any
nature belonging to any other person upon which the conduct of the
business of the Company or the Subsidiaries as it is being customarily
conducted is dependent. Except as set forth on Schedule 2.15(b),
neither the Company nor the Subsidiaries is bound by any contract or
agreement purporting to materially constrain or limit the Company or
the Subsidiaries in the conduct of its business or affairs. Neither the
Company nor the Subsidiaries are bound by any non-competition,
affirmative or restrictive covenant limiting the nature of the business
that any such corporation can carry on, or the time or territory in
which the business of the corporation and of the Subsidiaries can be
operated. Neither the Company nor the Subsidiaries knows of any bid or
contract proposal made by the Company or the Subsidiaries that, if
accepted and entered into, might result in a material loss to the
Company or the Subsidiaries.
2.16 INSURANCE
Schedule 2.16 sets forth a list of all policies of fire, extended
coverage, liability and all other kinds of insurance held by the
Company in connection with the conduct of its and its Subsidiaries'
business and operations (other than policies relating to Company
Plans). Such policies are in full force and effect and, to the
Company's Knowledge, neither the Company nor any Subsidiary is not in
default with respect to its obligations under any of such insurance
policies, except for any failures to be in full force and effect or
defaults that would not reasonably be expected to have a Company
Material Adverse Effect. The Company and its Subsidiaries maintain the
type and amount of insurance which the Company and its Subsidiaries
believe is adequate in coverage and amount to insure fully against the
risks to which the Company, its Subsidiaries and their employees,
directors, business, properties and other assets would reasonably be
expected to be exposed in the operation of their respective business.
2.17 EMPLOYEES
(a) Schedule 2.17 sets forth the names, the rate of compensation
(and the portions thereof attributable to salary and bonuses,
respectively) and location of all current employees of the
Company and each Subsidiary.
(b) No key employee or group of employees has given notice to
terminate or, to the Company's knowledge, has any plans to
terminate employment with the Company or any Subsidiary.
Neither the Company nor its Subsidiaries is a party to or
bound by any collective bargaining agreement, nor has it
- 19 -
experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes.
(c) To the Company's Knowledge, no organizational effort has been
made or threatened, either currently or within the past two
years, by or on behalf of any labor union with respect to
employees of the Company or any Subsidiary.
2.18 EMPLOYEE BENEFITS
(a) Schedule 2.18 lists all material employee benefit plans and
collective bargaining, employment or severance agreements or
other similar arrangements which the Company and its
Subsidiaries, or any ERISA Affiliate, sponsors, maintains, or
to which contributions are made, for the benefit of employees
of the Company, its Subsidiaries or an ERISA Affiliate,
including, without limitation, (1) any "employee benefit plan"
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (2) any
profit-sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement,
severance, welfare or incentive plan, agreement or
arrangement, (3) any plan, agreement or arrangement providing
for "fringe benefits." The plans, agreements and arrangements
described in this Section 2.18 are referred to herein as the
"COMPANY PLANS". For purposes of this Agreement, "ERISA
AFFILIATE" means any Person that is a member of "controlled
group of corporations" with, or is under "common control"
with, or is a member of the same "affiliated service group"
with the Company, as defined in Section 414 of the Code.
(b) None of the Company Plans is (i) a plan subject to Title IV of
ERISA or Section 412 of the Code, (ii) a "multi-employer plan"
(within the meaning of Section 3(37) of ERISA), (iii) a
"multiple employer plan" (within the meaning of Section 3(40)
of ERISA or Section 413(c) of the Code), (iv) a "voluntary
employees' beneficiary association" (within the meaning of
Section 501(c)(9) of the Code), or (v) a "multiple employer
welfare arrangement" (within the meaning of Section 3(40)(A)
of ERISA).
(c) Neither the Company, its Subsidiaries nor any ERISA Affiliate
has ever contributed to, or had an obligation to contribute
to, any plan subject to Title IV of ERISA or Section 412 of
the Code, any "multi-employer plan" (within the meaning of
Section 3(37) of ERISA), any "multiple employer plan" (within
the meaning of Section 3(40) of ERISA or Section 413(c) of the
Code), any "voluntary employees' beneficiary association"
(within the meaning of Section 501(c)(9) of the Code), or any
"multiple employer welfare arrangement" (within the meaning of
▇▇▇▇▇▇▇ ▇(▇▇)(▇) ▇▇ ▇▇▇▇▇).
- ▇▇ -
(▇) ▇▇▇▇ of the Company Plans, nor any trust created thereunder,
now holds or has heretofore held as assets any stock or
securities issued by the Company, its Subsidiaries or any
ERISA Affiliate.
(e) The Company and its Subsidiaries have delivered or made
available to Buyer true and complete copies of all documents
and summary plan descriptions of the Company Plans or summary
descriptions of any such Company Plan not otherwise in
writing. The Company and its Subsidiaries have delivered to
Buyer true and complete copies of the most recent
determination letters and the Forms 5500 filed in the most
recent plan year with respect to any Company Plan, including
all schedules thereto and financial statements with attached
opinions of independent accountants (if required). The Company
and its Subsidiaries have delivered to Buyer all
communications received from or sent to the Internal Revenue
Service or the Department of Labor within the last year,
including but not limited to any Forms 5330 filed by the
Company, its Subsidiaries or any ERISA Affiliate related to
Company Plans.
(f) Each Company Plan (and any related trust agreement) has been
administered in accordance with its terms, except for any
failure to so administer that would not reasonably be expected
to have a Company Material Adverse Effect. The Company, its
Subsidiaries and each ERISA Affiliate, is in compliance with
the applicable provisions of ERISA, the Code and all laws
applicable thereto, except for any failure to so comply that
would not reasonably be expected to have a Company Material
Adverse Effect.
(g) All reports, returns and similar documents with respect to
each Company Plan required to be filed with any Governmental
Authority or distributed to any participant of each Company
Plan have been duly and timely filed or distributed.
(h) No actions, suits, disputes or claims (other than routine
claims for benefits in the ordinary course) are pending or, to
the Company's Knowledge, threatened with respect to any
Company Plan. To the Company's Knowledge, no audits,
inquiries, reviews, proceedings, claims, or demands are
pending with any Governmental Authority with respect to any
Company Plan.
(i) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code has received a favourable
determination letter from the Internal Revenue Service that
such Company Plan is qualified under Section 401(a) of the
Code.
(j) No Company Plan provides for or continues medical or health
benefits, or life insurance or other death benefits (through
insurance or otherwise) for any employee or any dependent or
beneficiary of any employee after such
- 21 -
employee's retirement or other termination of employment
except as may be required by COBRA or applicable state law,
and there has been no communication to any employee that could
reasonably be expected to promise or guarantee any such
benefits. For purposes of this Agreement, "COBRA" means the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, Section 4980B of the Code, Title I Part 6 of ERISA,
and any similar state group health plan continuation law,
together with all regulations and proposed regulations
promulgated thereunder.
(k) The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay,
and will not accelerate the time of payment or vesting, or
increase the amount of compensation due to any individual.
(l) With respect to any Company Plan, all required or
discretionary (in accordance with historical practices)
payments, premiums, contributions, reimbursements, or accruals
for all periods ending prior to or as of the Effective Time
shall have been made or properly accrued on the current
balance sheets or will be properly accrued on the books and
records of the Company, its Subsidiaries and each ERISA
Affiliate as of the Effective Time. None of the Company Plans
has any unfunded liabilities which are not reflected on the
current balance sheet or the books and records of the Company,
its Subsidiaries and each ERISA Affiliates.
2.19 SECURITIES MATTERS
(a) Each Shareholder alone, or through his personal
representative, has such knowledge and experience in financial
and business matters and such experience in evaluating and
investing in companies such as Buyer as to be capable of
evaluating the merits and risks of an investment in the Buyer
Shares. Such Shareholder has the financial ability to bear the
economic risk of his investment in the Buyer Shares being
acquired hereunder, has adequate means for providing for his
current needs and contingencies and has no need for liquidity
with respect to his investment in Buyer.
(b) Each Shareholder is acquiring the Buyer Shares for his own
account, for investment purposes only, and not with the view
to, or for resale in connection with, any distribution
thereof. Such Shareholder understands that the Buyer Shares
have not been distributed pursuant to a prospectus in Canada
pursuant to applicable legislation and have not been
registered under the SECURITIES ACT of 1933, as amended (the
"SECURITIES ACT"), or under the securities laws of Canada, by
reason of a specified exemption from the registration or
prospectus provisions thereunder which depends upon, among
other things, the BONA FIDE nature of such Shareholder's
investment intent as expressed herein. Such Shareholder
acknowledges that his representations and warranties contained
herein are being relied upon by Buyer as a basis for the
exemption of the issuance of the Buyer
- 22 -
Shares hereunder from the registration requirements of the
Securities Act and any applicable state securities laws.
(c) Each Shareholder acknowledges that the Buyer Shares must be
held indefinitely until they are subsequently registered under
the Securities Act and under applicable state securities laws
or an exemption from such registration is available. Such
Shareholder has been advised or is aware of: (A) the
provisions of Rule 144 and Rule 145 promulgated under the
Securities Act which permits limited resale of the securities
purchased in a private placement subject to the satisfaction
of certain conditions including, among other things, the
availability of certain current public information about Buyer
and compliance with applicable requirements regarding the
holding period and the amount of securities to be sold and the
manner of sale and (B) Regulation S promulgated under the
Securities Act or other applicable legislation which permits
resale of the purchased securities in the United States or
Canada subject to certain restrictions. Each Shareholder
understands that only Buyer can take action to register the
Buyer Shares.
(d) Such Shareholder acknowledges that the Buyer Shares must also
be held in accordance with applicable securities laws in
Canada and the Shareholder undertakes not to sell, transfer or
assign the Buyer Shares in contravention of the applicable
laws in force in Canada.
(e) Each Shareholder or his representative has had an opportunity
to discuss the Buyer's business, management, financial affairs
and acquisition plans with its management, to review the
Buyer's facilities, and to obtain such additional information
concerning such Shareholder's investment in the Buyer Shares
in order for such Shareholder to evaluate its merits and
risks, and such Shareholder has determined that the Buyer
Shares are a suitable investment for such Shareholder and that
at this time such Shareholder could bear a complete loss of
his investment.
(f) Each Shareholder is aware that no U.S. or Canada federal,
state, provincial or other agency has passed upon or made any
finding or determination concerning the fairness of the
transactions contemplated by this Agreement or the adequacy of
the disclosure of the exhibits and schedules hereto or
thereto.
(g) Each Shareholder understands that all certificates for the
Buyer Shares issued to such Shareholder shall bear a legend in
substantially the following form and including such legend as
may be required under Canadian securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE
- 23 -
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE
DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS."
2.20 FACILITIES
Neither the Company nor its Subsidiaries owns any real property.
Schedule 2.20 sets forth a list of all real property currently leased
or occupied by the Company or its Subsidiaries or leased or occupied by
the Company or its Subsidiaries during the previous five (5) years
(collectively, the "FACILITIES"). Except as set forth on Schedule 2.20,
the Facilities are not subject to any encumbrances, encroachments,
building or use restrictions, exceptions, reservations or limitations,
except those which do not, taken as a whole, result in a Company
Material Adverse Effect or which prevent any continued use thereof in
the usual and normal conduct of the Company's or its Subsidiaries'
business. There are no pending or, to the Company's Knowledge,
threatened condemnation proceedings relating to any of the Facilities.
2.21 ENVIRONMENTAL MATTERS
(a) There is not now nor has there been any treatment, storage,
disposal, transportation, handling, production or processing,
other than that required in the normal course of business and
in compliance in all material respects with all applicable
Environmental Laws, by the Company or its Subsidiaries, of any
Hazardous Substance at the Facilities. There is not now nor
has there been any Release of any Hazardous Substance at, to
or from any location for which the Company or any of its
Subsidiaries may be liable which require any investigation,
response or remediation activities under applicable
Environmental Laws the cost of which, individually or in the
aggregate, could reasonably be expected to have a Company
Material Adverse Effect.
(b) To the Company's Knowledge, there is not now nor have there
been any underground storage tanks located at the Facilities
during the Company's or its Subsidiaries' lease or use
thereof, and no such tanks have been removed by or on behalf
of the Company or its Subsidiaries from any Facilities at any
time.
(c) Schedule 2.21(c) contains a list of all Environmental Permits
held by the Company. Each of the Company and its Subsidiaries
has had within the past three years and presently has each
Environmental Permit required under applicable Environmental
Laws for the Business as currently
- 24 -
operated and for any alterations or improvements conducted by
the Company and its Subsidiaries at the Facilities, except
where the failure to have any such Environmental Permit,
individually or in the aggregate, would not have a Company
Material Adverse Effect. The Company and its Subsidiaries has
been and is currently in material compliance with all
Environmental Laws, including each Environmental Permit,
except where the failure to so comply, individually or in the
aggregate, would not have a Company Material Adverse Effect.
The Company and its Subsidiaries have made available to Buyer
all environmental reports, audits, assessments or studies
performed or prepared within the last three years within the
possession or control of the Company its Subsidiaries with
respect to the Facilities.
(d) Neither the Company nor its Subsidiaries has (i) entered into
or been subject to any consent decree, compliance order, or
administrative order with respect to the Facilities or any
property to which any Hazardous Substances generated by the
Company or any of its Subsidiaries has been sent for
treatment, storage or disposal, which decree or order is still
in effect; (ii) within the past three years received notice
under the citizen suit provision of any Environmental Law in
connection with the Facilities or any other property to which
any Hazardous Substance generated by the Company or any of its
Subsidiaries has been sent for treatment, storage or disposal;
(iii) within the past three years received any request for
information, notice, demand letter, administrative inquiry or
formal or informal complaint or claim with respect to any
Environmental Condition relating to the Facilities or any
other property to which any Hazardous Substance generated by
the Company or any of its Subsidiaries has been sent for
treatment, storage or disposal; or (iv) been subject to or,
within the past three years, threatened with any governmental
or citizen enforcement action with respect to the Facilities
or any other property to which any Hazardous Substance
generated by the Company or any of its Subsidiaries has been
sent for treatment, storage or disposal, and to the Company's
Knowledge, none of the matters set forth in this clause (d)
will be forthcoming.
(e)
There are not now nor have there been any capacitors,
transformers, other equipment, or materials containing PCBs
which are or were owned by the Company or any of its
Subsidiaries at or on the Facilities in quantities or
concentrations that require removal or remediation by the
Company or any of its Subsidiaries under Environmental Laws.
To the Company's Knowledge, after due inquiry there is not now
nor has there been prior to or during the lease, operation or
use of any Facility by the Company or any of its Subsidiaries,
asbestos present at or on the Facilities in a condition that
requires abatement, encapsulation or removal by the Company or
any of its Subsidiaries under any Environmental Laws.
- 25 -
For purposes of this Section 2.21, the following defined terms have the
meanings set forth below:
"ENVIRONMENT" means soil, surface waters, ground waters, land,
stream sediments, surface or subsurface strata, ambient air
and any environmental medium.
"ENVIRONMENTAL CONDITION" means any condition with respect to
the Environment on or at the Facilities, any property to which
any Hazardous Substances generated by the Company or any of
its Subsidiaries has been sent for treatment, storage or
disposal, whether or not yet discovered, which does or is
reasonably likely to result in any material damage, loss,
cost, expense, claim, demand, order, or liability to or
against Buyer or the Company or any of its Subsidiaries.
"ENVIRONMENTAL LAW" means any environmental or health and
safety-related law, regulation, rule, ordinance, or legally
enforceable order or determination of any Governmental Entity.
"ENVIRONMENTAL PERMITS" means any and all federal, state and
local governmental permits, licenses and other authorizations
and approvals required under any Environmental Law, or that
relates to the Environment or to public health and safety or
worker health and safety as they may be affected by the
Environment.
"HAZARDOUS SUBSTANCES" shall mean any flammable material,
explosives, radon, radioactive materials, asbestos,
urea-formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum by-products, methane, hazardous
materials, hazardous waste, or hazardous or toxic substances
as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
ss.9601, et seq.), the Hazardous Materials Transportation Act,
as amended (49 U.S.C. ss.1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. ss.6901,
et seq.), the Toxic Substances Control Act, as amended (15
U.S.C.ss.2601, et seq.), Articles 15 and 27 of the New York
State Environmental Conservation Law or any other applicable
Environmental Law and the regulations promulgated thereunder.
"RELEASE" has the same meaning as given to that term in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C.ss.9601, et seq.)
and the regulations promulgated thereunder.
- 26 -
2.22 TRANSACTION WITH THE SHAREHOLDERS
Except as set forth in Schedule 2.22, the Company and its Subsidiaries
do not owe any amount to the Shareholders or the Shareholder Affiliates
for money loaned to the Company and the Shareholders and the
Shareholder Affiliates do not owe any amount to the Company or the
Subsidiaries for money loaned to any of the Shareholders or the
Shareholder Affiliates. Except as set forth in Schedule 2.22, the
Company, the Shareholders and the Shareholder Affiliates have not
entered into or have any obligation, directly or indirectly, to enter
into any transaction, including, without limitation, the purchase from,
sale to or exchange of property with, or the rendering of any service
by or for the Company, its Subsidiaries, the Shareholders or the
Shareholder Affiliates, as the case may be.
2.23 CAPITAL EXPENDITURES
Schedule 2.23 sets forth all of the completed and planned capital
expenditures of Fishers as of September 30, 2000 in respect of the
construction of the new additional 20,000 square foot facility situated
at 7647 County Road, in the town of Fishers in the State of New York
which all form part of the Fishers' Assets sold to the Surviving
Corporation as described in Section 1.11.
2.24 USE OF NAME
Except as set forth on Schedule 2.24 the Company has full exclusive
right and title to use its corporate name as set forth in its
certificate of incorporation.
2.25 BROKERS, FINDERS OR FINANCIAL ADVISORS
No broker, investment banker, financial advisor or other person, other
than Wit SoundView Corporation, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company, its Subsidiaries or
any Shareholder.
2.26 EXCLUSIVITY OF REPRESENTATIONS
THE REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY AND THE
SHAREHOLDERS IN THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL
OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES. THE COMPANY AND THE SHAREHOLDERS HEREBY DISCLAIM
ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE BUYER OR ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION, INCLUDING ANY FINANCIAL PROJECTIONS
OR OTHER SUPPLEMENTAL DATA.
- 27 -
2.27 FULL DISCLOSURE
Each of the Shareholders has made or caused to be made due enquiry with
respect to each of the representations, warranties and statements
contained in this Agreement and in each of the schedules, certificates,
documents and other writings referred to herein or furnished to the
Buyer hereunder, and none of the same contains any untrue statement of
a material fact or omit a material fact necessary to make the
statements contained therein not misleading, and all such statements,
taken as a whole, together with this Agreement, do not contain any
untrue statement of a material fact or omit a material fact necessary
to make the statements contained herein and therein not misleading.
Save and except for those matters disclosed herein, the Shareholders
have no knowledge of any facts and there are not any facts which should
reasonably be made known to the Buyer relating to the Company or the
Subsidiaries not herein disclosed, which might be reasonably expected
to materially diminish the Buyer's appreciation of the worth or
profitability of the Company and the Subsidiaries, taken as a whole, or
which, if known by the Buyer, might be reasonably expected to deter the
Buyer from completing the transactions herein contemplated.
ARTICLE 3
REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB
Buyer and Buyer Sub hereby jointly and severally represent and warrant to the
Company and the Shareholders, as of the date hereof (except as to any
representation or warranty which specifically relates to an earlier date), as
follows:
3.1 ORGANIZATION AND QUALIFICATIONS
Each of Buyer and Buyer Sub is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as
currently conducted. Buyer and Buyer Sub are each duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of their respective businesses
conducted or property owned by each makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the
case may be, would not reasonably be expected to have a Buyer Material
Adverse Effect. For purposes of this Agreement, "BUYER MATERIAL ADVERSE
EFFECT" means any change, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any
change or effect) that is materially adverse to the business, financial
condition or results of operations of the Buyer and its subsidiaries
(including Buyer Sub), taken as a whole, provided, however, any adverse
change, effect or circumstance (a) primarily arising out of or
resulting primarily from actions contemplated by the parties hereto in
connection with this Agreement; (b) resulting from economic factors
affecting the economy as a whole; (c) resulting in changes from the
market price or trading volume of the
- 28 -
Buyer Subordinate Voting Shares; or (d) resulting from factors
generally affecting the specific markets in which the Buyer and its
subsidiaries compete shall not be deemed in themselves, either alone or
in combination, to constitute, and shall not be taken into account in
determining whether there has been, a Buyer Material Adverse Effect.
3.2 CAPITALIZATION
The authorized, issued and outstanding shares of each class of capital
stock of Buyer and Buyer Sub are as set forth in Exhibit C. Exhibit C
also sets forth the number of shares reserved for issuance pursuant to
the Buyer's duly approved stock option plans (collectively, the "BUYER
STOCK OPTION PLANS"), and the total number of options outstanding under
Buyer Stock Option Plans or otherwise. All of the issued and
outstanding shares of capital stock of Buyer and Buyer Sub and Buyer
Sub have been duly authorized and validly issued and are fully paid and
non-assessable. Except as provided in this Agreement and pursuant to
the Buyer Stock Option Plans: (a) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of Buyer or Buyer Sub
is authorized or outstanding; (b) Buyer and Buyer Sub have no
obligation (contingent or otherwise) to issue any subscription,
warrant, option, convertible security or other such right or to issue
or distribute to holders of any shares of their capital stock any
evidences of indebtedness or assets of Buyer; and (c) except for the
preferred shares series 1 of the Buyer of which 800,000 are issued and
outstanding, Buyer and Buyer Sub have no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of their
capital stock or any interest therein or to pay any dividend or make
any other distribution in respect thereof. All of the issued and
outstanding shares of capital stock of Buyer have been offered, issued
and sold by Buyer in compliance with applicable federal and state
securities laws or pursuant to valid exemptions therefrom.
3.3 AUTHORIZATION
Buyer and Buyer Sub each have the requisite corporate power and
authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out their obligations
hereunder. The execution and delivery of this Agreement by the Buyer
and Buyer Sub and the consummation by them of the transactions
contemplated hereby have been duly authorized by all necessary action
on the part of the Buyer and Buyer Sub, and no further action is
required by the Buyer or Buyer Sub. This Agreement has been duly
executed by the Buyer and Buyer Sub and, assuming this Agreement
constitutes a valid and binding obligation of the Company and the
Shareholders, this Agreement constitutes a valid and binding agreement
of the Buyer and Buyer Sub enforceable against each of them in
accordance with its terms, subject, however, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity, regardless of
whether such
- 29 -
enforceability is considered in equity or at law. Neither Buyer nor
Buyer Sub is in violation of any of the provisions of its Certificate
of Incorporation, bylaws or other organizational documents.
3.4 NON-CONTRAVENTION
Subject to regulatory approval under applicable securities laws and
regulations, including those of any stock exchanges, the execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or
assets of the Buyer or any of its subsidiaries (including Buyer Sub)
pursuant to, any provision of: (a) the Certificate of Incorporation or
By-laws of the Buyer or any provision of the comparable organizational
documents of Buyer or any of its subsidiaries; (b) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the
Buyer or any of its subsidiaries or their respective properties or
assets; or (c) subject to the governmental filings and other matters
referred to in Section 3.5, any statute, law, rule, regulation,
judgment, order or decree applicable to the Buyer or any of its
subsidiaries or their respective properties or assets, other than, in
the case of clauses (b) and (c) above, any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would
not reasonably be expected to have a Buyer Material Adverse Effect or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
3.5 CONSENTS AND APPROVALS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or
with respect to the Buyer or any of its subsidiaries (including Buyer
Sub) in connection with the execution and delivery of this Agreement by
the Buyer or the consummation by the Buyer and Buyer Sub of the
transactions contemplated by this Agreement, except for: (a) the filing
of a pre-merger notification and report form under the HSR Act and
applicable filings under foreign antitrust competition laws; (b)
approvals for listing of the shares to be issued in furtherance of the
transactions set forth herein on The Toronto Stock Exchange and for
quotation on the Nasdaq National Market and any approval of the
shareholders of the Buyer; (c) such filings, consents, approvals,
orders, registrations and declarations as may be required under the
laws of any foreign country in which the Buyer or any of its
subsidiaries conducts any business or owns any assets; (c) such
filings, consents, approvals, orders, registrations and declarations as
may be necessary as a result of the issuance of the Buyer Shares or any
facts or circumstances relating solely to the Company; and (d) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
would not,
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individually or in the aggregate, reasonably be expected to have a
Buyer Material Adverse Effect or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
3.6 LITIGATION; PROCEEDINGS
There is no action, suit or proceeding, governmental or otherwise,
pending or, to the Buyer's Knowledge, threatened against the Buyer, any
of its subsidiaries (including Buyer Sub) or any of their respective
properties or business that questions the validity of this Agreement,
the right of the Buyer or Buyer Sub to enter into this Agreement or to
consummate the transactions contemplated hereby, or that, individually
or in the aggregate, would reasonably be expected to have a Buyer
Material Adverse Effect. There is no judgment, decree, injunction, rule
or order of any Governmental Entity outstanding against the Buyer or
Buyer Sub or any of their subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would have, any such effect.
3.7 AUTHORIZATION FOR BUYER SHARES
Buyer has taken all necessary action to issue the Buyer Shares by the
Effective Time. The Buyer Shares have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable and free and
clear of all Liens (other than restrictions on transfer imposed by
applicable securities laws) and will not be issued in violation of any
pre-emptive rights, rights of first refusal or similar rights.
3.8 CANADIAN DOCUMENTS
Buyer has provided to the Company and each Shareholder each statement
and report, as may be required to have been filed as of the date hereof
under Canadian securities laws (the "CANADIAN DOCUMENTS"). As of their
respective filing dates, the Canadian Documents complied in all
material respects with the requirements of the securities laws in force
in Canada, and none of the Canadian Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed
Canadian Document. The financial statements of Buyer being the
consolidated audited balance sheets of the Buyer as at August 31, 1999
and 1998 and the statements of earnings, retained earnings and cash
flows for each of the years in the three years ended August 31, 1999
and the unaudited interim consolidated balance sheet, statements of
earnings, retained earnings and cash flows of the Buyer for the nine
months ended May 31, 2000 and May 31, 1999, including the notes thereto
(the "BUYER FINANCIAL STATEMENTS") were complete and correct in all
material respects as of their respective dates, complied as to form in
all material respects with applicable accounting requirements with
respect thereto as of their respective dates, and have
- 31 -
been prepared in accordance with Canadian GAAP applied on a basis
consistent throughout the periods indicated and consistent with each
other (except as may be indicated in the notes thereto or, in the case
of unaudited statements included in the Buyer's interim reports. The
balance sheets included in the Buyer Financial Statements present
fairly in all material respects as of their respective dates the
financial condition of the Buyer (subject, in the case of interim
financial statements, to normal, recurring year-end adjustments that
may be required upon audit).
3.9 NO UNDISCLOSED LIABILITIES
None of the Buyer and its subsidiaries (including Buyer Sub) have any
liability (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated and whether due or to become due)
which is material to the Buyer and its subsidiaries, taken as a whole,
except for: (a) liabilities shown on the latest balance sheet included
in the Canadian regulatory authorities Documents filed with the
Canadian regulatory authorities prior to the date of this Agreement
(the "BUYER BALANCE SHEET DATE"); (b) liabilities which have arisen in
the ordinary course of business since the Buyer Balance Sheet Date; and
(c) contractual liabilities incurred in the ordinary course of business
which are not required by Canadian GAAP to be reflected on a balance
sheet.
3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since the Buyer Balance Sheet Date, the Buyer has conducted its
business only in the ordinary course and there has not occurred any
events or changes that have had, or would reasonably be expected to
have, individually or in the aggregate, a Buyer Material Adverse
Effect.
3.11 INVESTMENT INTENT
The Buyer is acquiring the Company Shares for its own account for
investment purposes only and not with a view to or for distributing or
reselling such Company Shares or any part thereof or interest therein
without prejudice, however, to Buyer's rights to sell such securities
in compliance with applicable Canadian and U.S. federal and state
securities laws.
3.12 EXPERIENCE OF THE BUYER
The Buyer, through its representatives, has such knowledge,
sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective
investment in the Company Shares and has so evaluated the merits and
risks of such investment.
3.13 BROKERS, FINDERS OR FINANCIAL ADVISORS
Except for the fees payable by Buyer to ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ or any of its Affiliate, no broker, investment broker, financial
advisor or other person
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is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission from Buyer in connection with the
transactions contemplated by this Agreement.
3.14 FULL DISCLOSURE
The Buyer has made or caused to be made due enquiry with respect to
each of the representations, warranties and statements contained in
this Agreement and in each of the schedules, certificates, documents
and other writings referred to herein or furnished to the Shareholders
and the Company hereunder, and none of the same contains any untrue
statement of a material fact or omit a material fact necessary to make
the statements contained therein not misleading, and all such
statements, taken as a whole, together with this Agreement, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained herein and therein not
misleading.
ARTICLE 4
COVENANTS OF THE PARTIES
4.1 CONDUCT OF BUSINESS BY THE COMPANY
Except as set forth on Schedule 4.1, and except to the extent consented
to by Buyer or as expressly permitted or contemplated by this
Agreement, during the period from the date of this Agreement to the
Effective Time, the Company shall carry, and cause its Subsidiaries to,
on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the
extent consistent therewith, use reasonable efforts to preserve intact
its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others
having business dealings with it to the end that their goodwill and
ongoing businesses shall be unimpaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing,
without Buyer's consent (which consent shall not be unreasonably
withheld), during the period from the date of this Agreement to the
Effective Time, Shareholders shall not permit and the Company shall not
permit any of its Subsidiaries to:
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, except
for distributions of current year subchapter "S" corporation
earnings in amounts determined by the Company's Board of
Directors to reflect the taxes payable on such earnings, (i)
split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital
stock, or (ii) purchase, redeem or otherwise acquire any
shares of its capital stock or any other securities, or any
rights, warrants or options to acquire any such shares or
other securities;
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(b) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or
convertible securities;
(c) amend its Certificate of Incorporation or By-laws or other
comparable organization documents;
(d) acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof, or (ii) any assets that are
material, individually or in the aggregate, to the Company,
except purchases in the ordinary course of business consistent
with past practice;
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien (other than Liens pursuant to its existing
credit facilities) or otherwise dispose of any of its
properties or assets which are material, individually or in
the aggregate, to the Company, except in the ordinary course
of business consistent with past practice;
(f) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt
securities, or guarantee any debt securities of another
person, except for borrowings under its existing credit
facilities in amounts necessary to make distributions for
taxes as described in Section 4.1(a), or for working capital
purposes in an aggregate amount of less than $1,000,000, the
endorsement of checks in the normal course of business and the
extension of credit in the normal course of business, or (ii)
make any loans, advances or capital contributions to, or
investments in, any other Person, other than advances to
employees in accordance with past practice;
(g) except for the items currently contracted for by the Company,
make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $50,000 or,
in the aggregate, are in excess of $100,000;
(h) make any material Tax election or settle or compromise any
material income Tax liability;
(i) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued or contingent, asserted or
unasserted), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent
with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the
notes thereto) included in
- 34 -
the Financial Statements or incurred in the ordinary course of
business consistent with past practice;
(j) except in the ordinary course of business, modify, amend or
terminate any Company Contract, or waive, release or assign
any material rights or claims;
(k) except as required to comply with applicable law, (i) adopt,
enter into or amend any Company Plan, (ii) increase in any
material manner the compensation or fringe benefits of, or pay
any bonus to, any director, officer or employee of the Company
or its Subsidiaries (except for normal increases or bonuses in
the ordinary course of business consistent with past practice)
or (iii) grant any awards under any Employee Benefit Plan
(including the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units
or restricted stock, or the removal of existing restrictions
in any Employee Benefit Plan or agreement or awards made
thereunder);
(l) other than as required by law or GAAP, make any material
change to its accounting policies or procedures; or
(m) authorize any of, or commit or agree to take any of, the
foregoing actions.
4.2 PUBLIC ANNOUNCEMENTS
From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, no party hereto will issue or
cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby
without the prior consent of Buyer (in the case of the Shareholders or
the Company) or the Shareholders (in the case of Buyer), which consent
shall not be unreasonably withheld; provided, however, that: (a)
nothing herein will prohibit either party from issuing or causing
publication of any such press release or public announcement to the
extent that such party's counsel reasonably determines such action to
be required by law, or the regulations of any government agency or the
principal exchange or market on which Buyer Subordinate Voting Shares
are traded, in which case the party making such determination will, to
the greatest extent practicable in light of the circumstances, use best
efforts to allow the other party reasonable time to comment on such
release or announcement in advance of its issuance; and (b) Buyer, the
Company and the Shareholders may disclose this Agreement and the
transactions contemplated hereby to third parties in connection with
securing consents of such third parties and in connection with any
permits, approvals, filings or consents required by law to be obtained.
To the extent feasible, prior to the Closing, all press releases or
other announcements or notices regarding the transactions contemplated
by this Agreement shall be made jointly by Buyer and the Company.
- 35 -
4.3 NON-SOLICITATION; NON-NEGOTIATION
The Company and the Shareholders agree that they will not, and they
will use their commercially reasonable efforts to cause their
representatives, agents or employees acting on their behalf, not to,
after the execution of this Agreement until the earlier of (a) the
termination of this Agreement or (b) the Effective Time, directly or
indirectly, solicit, encourage, initiate, negotiate or discuss with any
third party or permit the consummation of any acquisition proposal
relating to or affecting the Company, or any direct or indirect
interests in the Company, whether by exchange offer, purchase of assets
or stock, business combination, merger or other transaction, and that
the Company and the Shareholders will promptly advise Buyer of the
terms of any communications they may receive relating to any bid for
all or any part of any such interest in the Company.
4.4 COMMERCIALLY REASONABLE EFFORTS
Subject to the terms and conditions herein, each of the parties hereto
agrees to use all commercially reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done as promptly as
practicable, all things necessary, proper and advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including without
limitation, fulfilment of the conditions to closing set forth herein.
If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, including,
without limitation, the execution of additional instruments, the proper
officers and directors of the Buyer and the Company and the
Shareholders shall take all such necessary action.
4.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT AND FOREIGN REGULATORY REQUIREMENTS
(a) To the extent required by law, each of the Company and the
Buyer and each of the Shareholders shall (i) prepare and file
as promptly as practicable with the Department of Justice and
the Federal Trade Commission the notification and report form,
if any, required for the transactions contemplated hereunder
by the HSR Act, including without limitation, a request for
early termination of the waiting period thereunder, as well as
any filings with, or submissions to, any antitrust,
competition or other similar authority in any foreign
jurisdiction where such filing is required in connection with
the transactions contemplated hereby, and (ii) respond
promptly to inquiries, if any, from the Federal Trade
Commission or the Department of Justice or the antitrust,
competition or comparable governmental authority of any
foreign jurisdiction in connection with such filing. The Buyer
will be responsible for all filing fees in connection with the
filings required by the HSR Act or the antitrust, competition
or comparable laws of any foreign jurisdiction and each party
shall bear the expenses for the preparation of their
documentation for the filing.
- 36 -
(b) Without limiting the generality of the foregoing, the Company
and the Buyer each agree to cooperate and to use their
respective commercially reasonable efforts to obtain any
government clearances required to consummate the transactions
contemplated by this Agreement (including through compliance
with the HSR Act), to respond to any requests for information
from Governmental Entities, and to contest and resist any
action, including any legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent (an "ORDER") that
restricts, prevents or prohibits the consummation of the
transactions contemplated by this Agreement, including,
without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal and all
available legislative action. The parties also agree to take
any and all of the following actions to the extent
commercially reasonable to obtain the approval of any
Governmental Entity with jurisdiction over the enforcement of
any applicable laws regarding the transactions contemplated by
this Agreement: entering into negotiations; providing
information; substantially complying with any second request
for information pursuant to the HSR Act; making proposals;
entering into and performing agreements or submitting to
judicial or administrative orders; selling or otherwise
disposing of, or holding separate (through the establishment
of a trust or otherwise) particular assets or categories of
assets, or businesses of the Company or the Buyer; and
withdrawing from doing business in a particular jurisdiction.
The parties hereto will, to the extent permitted by applicable
law, consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other federal, state
or foreign antitrust or fair trade law. Notwithstanding
anything to the contrary in this section, neither the Company
nor the Buyer shall be required to take any action that would
reasonably be expected to substantially impair the overall
benefits expected, as of the date hereof, to be realized from
the consummation of the transactions contemplated by this
Agreement.
4.6 COVENANTS OF PARTIES
From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, each of the parties to this
Agreement covenants and agrees that it shall take no action which
would: (a) materially adversely affect the ability of any party to this
Agreement to obtain any consents required for the transactions
contemplated hereby; or (b) materially adversely affect the ability of
any party to perform its covenants and agreements under this Agreement.
- 37 -
4.7 MODIFICATION OF DISCLOSURE SCHEDULES
At any time prior to four business days before the Effective Time, the
Company and the Shareholders, by written notice to the Buyer, may amend
or supplement the Disclosure Schedules attached to this Agreement with
respect to any matter that, if existing or occurring at or prior to the
Effective Time, would have been required to be set forth or described
in the Disclosure Schedules or that is necessary to complete or correct
any information in any representation or warranty contained in ARTICLE
2. The Buyer shall have two business days to object in writing to such
amendment or supplement. If such amendment or supplement is considered
by the Buyer as a Company Material Adverse Effect then the Buyer shall
have the right to terminate this Agreement as described in Section
8.1(d). If the Buyer does not object within such two business day
period, then such amendment or supplement shall be given effect for all
purposes of this Agreement.
4.8 CONTACT WITH CUSTOMERS AND SUPPLIERS
The Buyer (and all of its agents and affiliates and any employees,
directors or officers thereof) will not contact and communicate with
the employees, customers, suppliers and licensors of the Company in
connection with the transactions contemplated hereby unless it has
received the prior written consent of the Company, which consent shall
not be unreasonably withheld but may be conditioned in any reasonable
manner.
4.9 SECONDARY OFFERING
(a) THE BUYER SHALL:
(i) use its commercially reasonable efforts to file a
registration statement on Form F-1 (the "SECONDARY
REGISTRATION STATEMENT") with the SEC within 90 days
after the Closing in order to register the resale by
the Shareholders of Buyer Shares in an underwritten
public offering led by an underwriter selected by the
Buyer equal to any number of Buyer Shares not subject
to the lock-up as set forth in Section 5.2(i)
provided, however, that the aggregate market value of
the Buyer Shares registered for resale shall not be
less than US$100,000,000 or more than US$300,000,000
(including any over-allotment option) (based upon the
average closing price quoted on the Nasdaq National
Market for the five trading days ending on the fifth
day prior to the filing of such Registration
Statement); and
(ii) upon the effectiveness of such Registration
Statement, facilitate an underwritten secondary
public offering (the "SECONDARY OFFERING") led by an
underwriter selected by the Buyer of the
- 38 -
Buyer Shares registered under the Secondary
Registration Statement;
(iii) have the right, however, to (A) postpone such filing
of the Secondary Registration Statement or
facilitation of such Secondary Offering for a period
of up to 90 days after the Closing if the Buyer is
engaged in any bona fide proposal for a merger,
acquisition or material financing which, in the good
faith determination of the Board of Directors of the
Buyer, would be adversely affected by the
Registration Statement or the Offering to the
material detriment of the Buyer, or (B) need not make
such effort to file the Registration Statement or
facilitate such Offering if the Board determines in
good faith after consulting with the Buyer's
financial advisors that the Offering would materially
adversely affect the existing shareholders of the
Buyer due to the capital market conditions at such
time.
(b) In connection with the Secondary Offering, the Buyer and the
Shareholders shall agree to execute an underwriting agreement
with the underwriter of the Secondary Offering which is
customary for secondary equity offerings, including 90-day
"market stand-off" provisions.
(c) The Buyer shall be obligated to pay any expenses incurred in
connection with the preparation and filing of the Secondary
Registration Statement, and the Shareholders shall be
obligated to pay any underwriting commissions or discounts in
connection with the Secondary Offering.
(d) The Buyer and the Shareholders shall enter into customary
indemnification arrangements, pursuant to which the Buyer
shall indemnify the Shareholders with respect to any
misstatements or omissions made in the Secondary Registration
Statement relating to the Buyer; provided, however, that the
Buyer will not be liable in any such case if and to the extent
that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in
connection with the business and financial information
relating to the Company prior to the Closing.
(e) If the Secondary Offering is not completed by March 30, 2001,
the Shareholders may make one written request (which request
shall be made by ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ on behalf of the
Shareholders) to the Buyer to register, and the Buyer shall
register, under the Securities Act (other than pursuant to a
Registration Statement on Form F-4 or S-8 or any successor
thereto) (a "DEMAND REGISTRATION") for any number of Buyer
Shares not subject to the lock-up as set forth in Section
5.2(i) received by the Shareholders pursuant to this Agreement
for the resale of such shares in an underwritten public
offering led by an underwriter selected by the
- 39 -
Shareholders and subject to the prior consent of the Buyer,
which consent shall not be unreasonably withheld; provided
that the Buyer shall not be obligated to effect (x) more than
one Demand Registration for the Shareholders or (y) a Demand
Registration if the Shareholders propose to sell Buyer Shares
with an aggregate price (based upon the average closing price
quoted on the Nasdaq National Market for the five trading days
ending on the fifth day prior to the date of such request) of
less than US$100,000,000 or not more than US$300,000,000. If
at the time the Demand Registration is made pursuant to this
Section 4.9(e), the Buyer is engaged in any bona fide proposal
for a merger, acquisition or material financing which, in the
good faith determination of the Board of Directors of the
Buyer, would be adversely affected by the Demand Registration
to the material detriment of the Buyer, then the Buyer may at
its option direct that such request be delayed for a
reasonable period not in excess of 90 days from the date of
the written request. The request for a Demand Registration by
the Shareholders shall state the amount of the Buyer Shares
proposed to be sold and the lead underwriter selected by the
Shareholders. The Buyer shall be obligated to pay any expenses
incurred in connection with the Demand Registration and the
Shareholders shall be obligated to pay any underwriting
commissions or discounts in connection with the Demand
Registration. It being understood that such sales by
Shareholders in Section 4.9 shall be made only to U.S.
residents through the Nasdaq National Market.
(f) Without limiting or otherwise restricting the rights granted
to the Shareholders pursuant to this Section 4.9 or Section
6.3, if the Buyer proposes to register (including for this
purpose a registration effected by the Buyer for stockholders
other than the Shareholders) any of its stock or other
securities under the Securities Act in connection with the
public offering of such securities (other than a registration
relating solely to the sale of securities to participants in a
Buyer employee benefit plan, or a registration on any form
which does not include substantially the same information as
would be required to be included in a registration statement
covering the sale of the Buyer Shares), the Buyer shall,
within five (5) days before the anticipated filing date, give
each Shareholder written notice of such registration. Upon the
written request of any Shareholder given within five (5) days
after the date of such notice by the Buyer, the Buyer shall,
subject to the provisions of this Section, cause to be
registered under the Securities Act all of the Buyer Shares
that each such Shareholder has requested to be registered. The
failure of any Shareholder to respond within such five-day
period shall be deemed to be a waiver of such Shareholder's
rights under this Section 4.9(f), only with respect to the
particular registration for which notice has been given. If a
Shareholder sends the Buyer a written request for inclusion of
part or all of such Shareholder's Buyer Shares in a
registration, such Shareholder shall not be entitled to
withdraw or revoke such request without prior written consent
of the Buyer in its sole discretion unless, as a result of
- 40 -
facts or circumstances arising after the date on which such
request was made relating to the Buyer or to market
conditions, such Shareholder reasonably determines that
participation in such registration would have a material
adverse effect on such Shareholder. In connection with any
offering involving an underwriting of shares of the Buyer's
capital stock, the Buyer shall not be required under this
Section 4.9(f) to include any of the Buyer Shares in such
underwriting unless the Shareholders accept the terms of the
underwriting as agreed upon between the Buyer and the
underwriters selected by it (or by other persons entitled to
select the underwriters). If the total amount of securities,
including Buyer Shares requested by Shareholders to be
included in such offering, exceeds the amount of securities
that the underwriters determine in their sole discretion is
compatible with the success of the offering in view of the
market conditions, then the Buyer shall be required to include
in the offering only that number of such securities, including
Buyer Shares, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering,
FIRST all of the securities to be offered for the account of
the Buyer, SECOND, the securities to be offered for the
account of the selling shareholders (including the selling
Shareholders), pro rata based on the number of securities
owned by such shareholders and entitled to inclusion therein
on the basis of a registration rights agreement with the
Buyer; and THIRD, any other securities requested to be
included in such offering. This Section 4.9(f) shall cease to
apply on June 1, 2002, subject to the Buyer complying with
Sections 4.9 and 6.3.
4.10 OTHER ACTIONS
No party shall take any action, except in every case as may be required
by applicable law, that would or is intended to result in: (a) any of
its representations and warranties set forth in this Agreement that are
qualified as to materiality being or becoming untrue; (b) any of such
representations and warranties that are not so qualified becoming
untrue in any manner having a Company Material Adverse Effect or Buyer
Material Adverse Effect, as the case may be; (c) any of the conditions
set forth in this Agreement not being satisfied or in a violation of
any provision of this Agreement; or (d) adversely affecting the ability
of any of them to obtain any of the consents or approvals required from
any Governmental Entity as a condition to Closing.
4.11 TAX RETURN FILING.
(a) The Shareholders shall cause the Company to prepare, in a
manner consistent with past practices, and timely file
(including extensions of time to file) all Tax Returns
required to be filed by the Company, the due date of which
(without extensions) occurs on or before the date of the
Closing and pay (i) all Taxes due with respect to any such Tax
Returns, and (ii) all other Taxes due or claimed to be due
from or with respect to the Company on or before the date of
the Closing; provided that the Shareholders shall
- 41 -
submit drafts of all such Tax Returns that are related to
Taxes based on the income of the Company to Buyer no later
than 30 days prior to the due date of such Tax Return, for
Buyer's review and comment.
(b) The Company will prepare and timely file any Tax Returns due
to be filed by the Company after the date of the Closing but
relating to periods of time prior to the date of the Closing.
(c) The Buyer will, or will cause the Company to prepare and
timely file all Tax Returns with respect to the Company that
relate to the Straddle Period and are required to be filed
after the date of the Closing.
(d) The Shareholders will take whatever action is necessary to
maintain the S status of the Company for federal purposes and
for the purposes of each state listed in Schedule 2.12 as a
state in which the Company is treated as an S corporation,
through the date that is one day prior to Closing.
(e) The Shareholders will not cause the Company to make any
additional federal tax elections under the Code with respect
to the Company for any tax period ending after the date of the
Closing.
4.12 ASSISTANCE AND COOPERATION
After the date of the Closing, each of the Shareholders and Buyer shall
as may reasonably be requested:
(a) assist (and, where appropriate, cause their respective
affiliates to assist) the other party in preparing any Tax
Returns or reports which such other party is responsible for
preparing and filing in accordance with Section 4.11;
(b) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the
Company or the Subsidiaries;
(c) make available to the other and to any taxing authority to the
extent reasonably requested all information, records, and
documents relating to Taxes of the Company or the
Subsidiaries;
(d) provide timely notice to the other in writing of nay pending
or threatened tax audits or assessments of the Company or the
Subsidiaries for any taxable period (or portion thereto)
ending on or prior to the date of the Closing; and
(e) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or
information requested with respect to any such taxable period.
- 42 -
Any information obtained under the provisions of this Section 4.12
shall be kept confidential except as may otherwise be necessary in
connection with the filing of Tax Returns or claims for refund or in
conducting an audit or other proceeding.
4.13 SUBCHAPTER S RELIEF.
In the event of an inadvertent termination of the Company's S
corporation status prior to the date of the Closing for federal or
state purposes, the Shareholders will use their best efforts to obtain
relief with the appropriate taxing authority.
4.14 TAX COVENANTS
(a) Buyer has been engaged in an active trade or business outside
the United States (within the meaning of Treas. Reg.
ss.1.367(a)-2T(b)(2) and (3)) for the entire 36-month period
ending on the date of the Closing. Buyer has no intention to
substantially dispose of or discontinue such trade or
business. For this representation, the activities of any
qualified subsidiary of Buyer (as defined in Treas.
Reg.ss.1.367(a)-3(c)(5)(vii)) or any qualified partnership
owned by Buyer (as defined in Treas.
Reg.ss.1.367(a)-3(c)(5)(viii)), may be considered the
activities of Buyer.
(b) (i) Fifty percent (50) or less of both the total voting
power and the total value of the stock of Buyer will
be received in the Merger, in the aggregate, by the
Shareholders who are United States persons, as
defined in Treas. Reg.ss.1.367(a)-3(c)(5)(iv)).
(ii) Fifty percent (50%) or less of each of the total
voting power and the total value of the stock of
Buyer will be owned, in the aggregate, immediately
after the Merger by United States persons, as defined
in Treas. Reg. ss.1.367(a)-3(c)(5)(iv)), that are
either officers or directors of the Company as of the
date of this Agreement. For purposes of this
representation, any stock of the Buyer owned by
United States persons immediately after the transfer
will be taken into account, whether or not it was
received in the Merger for Company Common Stock.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligations of each party to consummate the transactions
contemplated hereby at the Closing are subject to the fulfillment to
each party's reasonable satisfaction on or prior to the Effective Time
of each of the following conditions:
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(a) HSR ACT. If applicable, the waiting period (and any extension
thereof) applicable to the transactions contemplated hereby
and the issuance of the Buyer Shares under the HSR Act and any
applicable foreign antitrust and competition laws shall have
been terminated or shall have expired.
(b) SECURITIES REGULATORY APPROVALS. The regulatory approval
required under United States and Canadian securities laws and
under the by-laws, regulations or policies of the United
States and Canadian securities regulatory authorities and
stock exchanges and where required, any approval of the
Buyer's shareholders shall have been obtained.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other judgment or order
issued by any Government Entity, court of competent
jurisdiction or other statute, law, rule, legal restraint or
prohibition shall be in effect preventing the consummation of
the transactions contemplated hereby.
(d) The Shareholders shall have provided reasonable satisfactory
evidence of filing of certificate with the County of the
intention of Fishers to commence the Redemption. To the extent
that the ▇▇▇ ▇▇▇▇ have not been redeemed in full within 120
days after the Effective Time, Fishers shall use its best
efforts to cause the Surviving Corporation to be released from
any guaranty under the ▇▇▇ ▇▇▇▇.
(e) ESCROW AGREEMENT. Buyer and the Shareholders shall have each
executed and delivered the Escrow Agreement.
(f) TAX FREE REORGANIZATION. As of the Effective Time, the
proportion of Cash Consideration to Merger Consideration shall
be such that the transactions contemplated hereby will qualify
as a tax free reorganization pursuant to Sections 368
(a)(1)(A) and 368 (a)(2)(E) of the Code.
5.2 CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligation of Buyer and Buyer Sub to consummate the Merger at the
Closing is subject to the fulfillment to the Buyer's and Buyer Sub's
satisfaction on or prior to the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of the Company and the Shareholders contained in this
Agreement shall be true and correct in all respects without
giving effect to any qualification as to materiality such that
the aggregate effect of any inaccuracies in such
representation and warranties will not have a Company Material
Adverse Effect as of the date of this Agreement and as of the
Effective Time as though made as of the Effective Time, except
to the extent such representations and warranties expressly
relate to an earlier date, in which case as of such earlier
date. Buyer and Buyer Sub shall have received a
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certificate signed by a duly authorized officer of the Company
and by each Shareholder to such effect.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with
by the Company and each Shareholder at or prior to the
Effective Time shall have been performed or complied with by
the Company and each Shareholder in all material respects.
Buyer and Buyer Sub shall have received a certificate signed
by a duly authorized officer of the Company and by each
Shareholder to such effect.
(c) CONSENTS. All consents, the absence of which, in the
aggregate, would be reasonably likely to have a Company
Material Adverse Effect, shall have been obtained.
(d) RESIGNATIONS. Buyer shall have received the resignations,
effective as of the Effective Time, of each director of the
Company and the Subsidiaries specified by the Buyer in writing
at least five business days prior to the Closing, along with a
release of all claims against the Company and the
Subsidiaries.
(e) NO MATERIAL ADVERSE EFFECT. No fact or development shall have
occurred since the date of this Agreement and be continuing
which has had or would be reasonably likely to result in any
change, effect, event, occurrence or state of facts (or any
development that has had or is reasonably likely to have any
change or effect) that, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material
Adverse Effect. Buyer shall have received a certificate signed
by a duly authorized officer of the Company to such effect.
(f) DELIVERY OF SHARE CERTIFICATES. Each Shareholder shall have
delivered to Buyer for cancellation share certificates
representing the shares of the Company Common Stock duly
endorsed for transfer.
(g) STOCK PURCHASE. Each of Klimasewski and May shall have
delivered to Buyer share certificates representing all of
their respective shareholdings of each of the Subsidiaries,
duly endorsed for transfer, together with stock powers related
to such Shares, and shall have taken all actions reasonably
necessary to consummate the Stock Purchase.
(h) EMPLOYMENT AGREEMENTS. Each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall have
entered into and delivered to the Buyer an employment
agreement in the form of Schedule 5.2(h).
(i) LOCK-UP AGREEMENT. Each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall have
entered into and delivered to the Buyer a lock-up agreement in
the form of Schedule 5.2(i).
- 45 -
(j) LEGAL OPINION. The Buyer shall have received an opinion of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, the Company's and the
Shareholder's counsel, in the form reasonably acceptable to
counsel of the Buyer.
(k) RATIFYING RESOLUTIONS. Each of the Company and its
Subsidiaries shall have delivered to the Buyer resolutions
from their respective shareholders and boards of directors
ratifying all acts completed by such shareholders and board of
directors from their dates of incorporation to the Effective
Time.
(l) CERTIFICATES AND DOCUMENTS. The Company shall have delivered
at or prior to the Closing:
(i) a copy of the Company's Certificate of Incorporation,
with all amendments to date, certified by the
Secretary of State of New York as of a date within
three business days prior to the Effective Time,
together with Bylaws of the Company, certified by its
secretary as of the Effective Time;
(ii) resolutions of the Board of Directors of the Company
and of the Shareholders, authorizing and approving
all matters in connection with this Agreement and the
transactions contemplated herein, certified by a duly
authorized officer of the Company as of the Effective
Time;
(iii) copies of all OEM contracts, purchase contracts and
similar agreements in force and entered into by the
Company; and
(iv) such other documents relating to the transactions
contemplated in this Agreement as the Buyer may
reasonably request.
(m) SEC FINANCIAL STATEMENTS. The Shareholders shall have
delivered (i) consolidated, audited balance sheets of the
Company and its Subsidiaries as of the end of the two most
recent fiscal years, (ii) a consolidated, unaudited balance
sheet as of the end of the most recent quarter preceding the
Closing, (iii) consolidated, audited statements of income and
cash flows for each of the three fiscal years preceding the
Closing, and (iv) consolidated, unaudited statements of income
and cash flows for the interim period between the latest
audited balance sheet date and the date of the balance sheet
being provided pursuant to clause (ii), in each case meeting
the requirements of the SEC that would be applicable to the
Company as if its securities were registered under Section 12
of the SECURITIES AND EXCHANGE ACT OF 1934, as amended
(collectively, the "SEC FINANCIAL STATEMENTS").
(n) ACCOUNTANTS. The Buyer shall have received confirmation that
KPMG LLP, the Company's auditors, are independent certified
public accountants qualified to deliver the accountant's
report on the SEC Financial
- 46 -
Statements as required by the SEC. In addition, the Company
shall have entered into an agreement on terms satisfactory to
the Buyer with KPMG LLP pursuant to which KPMG LLP shall (A)
deliver to the Buyer any consents with respect to the Buyer's
use of the SEC Financial Statements and the use of KPMG's name
in connection with the Buyer's filings with the SEC and (B)
deliver customary "comfort letters" with respect to the SEC
Financial Statements and required reconciliations, as may be
reasonably requested by the Buyer.
(o) SECTION 1445 STATEMENT. Each Shareholder shall have furnished
Buyer with a statement meeting the requirements of Treasury
Regulation Section 1.1445-2(b)(2).
5.3 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND THE COMPANY
Each Shareholder's and the Company's obligation to consummate the
Merger at the Closing is subject to the fulfillment to its satisfaction
or waiver on or prior to the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Buyer and Buyer Sub contained in this Agreement
shall be true and correct in all respects without giving
effect to any qualification as to materiality such that the
aggregate effect of any inaccuracies in such representation
and warranties will not have a Buyer Material Adverse Effect
as of the date of this Agreement and as of the Effective Time
as though made as of the Effective Time, except to the extent
such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date. Each
Shareholder and the Company shall have received a certificate
signed on behalf of Buyer and Buyer Sub by duly authorized
executive officers of Buyer and Buyer Sub to such effect.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with
by the Buyer or Buyer Sub on or prior to the Effective Time
shall have been performed or complied with by the Buyer or
Buyer Sub in all material respects. Each Shareholder and the
Company shall have received a certificate signed on behalf of
Buyer or Buyer Sub by duly authorized executive officers of
Buyer and Buyer Sub to such effect.
(c) PAYMENT OF PURCHASE PRICE. Buyer shall have delivered to each
Shareholder cash representing the Cash Consideration, if any,
to be received by such Shareholder for its Shares of Company
Common Stock and certificates representing the Buyer Shares in
payment of the Stock Consideration to be received by such
Shareholder for its shares of Company Common Stock. Buyer
shall have delivered certificates representing the Escrow
Shares to the Escrow Agent.
- 47 -
(d) CONSENTS. All consents, the absence of which, in the
aggregate, would be reasonably likely to have a Buyer Material
Adverse Effect, shall have been obtained.
(e) NO MATERIAL ADVERSE EFFECT. No fact or development shall have
occurred since the date of this Agreement and be continuing
which has had or would be reasonably likely to result in any
change, effect, event, occurrence or state of facts (or any
development that has had or is reasonably likely to have any
change or effect) that, individually or in the aggregate, has
had or would reasonably be expected to have a Buyer Material
Adverse Effect. The Company and each Shareholder shall have
received a certificate signed on behalf of Buyer and Buyer Sub
by duly authorized officers of Buyer and Buyer Sub to such
effect.
(f) CANADIAN LEGAL OPINION. The Company and the Shareholders shall
have received an opinion of Fasken ▇▇▇▇▇▇▇▇▇ DuMoulin LLP, the
Buyer's Canadian counsel, in the form reasonably acceptable to
counsel to the Shareholders.
(g) U.S. LEGAL OPINION. The Company and Shareholders shall have
received an opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, the Buyer's U.S. counsel and Buyer Sub's counsel, in
the form reasonably acceptable to counsel to the Shareholders;
(h) CERTIFICATES AND DOCUMENTS. Buyer and Buyer Sub shall have
delivered at or prior to the Closing to the Company and each
of the Shareholders:
(i) a copy of Buyer's and Buyer Sub's respective
Certificates of Incorporation, with all amendments to
date, certified by the Secretaries of State or
similar officers of Buyer's and Buyer Sub's
respective jurisdictions of organization as of a date
within three business days prior to the Effective
Time, together with Bylaws of the Buyer and Buyer
Sub, certified by their respective Secretaries as of
the Effective Time;
(ii) resolutions of the Board of Directors of Buyer and
Buyer Sub, authorizing and approving all matters in
connection with this Agreement and the transactions
contemplated herein, certified by the Secretaries of
Buyer and Buyer Sub as of the Effective Time; and
(iii) such other documents relating to the transactions
contemplated in this Agreement as the Company and/or
any Shareholder may reasonably request.
(i) AUTHORIZATIONS. All authorizations, approvals or permits, if
any, of any Governmental Entity or regulatory body that are
required in connection with the lawful issuance and sale of
the Buyer Shares pursuant to this
- 48 -
Agreement shall have been duly obtained and shall be effective
on and as of the Closing.
ARTICLE 6
OTHER AGREEMENTS
6.1 CONFIDENTIALITY
After the Closing, Buyer, Buyer Sub and each Shareholder shall strictly
maintain the confidentiality of all information, documents and
materials relating to the Company or the transactions contemplated by
this Agreement, including without limitation the terms hereof, except
to the extent disclosure of any such information is reasonably believed
by the disclosing party to be required by law or authorized by the
other party, or otherwise made publicly available by the other party,
or reasonably occurs in connection with disputes over the terms of this
Agreement. In the event that any party hereto reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 6.1, such disclosing
party will (a) provide the other party with prompt notice before such
disclosure in order that the other party may attempt to obtain a
protective order or other assurance that confidential treatment will be
accorded to confidential information, and (b) cooperate with the other
party in attempting to obtain such order or assurance. The provisions
of this Section 6.1 shall not apply to any information, documents or
materials which are in the public domain or shall come into the public
domain, other than by reason of default by the disclosing party of this
Agreement or becomes known in the industry through no wrongful act on
the part of such disclosing party.
6.2 COOPERATION AFTER THE CLOSING
The Shareholders will, at any time, and from time to time, after the
Effective Time, execute and deliver such further instruments of
conveyance and transfer and take such additional action as may be
reasonably necessary to effect, consummate, confirm or evidence the
transactions contemplated by this Agreement. Without limiting the other
obligations of the Shareholders hereunder, each Shareholder agrees
that, after the Closing, he shall provide reasonable cooperation and
assistance to Buyer and the Company, at Buyer's sole cost and expense,
with respect to any matters, disputes, suits or claims by or against
any person not a party to this Agreement and including the execution of
agreements with the employees of the Surviving Company in accordance
with Buyer's current employment policies and applicable law.
6.3 REGISTRATION OF BUYER SHARES
(a) SHELF PROSPECTUS. The Buyer shall:
(i) as soon as practicable after June 29, 2001, prepare
and file with the SEC a registration statement on
Form F-3 or F-10 or any
- 49 -
comparable registration form then in effect (the
"REGISTRATION STATEMENT") relating to the resale of
the Buyer Shares by the Shareholders from time to
time on the Nasdaq National Market or the facilities
of any U.S. national securities exchange or market on
which the Buyer Shares (issued pursuant to this
Agreement) are then traded or in privately-negotiated
transactions in the United States;
(ii) use its reasonable efforts, subject to receipt of
necessary information from the Shareholders, to cause
the SEC to declare the Registration Statement
effective within 60 days after the Registration
Statement is filed by the Buyer;
(iii) promptly prepare and file with the SEC (and provide
notice to the Shareholders of any such filing) such
amendments and supplements to the Registration
Statement and the prospectus used in connection
therewith as may be necessary to keep the
Registration Statement effective until the earlier of
(i) two years after the effective date of the
Registration Statement, or (ii) the date on which the
Buyer Shares may be resold by the Shareholders
without registration by reason of Rule 144(k) under
the Securities Act or any other rule of similar
effect;
(iv) furnish to each Shareholder with respect to the Buyer
Shares registered under the Registration Statement
(and to each underwriter, if any, of such Buyer
Shares) such number of copies of prospectuses and
such other documents as the Shareholder may
reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Buyer
Shares by the Shareholder;
(v) file documents required of the Buyer for normal "blue
sky" clearance in states specified in writing by the
Shareholders; provided, however, that the Buyer shall
not be required to qualify to do business or consent
to service of process in any jurisdiction in which it
is not now so qualified or has not so consented;
(vi) notify each holder of Buyer Shares covered by such
Registration Statement at any time when a prospectus
relating thereto is required to be delivered under
the Securities Act of the happening of any event as a
result of which the prospectus included in such
Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading in the light of the circumstances then
existing. The Buyer will use reasonable best efforts
to amend or supplement such prospectus in order to
cause such prospectus not to include any untrue
statement of a material fact or omit to state a
- 50 -
material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances then
existing;
(vii) use its reasonable best efforts to furnish, on the
date that such Buyer Shares are delivered to the
underwriters for sale, if such securities are being
sold through underwriters selected by the Buyer, (i)
an opinion, dated as of such date, of the counsel
representing the Buyer for the purposes of such
registration, in form and substance as is customarily
given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and
(ii) a letter dated as of such date, from the
independent certified public accountants of the
Buyer, in form and substance as is customarily given
by independent certified public accountants to
underwriters in an underwritten public offering
addressed to the underwriters;
(viii) bear all expenses in connection with the procedures
in paragraphs (i) through (ix) of this Section, and
the registration of the Buyer Shares pursuant to the
Registration Statement, other than fees and expenses,
if any, of counsel and other advisers to the
Shareholders or underwriting discounts, brokerage
fees, Taxes payable and commissions incurred by the
Shareholders, if any; and
(ix) in the event of any underwritten public offering with
an underwriter selected by the Buyer, enter into and
perform its obligations under an underwriting
agreement, in usual and customary form, with the
managing underwriter(s) of such offering. Each
Shareholder participating in such underwriting shall
also enter into and perform its obligations under
such an agreement.
The Buyer understands that the Shareholders disclaim being
underwriters, and that the Shareholders being deemed an
underwriter shall not relieve the Buyer of any obligations it
has hereunder.
(b) DISPOSITION. Notwithstanding the generality of Section 6.3(a),
each Shareholder agrees that upon notice from Buyer at any
time or from time to time during the time the prospectus
relating to the securities proposed to be sold by such
Shareholder is required to be delivered under the Securities
Act of the happening of any event as a result of which, in
Buyer's opinion, the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing,
such Shareholder will forthwith discontinue such Shareholder's
disposition of such securities pursuant to the Registration
Statement until
- 51 -
the time of such Shareholder's receipt of a supplement to or
an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such securities,
such prospectus shall not include, in Buyer's opinion, an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing. It is understood and agreed that,
after the Registration Statement has been declared effective,
its effectiveness may be suspended on or one more occasions
for up to an aggregate of 90 days in a twelve-month period,
provided that no single suspension of such effectiveness shall
be in effect for more than 30 consecutive days.
(c) PUBLIC INFORMATION. For so long as Buyer is subject to the
reporting requirements of Section 13 or 15 of the Exchange Act
and any of the Buyer Shares are deemed "RESTRICTED SECURITIES"
under Rule 144 promulgated under the Securities Act, Buyer
will file the reports required to be filed by it under the
Securities Act and Section 13(a) or 15(d) of the Exchange Act
and the rules and regulations adopted by the SEC thereunder,
or, if it ceases to be so required to file such reports, it
will, upon the request of the Shareholders (i) make publicly
available such information as is necessary to permit sales of
Buyer Shares pursuant to Rule 144 under the Securities Act,
and (ii) take such further action that is reasonable in the
circumstances, in each case to the extent required from time
to time to enable the Shareholders to sell their Buyer Shares
without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the
Securities Act, as such rule may be amended from time to time,
or any similar rules or regulations hereafter adopted by the
SEC.
(d) LISTING. Buyer will use its reasonable best efforts to cause
the Buyer Shares to be sold pursuant to the Registration
Statement to be listed on the Nasdaq National Market or any
other securities exchanges or markets on which shares of Buyer
Subordinate Voting Shares are then listed.
(e) INDEMNIFICATION AND CONTRIBUTION.
(i) In the event of a registration of any of the Buyer
Shares under the Securities Act pursuant to this
Section 6.4, Buyer will indemnify and hold harmless
each Shareholder and each Shareholder Affiliate
against any losses, claims, damages or liabilities,
joint or several, to which such Shareholder or
Shareholder Affiliate may become subject under the
Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of
any litigation, if such settlement is effected with
the written consent of the Buyer), insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
untrue statement
- 52 -
or alleged untrue statement of any material fact
contained in the Registration Statement, including
the prospectus, financial statements and schedules,
and all other documents filed as a part thereof, as
amended at the time of effectiveness of the
Registration Statement, including any information
deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of SEC Rule
430A, or pursuant to SEC Rule 434, or the prospectus,
in the form first filed with the SEC pursuant to SEC
Rule 424(b), or filed as part of the Registration
Statement at the time of effectiveness if no Rule
424(b) filing is required (the "PROSPECTUS"), or any
amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and will reimburse each such
Shareholder and each such Shareholder Affiliate for
any legal or other expenses reasonably incurred by
such Shareholder or Shareholder Affiliate in
connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage,
liability or action; provided, however, that Buyer
will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged
omission so made in connection with the business
financial information relating to the Company prior
to the Closing or so made in conformity with
information furnished by such Shareholder
specifically for use in such Registration Statement.
For purposes hereof, the term "SHAREHOLDER AFFILIATE"
shall mean any affiliates of the Shareholder and any
officer, director, trustee or other person who
controls the Shareholder or any affiliate of the
Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and
the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment
included in or relating to, and any document
incorporated by reference in, the Registration
Statement.
(ii) In the event of a registration of any of the Buyer
Shares under the Securities Act pursuant to this
Section 6.4, each Shareholder having Buyer Shares
registered thereunder, severally and not jointly,
will indemnify and hold harmless Buyer and each Buyer
Affiliate, each underwriter and each person who
controls any underwriter within the meaning of the
Securities Act, against all losses, claims, damages
or liabilities, joint or several, to which Buyer or
such Buyer Affiliate, underwriter or person may
become subject under the Securities Act or otherwise,
insofar as such loses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue
statement of any material fact contained in the
Registration
- 53 -
Statement or any amendment or supplement thereof, or
arise out of or are based upon the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, and will
reimburse Buyer and each such officer, director,
underwriter and controlling person for any legal or
other expenses reasonably incurred by them in
connection with investigating or defending any such
loss, claim, damage, liability or action; provided,
however, that such Shareholder will be liable under
the Section 6.3(e)(ii) in any such case if and only
to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue
statement or alleged untrue statement of a material
fact or omission or alleged omission of a material
fact made in reliance upon and in conformity with
information pertaining to such Shareholder furnished
in writing to Buyer by such Shareholder specifically
for use in the Registration Statement; and provided
further, however, that the liability of each
Shareholder hereunder shall not in any event exceed
the net proceeds received from the sale of his, her
or its Buyer Shares covered by such Registration
Statement.
(iii) Promptly after receipt by an indemnified party under
this Section 6.3(e) of notice of the threat or
commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made
against an indemnifying party under this Section
6.3(e), promptly notify the indemnifying party in
writing thereof; but the omission to so notify the
indemnifying party will not relieve it from any
liability which it may have to any indemnified party
for contribution or otherwise under the indemnity
agreement contained in this Section 6.3(e) to the
extent it is not prejudiced as a result of such
failure. In case any such action is brought against
any indemnified party and such indemnified party
seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying
parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the
defendants in any such action include both the
indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded
that there may be a conflict between the positions of
the indemnifying party and the indemnified party in
conducting the defense of any such action or that
there may be legal defenses available to it and/or
other indemnified parties which are different from or
additional to those available to the indemnifying
party, the indemnified party or parties shall have
the right to select separate counsel to assume such
legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the
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indemnifying party to such indemnified party of its
election so to assume the defense of such action and
approval by the indemnified party of counsel, the
indemnifying party will not be liable to such
indemnified party under this Section 6.3(e) for any
legal or other expenses subsequently incurred by such
indemnified party in connection with the defense
thereof unless (1) the indemnified party shall have
employed such counsel in connection with the
assumption of legal defenses in accordance with the
proviso to the preceding sentence (it being
understood, however, that the indemnifying party
shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party
in the case of paragraph (i), representing all of the
indemnified parties who are parties to such action)
or (2) the indemnified party shall not have employed
counsel reasonably satisfactory to the indemnifying
party to represent the indemnified party within a
reasonable time after notice of commencement of
action, in each of which cases the reasonable fees
and expenses of counsel shall be at the expense of
the indemnifying party.
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities
Act in any case in which either (1) any indemnified
party exercising rights under this Agreement makes a
claim for indemnification pursuant to this Section
6.3(e) but it is judicially determined (by the entry
of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such
indemnification may not be enforced in such case
notwithstanding the fact that this Section 6.3(e)
provides for indemnification in such case, (2)
contribution under the Securities Act may be required
on the part of any such Shareholder in circumstances
for which indemnification is provided under this
Section 6.3, or (3) the indemnification provided for
by this Section 6.3 is insufficient to hold harmless
an indemnified party, other than by reason of the
exceptions provided therein, then, and in each such
case, Buyer and the Shareholders will contribute to
the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from
others) (x) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party
on the one hand and the indemnified party on the
other or (y) if the allocation provided by clause (x)
above is not permitted by applicable law, or provides
a lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative fault
referred to in clause (x) above but also the relative
benefits received by the indemnifying party and the
indemnified party from the registration of the
securities as well as the statements or omissions
which resulted in such losses, claims, damages or
liabilities and any other relevant equitable
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considerations. No Shareholder will be required to
contribute any amount in excess of the net proceeds
received from the sale of his, her or its Buyer
Shares covered by such Registration Statement and no
person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 12
of the Securities Act) will be entitled to
contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
(v) The obligations of the Buyer and the Shareholders
under this Section 6.3(e) shall survive completion of
any offering of Buyer Shares pursuant to a
Registration Statement and the termination of Buyer's
obligations under Section 6.3(a). No indemnifying
party, in the defense of any such claim or
litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment
or enter into any settlement which does not include
as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim
or litigation.
(f) INFORMATION AVAILABLE. So long as the Registration Statement
is effective covering the resale of Buyer Shares owned by the
Shareholders, the Buyer will furnish to each Shareholder:
(i) as soon as practicable after (A) its Annual Report on
Form 10-K, 20-F or 40-F, (B) its interim reports, (C)
its material change reports, (D) its proxy statement,
(E) a full copy of the particular Registration
Statement covering the Buyer Shares, and (F) a copy
of each other registration statement covering Buyer
Subordinate Voting Shares filed with the SEC (the
foregoing, in each case, excluding exhibits unless
requested by such Shareholder); and
(ii) a reasonable number of copies of the prospectuses to
supply to any other party requiring such
prospectuses; and the Buyer, upon the reasonable
request of the Shareholder, will meet with the
Shareholder or a representative thereof at the
Buyer's headquarters to discuss information relevant
for disclosure in the Registration Statement covering
the Buyer Shares and will otherwise cooperate with
any Shareholder conducting an investigation for the
purpose of reducing or eliminating such Shareholder's
exposure to liability under the Securities Act,
including the reasonable production of information at
the Buyer's headquarters, subject to appropriate
confidentiality limitations.
6.4 REORGANIZATION
From and after the date hereof and until the Effective Time, no party
hereto, nor, in the case of the corporate entities, any of their
respective subsidiaries or other
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affiliates shall knowingly take any action, or knowingly fail to take
any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code. Each of Buyer, the Company, the Surviving
Corporation and the Shareholders shall file all federal and state
income tax returns consistent with the treatment of the Merger as a
Reorganization within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code.
6.5 EXPENSES
Except as otherwise expressly provided herein, each party hereto will
pay its own expenses incurred in connection with the negotiation of
this Agreement, the performance of their respective obligations
hereunder and the consummation of the transactions contemplated hereby,
whether or not consummated.
6.6 NON-COMPETITION
The Shareholders shall not, for a period of three years from the
Effective Time ("NON-COMPETE PERIOD"), within Canada, the United States
and the European Union and in any country in which the Buyer or the
Company presently conducts or may conduct business in the future,
without the prior written consent of the Buyer, directly or indirectly,
in any manner whatsoever, including, without limitation, either
individually or in partnership or jointly or in conjunction with any
other person, as principal, agent, shareholder or in any other manner
whatsoever, carry on or be engaged in or be concerned with or lend
money to, guarantee the debts or obligations of, or permit their names
to be used or employed by any person or entity engaged or concerned
with or interested in the business of supply of DWDM test and
measurement instrumentation, component and positioning and biomedical
products.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
7.1 SURVIVAL NOTWITHSTANDING INVESTIGATION.
Notwithstanding any investigation conducted before the Effective Time
and notwithstanding implied knowledge or notice of any fact or
circumstance which any Person may have as a result of such
investigation or otherwise, the parties hereto shall be entitled to
rely upon the representations and warranties set forth herein and the
obligations of the parties hereto with respect thereto shall survive
the Effective Time and shall continue in full force and effect in
accordance with and subject to the terms of this ARTICLE 7.
7.2 GENERAL INDEMNIFICATION BY THE SHAREHOLDERS.
Subject to the provisions contained herein, each of the Shareholders
shall be liable to the Buyer and their respective directors, officers
and employees (collectively,
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the "BUYER INDEMNIFIED PERSONS" and each a "BUYER INDEMNIFIED Person")
and shall defend, indemnify and hold harmless all of the Buyer
Indemnified Persons against any and all Claims incurred or suffered by
or imposed upon any of the Buyer Indemnified Persons arising directly
or indirectly out of:
(a) the breach of any agreement, covenant, representation or
warranty of any of the Shareholders or the Company contained
in or contemplated by this Agreement (other than Sections
2.12, 4.11, 4.12 or 4.13 hereof) or in any other agreement or
document required to be furnished by any of the Shareholders
or the Company to the Buyer hereunder; and
(b) the non-fulfilment of any agreement, covenant or obligation of
any of the Shareholders or the Company contained in this
Agreement (other than Sections 2.12, 4.11, 4.12 or 4.13
hereof) or in any other agreement or document required to be
entered into by any of the Shareholders or the Company
pursuant hereto to the extent not waived in writing by the
Buyer.
The obligation of indemnification of the Shareholders hereunder shall
be joint and several.
For the purpose of this indemnification all representations and
warranties shall be read without giving effect to any qualification as
to materiality.
7.3 INDEMNIFICATION BY THE BUYER.
The Buyer shall be liable to each of the Shareholders and their
respective heirs and assigns (collectively the "SHAREHOLDERS
INDEMNIFIED PERSONS" and each a "SHAREHOLDERS INDEMNIFIED PERSON") and
shall defend, indemnify and hold harmless all of the Shareholders
Indemnified Persons against any and all Claims incurred or suffered by
or imposed upon any of the Shareholders Indemnified Persons arising
directly or indirectly out of:
(a)
the breach of any agreement, covenant, representation or
warranty of the Buyer contained in or contemplated by this
Agreement or in any other agreement or document required to be
furnished by the Buyer to the Shareholders hereunder; and
(b) the non-fulfilment of any agreement, covenant or obligation of
the Buyer contained in this Agreement or in any agreement or
document required to be entered into by the Buyer pursuant
hereto, to the extent not waived in writing by the
Shareholders;
provided that the amount of indemnification in relation to such Claims
to be made by the Shareholder Indemnified Person pursuant to the
provisions hereof shall be limited to a fraction of the total Claims
resulting from the applicable breach determined by dividing the number
of Buyer Subordinate Voting Shares of the share capital of the Buyer
held by such Shareholder immediately after the
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Effective Time divided by the total number of Buyer Shares issued
pursuant to this Agreement.
7.4 INDEMNIFICATION AGAINST THIRD PARTY CLAIMS.
(a) Promptly upon receipt by any of the Buyer Indemnified Persons
or the Shareholder Indemnified Persons (in this Section
referred to as the "INDEMNITEE") of a notice of any Third
Party Claim in respect of which the Indemnitee proposes to
demand indemnification from the Buyer or the Shareholder (in
this Section referred to as the "INDEMNITOR") pursuant to the
provisions hereof, the Indemnitee shall give written notice to
that effect to the Indemnitor with reasonable promptness.
(b) The Indemnitor shall have the right by written notice to the
Indemnitee not later than 30 days after giving of the notice
described in Section 7.4 to assume the control of the defence,
compromise or settlement of the Third Party Claim, provided
that such assumption shall, by its terms, be without cost to
the Indemnitee and shall not limit in any way the Indemnitee's
right to indemnification pursuant to the provisions hereof.
(c) Upon the assumption of control by the Indemnitor as aforesaid,
the Indemnitor shall, at its expense, diligently proceed with
the defence, compromise or settlement of the Third Party Claim
at Indemnitor's sole expense, including retention of counsel
reasonably satisfactory to the Indemnitee and, in connection
therewith, the Indemnitee shall co-operate fully, but at the
sole expense of the Indemnitor, to make available to the
Indemnitor all pertinent information and witnesses under the
Indemnitee's control, make such assignments and take such
other steps as in the opinion of counsel for the Indemnitor
are necessary to enable the Indemnitor to conduct such
defence, provided always that the Indemnitee shall be entitled
to reasonable security from the Indemnitor for any expense,
costs or other liabilities to which it may be or may become
exposed by reason of such co-operation.
(d) The final determination of any such Third Party Claim,
including all related costs, attorneys' fees and expenses,
shall be binding and conclusive upon the Indemnitor and the
Indemnitee as to the validity or invalidity, as the case may
be, of such Third Party Claim against the Indemnitor
hereunder.
Notwithstanding any provision of this Section 7.4, the Indemnitor may
not consent to any settlement of a Third Party Claim if the terms of
such settlement require the Indemnitee to act or refrain from acting,
without the prior written consent of the Indemnitee.
(e) Should the Indemnitor fail to give notice to the Indemnitee as
provided in Section 7.4, the Indemnitee shall be entitled to
make such settlement of the
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Third Party Claim as in its sole discretion may appear
advisable, and such settlement or any other final
determination of the Third Party Claim shall be binding upon
the Indemnitor.
7.5 TAX INDEMNIFICATION.
(a) The Shareholders agree, jointly and severally, to indemnify
and hold harmless the Buyer Indemnified Parties against any
Losses incurred or paid by a Buyer Indemnified Party, which
arise as a result of (i) any liability for any Taxes imposed
on the Company and the Subsidiaries pursuant to federal,
state, local or foreign law attributable to any periods ending
on or before the date of the Closing, (ii) with respect to any
Straddle Period, the portion of Taxes payable by or assessed
against the Company which are properly allocable to the part
of such Straddle Period ending on the date of the Closing,
pursuant to Section 7.5(b), (iii) any breach of the
representations or warranties made by the Company and the
Shareholders in Section 2.12, and (iv) any breach of, or
failure to perform, any agreement or covenant contained in
Sections 4.11, 4.12 or 4.13 hereof (all such Losses being "TAX
LOSSES"). Any indemnity payments to or from the Shareholders
or to or from the Buyer pursuant to this Agreement, whether
under this Section 7.5 or otherwise, shall be treated by the
Buyer and the Shareholders as purchase price adjustments for
all tax purposes. All indemnification obligations set forth in
this Section 7.5(a) shall be treated as "TAX CLAIMS" for
purposes of this Agreement.
(b) For purposes of this Section 7.5, with respect to any taxable
year or period beginning before and ending after the date of
the Closing (a "STRADDLE PERIOD"), an allocation of Taxes
shall be made to the part of such Straddle Period which ends
on the date of the Closing based on (i) the closing of the
books method, in the case of income or any similar Taxes, (ii)
the number of days elapsed between the beginning of such
Straddle Period to and including the date of the Closing in
the case of property Taxes, and (iii) when the relevant
transaction occurs, in the case of sales and gross receipts
Taxes.
7.6 INDEMNIFICATION TO BE AFTER TAX, INSURANCE, ETC.
The amount of the indemnification for any Claim which the Buyer
Indemnified Persons and the Shareholder Indemnified Persons shall be
entitled to receive pursuant to this Agreement shall be payable on
demand and shall be determined after giving effect to any insurance
recoveries, tax savings and recoveries from third parties.
7.7 EXPIRY AND LIMITS OF LIABILITY
(a) The representations and warranties of the Shareholders herein
(other than those of the Shareholders with respect to the
matters set forth in
- 60 -
Section 7.7(b)), shall terminate on the date which is 90 days
after the date the Buyer has publically released its audited
financial statements for the year ended August 31, 2002 except
to the extent that, during such period, any Buyer Indemnified
Person shall have given detailed notice (to the extent
feasible) to the Shareholders of a specified Claim in respect
of any representation or warranty in which case such
representation and warranty with respect to such Claim shall
continue in full force and effect until the final
determination of such Claim.
(b) Notwithstanding the foregoing provisions of Section 7.7(a):
(i) representations and warranties herein of the
Shareholders with respect to the Company Common Stock
and the share capital of the Company and any of the
Subsidiaries as set forth in Sections 2.1, 2.2., 2.3
and 2.5 shall survive indefinitely;
(ii) representations and warranties herein of the
Shareholders relating to any liability of the Company
or the Subsidiaries for the payment of Taxes shall
survive so long as any claim may be made in respect
of such matters under any applicable statute of
limitations; and
(iii) notwithstanding the foregoing, there shall be no
limit of time on the representations and warranties
of the Shareholders relating to any matter in the
case of fraud, gross negligence, voluntary omission
or bad faith on the part of the Shareholders.
(c) Notwithstanding the other provisions of this ARTICLE 7, no
Claims with respect to breaches or failure of representations
and warranties contemplated by Section 7.7(b)(i) and
7.7(b)(iii) may be made against the Shareholders hereunder
unless and until the aggregate amount of all Claims which may
be made pursuant to this Agreement exceed $250,000, in which
event the Shareholders shall become liable for the full amount
of all Claims on a dollar for dollar basis, up to a maximum
amount equal to:
(i) the Merger Consideration in the event of a Claim
arising from a breach of a representation and
warranty with respect to the matters set forth in
Sections 2.1, 2.2., 2.3 and 2.5, and;
(ii) 30% of the Merger Consideration, in the event of a
Claim arising from a breach of any other
representation and warranty set forth in this
Agreement.
(d) Any claims for which the Shareholders shall become liable
shall be payable to the Buyer from the Escrow Fund on a dollar
for dollar basis. In the event the Claims exceed the amount
contained in the Escrow Fund, the Shareholders shall become
liable for such further amount on a dollar for dollar basis,
subject to Section 7.7(c).
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(e) The representations and warranties of the Buyer shall
terminate on the date which is 90 days after the date on which
the Buyer has publically released its audited financial
statements for the year ended August 31, 2002 except to the
extent that, during such period any Shareholders Indemnified
Person shall have given detailed notice to the Buyer of a
specified Claim in respect of any representation or warranty
in which case such representation and warranty shall continue
in full force and effect until the final determination of such
Claim.
(f) Notwithstanding the foregoing provisions of Section 7.7(e):
(i) representations and warranties herein of the Buyer
with respect to the Buyer Shares and the share
capital of the Buyer shall survive in accordance with
the applicable statute of limitations under the
securities laws in Canada and the United States; and
(ii) notwithstanding the foregoing, there shall be no
limit of time on the representations and warranties
of the Buyer relating to any matter in the case of
fraud, gross negligence, voluntary omission or bad
faith on the part of the Buyer.
(g) Notwithstanding the other provisions of this Section 7.7, no
Claims with respect to breaches or failure of representations
and warranties contemplated by Section 7.7(b) may be made
against the Buyer hereunder unless and until the aggregate
amount of all Claims which may be made pursuant to this
Agreement exceed $250,000, in which event the Buyer shall
become liable for the full amount of all Claims on a dollar
for dollar basis, up to a maximum amount equal to:
(i) the Merger Consideration, in the event of a Claim
arising from a breach of a representation and
warranty with respect to the matters set forth in
Sections 3.1, 3.2 and 3.3, and;
(ii) 30% of the Merger Consideration in the event of a
Claim arising from a breach of any other
representation and warranty set forth in this
Agreement.
7.8 PROCEDURE
Promptly (but in no event more than 15 days) after receipt by a Buyer
Indemnified Party or a Shareholder Indemnified Party (an "INDEMNIFIED
PARTY") (as the case may require) of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 7.8,
notify in writing the indemnifying party of the commencement thereof.
In case any such action is brought against any Indemnified Party, and
such Indemnified Party notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that it may wish, jointly with any
other
- 62 -
indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory
to such Indemnified Party; PROVIDED, in the case of Tax Claims, that
the Shareholders have acknowledged to the Buyer in writing the
Shareholders' liability under Section 7.5 for all Tax Losses incurred
or suffered by the Buyer or the Company which results from such action.
Following notification to the Indemnified Party of its election so to
assume the defense thereof, the indemnifying party shall not be liable
to such Indemnified Party under this Section 7.8 for any legal or other
expenses subsequently incurred by such Indemnified Party in connection
with the defense there, other than reasonable costs of investigation.
The Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of
the action, within a reasonable time after notice of commencement of
the action, with counsel reasonably satisfactory to the Indemnified
Party; PROVIDED HOWEVER, that the indemnifying party shall be required
to pay for Indemnified Party's counsel, if, such Indemnified Party
shall have reasonably concluded, on reliance of the written opinion of
counsel experienced in such matters, that there may be defenses
available to it or him which are different from or additional to those
available to the indemnifying party (in which case indemnifying parties
shall not have the right to direct the defense of action). The Buyer
shall also have the right to jointly control, with the Shareholders,
any contest involving a Tax Losses with respect to Straddle Periods. No
settlement of any action against an Indemnified Party shall be made
without the consent of the Indemnified Party, which shall not be
unreasonably withheld. In the event that any Indemnified Party should
have a direct claim against any indemnifying party hereunder that does
not involve any third-party claim or claims asserted against the
Indemnified Party, the Indemnified Party shall transmit to the
indemnifying party a written notice describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable
to such claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this ARTICLE 7.
If the indemnifying party does not notify the Indemnified Party within
90 days from its receipt of such notice that the indemnifying party
disputes such claim, the claim specified by the Indemnified Party in
the indemnity notice shall be deemed a liability of the indemnifying
party hereunder. If the indemnifying party has timely disputed such
claim, as provided above, such dispute shall be resolved by litigation
in an appropriate court of competent jurisdiction. The parties agree
that the sole and exclusive remedy which any party hereto shall have
against any other party hereto under this Agreement shall be the right
to proceed for indemnification in the manner and only to the extent
provided in this ARTICLE 7.
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ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION
This Agreement may be terminated at any time prior to the Closing
(except as limited as to time in Section 8.1(b) below):
(a) by the mutual written consent of the Buyer and the
Shareholders;
(b) by the Buyer or the Shareholders, if the Closing shall not
have occurred prior to the 90th day following the date hereof;
provided, however, that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party
if such party's failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted
in, the failure of the Closing to occur prior to such date;
(c) by the Buyer in the event a condition set forth in Sections
5.1 or 5.2 becomes incapable of being fulfilled; or
(d) by the Buyer in the event that a Disclosure Schedule is
amended or supplemented by the Company, which amendment or
supplement is considered by the Buyer to have a Company
Material Adverse Effect.
8.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement as provided in
Section 8.1, this Agreement shall forthwith become void and there shall
be no liability on the part of any party hereto; provided, however,
that nothing herein shall relieve either the Shareholders or the Buyer
from liability for any breach of this Agreement or failure to perform
hereunder. If this Agreement is terminated as provided herein, upon
request therefore, each party will re-deliver all documents, workpapers
and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same.
8.3 WAIVER
At any time prior to Closing, any party may (a) extend the time for the
performance of any of the obligations or other acts of any other party
hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound
thereby.
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ARTICLE 9
MISCELLANEOUS
9.1 ENTIRE AGREEMENT; AMENDMENTS
This Agreement, together with the Exhibits and Schedules hereto,
contain the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the
Exhibits and Schedules hereto.
9.2 NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (c) three business
days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) two business days after
deposit with recognized overnight courier, specifying next day
delivery, with written verification of receipt. The address for all
notices, requests, consents and other communications hereunder to the
parties to this Agreement shall be delivered or sent to the following:
(a) THE COMPANY:
Burleigh Instruments, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇.▇.▇.
ATTENTION: PRESIDENT
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇.▇.▇.
(b) THE BUYER OR BUYER SUB:
EXFO Electro-Optical Engineering Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Vanier, Quebec, Canada, G1T 2M5
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Fasken ▇▇▇▇▇▇▇▇▇ DuMoulin LLP
Stock Exchange Tower, 800 Place-Victoria, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
ATTENTION: MTRE ▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇.▇.▇.
▇▇▇▇▇▇▇ ▇. May, Jr.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇.▇.▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇.▇.▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇.▇.▇.
IN EACH CASE, WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE)
TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
- 66 -
9.3 AMENDMENTS; WAIVERS
No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by each party
to this Agreement, or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
9.4 HEADINGS
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
9.5 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company and the
Shareholders may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer. The Buyer and
Buyer Sub may not assign this Agreement or any of the rights or
obligations hereunder without the prior written consent of the Company
and the Shareholders.
9.6 NO THIRD-PARTY BENEFICIARIES
This Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
Person.
9.7 GOVERNING LAW; CONSENT TO JURISDICTION; LANGUAGE
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably consents to the jurisdiction of the state and federal
courts located in Monroe County, New York, to adjudicate any dispute
arising pursuant to this Agreement or the transactions contemplated
hereby, and waives any objections thereto. The parties have expressly
requested that this Agreement and all notices related thereto be
drafted in the English language. Les parties ont expressement exige que
cette convention ainsi que tous documents y afferents soient rediges en
anglais.
9.8 EXECUTION
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become
- 67 -
effective when counterparts have been signed by each party and
delivered to the other parties, it being understood that all parties
need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as
if such facsimile signature page were an original thereof.
9.9 SEVERABILITY
In case any one or more of the provisions of this Agreement shall be
invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
9.10 INTERPRETATION
The Section headings in this Agreement are for convenience of reference
only and shall not be deemed to alter or affect the meaning or
interpretation of any provision hereof. The language used in this
Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto. Any references
to the "KNOWLEDGE" of the Company or of the Shareholders or the
Company's "KNOWLEDGE" or the Shareholders' "KNOWLEDGE" or any similar
formulation shall mean the actual knowledge of the Shareholders or
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the Company's Chief Financial Officer. Any references
to the "KNOWLEDGE" of the Buyer or the Buyer's "KNOWLEDGE" or any
similar formulation shall mean the actual knowledge of the officers (as
defined in Rule 16a-1(f) of the Exchange Act) of Buyer The disclosure
of any matter in any portion of the Disclosure Schedules hereto shall
be deemed to be a disclosure for all purposes of this Agreement to
which such matter could reasonably be likely to be pertinent, but shall
expressly not be deemed to constitute an admission by the Company, the
Shareholders or the Buyer, as the case may be, or to otherwise imply,
that any such matter is material for the purposes of this Agreement.
9.11 CURRENCY
Unless otherwise stipulated herein, all dollar amounts are in the legal
currency of the United States of America.
- 68 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement of Merger and
Plan of Reorganization to be duly executed by their respective authorized
signatories as of the date first indicated above.
BURLEIGH INSTRUMENTS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Title: President
--------------------------------------------
EXFO ELECTRO-OPTICAL ENGINEERING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
EXFO SUB, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Title: President
--------------------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. May, Jr.
--------------------------------------------
▇▇▇▇▇▇▇ ▇. May, Jr.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT A
Certificate of Merger
of
EXFO SUB, INC
and
BURLEIGH INSTRUMENTS, INC
into
BURLEIGH INSTRUMENTS, INC
(Under Section 904 of the Business Corporation Law)
It is hereby certified on behalf of each of the constituent
corporations herein named, as follows:
FIRST: The Board of Directors of each of the constituent
corporations has duly adopted a plan of merger setting forth the terms and
conditions of the merger of said corporations.
SECOND: The name of the constituent corporation which is to be
the surviving corporation, and which is hereinafter sometimes referred to as the
"surviving constituent corporation", is Burleigh Instruments, Inc. The date upon
which its certificate of incorporation was filed by the Department of State is
August 25, 1972.
THIRD: The name of the other constituent corporation, which is
being merged into the surviving constituent corporation, and which is
hereinafter sometimes referred to as the "merged constituent corporation", is
EXFO Sub, Inc. The date upon which its certificate of incorporation was filed by
the Department of State is November 6, 2000.
2
FOURTH: As to each constituent corporation, the plan of merger
sets forth the designation and number of outstanding shares of each class and
series, as well as the specification of the classes and series entitled to vote
on the plan of merger, as follows:
Burleigh Instruments, Inc.
DESIGNATION OF EACH NUMBER OF
OUTSTANDING CLASS AND OUTSTANDING SHARES OF
SERIES OF SHARES EACH CLASS
Common Stock, 50,000 shares
$0.02 par value
EXFO Sub, Inc.
DESIGNATION OF EACH NUMBER OF
OUTSTANDING CLASS AND OUTSTANDING SHARES OF
SERIES OF SHARES EACH CLASS
Common Stock, 100 shares
$0.01 par value
FIFTH: The merger herein certified was authorized in respect
of the surviving constituent corporation by the vote of the holders of at least
two-thirds of all outstanding shares of the corporation entitled to vote on the
plan of merger.
SIXTH: The merger herein certified was authorized in respect
of the merged constituent corporation by the written consent of the holders of
all outstanding shares of the corporation entitled to vote on the plan of
merger.
SEVENTH: The effective date of the merger herein certified
shall be the 20th day of December, 2000.
3
IN WITNESS WHEREOF, we have subscribed this document on the
date set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained therein have been examined by us and are true and
correct.
Signed on December 19, 2000.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
of the Board of EXFO Sub, Inc.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Secretary of
EXFO Sub, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, President of
Burleigh Instruments, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary of
Burleigh Instruments, Inc.
EXHIBIT D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is dated the ___ day of December, 2000, by and
among EXFO Electro-Optical Engineering Inc., incorporated pursuant to the CANADA
BUSINESS CORPORATIONS ACT (the "BUYER"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ("▇▇▇▇▇▇▇▇▇▇▇")
▇▇▇▇▇▇▇ ▇. May, Jr. ("MAY"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇") (collectively, the "SHAREHOLDERS"), and CIBC Mellon Trust Company,
as escrow agent (the "ESCROW AGENT").
RECITALS
WHEREAS; Buyer, EXFO Sub, Inc., a New York corporation ("BUYER SUB"),
Burleigh Instruments, Inc., a New York corporation and the Shareholders are
parties to that certain Agreement of Merger and Plan of Reorganization dated
November ___, 2000 (the "MERGER AGREEMENT"), providing for the merger of Buyer
Sub with and into Burleigh; and
WHEREAS, the parties intend to establish an escrow fund pursuant to
Section 1.9 of the Merger Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the premises
and of their mutual covenants hereinafter set forth and intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall, for all purposes of this
Escrow Agreement, have the meanings herein specified, unless the context
otherwise specifies or requires. Capitalized terms used and not otherwise
defined in this Escrow Agreement shall have the respective meanings given to
them in the Merger Agreement.
"ESCROW AGENT" means CIBC Mellon Trust Company, as escrow agent under
this Escrow Agreement, and shall include its successors and permitted assigns.
"ESCROW FUND" means the Escrowed Shares and the Funds, if any.
"ESCROWED SHARES" means the shares of Buyer Subordinate Voting Shares,
without par value, which are from time to time held in escrow by the Escrow
Agent pursuant to this Escrow Agreement.
"FUNDS" means any cash received from a Shareholder by the Escrow Agent
in lieu of Escrowed Shares pursuant to Section 2.2(a), or any other cash
received by the Escrow Agent pursuant to the terms hereof.
"QUALIFIED INVESTMENTS" means any of the following securities, if and
to the extent the same have a maturity of not more than 30 days and are at the
time legal for investment or security, as the case may be, of escrowed funds:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America;
(b) bonds, debentures, notes or other evidences of
indebtedness issued by any of the following agencies or such other like
governmental or government-sponsored agencies which may be hereafter
created: Bank for Cooperatives; Federal Intermediate Credit Banks;
Federal Financing Banks; Federal Home Loan Bank System; Export-Import
Bank of the United States; Farmers Home Administration; Small Business
Administration; Inter-American Development Bank; International Bank for
Reconstruction and Development; Federal Land Banks; the Federal
National Mortgage Association; and the Government National Mortgage
Association;
(c) public housing bonds issued by public agencies or
municipalities and fully secured as to the payment of both principal
and interest by a pledge of annual contributions under an annual
contributions contract or contracts with the United States of America;
or temporary notes, preliminary loan notes, or project notes issued by
public agencies or municipalities, in each case fully secured as to the
payment of both principal and interest by a requisition or payment
agreement with the United States of America;
(d) direct and general obligations of any state of the United
States of America, to the payment of the principal of and interest on
which the full faith and credit of such state is pledged, if at the
time of their purchase such obligations are rated in either of the two
highest rating categories by the rating service or services of either
Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., or,
upon the discontinuance of either or both of such services, such other
national recognized rating service or services, as the case may be, as
shall be selected by the Escrow Agent;
(e) negotiable or non-negotiable certificates of deposit, time
deposits, or other similar banking arrangements, issued by any bank or
trust company the deposits of which are insured by the Federal Deposit
Insurance Corporation, such securities to be secured as to principal,
but only to the extent not insured by the Federal Deposit Insurance
Corporation or a similar corporation chartered by the United States of
America, by the securities listed in (a), (b), (c) or (d) above and in
a manner satisfactory to the Escrow Agent;
(f) repurchase agreements secured as to principal by the
securities listed in (a), (b), (c) or (d) above and in a manner
satisfactory to the Escrow Agent; and
(g) commercial paper with the highest rating by NCO/Moody's
Commercial Paper Division of ▇▇▇▇▇'▇ Investors Service, Inc.
ARTICLE II
DESIGNATION OF ESCROW AGENT; ASSETS SUBJECT TO ESCROW
Section 2.1 DESIGNATION OF ESCROW AGENT. The parties hereto other
than the Escrow Agent hereby designate and appoint CIBC Mellon Trust Company, as
Escrow Agent to serve in accordance with the terms of this Escrow Agreement. The
Escrow Agent hereby accepts such
2
appointment and agrees to act in accordance with the terms and conditions
provided in this Escrow Agreement.
Section 2.2 ASSETS SUBJECT TO ESCROW.
(a) The Shareholders hereby deposit an aggregate of _____
shares of Buyer Subordinate Voting Shares, (consisting of ___ shares
deposited by Klimasewski, ___ shares deposited by May, ___ shares
deposited by ▇▇▇▇▇▇▇ and ____ shares deposited by ▇▇▇▇▇▇▇), issued in
the name of such Shareholders, to be held by the Escrow Agent in
accordance with the terms and provisions of this Escrow Agreement. At
any time during the term of this Agreement, any Shareholder may
substitute cash for any shares of Buyer Subordinate Voting Shares
initially deposited by such Shareholder and remaining in the Escrow
Fund. The amount of cash to be deposited by such Shareholder for each
share of Buyer Subordinate Voting Shares to be removed from the Escrow
Fund will be equal to the Closing Price, which the parties agree is
$_____.
(b) Cash or other property received by the Escrow Agent in
respect of the Escrowed Shares from redemption or liquidation thereof,
shall be held by the Escrow Agent in accordance with the terms and
provisions of this Agreement. Any dividends declared with respect to
the Escrowed Shares, whether in cash, shares of the Buyer Subordinate
Voting Shares or other property shall be promptly forwarded to the
proper Shareholder.
ARTICLE III
DURATION OF ESCROW; TREATMENT OF FUNDS
Section 3.1 DURATION OF ESCROW. Subject to the provisions of
Article IV hereof, the Escrow Agent shall hold the Escrowed Shares and the Funds
as provided in this Escrow Agreement until the termination hereof in accordance
with Article IV.
Section 3.2 ESCROWED SHARES. Except as expressly provided in this
Escrow Agreement, the Escrowed Shares may not be transferred, sold or otherwise
disposed of by the Escrow Agent. Each of the Shareholders shall be permitted to
exercise any voting rights with respect to the Escrowed Shares issued in his
name.
Section 3.3 FUNDS. All Funds received by the Escrow Agent under
the provisions of this Escrow Agreement shall, as nearly as may be practicable,
be continuously invested and reinvested by the Escrow Agent in Qualified
Investments pursuant to the written instructions of the Shareholders, in each
case maturing within not more than 30 days from the date of the acquisition
thereof. The Escrow Agent shall sell at the best price obtainable at market
rates provided by broker/dealers or present for redemption any such securities
so purchased as an investment of Funds whenever it shall be necessary to do so
in order to provide Funds to make any distribution required pursuant to this
Agreement. Subject to compliance with the foregoing, the Escrow Agent shall not
be liable or responsible for any loss resulting from any such investment.
3
Section 3.4 INCOME. All income from the investment of Funds (net
of losses, if any) shall be allocable to the Shareholders as their interests may
from time to time appear and distributed among the Shareholders by the Escrow
Agent not less frequently than quarterly.
ARTICLE IV
CLAIMS
Section 4.1 NOTICE OF CLAIMS. From time to time on or before the
termination of this Agreement, the Company may give notice (a "Notice") to the
Shareholders, and the Escrow Agent asserting in reasonable detail the nature and
dollar amount of any claim (a "Claim") it may have under Section 7.2 of the
Merger Agreement. If the Shareholders give notice to the Company and the Escrow
Agent disputing any Claim (a "Counter Notice") within 30 days following receipt
by the Escrow Agent of the Notice regarding such Claim, such Claim shall be
resolved as provided in Section 4.3. If no Counter Notice is received by the
Escrow Agent within such 30-day period, then the amount of damages claimed by
the Company in the Notice shall be deemed established for purposes of this
Escrow Agreement and, at the end of such 30-day period, the Escrow Agent shall
pay to the Buyer the portion of the Escrow Fund claimed in the Notice from (and
in all cases only to the extent of) the Escrow Fund.
Section 4.2 DISTRIBUTIONS. In making any payment of a Claim from
the Escrow Fund, the Escrow Agent may distribute as consideration therefor: (a)
shares of Buyer Subordinate Voting Shares, which shall be valued for this
purpose at the closing sales price per share of Buyer Subordinate Voting Shares
on the most recent date on which trading of such stock occurred on the principal
exchange or market on which such shares are then traded preceding the date of
such distribution, or (b) cash. Any distributions to the Buyer pursuant to this
Article IV shall be allocable to the Shareholders pro rata in accordance with
their initial deposits into the Escrow Fund.
Section 4.3 COUNTER NOTICE; RESOLUTION. If a Counter Notice has
been given pursuant to Section 4.1 the Escrow Agent shall make no distribution
except in accordance with (i) joint written instructions of the Buyer and the
Shareholders or (ii) a final non-appealable order of a court of competent
jurisdiction. Any such court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that the order is final and non-appealable. The Escrow Agent shall act on such
court order and legal opinion without further question.
Section 4.4 JOINT INSTRUCTIONS. Notwithstanding anything in this
Escrow Agreement to the contrary, the Escrow Agent shall be entitled to rely on
any joint written instructions received from the Buyer and the Shareholders.
ARTICLE V
TERMINATION
Section 5.1 TERMINATION OF ESCROW. On the date which is 365 days
after the Closing Date as defined in the Merger Agreement, the Escrow Agent
shall pay and distribute 50% of the Escrow Fund pro rata to the Shareholders in
accordance with each Shareholder's initial deposit to the Escrow Fund, unless
any Claims are then pending, in which case a portion of the
4
Escrowed Shares and Funds equal to the disputed portion of any pending claim
shall be retained by the Escrow Agent in the Escrow Fund, pending joint written
instructions of the Company and the Shareholders or a final non-appealable order
of a court of competent jurisdiction as contemplated by Section 4.3 and the
remaining balance of the Escrow fund shall be released on the date which is the
second anniversary date of the Closing Date, as defined in the Merger Agreement,
unless any Claims are then pending, in which case a portion of the Escrowed
Shares and Funds equal to the disputed portion of any pending claim shall be
retained by the Escrow Agent in the Escrow Fund, pending joint written
instructions of the Company and the Shareholders or a final non-appealable order
of a court of competent jurisdiction as contemplated by Section 4.3. The Buyer
and the Shareholders agree to provide such joint written instructions to deliver
such Escrowed Shares and Funds to the Shareholders to the extent they exceed the
reasonably anticipated value of the Claims then pending.
ARTICLE VI
DUTIES OF ESCROW AGENT
Section 6.1 LIABILITY. The Escrow Agent shall not be liable,
except for its own gross negligence or willful misconduct and, except with
respect to claims based upon such gross negligence or willful misconduct that
are successfully asserted against the Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless the Escrow Agent (and
any successor Escrow Agent) from and against any and all losses, liabilities,
claims, actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Escrow Agreement.
Without limiting the foregoing, the Escrow Agent shall not be liable in
connection with its investment or reinvestment of any Funds held by it hereunder
in good faith, in accordance with the terms hereof, including, but not limited
to, any liability for any reasonable delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Fund, or any loss of interest incident to any such reasonable delays.
Section 6.2 RELIANCE. The Escrow Agent shall be entitled to rely
upon any order, judgment, certification, demand, notice, instrument or other
writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature reasonably believed by it to be genuine and may assume
that the person purporting to give receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so. The Escrow Agent may conclusively presume that the
undersigned representative of any party hereto which is an entity other than a
natural person has full power and authority to instruct the Escrow Agent on
behalf of that party unless written notice to the contrary is delivered to the
Escrow Agent. The Escrow Agent may act pursuant to the advise of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice.
Section 6.3 RESIGNATION. The Escrow Agent (and any successor
Escrow Agent) may at any time resign as such by delivering the Escrow Fund to
any successor Escrow Agent jointly designated by the Buyer and the Shareholders
in writing, or to any court of competent jurisdiction, whereupon the Escrow
Agent shall be discharged of and from any and all further
5
obligations arising in connection with this Escrow Agreement. The resignation of
the Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent jurisdiction) or (b) the day which is
30 days after the date of delivery of its written notice of resignation to the
other parties hereto. If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until receipt
of a designation of successor Escrow Agent or a joint written disposition
instruction by the other parties hereto or a final non-appealable order of a
court of competent jurisdiction.
Section 6.4 DISAGREEMENTS. In the event of any disagreement
between the other parties hereto resulting in adverse claims or demands being
made in connection with the Escrow Fund or in the event that the Escrow Agent in
good faith is in doubt as to what action it should take hereunder, the Escrow
Agent shall be entitled to retain the Escrow Fund until the Escrow Agent shall
have received (i) a final non-appealable order of a court of competent
jurisdiction directing delivery of the Escrow Fund or (ii) a written agreement
executed by the Buyer and the Shareholders directing delivery of the Escrow
Fund, in which event the Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied by
a legal opinion by counsel for the presenting party satisfactory to the Escrow
Agent to the effect that the order is final and non-appealable. The Escrow Agent
shall act on such court order and legal opinion without further question.
Section 6.5 FEES. The Buyer shall pay the Escrow Agent
compensation, as payment in full for the services to be rendered by the Escrow
Agent hereunder, in the amounts set forth on Schedule A attached hereto, and
agrees to reimburse the Escrow Agent for all reasonable expenses incurred in
performance of its duties hereunder. Any compensation and reimbursement of
expenses to which the Escrow Agent is entitled shall be borne and paid solely by
the Buyer.
Section 6.6 SECURITIES DEPOSITORY. The other parties hereto
authorize the Escrow Agent, for any securities held hereunder, to use the
services of any United States central securities depository it reasonably deems
appropriate, including, but not limited to, the Depository Trust Company and the
Federal Reserve Book Entry System.
Section 6.7 NO OTHER DUTIES. This Escrow Agreement expressly sets
forth all the duties of Escrow Agent with respect to any and all matters
pertinent hereto. No implied duties or obligations shall be read into this
Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be bound
by the provisions of any agreement among the other parties hereto except this
Escrow Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (c) three business days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) two business days after deposit with recognized overnight courier,
specifying next day delivery, with
6
written verification of receipt. The address for all notices, requests, consents
and other communications hereunder to the parties to this Agreement shall be
delivered or sent to the following:
The Buyer:
EXFO Electro-Optical Engineering Inc.
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy (which shall not constitute notice) to:
Fasken ▇▇▇▇▇▇▇▇▇ DuMoulin LLP
Stock Exchange Tower, Suite 3400
▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_________________________
_________________________
_________________________
▇▇▇▇▇▇▇ ▇. May, Jr.
_________________________
_________________________
_________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
_________________________
_________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
7
_________________________
_________________________
In each case, with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Escrow Agent:
_________________________
_________________________
_________________________
Attention: ___________, Esq.
Telephone (___)__________
Facsimile (___) ___________
Or such other address as may be designated in writing hereafter, in the same
manner, any party hereto.
Section 7.2 COUNTERPARTS. This Escrow Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute a single agreement.
Section 7.3 CAPTIONS. The captions in this Escrow Agreement are
for convenience of reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.
Section 7.4 NO WAIVER. The failure of a party to insist upon
strict adherence to any term of this Escrow Agreement on any occasion shall not
be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Escrow Agreement.
Any waiver must be in writing.
Section 7.5 EXCLUSIVE AGREEMENT; AMENDMENT. This Escrow Agreement
supersedes all prior agreements among the parties with respect to its subject
matter, is intended (with the documents referred to herein) as a complete and
exclusive statement of the terms of the agreement among the parties with respect
thereto and cannot be changed or terminated except by a written instrument
executed by Buyer, the Shareholders and the Escrow Agent.
Section 7.6 GOVERNING LAW. This Escrow Agreement and (unless
otherwise provided) all amendments hereof and waivers and consents hereunder
shall be governed by the laws of the State of New York, without regard to the
conflicts of law principles thereof.
8
IN WITNESS WHEREOF, Buyer, each of the Shareholders and the Escrow
Agent have caused this Escrow Agreement to be duly executed as of the day and
year first above written.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
By: _______________________________________
Name:
Title:
SHAREHOLDERS
____________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
____________________________________________
▇▇▇▇▇▇▇ ▇. May, Jr.
____________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CIBC MELLON TRUST COMPANY
By: _______________________________________
Name:
Title:
9
DISCLOSURE SCHEDULES
All documents referenced in these schedules were made available
to the Buyer at an earlier date. Additional access to any
referenced documents may be available upon request.
THE DISCLOSURE OF ANY MATTER IN A PORTION OF THESE DISCLOSURE
SCHEDULES SHALL BE DEEMED TO BE A DISCLOSURE FOR ALL PURPOSES OF
THE AGREEMENT OF MERGER AND PLAN OF REORGANIZATION TO WHICH SUCH
MATTER COULD REASONABLY BE LIKELY TO BE PERTINENT, BUT SHOULD
EXPRESSLY NOT BE DEEMED TO CONSTITUTE AN ADMISSION BY THE COMPANY,
THE SHAREHOLDERS OR THE BUYER, AS THE CASE MAY BE, OR TO OTHERWISE
IMPLY, THAT ANY SUCH MATTER IS MATERIAL FOR PURPOSES OF THIS
AGREEMENT.
SCHEDULE 2.2
SUBSIDIARIES
--------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS, GmbH
--------------------------------------------------------------------------------
Jurisdiction of incorporation Germany
--------------------------------------------------------------------------------
The number of shares of authorized capital DM 150,000
stock of each class of its capital stock
--------------------------------------------------------------------------------
The number of issued and outstanding shares DM 150,000
of each class of its capital stock
--------------------------------------------------------------------------------
The names of the holders of issued and ▇▇▇▇▇▇▇ ▇. May, DM 16,500
outstanding shares of each class of capital ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 16,500
stock and the number of shares held by each Burleigh Instruments, Inc., DM 117,000
such holder
--------------------------------------------------------------------------------
The number of shares of its capital stock held None
in treasury
--------------------------------------------------------------------------------
Managing Director ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS (U.K.) Ltd.
--------------------------------------------------------------------------------
Jurisdiction of Incorporation United Kingdom
--------------------------------------------------------------------------------
The number of shares of authorized capital (pound) 1,000
stock of each class of its capital stock
--------------------------------------------------------------------------------
The number of issued and outstanding shares (pound) 700
of each class of its capital stock
--------------------------------------------------------------------------------
The names of the holders of issued and Burleigh Instruments, (pound) 500
outstanding shares of each class of capital ▇▇▇▇▇▇▇ ▇. May, (pound) 100
stock and the number of shares held by each ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, (pound) 100
such holder
--------------------------------------------------------------------------------
The number of shares of its capital stock held None
in treasury
--------------------------------------------------------------------------------
Managing Director ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
Officer ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
--------------------------------------------------------------------------------
SCHEDULE 2.3
CAPITALIZATION
--------------------------------------------------------------------------------
SHAREHOLDER NUMBER OF SHARES
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 19,467
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. May 19,467
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,390
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 3,676
--------------------------------------------------------------------------------
Total 50,000
--------------------------------------------------------------------------------
Authorized capitalization of 1,000,000 shares of common stock, $0.02 par value.
SHARE RESTRICTION AGREEMENTS
----------------------------
1) Shareholders Agreement among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. May and
Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
the transfer of shares by granting an option to purchase the shares
first to the other shareholders and then to Burleigh Instruments, Inc.
2) Stock Purchase Agreement among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. May, May 12, 2000. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ have pledged their shares pursuant to a pledge agreement dated
May 12, 2000 to secure payment of certain promissory notes.
SCHEDULE 2.4
CONFLICTS WITH AGREEMENTS
1) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., September 1, 2000
2) Environmental Compliance and Indemnification Agreement, September 1,
2000
3) Agency Compliance Agreement between Ontario County ▇.▇.▇. and ▇▇▇▇▇▇▇▇
Instruments, Inc., September 1, 2000
4) Inducement Agreement among Ontario County ▇.▇.▇., Fishers Development
Company and Burleigh Instruments, Inc., September 1, 2000
5) Guaranty Agreement from Fishers Development Company and Burleigh
Instruments, Inc. to Ontario County ▇.▇.▇. and The Huntington National
Bank, September 1, 2000
6) Continuing Guaranty from Burleigh Instruments, Inc. to KeyBank N.A.,
September 22, 2000
7) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., January 1, 1978
8) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., First Amendment, April 8, 1993
9) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., Second Amendment, March 10, 1998
10) Guaranty of Payment and Performance between Burleigh Instruments, Inc.
and KeyBank N.A., April 15, 1998
11) Term Loan Agreement between Burleigh Instruments, Inc. and KeyBank,
April 8, 1993
12) Promissory Note in the principal amount of $786,000 made by Burleigh
Instruments, Inc. to KeyBank N.A., April 8, 1993
13) Burleigh Instruments, Inc. Capital Grant from Empire State Development,
March 24, 2000
14) Ontario County RIF Loan Application
15) Business Loan Agreement between KeyBank N.A. and Burleigh Instruments,
Inc., September 22, 2000
16) Commercial Security Agreement and Promissory Note between KeyBank N.A.
and Burleigh Instruments, Inc., July 18, 2000
17) NASA SBIR Phase II Contract, March 12, 1999
18) Department of the Air Force Contract, June 22, 2000
19) UCLA Subcontract to Air Force Contract, October 9, 2000
20) USHIO Research Institute of Technology Inc. Development Agreement,
March 11, 1998
21) EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
amended, December 10, 1997, and Termination of Annex III to Strategic
Alliance Agreement, August 20, 1999
22) Package Insurance, Zurich Group, Policy # CMM 31725527, August 1, 2000
23) Automobile Insurance, Zurich Group, Policy # CMM 31725527, August 1,
2000
24) Workers' Compensation Insurance, Zurich Group, Policy # TC1 95562931,
August 1, 2000
25) Umbrella Insurance, Zurich Group, Policy # UBA 95469814, August 1, 2000
26) Directors and Officers Insurance, Zurich Group, Policy # ▇▇▇-▇▇-▇▇,
August 1, 2000
27) Producer Loan Agreements between Burleigh Instruments, Inc. and
Burleigh DISC, Inc.:
a) Dated April 1, 1994 for $17,200.00
b) Dated February 28, 1995 for $440,000.00
c) Dated February 28, 1997 for $207,250.00
d) Dated April 1, 1998, for $273,700.00
SCHEDULE 2.5
SHARE OWNERSHIP
---------------
1) Shareholders Agreement among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. May and
Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
the transfer of shares by granting an option to purchase the shares
first to the other shareholders and then to Burleigh Instruments, Inc.
2) Stock Purchase Agreement among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. May, May 12, 2000. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ have pledged their shares pursuant to a pledge agreement dated
May 12, 2000 to secure payment of certain promissory notes.
SCHEDULE 2.10
CERTAIN CHANGES OR EVENTS
-------------------------
1) Burleigh Instruments, Inc. is considering an amendment to its 401(k)
Plan and Sales Growth Bonus Plan to eliminate the current six month
waiting period for participation.
2) Burleigh Instruments, Inc. expects to implement a Cafeteria Plan for
its employees effective January 1, 2001.
3) Burleigh Instruments, Inc. expects to implement a Recruiting Bonus
Program effective January 1, 2001.
4) Burleigh Instruments, Inc. expects to implement a Referral Bonus
Program for its employees effective January 1, 2001.
5) The Company's appeal of an export license denial for the return of an
Atomic Force Microscope System to the Government of India (the unit had
been returned to Burleigh for repairs) has been denied by the Bureau of
Export Administration. Burleigh has advised the Government of India
that it cannot pursue this matter further. By letter dated November 16,
2000, the Government of India has requested a refund of the cost of the
unit (approximately $42,000).
SCHEDULE 2.12
S CORPORATION ELECTION
----------------------
Burleigh Instruments, Inc. has elected to be treated as an S
corporation for New York state tax and Federal tax purposes. However, Burleigh
Instruments, Inc. is subject to tax in Maryland and has not elected to be
treated an S corporation for Maryland state tax purposes.
SCHEDULE 2.13(A)
INTELLECTUAL PROPERTY
---------------------
U.S. PATENTS
1) Patent # 5847387: Support Device and Stage Assembly for a Scanned-Probe
Microscope, December 8, 1998
2) Patent # 5831264: Electrostrictive Actuator for Scanned-Probe
Microscope, November 3, 1998
3) Patent # ▇▇▇▇▇▇▇: Peristaltic Driver Apparatus, May 12, 1998
4) Patent # ▇▇▇▇▇▇▇: System for Exchanging Samples and Electrode Tip Units
in a Surface Probe Microscope, October 20, 1992
5) Patent # 4874979: Electromechanical Translation Apparatus, October 17,
1989
6) Patent # 4336809: Human and Animal Tissue Photoradiation System and
Method, June 29, 1982
7) Patent # 4319843: Interferometer Apparatus for the Direct Measurement
of Wavelength and Frequency, March 16, 1982
8) Patent # 4208636: Laser Apparatus, June 17, 1980
9) Patent # 4157802: Rigid Thermally Stable Structure for Supporting
Precision Devices, June 12, 1979
10) Patent # 3902085: Electromechanical Translation Apparatus, August 26,
1975
11) Patent # 3902084: Piezoelectric Electromechanical Translation
Apparatus, August 26, 1975
U.S. PATENTS APPLIED FOR OR PENDING (THE COMPANY AND THE SHAREHOLDERS MAKE NO
REPRESENTATION REGARDING WHETHER ANY SUCH PATENTS WILL BE GRANTED.)
12) Patent Application: Inertial Impact Drill for Cytological Applications,
filed June 14, 2000
13) Patent Application: Flex-tensional Electromechanical Displacement
Amplifier, filed March 16, 2000
14) Patent Application: Linear Incremental Bi-directional Motor with a
Ratchet Stepper Mechanism, filed June 5, 2000
15) Patent Application: Linear Incremental Bi-directional Motor with
Interdigitated High Force Clamps, filed June 5, 2000
16) Patent Application: Laser Wavelength Meter, filed November 15, 2000.
FOREIGN PATENTS
17) Canadian Patent: Electromechanical Translation Apparatus, December 29,
1992
U.S. TRADEMARKS
19) Trademark for "Inchworm" dated May 22, 1984, Reg. No 1,278,748
20) Trademark for "Gibraltar" dated October 20, 1998, Reg. No 2,198,525
21) Trademark for "Wavemeter" dated August 11, 1981, Reg. No 1,164,470
22) Trademark for "Instructional STM" dated August 10, 1993, Reg. No
1,787,680
23) Trademark for "Aris" dated October 29, 1991, Reg. No 1,662,937
24) Trademark for "Metris" dated October 28, 1997, Reg. No 2,109,779
25) Trademark for "True Image" dated October 26, 1993, Reg. No 1,800,550
26) Trademark for "Hifase" dated April 24, 1990, Reg. No 1,592,830
27) Trademark for "True View" dated February 21, 1995, Reg. No, 1,879,556
28) Trademark for "Resolver" dated February 17, 1998 (2), Reg. No 2,137,226
29) Trademark for "Resolver and Design" dated March 10, 1998, Reg. No
2,142,507
30) Trademark for "Tip Check" dated September 14, 1993, Reg. No 1,792,463
U.S. TRADEMARKS APPLIED FOR OR PENDING (THE COMPANY AND THE SHAREHOLDERS MAKE NO
REPRESENTATION REGARDING WHETHER ANY SUCH TRADEMARKS WILL BE REGISTERED.)
31) Trademark Application for "PiezoDrill," filed June 20, 2000, Serial No
761073,291
32) Trademark Application for "Freedom," filed November 20, 2000, Serial
N(degree) 76167987
33) Trademark Application for "Burleigh," filed November 10, 2000, Serial
N(degree) 76163387
DOMAIN NAMES
34) "▇▇▇▇▇▇▇▇.▇▇▇"
35) "▇▇▇▇▇▇▇▇▇▇.▇▇▇"
LICENSES
36) License from UFO Systems, Inc. on March 4, 1993 for software
37) License from Alligator Technologies for "Prime Factor FFT" software
38) License from Hewlett Packard for Patent # 29246
39) License for development of Microsoft Windows prototype code
40) Research Systems Inc. OEM Software License Agreement dated April 16,
1999
41) WinZip 4.0 Registration Form/Invoice dated June 16, 1993
42) MAXCIM software program sublicensed from ▇▇▇▇▇▇▇ ▇. May and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇
43) Non-exclusive (after July 1, 2001) License from Micromap Technology
Purchase Agreement dated July 1, 1998 for software and Microscope
design.
44) License/Software Agreements for individual computers or operators of
computers, as follows:
1. AutoCad lt97
a. Serial Number: 160-10430686
2. AutoCAD LT
a. Serial Number: 160-10396370
3. MathCad
a. Serial Number: PN900909DP1938C
4. AutoCad
a. Serial number: 110-99777441
5. AutoCad LT
a. Serail Number: 160-10698669
6. Mathcad7
a. PN702805D00319-2a
7. AutoCad LT
a. Serial Number: 160-10430692
8. AutoCAD LT
a. Serial Number: 160-10696211
9. AutoCAD
a. Serial Number: 160-10430695
10. AutoCAD
a. Serial Number: 110-99512979
11. AutoCAD LT
a. Serial Number: 160-10677955
12. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, operator
a. AutoCAD, Serial Number: 160-10430691
b. Microsoft Projec, Serial Number: 53606-892-0489331-11977
13. ▇▇▇ ▇▇▇▇▇▇▇▇, operator
a. AutoCAD, Serial Number: 110-99512978
b. SolidWorks 2000, Serial Number: 0000 0001 9324 0050
c. Axum, Serial Number: AP510805D00559
E. Mathcad7, PN702805D00341-2a
14. ▇▇▇ ▇▇▇▇▇▇▇, operator
a. AutoCAD LT, Serial Number: 160-10430701
b. PartMiner, Number: 160388
c. MAX+plus II
d. Magnetics Designer, Number : 3578
15. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, operator
a. AutoCAD LT, Serial Number: 160-10430702
b. Micrsoft Project, ID: 63606-809-3258881-53883
c. SmartDraw, SD-00-213305-000A-00000-50-84582
d. Parts&Vendors SE Edition, License: td9812211084811
16. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, operator
a. AutoCAD, Serial Number: 110-99512979
b. SolidWorks 2000, Serial Number: 0000 0001 9321 9606
17. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, operator
a. AutoCAD LT, Serial Number: 160-10430703
18. ▇▇▇ ▇▇▇▇▇, operator
a. AutoCAD LT, Serial Number: 160-10430699
b. Microsoft Project, Serial Number: 53606-330-9020012-48781
19. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, operator
a. AutoCAD LT, Serial Number: 160-10430707
b. Mathcad7, pn702802d00708-2a
c. EDC-1000HR Imaging Software
d. ZEMAX-SE, Serial Number: 28-716
20. ▇▇▇▇▇ ▇▇▇▇, operator
a. About AutoCAD, Serial Number: 110-99512948
b. About SolidWorks 2000, Serial Number: 000 0007 5001 0478
21. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, operator
a. About AutoCAD, Serial Number: 110-▇▇▇▇▇▇▇▇▇
b. About SolidWorks 2000, Serial Number: 000 0001 9322 2645
22. ▇▇▇▇ ▇▇▇▇▇▇, operator
a. About AutoCAD, Serial Number: 110-99512968
b. About SolidWorks 2000, Serial Number: 0000 0012 5192 2610
23. ▇▇▇▇ ▇▇▇▇▇▇▇, operator
a. About AutoCAD LT, Serial Number: 160-10430709
b. Mathcad7, Serial Number: vn702802d00419-2a
c. About Convert It!Pro
24. ▇▇▇▇ ▇▇▇▇, operator
a. About Mathcad, Serial Number: PU80081oDA6180
b. About AutoCAD LT, Serial Number: 160,10430687
c. About Corel PHOTO-PAINT Plus, Serial Number: 056878
25. Autodesk Audo CAD LT 97
a. Serial Number: 160-10430694
SCHEDULE 2.13(B)
INTELLECTUAL PROPERTY
---------------------
The Company's products include certain embedded proprietary software, which the
Company deems to be distributed pursuant to a license.
SCHEDULE 2.13(E)
CONFLICTS WITH AGREEMENTS DEALING IN
------------------------------------
INTELLECTUAL PROPERTY
---------------------
1) NASA SBIR Phase II Contract, March 12, 1999
2) Department of the Air Force Contract, June 22, 2000
3) UCLA Subcontract to Air Force Contract, October 9, 2000
4) USHIO Research Institute of Technology Inc. Development Agreement,
March 11, 1998
5) EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
amended, December 10, 1997, and Termination of Annex III to Strategic
Alliance Agreement, August 20, 1999
SCHEDULE 2.14
LIENS
-----
1) KeyBank of New York filed with the New York Department of State and
with the Ontario County Clerk two UCC-1 financing statements covering
all of the Company's goods, accounts, chattel paper, general
intangibles, instruments, documents, wherever located, whether now or
existing or hereafter acquired or arising.
SCHEDULE 2.15
COMPANY CONTRACTS
-----------------
1) Wit Soundview Engagement Agreement dated August 16, 2000
2) Coherent Scientific PTY Agreement
3) Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
2000
4) MJL Crysteck, Inc. Distributor Agreement dated June 25, 1999
5) SE Technologies Corporation Distributor Agreement dated February 26,
1999
6) Eppendorf Scientific Value Added Reseller Purchase Agreement dated
October 1, 1999
7) Athens Scientific Representatives Distributor Agreement dated December
8, 1998
8) Daekhon International, Inc. Distributor Agreement dated November 1,
1998
9) AEI Customs Brokerage Services Power of Attorney from Burleigh dated
October 15, 1998
10) NPI GmbH Distributor Agreement dated October 1, 1998
11) Nikon Reseller Purchase Agreement dated September 30, 1998
12) ▇▇▇▇ Institute Distributor Agreement dated May 15, 1998
13) Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
1998
14) ▇▇▇ ▇▇▇▇ Scientific Corporation Distributor Agreement dated December
15, 1997
15) ▇▇▇▇▇▇▇ Scientific Distributor Agreement dated November 1, 1997
16) Olympus America, Inc. Distributor Agreement dated September 18, 1997
17) 2M Strumenti S.r.l. Distributor Agreement dated July 1, 1997
18) 2M Strumenti S.r.l. Second Distributor Agreement dated July 1, 1997
19) Gamma Optronic AB Distributor Agreement dated February 1, 1997
20) MD Scitech Ltd. Distributor Agreement dated February 1, 1997
21) ▇▇▇▇ Zeiss Inc. Value Added Reseller Purchase Agreement
22) Optilas GmbH Distributor Agreement dated February 14, 1995
23) Mestec AS Distributor Agreement dated October 1, 1993
24) Indeco Distributor Agreement dated February 1, 1993
25) New Technology RK Ltd. Representation Agreement dated March 1, 1990
26) Optilas B.V. Representation Agreement dated January 1, 1989
27) Decada Representation Agreement dated January 1, 1989
28) GMP Representation Agreement dated January 1, 1989
29) Scientific Instruments Marketing, Co. Representation Agreement dated
January 1, 1989
30) Opto Electronica S/A Distributor Agreement dated February 1, 1992
31) Lasing SA Representation Agreement dated January 1, 1989
32) Atlaser di Distributor Agreement dated June 1, 2000
33) Ambios Technology, Inc. Representative Agreement dated July 1, 1999
34) Tech Science Ltd. Representation Agreement dated November 12, 1990
35) Hellenic Scientific Representation Agreement dated January 1, 1989
36) Micromap Technology Purchase Agreement dated July 1, 1998
37) Newport Supply Agreement dated May 29, 1997
38) Micromap Manufacturing and Sales Agreement dated September 18, 1996
39) Direct Optical Research Purchase Order dated March 1, 2000
40) ▇▇▇▇▇▇▇ Corporation Purchase Order (date illegible)
41) Cavendish Instruments Purchase Orders (date illegible)
42) Ontario County ▇.▇.▇. 2000 Bond
43) Burleigh Instruments Capital Grant from Empire State Development
44) Ontario County RIF Loan Application
45) KeyBank N.A. Mortgage Financing 1998
46) KeyBank N.A. Mortgage Financing 1993
47) ▇▇. ▇▇▇▇▇ Erdogan Advisor Agreement dated February 28, 2000
48) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Consulting Agreement dated January 1, 2000
49) ▇▇▇▇▇ ▇. ▇▇▇▇ Consulting Agreement dated June 27, 1997
50) ▇▇▇ ▇▇▇▇▇▇▇▇▇ Consultant Agreement
51) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Consultant Agreement
52) ▇▇▇▇ ▇▇▇▇ FY2000 Commission Program dated March 18, 2000
53) ▇▇▇▇▇ ▇▇▇▇ FY2000 Commission Program dated March 18, 2000
54) ▇▇▇▇▇▇ ▇▇▇▇▇▇ FY2000 Commission Program dated March 18, 2000
55) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ FY2000 Commission Program dated October 11, 2000
56) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FY2000 Commission Program dated October 16, 2000
57) ▇▇▇▇▇ ▇▇▇▇▇ FY2000 Commission Program dated October 16, 2000
58) ▇▇▇ ▇▇▇▇▇▇ FY2000 Commission Program dated October 1, 2000
59) ▇▇▇▇▇ ▇▇▇▇▇▇ FY2000 Commission Program dated October 1, 2000
60) ▇▇▇▇ ▇▇▇▇▇▇▇ FY2000 Commission Program
61) ▇▇▇▇ ▇▇▇▇▇▇▇ FY2000 Commission Program
62) Fishers Development Company Sublease Agreement dated September 1, 2000
63) Fishers Development Company - Ontario County ▇.▇.▇. Lease Dated
September 1, 2000
64) ▇▇▇▇▇▇▇▇ Scottsman, Inc. Modular Trailer Lease dated February 4, 2000
65) NASA SBIR Phase II Contract, March 12, 1999
66) Precision Engineering Center North Carolina State University Membership
Agreement dated January 23, 1998
67) USHIO Research Institute of Technology Inc. Development Agreement dated
March 11, 1998
68) EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
amended, December 10, 1997, and Termination of Annex III to Strategic
Alliance Agreement, August 20, 1999
69) Joint Development Agreement between Intelligent Automation, Inc. and
Burleigh Instruments, Inc., January 23, 1997
70) Agreement between Burleigh Instruments, Inc. and MicroE Inc. for
development and reselling of Ultra High Vacuum Position Encoders, April
17, 1998
71) Agreements between Intelligent Automation and Burleigh Instruments,
Inc., November 28, 1994 and December 21, 1994
72) UCLA Contract dated September 1, 2000
73) Department of the Air Force AFMC Contracts dated June 22, 2000
74) Salary Continuation Plans and Noncompete Agreements with ▇▇▇▇▇▇▇ ▇. May
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, each dated April 17 1989
75) Compaq Computer Services Agreement (and services rendered) dated April
2000
76) ▇▇▇▇▇▇▇▇ Communications Solutions Telephone Systems Renewal Contract
Charges dated February 14, 2000
77) Forte Software Support Agreement dated October 11, 1999
78) Liebert Global Services Agreement
79) Iron Mountain Data Base Update
80) ▇▇▇▇▇ Architects, A.I.A., August 16, 1999
81) RONCO Purchase Agreement, September 18, 2000
82) KeyCorp Equipment Leasing Agreement dated July 26, 2000
83) Xerox Lease Agreements for Two Copiers/Printers dated July 25, 2000
84) Purchase Order for Melles Griot dated June 16, 2000
85) Purchase Order for Surmotech dated July 14, 2000
86) Purchase Order for Surmotech dated September 15, 2000
87) Purchase Order for Heidenhan Corp. dated November 3, 2000
88) Purchase Order for API Motion Inc. dated October 6, 2000
89) Purchase Order for Noritake dated October 31, 2000
90) Purchase Order for JDS Uniphase Corp. dated July 17, 2000
91) Purchase Order for Technical Applications Association dated December 1,
2000
92) Purchase Order for Arrow Electronics dated November 29, 2000
93) Producer Loan Agreements between Burleigh Instruments, Inc. and
Burleigh DISC, Inc.:
a) Dated April 1, 1994 for $17,200.00
b) Dated February 28, 1995 for $440,000.00
c) Dated February 28, 1997 for $207,250.00
d) Dated April 1, 1998, for $273,700.00
SCHEDULE 2.15(A)
BREACHES OF COMPANY CONTRACTS
-----------------------------
1) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., September 1, 2000
2) Environmental Compliance and Indemnification Agreement, September 1,
2000
3) Agency Compliance Agreement between Ontario County ▇.▇.▇. and ▇▇▇▇▇▇▇▇
Instruments, Inc., September 1, 2000
4) Inducement Agreement among Ontario County ▇.▇.▇., Fishers Development
Company and Burleigh Instruments, Inc., September 1, 2000
5) Guaranty Agreement from Fishers Development Company and Burleigh
Instruments, Inc. to Ontario County ▇.▇.▇. and The Huntington National
Bank, September 1, 2000
6) Continuing Guaranty from Burleigh Instruments, Inc. to KeyBank N.A.,
September 22, 2000
7) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., January 1, 1978
8) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., First Amendment, April 8, 1993
9) Sublease Agreement between Fishers Development Company and Burleigh
Instruments, Inc., Second Amendment, March 10, 1998
10) Guaranty of Payment and Performance between Burleigh Instruments, Inc.
and KeyBank N.A., April 15, 1998
11) Term Loan Agreement between Burleigh Instruments, Inc. and KeyBank,
April 8, 1993
12) Promissory Note in the principal amount of $786,000 made by Burleigh
Instruments, Inc. to KeyBank N.A., April 8, 1993
13) Burleigh Instruments, Inc. Capital Grant from Empire State Development,
March 24, 2000
14) Ontario County RIF Loan Application
15) Business Loan Agreement between KeyBank N.A. and Burleigh Instruments,
Inc., September 22, 2000
16) Commercial Security Agreement and Promissory Note between KeyBank N.A.
and Burleigh Instruments, Inc., July 18, 2000
17) NASA SBIR Phase II Contract, March 12, 1999
18) Department of the Air Force Contract, June 22, 2000
19) UCLA Subcontract to Air Force Contract, October 9, 2000
20) USHIO Research Institute of Technology Inc. Development Agreement,
March 11, 1998
21) EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
amended, December 10, 1997, and Termination of Annex III to Strategic
Alliance Agreement, August 20, 1999
22) Package Insurance, Zurich Group, Policy # CMM 31725527, August 1, 2000
23) Automobile Insurance, Zurich Group, Policy # CMM 31725527, August 1,
2000
24) Workers' Compensation Insurance, Zurich Group, Policy # TC1 95562931,
August 1, 2000
25) Umbrella Insurance, Zurich Group, Policy # UBA 95469814, August 1, 200
26) Directors and Officers Insurance, Zurich Group, Policy # ▇▇▇-▇▇-▇▇,
August 1, 2000
27) Producer Loan Agreements between Burleigh Instruments, Inc. and
Burleigh DISC, Inc.:
a) Dated April 1, 1994 for $17,200.00
b) Dated February 28, 1995 for $440,000.00
c) Dated February 28, 1997 for $207,250.00
d) Dated April 1, 1998, for $273,700.00
SCHEDULE 2.15(B)
Please refer to the Licenses listed in Schedule 2.13(A).
EMBEDDED SOFTWARE LICENSES
--------------------------
The Company includes on certain of its products embedded software owned
by third-parties and distributed by the Company pursuant to a license.
CONTRACTS RESTRICTING SALES TERRITORY
-------------------------------------
1) Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
2000
2) MJL Crysteck, Inc. Distributor Agreement dated June 25, 1999
3) SE Technologies Corporation Distributor Agreement dated February 26,
1999
4) Athens Scientific Representatives Distributor Agreement dated December
8, 1998
5) Daekhon International, Inc. Distributor Agreement dated November 1,
1998
6) NPI GmbH Distributor Agreement dated October 1, 1998
7) Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
1998
8) ▇▇▇ ▇▇▇▇ Scientific Corporation Distributor Agreement dated December
15, 1997
9) ▇▇▇▇▇▇▇ Scientific Distributor Agreement dated November 1, 1997
10) 2M Strumenti S.r.l. Distributor Agreement dated July 1, 1997
11) Gamma Optronic AB Distributor Agreement dated February 1, 1997
12) MD Scitech Ltd. Distributor Agreement dated February 1, 1997
13) Optilas GmbH Distributor Agreement dated February 14, 1995
14) Mestec AS Distributor Agreement dated October 1, 1993
15) Indeco Distributor Agreement dated February 1, 1993
16) Opto Electronica S/A Distributor Agreement dated February 1, 1992
17) Atlaser di Distributor Agreement dated June 1, 2000
SCHEDULE 2.16
INSURANCE
---------
--------------------------------------------------------------------------------
INSURANCE POLICY POLICY EFFECTIVE
COMPANY TYPE NUMBER DATE
--------------------------------------------------------------------------------
Zurich Group Commercial Property and CMM 31725527 August 1, 2000
General Liability Insurance
--------------------------------------------------------------------------------
Zurich Group Automobile Insurance CMM 31725527 August 1, 2000
--------------------------------------------------------------------------------
Zurich Group Workers' Compensation TC1 95562931 August 1, 2000
Insurance
--------------------------------------------------------------------------------
Zurich Group Umbrella Insurance UBA 95469814 August 1, 2000
--------------------------------------------------------------------------------
Zurich Group Directors and Officers ▇▇▇-▇▇-▇▇ August 1, 2000
Insurance
--------------------------------------------------------------------------------
SCHEDULE 2.17
-------------
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS DECEMBER 1, 2000 BONUS IS ON A CASH BASIS
HIRE ANNUAL YTD
DEPT EMPLOYEE TITLE DATE SALARY BONUS
-----------------------------------------------------------------------------------------------------------------------------
5500 ▇▇▇▇▇, ▇▇▇▇▇ ElectronicTechnician 10/25/1999 31,200 5,664
5500 ▇▇▇▇▇, ▇▇▇▇▇▇ Electronic Technician 3/12/2000 29,120 2,014
6600 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Customer Service Technician 3/20/2000 37,440 6,615
6100 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ * Regional Sales Manager 8/7/2000 40,000 0
7000 ▇▇▇▇, ▇▇▇▇▇ Order Entry Manager 10/30/2000 45,000 0
7000 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Vice President, Finance 8/1/1986 110,000 25,983
5500 ▇▇▇▇, ▇▇▇▇▇▇ Mechanical Assembler 6/1/1999 18,720 4,395
8100 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Senior Mechanical Designer 4/13/1992 58,850 13,555
5900 ▇▇▇▇▇, ▇▇▇▇▇▇ Senior Manufacturing Engineering 2/3/1986 65,000 15,085
5800 Blend, ▇▇▇▇▇ Senior Buyer 1/12/1998 45,318 10,609
7000 Block, ▇▇▇▇▇▇▇▇▇ PC Support Specialist 4/17/2000 33,280 5,429
8200 ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇. Software Engineer 10/16/2000 80,000 0
8100 ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ Software Engineer 1/4/1999 72,000 16,727
6500 ▇▇▇▇▇▇▇, ▇▇▇▇▇ Electronic Communications Manager 9/5/2000 55,000 3,308
5800 ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Purchasing Manager 6/28/1982 55,016 13,017
5500 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Group Leader/Sr. Electronic Technician 11/20/1989 37,440 8,408
8100 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Manager of Engineering 1/5/1998 73,000 16,580
8200 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Electrical Engineer 6/10/1996 45,150 10,333
6100 ▇▇▇▇, ▇▇▇▇▇ * Regional Sales Manager 3/6/2000 40,000 0
8100 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Optical Engineer 6/25/1979 55,000 12,480
8200 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Manager of Engineering 9/22/1997 65,400 14,592
8200 ▇▇▇▇▇, ▇▇▇▇▇ Mechanical Engineer 6/23/1999 55,650 12,581
5800 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Traffic Coordinator 4/21/1992 28,496 6,841
8100 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇. Electrical Engineer 4/8/1991 63,000 14,551
5200 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Group Leader (PART TIME) 3/1/1983 23,712 5,566
7500 ▇▇▇▇▇▇▇, ▇▇▇▇▇ President 5/22/1977 122,446 42,870
8200 ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ Mechanical Engineer 5/4/1998 63,000 14,551
6200 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Worldwide Manager, Sales & Marketing 8/2/1996 89,042 12,664
5800 ▇▇▇▇▇▇, ▇▇▇▇ Buyer/Expeditor (PART TIME) 12/8/1980 19,000 4,580
7000 ▇▇▇▇▇▇▇, ▇▇▇▇▇ Receptionist 9/11/2000 20,800 0
7500 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Vice President, Technology 10/24/1977 100,340 31,179
7000 ▇▇▇▇, ▇▇▇▇▇▇▇ Manager of Information Technology 2/16/1996 73,500 16,753
5400 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Machine Shop Supervisor 3/13/1978 47,000 10,866
6200 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Software Engineer 12/6/1999 75,000 8,873
6100 ▇▇▇▇, ▇▇▇▇ * North American Sales Manager 2/1/1996 55,000 0
6500 ▇▇▇▇▇▇, ▇▇▇▇▇▇ Technical Writer (PART TIME) 1/4/1999 38,938 9,061
6200 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Director, Positioning Products 8/12/1991 100,000 13,799
5900 ▇▇▇▇▇, ▇▇▇▇▇▇▇ Manufacturing Supervisor 12/23/1974 50,000 11,683
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS DECEMBER 1, 2000 BONUS IS ON A CASH BASIS
HIRE ANNUAL YTD
DEPT EMPLOYEE TITLE DATE SALARY BONUS
-----------------------------------------------------------------------------------------------------------------------------
8100 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Mechanical Design Engineer 2/28/2000 44,000 3,837
6100 ▇▇▇▇▇▇, ▇▇▇▇▇▇ * Regional Sales Manager 5/17/1999 40,000 0
8100 ▇▇▇▇, ▇▇▇▇▇▇▇ Senior Optical Engineer 6/30/1993 80,250 17,970
6200 ▇▇▇▇▇▇, ▇▇▇▇▇▇ * Worldwide Sales Manager 3/8/1993 50,000 0
5500 ▇▇▇▇▇▇, ▇▇▇ Mechanical/Electronic Assembler 1/4/1999 19,760 4,900
8100 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Senior Software Engineer 7/10/2000 67,500 5,886
6500 ▇▇▇▇▇▇, ▇▇▇▇ Sales & Marketing Assistant 4/10/1985 30,285 6,405
7500 ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ DIRECTOR 8/1/1972 95,000 0
6600 ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Director, Marketing Services 12/23/1989 78,750 19,486
5900 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Manager of Manufacturing Engineering 9/11/2000 75,000 0
8200 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Mechanical Designer 12/6/1999 40,400 4,797
6200 ▇▇▇▇▇▇, ▇▇▇▇▇ * Sales Representative 6/3/1996 30,000 0
6100 ▇▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇ * Product Marketing Manager 5/24/1999 70,000 0
6600 ▇▇▇▇, ▇▇▇ Customer Services Coordinator 4/19/1999 33,000 9,694
7000 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Accounting Manager 3/21/1977 53,000 13,378
6600 ▇▇▇▇▇, ▇▇▇▇ Customer Service Engineer 8/31/1981 51,000 11,354
5100 ▇▇▇▇▇, ▇▇▇▇▇ Group Leader 10/20/1986 31,200 7,077
7000 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Database Administrator 10/9/2000 65,000 1,803
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Manager of Engineering Services 9/18/2000 55,000 0
5900 ▇▇▇▇, ▇▇▇▇▇▇▇ Production Expediter 4/24/2000 24,960 692
6200 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇ Mgr, Applications Develp & Systems 9/29/2000 90,000 4,162
Integration
7500 ▇▇▇, ▇▇▇▇▇▇▇ DIRECTOR 8/1/1972 95,000 0
7000 ▇▇▇▇▇, ▇▇▇ Order Entry Clerk (PART TIME) 6/7/1999 20,800 4,442
5500 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Electronic Assembler 5/30/2000 17,680 0
5200 ▇▇▇▇▇▇, ▇▇▇▇ Mechanical Assembler 2/18/1985 29,640 6,979
6100 ▇▇▇▇▇, ▇▇▇▇▇ * International Sales Manager 9/5/2000 50,000 0
5400 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ CNC Operator 2/6/1996 29,120 7,024
5200 ▇▇▇▇▇▇▇▇▇, ▇▇▇ Mechanical Assembler 12/20/1999 18,928 3,080
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Director of Manufacturing 12/12/1979 89,000 22,345
5100 ▇▇▇▇▇, ▇▇▇ Electronic Assembler 2/22/2000 16,640 1,951
5100 ▇▇▇▇▇▇, ▇▇▇▇▇▇ Mechanical Assembler 12/8/1997 19,968 4,467
7000 ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Order Entry Clerk 7/10/2000 22,880 846
8200 ▇▇▇▇▇▇, ▇▇▇▇▇ Program Manager of Government Funded 9/25/2000 65,000 0
Projects
5100 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Electronic Technician H30 11/3/1997 30,576 6,894
6500 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Manager, Marketing Services 1/10/2000 64,000 12,681
5500 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Electronic Technician 10/2/2000 31,200 0
6100 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Director, Optical Instruments Division 7/1/1997 103,000 28,194
6200 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ * Sales 3/3/2000tative 30,000 0
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS DECEMBER 1, 2000 BONUS IS ON A CASH BASIS
HIRE ANNUAL YTD
DEPT EMPLOYEE TITLE DATE SALARY BONUS
-----------------------------------------------------------------------------------------------------------------------------
7000 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Human Resources Clerk 4/17/2000 22,880 846
5100 ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Optical Technician 5/1/1978 39,350 9,375
7000 ▇▇▇▇▇▇, ▇▇▇▇ Manager of Human Resources 5/1/1998 61,500 14,165
5900 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ Manager, Production Planning 1/16/1995 52,000 12,185
8200 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Electronic Technician 9/29/1997 35,000 8,297
6600 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Optical Engineer 6/26/2000 44,000 0
5400 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Instrument Maker 6/22/1989 41,392 9,872
8200 ▇▇▇▇▇, ▇▇▇▇▇ ▇▇. Electrical Engineer 1/24/2000 70,000 13,870
5800 ▇▇▇▇▇▇▇▇, ▇▇▇▇ Buyer/Planner 11/21/1995 35,700 8,579
8500 ▇▇▇▇, ▇▇▇▇▇▇▇ Mechanical Designer 2/11/1998 40,414 9,178
6500 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Graphics Designer 10/20/1997 56,675 12,700
5400 ▇▇▇▇▇▇▇, ▇▇▇▇ CNC Programmer 3/21/1989 40,414 9,493
5100 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ Electro/Optics Technician 8/2/1999 31,200 6,637
5200 ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Mechanical Assembler 8/22/1988 29,640 6,882
5900 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ Manufacturing Engineer 1/5/1998 57,200 13,363
6200 ▇▇▇▇▇▇▇, ▇▇▇▇ * Worldwide Sales Manager 5/24/1999 50,000 0
5900 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Manufacturing Engineer 9/28/1987 60,900 13,997
7000 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Accountant II 6/14/1984 29,846 6,996
6200 ▇▇▇▇▇▇▇▇ III, ▇▇▇ Product Development Manager 6/20/1997 50,820 11,684
5200 ▇▇▇▇▇, ▇▇▇▇▇ Mechanical Assembler 10/20/1997 29,120 5,752
5800 ▇▇▇▇▇, ▇▇▇▇▇▇▇ Traffic Coordinator 6/12/2000 18,200 673
5200 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Mechanical Assembler 11/16/2000 19,760 0
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Customer Service Technician 8/7/2000 40,400 3,523
8100 ▇▇▇▇▇, ▇▇▇▇▇ Electronics Engineer 7/1/1987 49,000 11,565
8200 ▇▇, ▇▇▇ Applications Scientist 2/16/1999 57,750 12,973
6200 ▇▇▇▇▇▇, ▇▇▇▇▇ Administrative Assistant 12/30/1994 27,040 6,462
6600 ▇▇▇▇▇, ▇▇▇▇▇ Customer Service Engineer 5/2/1983 51,000 11,892
* plus commission TOTAL 5,115,596 832,515
All employees of Burleigh Instruments are located in Fishers, New York.
SCHEDULE 2.18
COMPANY PLANS
-------------
1) Welfare Plan for Employees for Burleigh Instruments, Inc., amended and
restated as of January 1, 1998
2) Burleigh Instruments, Inc. 401(K) Profit Sharing Plan, amended and
restated as of October 1, 1999
3) Executive Group Carve Out "Split Dollar" Life Insurance Plans for ▇.
▇▇▇▇▇▇▇▇▇▇▇, W. May, ▇. ▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇
4) "Key Management" Life Insurance Policies with Security Mutual Life for
▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇
5) Salary Continuation Plans and Noncompete Agreements with ▇▇▇▇▇▇▇ ▇. May
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, each dated April 17 1989
6) Burleigh Instruments, Inc. Fringe Benefits Plan and Policies Enacted
Pursuant to the Employee Handbook
7) Burleigh Instruments, Inc. Health & Dental Plan
8) Burleigh Instruments, Inc. Life Insurance
9) Burleigh Instruments, Inc. Disability Plan
10) Burleigh Instruments, Inc., Employee Term Life Coverage
11) Burleigh Instruments, Inc., Long Term Disability Coverage
12) Burleigh Instruments, Inc., Management Bonus Plan
13) Burleigh Instruments, Inc., Workers' Compensation Plan
14) Burleigh Instruments, Inc., Life Insurance Plan
15) Burleigh Instruments, Inc., Cafeteria Plan (expected implementation
date January 1, 2001)
16) Burleigh Instruments, Inc., Recruitment Bonus Plan (expected
implementation date January 1, 2001)
17) Burleigh Instruments, Inc., Referral Bonus Plan (expected
implementation date January 1, 2001)
SCHEDULE 2.20
-------------
CURRENT LEASES
--------------
1) Burleigh Instruments, Inc.:
a) Burleigh Park, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b) Ten Mini Storage Units, for month to month terms, totaling
$980/month.
PROPERTY PREVIOUSLY OWNED WITHIN THE LAST FIVE YEARS
----------------------------------------------------
2) Burleigh Instruments (U.K.), Ltd.: 9 Allied Business Centre,
Coldharbour Lane, Harpenden, Herts. AL5 4UT, U.K.
SCHEDULE 2.21(C)
ENVIRONMENTAL PERMITS
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1) New York State Department of Health Permit for Use of Hypodermic
Syringes dated May 12, 1981.
SCHEDULE 2.22
TRANSACTIONS WITH THE SHAREHOLDERS
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1) Producer Loan Agreements between Burleigh Instruments, Inc. and
Burleigh DISC, Inc.:
a) Dated April 1, 1994 for $17,200.00
b) Dated February 28, 1995 for $440,000.00
c) Dated February 28, 1997 for $207,250.00
d) Dated April 1, 1998, for $273,700.00
2) Sublease Agreement with Fishers Development Company dated September 1,
2000
3) MAXCIM software program sublicensed from ▇▇▇▇▇▇▇ ▇. May and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇
4) Shareholders Agreement among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. May and
Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
the transfer of shares by granting an option to purchase the shares
first to the other shareholders and then to Burleigh Instruments, Inc.
5) Stock Purchase Agreement among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. May, May 12, 2000. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ have pledged their shares pursuant to a pledge agreement dated
May 12, 2000 to secure payment of certain promissory notes.
SCHEDULE 2.23
CAPITAL EXPENDITURES
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COST OF PROJECT FOR NEW BUILDING
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BUILDING CONSTRUCTION COSTS $ 1,799,617.00
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EXISTING BUILDING COSTS $ 200,000.00
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PROFESSIONAL FEES AND OTHER COSTS $ 297,285.00
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PRODUCTION EQUIPMENT $ 200,628.00
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TOTAL $ 2,497,530.00
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ADDITIONAL COSTS
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LEASING EQUIPMENT THROUGH KEY CORPORATE $ 800,000.00
CAPITAL (APPROXIMATE TOTAL)
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PRESENT LEASE LINE OF CREDIT ALREADY DRAWN $ 300,000.00
(APPROXIMATE)(APPROXIMATE)
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SCHEDULE 2.24
USE OF NAME
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None
SCHEDULE 4.1
CONDUCT OF BUSINESS BY THE COMPANY
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None
SCHEDULE 5.2(H)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of _________, 2000 is
entered into by and between Burleigh Instruments, Inc., a corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.▇. (the
"Corporation") and [name](the "Employee").
TERMS OF AGREEMENT
------------------
In consideration of this Agreement and the continued employment of the Employee
by the Corporation, the parties agree as follows :
1. EMPLOYMENT
The Corporation hereby agrees to employ Employee, on a full-time basis
commencing on or about _________, 2000, to act as [title] of the
Corporation and to perform such acts and duties and furnish such
services to the Corporation in connection with and related to that
position as is customary for persons with similar positions in like
companies, as the [title] shall from time to time reasonably direct.
Employee hereby accepts said employment. Employee shall use his best
and most diligent efforts to promote the interests of the Corporation;
shall discharge his duties in a highly competent manner; and shall
devote his full business time and his best business judgement, skill
and knowledge to the performance of his duties and responsibilities
hereunder. This Agreement shall not be interpreted to prohibit Employee
from making passive personal investments or conducting private business
affairs if such activities do not materially interfere with the
services required under this Agreement. Employee shall report to the
[title] of the Corporation.
2. COMPENSATION AND BENEFITS
2.1 SALARY
During the term of this Agreement, the Corporation shall pay
Employee the remuneration indicated in Schedule A. The
Employee's remuneration may be adjusted upwards in accordance
with the Corporation's policies and procedures.
2.2 DISCRETIONARY BONUS
During the term of this Agreement, the Employee may
participate in such bonus plan or plans of the Corporation as
the Board of Directors of the Corporation may approve for the
Employee. Nothing contained in this Section 2.2 shall be
construed to require
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the Board of Directors to approve a bonus plan or in any way
grant to Employee the right to receive bonuses not otherwise
approved.
2.3 BENEFITS
During the term of this Agreement, the Employee shall receive
such benefits as customarily provided to other officers and
employees of the Corporation. Details of such benefits as of
the date hereof are set forth in Schedule B of this Agreement.
2.4 VACATION
Employee may take paid vacation during each year as set forth
in Schedule A at such times as shall be consistent with the
Corporation's vacation policies and (in the Corporation's
judgement) with the Corporation's vacation schedule for
officers and other employees.
2.5 EXPENSES
Pursuant to the Corporation's customary policies in force at
the time of payment, Employee shall be promptly reimbursed,
against presentation of vouchers or receipts therefor, for all
authorised expenses properly incurred by him on the
Corporation's behalf in the performance of his duties
hereunder.
3. TERMINATION
3.1 UNDERTAKING BY EMPLOYEE
The Employee hereby undertakes not to voluntarily terminate
his employment with the Corporation for a period of two (2)
years from the date hereof and acknowledges that in the event
that he does so terminate this Agreement, certain penalties
shall be payable by him, as set forth in the Agreement of
Merger and Plan of Reorganization, entered into by the
Employee, the Corporation and certain other parties on [date].
3.2 DISABILITY
If during the term of this Agreement, Employee becomes ill,
disabled or otherwise incapacitated so as to be unable to
perform his usual duties (a) for a period in excess of one
hundred and eighty (180) consecutive days, or (b) for more
than one hundred eighty (180) days in any consecutive twelve
(12) month period and this incapacity has not been remedied by
the end of the twelfth (12th) month of such consecutive twelve
(12) month period, then the Corporation shall have the right
to terminate this Agreement, subject only to applicable laws,
on thirty (30) day's notice to Employee. Termination pursuant
to this Section 3.1 shall not affect any rights Employee may
otherwise have under any disability insurance policies in
effect at the time of such termination.
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3.3 DISCHARGE FOR CAUSE
The Corporation may discharge Employee and terminate his
employment under this Agreement for cause without further
liability to the Corporation by a majority vote of the Board
of Directors of the Corporation except that the Employee, if a
Director, shall not be entitled to vote thereon. As used in
this Section 3.2, "cause" shall mean any or all of the
following;
(a) gross or wilful misconduct of Employee during the
course of his employment;
(b) conviction of any criminal offence involving
dishonesty, breach of trust or moral turpitude during
the term of this Agreement; or
(c) Employee's breach of any of the material terms of
this Agreement.
3.4 TERMINATION WITHOUT CAUSE
Upon thirty (30) days prior written notice, the Corporation
may terminate this Agreement without cause by a majority vote
of the Board of Directors of the Corporation except that the
Employee, if a Director, shall not be entitled to vote
thereon. The Corporation shall incur no liability in this
regard except that it shall continue to pay Employee the
remuneration set forth in Schedule A at his then current rate
for a six (6) month period after termination if termination
shall occur prior to the events mentioned in Section 3.4.
3.5 TERMINATION FOLLOWING MERGER OR ACQUISITION
Notwithstanding Section 3.4, if the Corporation merges or
consolidates with another corporation, if substantially all of
the assets of the Corporation are sold, if a majority of the
outstanding stock of the Corporation is acquired by another
person, or if the control of the Corporation's majority
shareholder changes (a "Triggering Event") and Employee's
employment is subsequently terminated by the Corporation or
surviving entity other than for cause as described in 3.2,
Employee shall be entitled to severance benefits as described
below based on the length of service with the Corporation
since the Triggering Event:
LENGTH OF SERVICE SINCE THE SEVERANCE BENEFITS
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TRIGGERING EVENT
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0 to 12 months 12 months' remuneration
plus health benefits;
more than 12 months 6 months' remuneration
plus health benefits;
For purposes of this Section 3.5, Employee shall be entitled
to treat a material demotion in title or function as
termination under this Section 3.5, but only if Employee
expressly so notifies the Corporation and terminates his
employment hereunder within thirty (30) days of such demotion
or relocation. If Employee is offered a substantially similar
position with the surviving entity, Employee's refusal
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to accept such position shall not be treated as subject to
this Section 3.5, but rather shall be treated as a voluntary
termination by Employee under Section 3.6.
3.6 VOLUNTARY TERMINATION BY EMPLOYEE
In the event of voluntary termination by Employee after a
period of two (2) years from the date hereof, Employee shall
be entitled only to those amounts that have accrued to the
date of termination in accordance with the terms hereof or are
expressly payable under the terms of the Corporation's
applicable benefit plans or are required by applicable law.
The Corporation may, in its sole and absolute discretion,
confer such other benefits or payments as it determines, but
Employee shall have no entitlement thereto
4. MISCELLANEOUS
4.1 INSURANCE
The Corporation hereby represents that it is presently the
holder of directors and officers insurance in an amount and
having a coverage that is recommended by its legal advisors
and insurance broker as adequate taking into account the
status of the Corporation, its size and the nature of its
activities. The Corporation undertakes to ensure that such
insurance shall remain in force throughout the term of this
Agreement and in the event such insurance is cancelled, the
Corporation shall immediately advise the Employee in writing.
4.2 ADDITIONAL AGREEMENTS
Upon execution of this Agreement, the Employee shall execute
and deliver to the Corporation, unless previously delivered,
an Exclusivity, Confidentiality, Assignment of Work Product,
Non-Competition and Non-Solicitation Agreement.
4.3 NOTICES
Any notice or communication given by any party hereto to the
other party shall be in writing and personally delivered or
mailed by certified mail, return receipt requested, postage
prepaid, to the addresses provided above. All notices shall be
deemed given when actually received. Any person entitled to
receive notice (or a copy thereof) may designate in writing,
by notice to the others, such other address to which notices
to such person shall thereafter be sent.
4.4 ENTIRE AGREEMENT
This Agreement contains the entire understanding of the
parties in respect of its subject matter and supersedes all
prior agreements and understandings between the parties with
respect to such subject matter, provided, however that nothing
in this Agreement shall affect the Employee's obligations
under the Exclusivity,
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Confidentiality, Assignment Of Work Product, Non-Competition
And Non-Solicitation Agreement signed by the Employee.
4.5 AMENDMENT WAIVER
This Agreement may not be amended, supplemented, cancelled or
discharged, except by written instrument executed by the party
affected thereby. No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder shall
operate as a waiver thereof. No waiver of any breach of any
provision of this Agreement shall be deemed to be a waiver of
any preceding or succeeding breach of the same or any other
provision.
4.6 BINDING EFFECT, ASSIGNMENT
Employee's rights or obligations under this Agreement may not
be assigned by Employee. The rights and obligations set forth
in this Agreement shall bind and inure to the benefit of the
Corporation and its successors and assigns. The Corporation
will use its best efforts to require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to assume expressly and agree to
perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it as
if no such event had taken place. As used in this Agreement,
"Corporation" shall mean the Corporation as herein before
defined any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
4.7 HEADINGS
The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or
interpretation of this Agreement.
4.8 GOVERNING LAW, INTERPRETATION
This Agreement shall be construed in accordance with and
governed for all purposes by the laws applicable in the State
of New York. Service of process in any dispute shall be
effective (a) upon the Corporation, if service is made on any
officer of the Corporation other than the Employee; (b) upon
the Employee, if served at Employee's residence last known to
the Corporation with an information copy to the Employee at
any other residence, or care of a subsequent employer, of
which the Corporation may be aware.
4.9 FURTHER ASSURANCES
Each of the parties agrees to execute, acknowledge, deliver
and perform, or cause to be executed, acknowledged, delivered
and performed at any time, or from time to time, as the case
may be, all such further acts, deeds, assignments, transfers,
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conveyances, powers of attorney and assurances as may be
necessary or proper to carry out the provisions or intent of
this Agreement.
4.10 SEVERABILITY
If any one or more of the terms, provisions, covenants or
restrictions of this Agreement shall be determined by a court
of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
BURLEIGH INSTRUMENTS, INC.
BY: ________________________ _____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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SCHEDULE A
TO
EMPLOYMENT AGREEMENT
REMUNERATION AND VACATION
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1. REMUNERATION
2. VACATION
______ weeks of paid vacation annually.
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SCHEDULE B
TO
EMPLOYMENT AGREEMENT
BENEFITS
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The Employee shall continue to be entitled to the same benefits as
those in force prior to the date hereof. It is expected that this
package will evolve in the future.
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SCHEDULE 5.2(I)
____________, 2000
EXFO ELECTRO-OPTICAL ENGINEERING INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
RE: AGREEMENT OF MERGER AND PLAN OF REORGANIZATION BETWEEN EXFO
ELECTRO-OPTICAL ENGINEERING INC. ("EXFO"), EXFO SUB, INC. , BURLEIGH
INSTRUMENTS, INC. (THE "COMPANY") AND ALL OF THE SHAREHOLDERS OF THE
COMPANY (THE "TRANSACTION")
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Dear Sirs:
The undersigned shareholder of the Company understands that an Agreement of
Merger and Plan of Reorganization (the "Agreement") will be executed by the
Shareholders of the Company named therein. As consideration for the Transaction,
the Shareholders shall receive subordinate voting shares of EXFO (the "Buyer
Shares"). Of the o Buyer Shares received by the undersigned in the Transaction,
o Buyer Shares representing 52% of the Buyer Shares so received by the
undersigned are not subject to the Lock-Up Obligation (as such term is defined
below), subject to regulatory resale restrictions of the competent securities
regulators and the remaining o Buyer Shares received in the Transaction,
representing 48% of the Buyer Shares received by the undersigned, shall be
subject to the Lock-Up Obligation as set forth below (the "Lock-Up Buyer
Shares")
1. In recognition of the benefit that the Transaction will confer upon the
undersigned as a shareholder of EXFO, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with EXFO that the undersigned
will not, without the prior written consent of EXFO, directly or
indirectly, (i) offer, pledge, sell (including any sale pursuant to
Rule 144 under the SECURITIES ACT of 1933, as amended), contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer the Lock-Up Buyer Shares
(including, without limitation, Buyer Shares which may be deemed to be
beneficially owned by such shareholder in accordance with the rules of
the Securities and Exchange Commission or the securities legislation of
any province or territory of Canada and Buyer Shares that may be issued
upon exercise of any option or warrant) or any securities convertible
into or exchangeable or exercisable for Buyer Shares, now owned or with
respect to which the undersigned has or hereafter acquires the power of
disposition, or file any registration statement or prospectus with
respect to any of the foregoing (other than as set forth in the
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Agreement) or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Lock-Up Buyer
Shares, whether any such swap or Transaction is to be settled by
delivery of shares or other securities, in cash or otherwise;
(collectively the "Lock-Up Obligation"). The Lock-Up Obligation shall
be released as to 8% on each date which is two days following the
release by EXFO of its quarterly financial statements for the next
following six quarters after June 29, 2001.
The undersigned understands that EXFO will proceed with the Transaction in
reliance upon this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the successors and assigns of the undersigned.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's registrar and transfer agent against the
transfer of Buyer Shares held by the undersigned except in compliance with the
foregoing restrictions.
This Lock-Up Letter Agreement has been entered into on the date first written
above. This Lock-Up Letter Agreement shall be governed by the laws of the State
of New York.
Very truly yours,
_____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇