MDS INC. - AND - METHER PROPERTIES LIMITED PARTNERSHIP - AND - BOREALIS INFRASTRUCTURE MANAGEMENT INC.
Execution
Copy
-
AND
-
METHER
PROPERTIES LIMITED PARTNERSHIP
-
AND
-
BOREALIS
INFRASTRUCTURE MANAGEMENT INC.
Dated
this 4th
day of October, 2006
TABLE OF
CONTENTS
Article 1
INTERPRETATION
1.1
Definitions
1.2
Interpretation
1.3
Entire Agreement
1.4
Amendment
1.5
Waiver of Rights
1.6
Schedules
1.7
Applicable Law
1.8
Currency
1.9
Performance on Holidays
1.10
Calculation of Time
1.11
Severability
1.12
No Third Party Beneficiaries
Article 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1
Purchase and Sale of Purchased Assets
2.2
Excluded Assets
2.3
Non-Assignable Contracts
2.4
Place of BC Closing
2.5
BC Closing Time
Article 3
CONSIDERATION FOR PURCHASED ASSETS
3.1
Purchase Price; Holdback Amount
3.2
Post-Closing Audit
3.3
Determination of Value of Inventory, Accounts Receivable
3.4
Working Capital Adjustment
3.5
General Adjustments
3.6
Long-Term Liability and Other Adjustments
3.7
Interest
3.8
Allocation of Purchase Price
3.9
Payment of Purchase Price
3.10
Transfer Taxes and Tax Elections
3.11
Excluded Liabilities
Article 4
REPRESENTATIONS AND WARRANTIES
4.1
Representations and Warranties of MDS
4.2
Representations and Warranties of Buyer
4.3
Commission
4.4
Qualification of Representations and Warranties
4.5
Survival of Representations and Warranties of MDS
4.6
Survival of Representations and Warranties of Buyer
4.7
Knowledge of MDS
4.8
No Breach
Article 5
OTHER COVENANTS OF THE PARTIES
5.1
Conduct Prior to the BC Closing
5.2
Regulatory Consents
5.3
Buyer’s Covenants
5.4
Benefit Plans
5.5
Undertaking to Change Name
5.6
Non-Competition Agreement
5.7
Transaction Structure
5.8
Shared Contracts
5.9
Designated Affiliates
5.10
Intentionally Deleted
5.11
Replacement Material Contracts
Article 6
CONDITIONS PRECEDENT
6.1
Buyer’s Conditions
6.2
Conditions of MDS
6.3
Waiver
6.4
Failure to Satisfy Conditions
Article 7
POST-CLOSING PROVISIONS
7.1
Insurance and Risk of Loss
7.2
Litigation
7.3
Post-Closing Access
7.4
Excluded Asset Adjustment
7.5
Tax Matters
7.6
Privacy Notification
7.7
Other Confidentiality Agreements
7.8
Post Closing Reimbursements
7.9
No MDS Guarantees on Lease Renewals
7.10
Survival of Covenants
Article 8
INDEMNIFICATION
8.1
Definitions
8.2
Indemnification by MDS
8.3
Indemnification by Buyer
8.4
Agency for Representatives
8.5
Notice of the Defence of Third Party Claims
8.6
Assistance for Third Party Claims
8.7
Settlement of Third Party Claims
8.8
Direct Claims
8.9
Failure to Give Timely Notice
8.10
Limitation
8.11
▇▇▇ Indemnity and Subordination of Obligations
8.12
Reductions and Subrogation
8.13
Exclusive Remedy
8.14
Duty to Mitigate
8.15
General Limitations
8.16
Adjustment to the Purchase Price
Article 9
ARBITRATION
9.1
Arbitration
9.2
Applicable Laws
9.3
Arbitration Act
Article 10
GENERAL
10.1
Expenses
10.2
Time
10.3
Notices
10.4
Assignment, Successors
10.5
Further Assurances
10.6
Public Announcements
10.7
Counterparts
10.8
Facsimile Execution
10.9
No Partnership
10.10
Survival
SCHEDULE 2.5 TRANSACTION STRUCTURE
AND
CLOSING SEQUENCE
SCHEDULE 3.1 HOLDBACK
AMOUNT
SCHEDULE 3.8 PURCHASE PRICE
ALLOCATION
SCHEDULE 6.1.5(B) Closing Conditions
in favour of Buyer
SCHEDULE 6.2.4(B) Closing Conditions
in favour of MDS
SCHEDULE 9.3 RULES OF PROCEDURE
FOR
ARBITRATION
This
agreement is made this 4th day of October, ▇▇▇▇
▇ ▇ ▇ ▇ ▇ ▇ ▇:
- and -
METHER PROPERTIES LIMITED
PARTNERSHIP,
a limited partnership governed by the laws of British Columbia
(“▇▇▇▇▇▇ ▇▇”), by its general partner, Mether Management Ltd.
a limited partnership governed by the laws of British Columbia
(“▇▇▇▇▇▇ ▇▇”), by its general partner, Mether Management Ltd.
- and -
BOREALIS INFRASTRUCTURE
MANAGEMENT INC.,
a corporation incorporated under the laws of Canada
(“Buyer”)
a corporation incorporated under the laws of Canada
(“Buyer”)
RECITALS:
1.
Pursuant to this Agreement, each of MDS and ▇▇▇▇▇▇ ▇▇ has agreed to sell
and MDS
has agreed to cause Metro LP and Metro GP (as defined below) to sell to
Buyer
the Purchased Assets (as defined below) owned by it, the Replacement Contracts
(as defined below) to be acquired by MDS as provided herein and the ▇▇▇
Assets
(as defined below) to be acquired by MDS as provided in recital 3 below
and
Buyer has agreed to purchase the Purchased Assets, the Replacement Contracts
and
the ▇▇▇ Assets and assume the Assumed Liabilities (as defined below) on
the
terms and subject to the conditions set forth in this Agreement.
2.
The boards of directors of MDS, Buyer, Metro GP and ▇▇▇▇▇▇ ▇▇ (as defined
below)
and the limited partners of Metro LP and ▇▇▇▇▇▇ ▇▇ have approved the execution
and delivery of this Agreement, the performance of their respective obligations
hereunder, if any, and the transactions contemplated by this Agreement.
3.
Concurrently with the execution and delivery of this Agreement, MDS has
entered
into an agreement with ▇▇▇ Labs and ▇▇▇ (each as defined below) pursuant
to
which ▇▇▇ Labs has agreed to sell to MDS the ▇▇▇ Assets and MDS has agreed
to
purchase the ▇▇▇ Assets and assume the ▇▇▇ Liabilities (as defined below)
on the
terms and subject to the conditions set forth in such agreement.
4.
Contemporaneously with and conditional upon the execution of this Agreement
by
the Parties, MDS and Buyer shall execute and deliver a purchase agreement
with
respect to the Ontario Diagnostics Business (as defined below) on terms
mutually
acceptable to such parties.
5.
Certain of the Purchased Assets, the Replacement Contracts and ▇▇▇ Assets
may be
acquired by Designated Buyer Affiliates (as defined below) pursuant to
the terms
of this Agreement.
IN CONSIDERATION of the
premises and the respective agreements in this Agreement, and of other
consideration (the receipt and sufficiency of which are acknowledged by
each
Party), the Parties agree as follows:
Article 1
INTERPRETATION
INTERPRETATION
In this Agreement including the
Recitals,
“Accounts Receivable”
means, with respect
to any Person at a given time, all accounts receivable of
the Person as at that time;
“Accrual Adjustment
Date” has the meaning set forth in Subsection 3.6(b);
“Affiliate” means, with
respect to any Person,
i.any
other Person who directly or indirectly controls, is controlled by, or
is under
direct or indirect common control with, such Person, or
ii.any
other Person that directly or indirectly owns all of the participating
equity of
such Person or for which all of the participating equity is directly or
indirectly owned by such Person; and
a Person shall be deemed to “control” a
Person if such Person possesses directly or indirectly the power to direct
or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
“controlled” shall have a similar meaning;
“Agreement” means this
asset purchase agreement and all attached schedules, in each case as
supplemented, amended, restated or replaced from time to time;
“Applicable Law” means
any domestic or foreign statute, law (including the common law), ordinance,
rule, regulation, or Order, or the terms of any consent, exemption, approval
or
Licence of any Governmental Authority, that applies in whole or in part
to MDS,
Buyer, a Designated Buyer Affiliate, an Operator, the Diagnostics Business
or
the way the Diagnostics Business is carried on or to any of the Purchased
Assets, the ▇▇▇ Assets or Other Assets, as applicable;
“Assignment and Assumption
Agreement” has the meaning set forth in Subsection 6.1.8(d);
“Assumed Liabilities”
means, subject
to Section 2.2, the MDS Operating Liabilities, the MDS Metro
Liabilities, the Metro Operating Liabilities, the Metro Non-Operating
Liabilities and the ▇▇▇ Liabilities;
“Assumed Long-Term
Liabilities” means the Liabilities of the Diagnostics Business
reflected on the Closing Balance Sheet other than those included in Working
Capital;
“BC Closing” means the
completion of the sale to, and the purchase by, Buyer of the Purchased
Assets,
the Replacement Contracts and the ▇▇▇ Assets, the assumption of the Assumed
Liabilities by Buyer and the completion of all other transactions contemplated
by this Agreement that are to occur contemporaneously with or prior to
the
purchase and sale of the Purchased Assets, the Replacement Contracts and
the ▇▇▇
Assets and the assumption of the Assumed Liabilities;
“BC Closing Date”
means:
(i)
the later of (A) November 30, 2006, and (B) if any of the conditions set
forth
in Section 6.1 or 6.2 is not satisfied or waived on any date, the next
Business
Day following the date the last of such conditions is satisfied or waived;
or
(ii)
such later date as the Parties may agree in writing as the date that the
BC
Closing shall take place;
“BC Closing Time” means
1:00 p.m. (Toronto time) on the BC Closing Date, or such other time on
that date
as the Parties agree in writing that the BC Closing shall take place;
“BC College” means the
College of Physicians and Surgeons of British Columbia;
“BC Employees” means all
of the employees of the Operators as at the BC Closing Time, including
the Metro
Employees, which are, as at August 28, 2006, those employees identified
in
Schedule F annexed to the Disclosure Letter;
“BC Licensing Act” means
the Medicare Protection Act (British Columbia) and the Medical and Health
Care Services Regulation;
“BC Retirement Plans”
means, collectively,
the MDS Metro Laboratory Services Pension Plan and the MDS
Metro Group Registered Retirement Savings Plan;
“BC Sub Balance Sheets”
has the meaning
set forth in Subsection 3.2(a);
“BCMA” means British
Columbia Medical Association;
“Benefit Plans” means
all bonus, deferred compensation, incentive compensation, share purchase,
share
appreciation, phantom share, restricted stock unit, deferred stock unit,
share
option, severance or termination pay, hospitalization or other medical
benefits,
life or other insurance, dental, disability, salary continuation, vacation,
supplemental unemployment benefits, profit-sharing, mortgage assistance,
legal
benefits, change of control, retention, employee loan, employee assistance,
pension, retirement or supplemental retirement plan or agreement (including
any
defined benefit or defined contribution Pension Plan and any group registered
retirement savings plan), and each other employee benefit plan or agreement
sponsored, maintained or contributed to or required to be contributed to
by MDS
or one or more Operators for the benefit of any Employees or former employees,
officers or directors of the Diagnostics Business or their dependants or
beneficiaries, whether written or unwritten, formal or informal, funded
or
unfunded, insured or uninsured, registered or unregistered and whether
or not
subject to any Applicable Law, except that the term “Benefit Plans” shall not
include any statutory plans with which MDS or an Operator is required to
comply,
including the Canada Pension Plan and plans administered pursuant to applicable
provincial health Tax, workers’ compensation and workers’ safety and employment
insurance legislation nor shall the term “Benefit Plans” include the
Metro-▇▇▇▇▇▇ Clinical Laboratories Limited Partnership Executive Pension
Plan,
being the defined benefit retirement plan of which a former employee was
the
sole member;
“Books and Records”
means all books,
records, books of account, sales and purchase records, lists of
suppliers and customers, credit and pricing information, formulae, business,
engineering and consulting reports, research and development information,
plans
and projections, personnel records, operating guides, test data, health
records,
manuals, records, reports and information or documents of the Diagnostics
Business maintained by or on behalf of MDS or an Operator pursuant to,
or to
demonstrate compliance with, Applicable Law and all other documents, files,
records, correspondence, and all other data and information, financial
or
otherwise, of the Diagnostics Business held by or on behalf of MDS or an
Operator including all service level reports, metrics and performance data
(including raw data) relating to the provision of all services to the
Diagnostics Business (whether by MDS or third parties) and all data and
information stored electronically or on computer-related media (or in any
other
form or format) and Tax records of a Corporate Operator;
“Building” means a
plant, warehouse, building, structure, erection, improvement, appurtenance
or
fixture (including fixed machinery and fixed equipment) situate on or forming
part of the Land and includes without limitation all heating, ventilating,
air
conditioning, plumbing, sprinkler, life safety, electrical, mechanical,
drainage, elevating and security systems and infrastructure incorporated
in or
situate on the Building, together with all floor coverings and window coverings
incorporated within such Building;
“Business Day” means a
day other than a Saturday or Sunday, on which Canadian chartered banks
are open
for the transaction of domestic business in the City of Toronto;
“Buyer Purchase
Structure” has the meaning set forth in Section 5.7;
“Buyer’s Benefit Plans”
has the meaning
set forth in Subsection 5.4(c);
“Buyer’s Non-Union Benefit
Plans” has the meaning set forth in Subsection 5.4(c);
“Buyer’s Union Benefit
Plans” has the meaning set forth in Subsection 5.4(c);
“Closing Balance Sheet”
means an audited
combined balance sheet of the MDS Diagnostics Division as at
the BC Closing Time as prepared in accordance with Section 3.2;
“Closing Cash Amount”
means the portion
of the Purchase Price paid to MDS, or as MDS directs, by wire
transfer at the BC Closing as described in Section 3.1;
“Closing Documents”
means the Regional
Purchase Agreements and any document delivered
contemporaneously with the execution of this Agreement by the Parties or
prior
to or at the BC Closing Time as contemplated by or pursuant to this Agreement
but excluding, for greater certainty, the Ontario Documents;
“Closing Regional Balance
Sheet” means an unaudited supplementary schedule to the Closing Balance
Sheet consisting of a balance sheet of the MDS Diagnostics Division in
British
Columbia as at the BC Closing Date;
“Columbia Medical
Assets” means the 120 Class C common sharesof Columbia Medical
Laboratories Ltd. held by Metro LP;
“Columbia Medical
Liabilities” means all Liabilities of Metro LP under the memorandum of
agreement governing Columbia Medical Laboratories Ltd.;
“Commissioner” means the
Commissioner of Competition under the Competition Act or any person duly
authorized to exercise the powers of the Commissioner of Competition;
“Competition Act” means
the Competition Act (Canada);
“Competition Act
Clearance” means either of the following:
(a)
the issuance
of an advance ruling certificate by the Commissioner under section
102(1) of the Competition Act, which advance ruling certificate remains
in force at the BC Closing; or
(b)
the applicable
waiting period, if any, under section 123 of the Competition
Act shall have expired or been earlier terminated or waived and the
Commissioner shall have issued a No-Action Letter, in form and substance
satisfactory to the Buyer, acting reasonably, to the effect that the
Commissioner is satisfied that the Commissioner would not have sufficient
grounds upon which to apply to the Competition Tribunal for an order under
section 92 of the Competition Act with respect to the transactions
contemplated herein, which letter remains in force at the BC Closing;
“Competition Tribunal”
means the Competition
Tribunal established under the Competition Tribunal Act
(Canada);
“Confidentiality
Agreement” has the meaning set forth in Section 1.3;
“Consent Exclusion” has
the meaning set forth in Subsection 2.2(b);
“Contracts” means the
contracts, agreements, licence agreements and other legally binding instruments
entered into by a Person or to which a Person is bound or entitled including
restrictive agreements and negative covenant agreements, the full benefit
of all
unfilled supplier purchase orders, quotations, tenders for contracts which
remain open for acceptance, and entitlements and engagements, to which
such
Person is entitled including any deposits made in connection therewith,
and
forward commitments of any Person for supplies or materials, in all cases,
whether written or oral;
“Corporate Operator” has
the meaning set forth in Subsection 4.1.1(a);
“▇▇▇▇▇▇ Creek” means
▇▇▇▇▇▇ Creek Medical Laboratory, an unincorporated joint venture;
“▇▇▇▇▇▇ Creek Assets”
means the 87.5%
ownership interest of Metro LP in certain assets and the
diagnostics business of ▇▇▇▇▇▇ Creek;
“▇▇▇▇▇▇ Creek
Liabilities” means all Liabilities of Metro LP associated with its
ownership interest of ▇▇▇▇▇▇ Creek, including under the joint venture agreement,
as amended, in respect of ▇▇▇▇▇▇ Creek;
“Designated Buyer
Affiliate” has the meaning set forth in Subsection 5.9(a);
“Designated MDS
Affiliate” has the meaning set forth in Subsection 5.9(b);
“Diagnostics Business”
means the specimen
collection and diagnostic services businesses carried on
directly by MDS, in British Columbia, and the Operators consisting of the
provision of clinical laboratory testing for physicians, hospitals, non-hospital
health care institutions, employers or insurance companies, management
of
hospital laboratories and other support services for clinical diagnostics,
but
excluding, for avoidance of doubt, the businesses carried on by any Person
in
which MDS or an Operator does not directly or indirectly have a greater
than 50%
interest;
“Disclosed Personal
Information” has the meaning set forth in Subsection 5.1.4;
“Disclosure Letter”
means the letter
of MDS to Buyer dated the date hereof which sets forth, or
refers to documents which set forth, certain information, including information
to qualify the representations and warranties of MDS contained in
Section 4.1;
“DKML” means Dynacare
▇▇▇▇▇▇ Medical Laboratories Partnership, a partnership formed under the
laws of
Alberta;
“Employees” means
collectively, the BC Employees and the MDS Employees;
“Encumbrance” means any
encumbrance, security interest, mortgage, lien, hypothec, pledge, hypothecation,
title retention agreement, reservation of title, easement, servitude, right
of
occupation, executions, judgments, assignment, charge, trust or deemed
trust
affecting an asset;
“Environmental Laws”
means all Applicable
Laws relating to environmental matters or occupational
health and safety including but not limited to pollution, contamination
or
protection of the environment, the prevention or reduction to acceptable
levels
of pollution and further including those relating to Releases of Hazardous
Material into the environment (including ambient air, soil, surface water,
ground water and subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or
handling of Hazardous Material;
“Environmental Permit”
means any Licence
required by or pursuant to any applicable Environmental Law in
connection with the Diagnostics Business or connected to the Diagnostics
Business;
“Equipment” means, in
respect of a Person, all equipment, machines, machinery, motor vehicles,
trucks
and other mobile equipment, fixtures, gauges, furniture, furnishings, material
handling, data processing equipment, laboratory equipment, collection centre
equipment, typewriters, computers, servers, telecom equipment, data bases,
photocopiers, office equipment, implements, tools and spare parts, wherever
located and similar tangible personal property;
“Equipment Leases”
means, in respect
of a Person, the leases, subleases and conditional sales
contracts of Equipment to which such Person is a party;
“Estimated Long-Term
Liabilities” means an estimate of the Assumed Long-Term Liabilities as
at the BC Closing Time;
“Excelleris Assets”
means the following:
(a)
100 common shares
of Excelleris GP held by Metro LP;
(b)
50% Partnership
Interest in Excelleris LP held by Metro LP, as a limited
partner; and
(c)
all right, title
and interest of Metro LP in, to and under the shareholders’
agreement governing Excelleris GP;
“Excelleris GP” means
Excelleris Technologies Inc., a corporation incorporated under the laws
of
British Columbia;
“Excelleris Liabilities”
means all Liabilities
of Metro LP:
(a)
under the shareholders’ agreement governing
Excelleris GP; and
(b)
in respect of
the Partnership Interest in Excelleris LP held by Metro LP, as a
limited partner;
“Excelleris LP” means
Excelleris Technologies Limited Partnership, a limited partnership governed
by
the laws of British Columbia;
“Excluded Asset Event”
has the meaning
set forth in Subsection 2.2(b);
“Excluded Assets” means,
subject to Section 2.2, the following:
(a)
all shares of
Bow Valley Diagnostic Services Inc. held by MDS or Metro LP;
(b)
all cash, bank
balances, moneys in possession of banks and other depositories,
term deposits and similar cash property and bank accounts and trust accounts
of,
owned or held by or for the account of MDS or any Operator in the Diagnostics
Business, at the BC Closing Time but excluding for greater certainty any
▇▇▇▇▇
Cash;
(c)
any interest
of MDS or Metro LP in [REDACTED];
(d)
the interest
of MDS (whether directly or indirectly) in ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇ and
Metro GP;
(e)
all non-transferable
Licences of MDS or Metro LP listed in Section 1.1 of the
Disclosure Letter;
(f)
all property,
rights, assets and undertaking of MDS or Metro LP which are not
used Primarily in the Diagnostics Business including, for avoidance of
doubt,
those assets, contracts, trade marks and computer software listed in
Section 1.1 of the Disclosure Letter;
(g)
all information
and that part of any Books and Records of MDS or Metro LP
relating thereto which must not be disclosed by MDS or Metro LP to Buyer
pursuant to the provisions of Applicable Law or which would be libellous
if
disclosed;
(h)
any confidential
documents, data, information or records prepared by or on
behalf of MDS or an Operator and undisclosed to Buyer specifically in connection
with the proposed sale of the Diagnostics Business and the Purchased
Assets;
(i)
the corporate
and Tax records of MDS, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇ and Metro GP;
(j)
any information
or records related to any non-unionized Employee who does not
accept Buyer’s offer of employment or to other businesses of MDS and its
Affiliates as a whole, and not reasonably required in connection with the
Purchased Assets or the Diagnostics Business or its operations;
(k)
Intentionally
deleted;
(l)
all insurance
policies of MDS and an Operator and benefits for claims thereunder
relating to occurrences in the Diagnostics Business prior to the BC Closing
Time;
(m)
all amounts
due from MDS or Metro LP to the other or an Affiliate thereof;
(n)
all Tax and
GST credits, losses, rebates and refunds of MDS or an Operator,
including any rebate, refund or credit relating to a real estate assessment
in
respect of the Real Property included in the Purchased Assets, earned or
otherwise arising from or relating to the operation of the Diagnostics
Business
prior to the BC Closing Time or relating to a period of time prior to the
BC
Closing Time which become payable after the BC Closing Time and are not
reflected on the balance sheet included in the Quarterly Statements;
(o)
all right, title
and interest of MDS in, to or under, and the full benefit of,
the Shared Contracts;
(p)
any MDS Operating
Asset for which a replacement asset or contract will be
created or entered into (or sourced from a third party) in accordance with
the
provisions of (x) the Migration Agreement, which replacement asset or contract
will be conveyed or assigned to the Buyer as a Migrating Asset; or (y)
Section 5.8 and Section 5.11, which Replacement Contracts will be assigned
to the Buyer pursuant to this Agreement; and
(q)
the artwork
listed in Section 1.1 of the Disclosure Letter;
“Excluded Liabilities”
has the meaning
set forth in Section 3.11;
“Excluded Refund” has
the meaning set forth in Section 7.4;
“Field” means the
collection, testing, monitoring and/or reporting of test results of bodily,
cytological and other specimens from a patient at the request of any other
Person, including a patient, health care professional, employer or insurance
company;
“Financial Statements”
means the audited
combined financial statements for the MDS Diagnostics Division
as at October 31, 2005, including the notes thereto, copies of which financial
statements are annexed to the Disclosure Letter as Schedule A;
“General Conveyance” has
the meaning set forth in Subsection 6.1.8(c);
“Generally Accepted Accounting
Principles” or “GAAP” means generally accepted
accounting principles of Canada, applicable as at the date on which any
calculation or determination is required to be made in accordance with generally
accepted accounting principles, and where the Canadian Institute of Chartered
Accountants includes a recommendation in its Handbook concerning the treatment
of any accounting matter, such recommendation shall be regarded as the
only
generally accepted accounting principle applicable to the circumstances
that it
covers;
“Governmental Authority”
means any domestic
or foreign government whether federal, provincial, state or
municipal and any governmental agency, governmental authority, governmental
tribunal or governmental commission of any kind whatsoever;
“GST” means all goods
and service Taxes, sales Taxes levied by the federal government of Canada,
value
added Taxes or multi-stage Taxes and all provincial sales Taxes integrated
with
such federal Taxes;
“Hazardous Material”
means any substance,
pollutant, contaminant, material or waste that could
reasonably be expected to impair the quality of the environment or that
causes
or could reasonably be expected to cause an adverse effect on the environment
for any use which can be made of it and which is regulated under any
Environmental Law, including any such material regulated as hazardous,
toxic,
deleterious, caustic, dangerous, a contaminant, hazardous waste, a source
of
contaminant and including but not limited to any pathogen, bacteria, microbe,
virus, parasite, nuclear substance as defined in the Nuclear Safety and
Control Act or any related regulations, asbestos, petroleum products, urea
formaldehyde, chemical and biochemical waste;
“Holdback Amount” means
the amount determined as set forth in Schedule 3.1, which shall not exceed
$85,750,000;
“Intellectual Property
Rights” means all trade or brand names, business names, trade-marks
(including logos), trade ▇▇▇▇ registrations and applications, service marks,
service ▇▇▇▇ registrations and applications, copyrights (registered or
otherwise), moral rights, copyright registrations and applications, issued
patents and pending applications and other patent rights (including divisions,
reissues, renewals, re-examinations, continuations, continuations in part
and
extensions) applied for or registered in any and all jurisdictions and
all
rights of priority, rights to file applications for inventions and derivative
applications and patents in any and all jurisdictions, industrial design
registrations, pending applications for industrial design rights and other
industrial design rights, integrated circuit topographies, internet domain
names
(including Internet protocol addresses) and rights in and to e-mail addresses
and Software;
“Interim Period” means
the period between the date of this Agreement and the BC Closing Time;
“Inventory” means, in
respect of a Person, all inventories of replacements, laboratory supplies,
spare
and component parts, supplies, packaging and advertising and publicity
materials, wherever located, and whether on consignment or not;
“Investment Canada Act”
means the Investment
Canada Act (Canada);
“ITA” means the
Income Tax
Act (Canada);
“Land” means the lands
and Buildings owned by an Operator as described in Subsection 4.1.20 of
the
Disclosure Letter and all rights of way, easements, licences, benefits,
covenants and privileges and other rights relating thereto;
“Leased Premises” means
the premises or portions thereof which are subject to the Leases;
“Leases” means, in
respect of a Person, the leases, licenses, occupancy agreements or agreements
or
arrangements in the nature of a lease, license or occupancy agreement of
real
property to which such Person is a party, whether as lessor or lessee;
“Liabilities” means all
debts, obligations and liabilities, of any nature or kind whatsoever, whether
accrued or fixed, absolute or contingent, matured or unmatured, secured
or
unsecured, liquidated or unliquidated and whether or not reflected or required
to be reflected in a balance sheet in accordance with GAAP;
“Licence” means any
licence, permit, approval, right, privilege, concession or franchise issued,
granted, conferred or otherwise created by a Governmental Authority;
“Licensed IP” has the
meaning set forth in Subsection 4.1.18(b);
“Material Adverse
Effect” means any circumstance, state of facts or matter, either alone
or in combination, which is materially adverse to, or could reasonably
be
expected to have a material adverse effect on, the financial condition,
results
of operations, prospects or value of the Diagnostics Business or the Purchased
Assets, the Replacement Contracts and ▇▇▇ Assets taken as a whole, provided,
however, that any adverse circumstance, state of facts or matter directly
or
indirectly:
(a)
arising out
of or resulting in the ordinary course of business or from actions
taken by MDS, ▇▇▇, Buyer, a Designated Buyer Affiliate or an Operator pursuant
to, or as contemplated by, this Agreement, the Ontario Purchase Agreement
or the
▇▇▇ Agreement;
(b)
resulting from
the announcement or performance of this Agreement, the Ontario
Purchase Agreement or the ▇▇▇ Agreement or the transactions contemplated
hereby
or thereby;
(c)
resulting from
economic factors affecting the Canadian economy as a whole;
(d)
resulting from
factors generally affecting the specific markets in which the
Diagnostics Business operates, including any adjustment to the insured
laboratory services fee rates;
(e)
resulting from
any change in Applicable Laws or GAAP;
(f)
arising from
a material worsening of current conditions caused by acts of God,
terrorism or war (whether or not declared); or
(g)
resulting from
any failure of the Diagnostics Business to meet projections and
estimates;
shall not be deemed in themselves,
either
alone or in combination, to constitute a Material Adverse Effect;
“MDS Assets” means the
MDS Operating Assets and the MDS Metro Assets;
“MDS Confidentiality
Agreement” has the meaning set forth in the Ontario Purchase
Agreement;
“MDS Diagnostics
Division” means the combined operations, assets and Liabilities of the
Diagnostics Business and the Ontario Diagnostics Business and including
MDS’
proportionate consolidated interest in Toronto Medical Laboratories Limited
Partnership and MDS’ equity interest in Medical Laboratories of Windsor
Limited;
“MDS Employees” means
all of the employees of MDS working Primarily in the Diagnostics Business
as at
the BC Closing Time, which are, as at August 28, 2006, those employees
identified in Schedule F annexed to the Disclosure Letter;
“MDS ESOP” means the
employee share ownership plan of MDS as amended and restated as of
September 8, 2004;
“MDS Metro Assets” means
the 74.6% Partnership Interest in Metro LP held by MDS or an Affiliate
of
MDS;
“MDS Metro Liabilities”
means all Liabilities
of MDS or an Affiliate thereof in respect of the
Partnership Interest in Metro LP held by MDS or an Affiliate thereof, as
a
limited partner;
“MDS Operating Assets”
means all of the
assets, property and undertaking of every kind and nature and
wherever located, owned, leased, used or otherwise held by MDS Primarily
in
respect of the operation of the Diagnostics Business carried on by MDS,
excluding the Excluded Assets and the MDS Metro Assets, but including the
following:
(a)
all right, title
and interest of MDS in, to and under, and the full benefit of,
the Contracts relating Primarily to the Diagnostics Business including
those
listed in Schedule D annexed to the Disclosure Letter;
(b)
the Intellectual
Property Rights of MDS relating Primarily to the Diagnostics
Business, including the Intellectual Property Rights set forth in Schedule
E
annexed to the Disclosure Letter;
(c)
the Books and
Records, Prepaid Expenses, Technical Information, Warranty Rights
and Transferable Licences of MDS relating Primarily to the Diagnostics
Business;
(d)
all claims of
MDS relating to the Diagnostics Business (except to the extent
such claims relate to any Excluded Assets) or the MDS Operating Assets,
whether
▇▇▇▇▇▇ or inchoate, known or unknown, contingent or otherwise; and
(e)
the goodwill
of the Diagnostics Business carried on by MDS, including the
exclusive right to the Buyer to represent itself as carrying on the Diagnostics
Business in continuation of and in succession to MDS, subject to the provisions
of the Limited Trade ▇▇▇▇ Licence;
“MDS Operating
Liabilities” means, without duplication,
(a)
all Liabilities
of MDS relating to the Diagnostics Business or the MDS Operating
Assets in each case included in or provided for in, or required to be included
in or provided for in, the Closing Balance Sheet in accordance with GAAP
(including those Liabilities included in or provided for in the Financial
Statements that remain outstanding at the BC Closing Time) but excluding
payables owed by MDS to Metro LP or any of its Affiliates;
(b)
all Liabilities
of MDS under the Contracts included in the Purchased Assets and
the Replacement Contracts, in each case arising after the BC Closing Time
and
not related to any default of MDS existing prior to BC Closing (and remaining
unremedied at the BC Closing Time) or as a consequence of BC Closing;
(c)
all Liabilities
of MDS relating to the MDS Employees who accept the Buyer’s or
Designated Buyer Affiliate’s offer of employment as contemplated in
Subsection 5.3.1(a) hereof and which arise or become payable on or after
the BC Closing Time, including wages and any other form of compensation,
remuneration or benefits under any Benefit Plan including bonuses, termination
and severance pay, pensions and all other post-retirement benefits and
employee
health and welfare obligations and including any claims by any such Employee
arising on or after the BC Closing Time other than any arising under or
with
respect to the MDS Option Plan or MDS ESOP or the lack of such plans, or
any
retention, change of control or deal bonus pertaining to the sale of the
Diagnostics Business;
(d)
all Liabilities
of MDS and its Affiliates arising in respect of the Replacement
Contracts to the extent same relate directly to the Diagnostics Business
or the
MDS Operating Assets and arise after the BC Closing Time and are not related
to
any default of MDS or its Affiliates existing prior to (and remaining unremedied
at the BC Closing Time) or as a consequence of the BC Closing;
(e)
all Liabilities
of MDS relating directly to the MDS Operating Assets or the
Diagnostics Business arising, accruing or relating to periods on or after
the BC
Closing Time; and
(f)
all Liabilities
of MDS relating to the claims referred to in clause (d) of the
definition of MDS Operating Assets;
“MDS Option Plan” means
the MDS Inc. Stock Option Plan as amended and restated on December 5,
2005;
“Mether Assets” means
the 10,000 common shares and 460 preferred shares of Mether Properties
held by
▇▇▇▇▇▇ ▇▇ and all shares of Somargon Properties Ltd. held by ▇▇▇▇▇▇ ▇▇;
“▇▇▇▇▇▇ ▇▇” means Mether
Management Ltd., a corporation incorporated under the laws of British
Columbia;
“Mether Properties”
means Mether Properties
Ltd., a wholly-owned subsidiary of ▇▇▇▇▇▇ ▇▇ and a
corporation governed by the laws of British Columbia;
“Metro Employees” means
all employees of Metro LP as at the BC Closing Time which are, as at August
28,
2006, those employees identified in Schedule F annexed to the Disclosure
Letter
under the subheading Metro;
“Metro GP” means Metro
▇▇▇▇▇▇ Clinical Laboratories Ltd., a corporation incorporated under the
laws of
British Columbia;
“Metro GP Interests”
means the 0.9%
Partnership Interest in Metro LP held by Metro GP;
“Metro LP” means
Metro-▇▇▇▇▇▇ Clinical Laboratories Limited Partnership, a limited partnership
governed by the laws of British Columbia;
“Metro Non-Operating
Assets” means the following:
(a)
the ▇▇▇▇▇▇▇
Assets;
(b)
the Excelleris
Assets;
(c)
the Prince ▇▇▇▇▇▇
Assets;
(d)
the ▇▇▇▇▇▇▇
Assets;
(e)
the ▇▇▇▇▇▇ Creek
Assets; and
(f)
the Columbia
Medical Assets;
“Metro Non-Operating
Liabilities” means the following:
(a)
the ▇▇▇▇▇▇▇
Liabilities;
(b)
the Excelleris
Liabilities;
(c)
the Prince ▇▇▇▇▇▇
Liabilities;
(d)
the ▇▇▇▇▇▇▇
Liabilities;
(e)
the ▇▇▇▇▇▇ Creek
Liabilities; and
(f)
the Columbia
Medical Liabilities;
“Metro Operating Assets”
means all of the
assets, property and undertaking of every kind and nature and
wherever located, used or otherwise held by Metro LP and Metro GP excluding
the
Excluded Assets, the Metro Non-Operating Assets and the Victoria Assets
but
including the following:
(a)
all right, title
and interest of Metro LP and Metro GP in, to and under the
Leases and the Leased Premises as described under the subheading Metro
in
Schedule C annexed to the Disclosure Letter, all leasehold improvements
pertaining to the Leases and Leased Premises, all Equipment and Inventory
located in, on or about the Leased Premises and all appurtenances thereto;
(b)
all right, title
and interest of Metro LP and Metro GP in, to and under, and the
full benefit of, the Contracts and the Equipment Leases relating to the
Diagnostics Business carried on by Metro LP and Metro GP, including those
listed
in Schedule D annexed to the Disclosure Letter;
(c)
the Intellectual
Property Rights of Metro LP and Metro GP, including the
Intellectual Property Rights set forth in Schedule E annexed to the Disclosure
Letter;
(d)
the Accounts
Receivable (save and except for any Accounts Receivable of Metro LP
or Metro GP owing by MDS or any of its Affiliates), Books and Records,
▇▇▇▇▇
Cash, Prepaid Expenses, Technical Information, Warranty Rights and Transferable
Licences of Metro LP or Metro GP;
(e)
all claims of
Metro LP and Metro GP relating to the Diagnostics Business carried
on by them (except to the extent such claims relate to any Excluded Assets)
or
their Purchased Assets or the Replacement Contracts, whether ▇▇▇▇▇▇ or
inchoate,
known or unknown, contingent or otherwise; and
(f)
the goodwill
of the Diagnostics Business carried on by Metro LP and Metro GP,
including the exclusive right to the Buyer to represent itself as carrying
on
the Diagnostics Business in continuation of and in succession to Metro
LP and
Metro GP, subject to the provisions of the Limited Trade ▇▇▇▇ Licence;
“Metro Operating
Liabilities” means, without duplication,
(a)
all Liabilities
of Metro LP and Metro GP relating to the Diagnostics Business
carried on by them or the Metro Operating Assets included in or provided
for in,
or required to be included in or provided for in, the Closing Balance Sheet
in
accordance with GAAP (including those Liabilities included in or provided
for in
the Financial Statements that remain outstanding at the BC Closing Time)
but
excluding payables owed by Metro LP or Metro GP to MDS or any of its
Affiliates;
(b)
all Liabilities
of Metro LP and Metro GP under the Contracts, Leases and
Equipment Leases included in the Purchased Assets and the Replacement Contracts
of Metro LP and Metro GP;
(c)
all Liabilities
of Metro LP or Metro GP relating to the unionized Metro
Employees and the non-unionized Metro Employees who accept the Buyer’s or
Designated Buyer Affiliate’s offer of employment as contemplated by
Subsection 5.3.1(a) and which arise or become payable on or after the BC
Closing Time, including wages and any other form of compensation, remuneration
or benefits under any Benefit Plan including bonuses, termination and severance
pay, pensions and all other post-retirement benefits and employee health
and
welfare obligations and including any claims by any such Employee arising
on or
after the BC Closing Time, other than any Liabilities arising under or
with
respect to the MDS Option Plan or MDS ESOP, or the lack of such plans,
or any
retention, change of control or deal bonus pertaining to the sale of the
Diagnostics Business;
(d)
all Liabilities
of Metro LP or Metro GP or their Affiliates arising in respect
of the Replacement Contracts to the extent same relate directly to the
Diagnostics Business carried on by Metro LP or Metro GP or the Metro Operating
Assets and arise after the BC Closing Time and are not related to any default
of
Metro LP or Metro GP existing prior to (and remaining unremedied at the
BC
Closing Time) or as a consequence of the BC Closing;
(e)
all other Liabilities
of Metro LP not otherwise provided for herein relating
directly to the Diagnostics Business carried on by Metro LP or Metro GP,
other
than the Metro Non-Operating Liabilities;
(f)
all Liabilities
of Metro LP and Metro GP relating to the claims referred to in
clause (e) of the definition of the Metro Operating Assets;
but excluding, for greater certainty,
the
Metro Non-Operating Liabilities;
“Migrating Assets” has
the meaning attributed thereto in the Migration Agreement;
“Migration Agreement”
means the migration
agreement between Buyer and MDS executed contemporaneously
herewith;
“Minimum Required
Consents” has the meaning set forth in Schedule 3.1;
“No-Action Letter” means
a letter wherein the Commissioner advises the Parties, and whether or not
subject to any conditions or qualifications, that the Commissioner is of
the
view that there are not sufficient grounds at that time to initiate proceedings
before the Competition Tribunal under the merger provisions of the Competition
Act in respect of the transactions contemplated herein and in the Ontario
Purchase Agreement;
“Non-Assignable
Contract” means:
(a)
any of the Contracts,
Leases, Equipment Leases, Shared Contracts, Warranty
Rights or Transferable Licences included in the Purchased Assets:
(i)
an assignment or attempted assignment of which would constitute a breach
thereof
without the consent of a third party if such consent has not been obtained;
or
(ii)
an assignment of which would contravene any Applicable Law,
including
those set forth in Section 1.1 of the Disclosure Letter; and
(b)
any of the Contracts, Leases, Equipment Leases, Shared Contracts, Warranty
Rights or Transferable Licences requiring the consent of a third
party to a change of control of the applicable Operator including consent
to any deemed assignment or attempted assignment thereof related to
such change of control;
“Non-Assigned Leases”
has the meaning
set forth in Section 2.3;
“Non-Competition
Agreement” has the meaning set forth in Section 5.6;
“Non-Controlled Corporate
Operator” has the meaning set forth in Subsection 4.1.1(a);
“Non-Controlled
Operators” means, collectively, the Non-Controlled Corporate Operators
and the Non-Controlled Other Operators;
“Non-Controlled Other
Operators” means the following:
(a)
Excelleris LP; and
(b)
▇▇▇▇▇▇▇ ▇▇;
“Offer Employees” means
the MDS Employees and the non-unionized Metro Employees;
“Ontario Diagnostics
Business” means the specimen collection and diagnostic services
businesses carried on in Ontario and Quebec directly by MDS, MDS Laboratory
Services L.P. and MDS Quebec Inc. consisting of the provision of clinical
laboratory testing for physicians, hospitals, non-hospital health care
institutions, employers or insurance companies, management of hospital
laboratories and other support services for clinical diagnostics and the
AutoLabs Business (as defined in the Ontario Purchase Agreement) as well
as the
US Support Service Assets (as defined in the Ontario Purchase Agreement),
but
excluding, for avoidance of doubt, the businesses carried on by any Person
in
which MDS does not directly or indirectly have a greater than 50%
interest;
“Ontario Documents”
means the Ontario
Purchase Agreement, the Regional Purchase Agreement (as
defined in and entered into pursuant to the Ontario Purchase Agreement),
the
Migration Agreement, the Limited Trade ▇▇▇▇ License, the Non-Competition
Agreement, the CBS License Agreement, the MDS Confidentiality Agreement
and any
document delivered contemporaneously with the execution of the Ontario
Agreement
by the Parties or prior to or at the Ontario Closing as contemplated by
or
pursuant to the Ontario Purchase Agreement;
“Ontario Purchase
Agreement” means the asset purchase agreement between Buyer and MDS
executed contemporaneously herewith relating to the Ontario Diagnostics
Business;
“Ontario Purchased
Assets” means the “Purchased Assets” as that term is
defined in the Ontario Purchase Agreement;
“Operators” means Metro
LP, Metro GP, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ Labs, ▇▇▇▇▇▇ Properties, Prince
▇▇▇▇▇▇ Labs, ▇▇▇▇▇▇ Creek and ▇▇▇▇▇▇▇ Labs;
“Order” means any order,
judgment, injunction, decree, award or writ of any court, arbitrator or
Governmental Authority;
“ordinary course” or
“normal
course”, when used in relation to the conduct by a
Person, means any transaction or conduct which constitutes an ordinary
day-to-day business activity of the Person conducted in a commercially
reasonable and businesslike manner consistent with such Person’s past customs
and practices;
“Other Assets” has the
meaning set forth in Subsection 4.1.1(b);
“Other Confidentiality
Agreements” means all of the confidentiality agreements between any of
MDS and ▇▇▇ and/or their respective Affiliates and each party (other than
the
Buyer) that was in discussions with any of MDS and ▇▇▇ and/or their respective
Affiliates to purchase the Purchased Assets and/or the Ontario Purchased
Assets;
“Parties” means MDS,
▇▇▇▇▇▇ ▇▇ and Buyer, and upon a Designated Buyer Affiliate or Designated
MDS
Affiliate signing a contract of adhesion as required by Section 5.9, such
Designated Buyer Affiliate or Designated MDS Affiliate, collectively, and
“Party” means any one of them;
“Partnership Interest”
in respect of a
partner in a partnership, means all the units and/or other
interest held by such partner in such partnership, if any, and all right,
title
and interest of such partner under the partnership agreement governing
such
partnership and Applicable Law including all rights, benefits and entitlement
to
profits and losses, insurance proceeds, current account, capital account,
return
of capital, repayment of indebtedness and any other benefit in connection
with
the business, sale or dissolution of such partnership whether as a general
or
limited partner and whether of a general or limited partnership;
“Partnership Operator”
has the meaning
set forth in Subsection 4.1.1(a);
“Pension Plan” means
each of the Benefit Plans that is a “Registered Pension Plan” as that term is
defined in section 248(1) of the ITA;
“Permitted Encumbrances”
means:
(a)
inchoate or
statutory liens for Taxes and assessments, both general and special,
and other governmental charges not yet due and payable as of the BC Closing
Time;
(b)
statutory liens
incurred or deposits made by an Operator or MDS in connection
with workers’ compensation, unemployment insurance and similar legislation;
(c)
any reservations
or exceptions contained in the original grants from the Crown
as amended by statute;
(d)
all encroachments,
overlaps, overhangs, unrecorded servitudes and easements,
variations in area or measurement, rights of parties in possession or any
other
matters not of record which would be disclosed by an accurate survey or
physical
inspection of the Real Property, provided that same are not of such nature
as
to, individually or in aggregate, have a material adverse effect on the
use or
value of the Real Property subject thereto;
(e)
minor discrepancies
in the legal description of the Land or any adjoining real
property which would be disclosed in an up to date survey;
(f)
all servitudes
and easements (including conservation easements and public trust
easements, rights-of-way, road use agreements, covenants, conditions,
restrictions, reservations, licences, agreements and other matters of record)
and zoning by-laws, ordinances and other restrictions as to the use of
real
property, provided that same are not of such nature as to, individually
or in
aggregate, have a material adverse effect on the use or value of the Real
Property subject thereto and provided the same have been complied with
by the
Operators in all material respects to the BC Closing Date;
(g)
all registered
and unregistered municipal agreements and agreements with public
and private utilities, provided the same have been complied with by the
Operators in all material respects to the BC Closing Date;
(h)
the rights of
third parties under the Contracts, Equipment Leases, Leases and
Shared Contracts, the Replacement Contracts, the ▇▇▇ Assets or Other Assets
including the partnership agreements and shareholders’ agreements included in
the Purchased Assets, the ▇▇▇ Assets or Other Assets including the consent
rights and rights of first refusal of third parties triggered upon the
transfer
of Partnership Interests or shares included in the Purchased Assets or
the ▇▇▇
Assets, but excluding rights against any of MDS and the Operators arising
in
respect of indebtedness; and
(i)
in respect of
MDS or any Operator, the Encumbrances set forth in
Section 1.1 of the Disclosure Letter;
“Permitted Proposal” has
the meaning set forth in Subsection 5.1.1(e);
“Person” shall be
broadly interpreted and includes an individual, body corporate, partnership,
joint venture, trust, association, unincorporated organization, the Crown,
any
Governmental Authority or any other entity recognized by law;
“Personal Information”
means personal
information in each case as defined by the applicable Privacy
Laws and collected, used, disclosed or retained by MDS or an Operator in
connection with the Diagnostics Business;
“▇▇▇▇▇ Cash” means the
▇▇▇▇▇ cash of the MDS Diagnostics Division in British Columbia for use
in the
business at the premises at which the business is carried on;
“Post Closing Insured
Claim” has the meaning set forth in Section 7.1.
“Post Closing Insured Claim
Liability” has the meaning set forth in Section 7.1.
“Prepaid Expenses”
means, in respect
of a Person, all deposits and prepaid expenses of such Person
including those with any public utility or any municipal, governmental
or other
public authority, to the extent the same are transferable;
“Primarily” means, in
respect of any asset of a Person, each asset that has been used by such
Person
during the previous 12 months not less than 70% of the time, in the aggregate,
in the ordinary course of the Diagnostics Business;
“Prime Rate” for any day
means the rate of interest expressed as a rate per annum that Canadian
Imperial
Bank of Commerce establishes at its head office in Toronto as the reference
rate
of interest that it will charge on that day for Canadian dollar demand
loans to
its customers in Canada and which at present it refers to as its prime
rate;
“Prince ▇▇▇▇▇▇ Assets”
means the following:
(a)
336common shares
of ▇▇▇▇ held by Metro LP; and
(b)
50% Partnership
Interest in Prince ▇▇▇▇▇▇ Labs held by Metro LP;
“Prince ▇▇▇▇▇▇ Labs”
means Prince ▇▇▇▇▇▇
Medical Laboratory Partnership, a general partnership
governed by the laws of British Columbia;
“Prince ▇▇▇▇▇▇
Liabilities” means all Liabilities of Metro LP in respect of the
Partnership Interest in Prince ▇▇▇▇▇▇ Labs held by Metro LP, as a limited
partner;
“Privacy Laws” means all
applicable federal and provincial laws governing the collection, use, disclosure
and retention of Personal Information, including, the Personal Information
Protection and Electronic Documents Act (Canada), the Personal
Information Protection Act (Alberta) and the Personal Information
Protection Act (British Columbia);
“Proprietary IP” has the
meaning set forth in Subsection 4.1.18(a);
“Purchase Price” has the
meaning set forth in Subsection 3.1(a);
“Purchased Assets”
means, subject
to Section 2.2, the MDS Assets, the Mether Assets, the Metro
Operating Assets, the Victoria Assets and the Metro GP Interests;
“Purchased Corporate
Operator” has the meaning set forth in Subsection 4.1.26;
“Purchased Operator” has
the meaning set forth in Subsection 4.1.26;
“Quarterly Statements”
means the unaudited
combined financial statements prepared by MDS for the MDS
Diagnostics Division for the three (3), six (6) and nine (9) month periods
ended
January 31, 2006, April 30, 2006, and July 31, 2006, respectively, a copy
of
which financial statements are annexed to the Disclosure Letter as
Schedule B;
“Real Property” means
the Land and the Buildings thereon;
“Regional Assets” means
each of [REDACTED];
“Regional Financial
Statements” means the unaudited supplementary schedule to the Quarterly
Statements for the period ended July 31, 2006 for the MDS Diagnostics Division
in British Columbia consisting of a balance sheet as at July 31, 2006 and
an
income statement for the nine month period ending July 31, 2006;
“Regional Purchase
Agreement” has the meaning set forth in Subsection 2.1(b);
“Regulatory Consents”
means the Competition
Act Clearance and all approvals and consents of
Governmental Authorities required by reason of the transactions contemplated
herein in relation to the specimen collection and laboratory testing Licences
required under the BC Licensing Act and the Medical Practitioners Act (British
Columbia), and rules made pursuant to the Medical Practitioners Act, for
the
diagnostic testing facilities of the Operators in British Columbia relating
exclusively to the Diagnostics Business and the specimen collection Licences
for
the patient service centers of the Operators in British Columbia relating
exclusively to the Diagnostics Business including the approval of the Medical
Services Commission and, to the extent required by Applicable Law, the
BC
College, the Minister of Health (British Columbia), the Advisory Committee
on
Diagnostics Facilities of the Medical Services Commission and all similar
approvals and consents in the Provinces of Alberta and Manitoba as well
as those
approvals and consents set forth in Section 1.1 of the Disclosure Letter;
“Release” means
releasing, spilling, seeping, leaking, pumping, pouring, emitting, emptying,
discharging, depositing, injecting, escaping, leaching, disposing or dumping
into the environment of any Hazardous Materials or any consequent release,
spill, leak, emission, discharge, deposit, seepage, and/or exhaust of any
Hazardous Material;
“Replacement Contracts”
means, collectively,
each of the Contracts relating to the Diagnostics Business
entered into pursuant to (i) Section 5.8 in respect of Shared Contracts,
or (ii)
Section 5.11 in respect of a Subject Contract, which are transferred and
assigned to Buyer or a Designated Buyer Affiliate as contemplated herein;
“Representative” means,
in respect of a Person, each director, officer, employee, agent, solicitor,
accountant, professional advisor and other representative of the Person;
“▇▇▇” means ▇▇▇▇▇▇ ▇.
▇▇▇, a resident of Vancouver, British Columbia;
“▇▇▇ Agreement” means
the agreement dated the date hereof between MDS, ▇▇▇ Labs, The ▇▇▇ Family
Trust
and ▇▇▇ pursuant to which ▇▇▇ Labs agrees to sell to MDS the ▇▇▇ Assets
and MDS
agrees to purchase the ▇▇▇ Assets and assume the ▇▇▇ Liabilities on the
terms
and subject to the conditions set forth in such agreement, as such agreement
may
be supplemented, amended, restated or replaced from time to time;
“▇▇▇ Assets” means the
24.5% Partnership Interest in Metro LP held by ▇▇▇ or an Affiliate
thereof;
“▇▇▇ Closing” means the
“Closing”
as
that term is defined in the ▇▇▇ Agreement;
“▇▇▇ Holdings” means
Laboratory Holdings Ltd., a corporation governed by the laws of British
Columbia, and the trustee of The ▇▇▇ Family Trust;
“▇▇▇ Indemnification
Agreement” means the indemnification agreement of even date herewith
entered into by and among ▇▇▇, ▇.▇. ▇▇▇ Holdings Ltd., ▇▇▇ Labs and ▇▇▇
Holdings, on the one part, and Buyer, on the other part;
“▇▇▇ Labs” means ▇▇▇
Clinical Laboratories Ltd., a corporation incorporated under the laws of
British
Columbia controlled by ▇▇▇;
“▇▇▇ Liabilities” means
all Liabilities of ▇▇▇ or an Affiliate thereof in respect of the Partnership
Interests in Metro LP held by ▇▇▇ or an Affiliate thereof, as a limited
partner;
“▇▇▇ Parties” means
collectively, Rix, Rix Holdings, ▇▇▇ Labs, ▇▇ ▇▇▇ Holdings Ltd., the ▇▇▇
Trust
and a corporation to be formed by one or more of the ▇▇▇ Parties pursuant
to
Step 19 of Schedule 2.5 to this Agreement,and “▇▇▇ Party” means any one of
them
“ROFR Exclusion” has the
meaning set forth in Subsection 2.2(b);
“Rules” has the meaning
set forth in Section 9.3;
“Shared Contract” means
each Contract listed on Schedule H annexed to the Disclosure Letter pursuant
to
which MDS and one or more Operators is a party and whereby such parties
share
the rights, interests, benefits and Liabilities thereunder in accordance
with
the terms of each such Contract;
“Software” means all
computer software (in all forms and formats, including source code and
object
code) owned by the Operators or, to the extent owned for use Primarily
in the
Diagnostics Business, MDS, including the computer programs known by the
names as
set forth in Schedule E to the Disclosure Letter, including all versions
thereof, and all related documentation (of any kind or nature), development
tools, diagnostic tools, manuals, program files, data files (to the extent
required to execute and operate the Software), specifications, data model
structures, program and system logic, technical interfaces, program modules,
routines, sub-routines, algorithms, program architecture, design concepts,
system designs, program structure, sequence and organization, graphical
user
interfaces (including screen displays and so called “look & feel” but
excluding all logos and trade marks other than to the extent set forth
in
Subsection 4.1.18 of the Disclosure Letter ) and report layouts;
“▇▇▇▇▇▇▇ Assets” means
the following:
(a)
8,336 Class
A common shares of ▇▇▇▇▇▇▇ Labs held by Metro LP;
(b)
132 Class B
shares of ▇▇▇▇▇▇▇ Labs held by Metro LP; and
(c)
all right, title
and interest of Metro LP in, to and under the shareholders’
agreement governing ▇▇▇▇▇▇▇ Labs;
[REDACTED];
“▇▇▇▇▇▇▇ Labs” means
▇▇▇▇▇▇▇ Laboratories Ltd., a corporation governed by the laws of Alberta;
“▇▇▇▇▇▇▇ Liabilities”
means all Liabilities
of Metro LP under the shareholders’ agreement governing
▇▇▇▇▇▇▇ Labs;
[REDACTED];
“Subject Contract” has
the meaning set forth in Section 5.11;
“Target Working Capital”
means the targeted
amount of Working Capital of the MDS Diagnostics Division in
British Columbia being $(-3,000,000);
“Tax Returns” means any
return, declaration, report, schedule, information statement or return
with
respect to Taxes required to be filed with a Governmental Authority;
“Taxes” means, in
respect of a Person, any and all taxes and related governmental charges
(including assessments, charges, duties, rates, fees, imposts, levies or
other
governmental charges and interest, penalties or additions associated therewith)
including Canadian federal, provincial, municipal and local, foreign or
other
income, franchise, capital, real property, personal property, tangible,
withholding, payroll, employer health, social security, transfer, sales,
use,
consumption, GST, excise, anti-dumping, stamp, countervail and value added
taxes, all other taxes of any kind for which the Person may have any Liability
whether disputed or not and all Canada Pension Plan contributions and employment
insurance premiums;
“Technical Information”
means, in respect
of a Person, all right, title and interest in and to all trade
secrets, confidential information and proprietary know-how, in each case
used
Primarily in the Diagnostics Business and to the extent not subject to
an
Intellectual Property Right, whether developed or acquired by or on behalf
of
such Person including:
(a)
all confidential
information of a scientific, technical or business nature
whether in written, graphic, machine readable, electronic or physical
form;
(b)
all patterns,
plans, designs, research data, research plans, processes,
formulae, drawings, unpatented blue prints, flow sheets, equipment and
parts
lists, instructions, manuals, records and procedures; and
(c)
all inventions
other than as embodied in any issued patents and pending patent
applications;
“Threshold Adjustment”
has the meaning
set forth in Section 3.5;
“▇▇▇▇▇▇▇ Assets” means
the following:
(a)
500 common sharesof
▇▇▇▇▇▇▇ ▇▇ held by ▇▇▇ in trust for Metro LP;
(b)
49.5% Partnership
Interest in ▇▇▇▇▇▇▇ ▇▇ held by ▇▇▇ in trust for Metro LP, as a
limited partner; and
(c)
all right, title
and interest of Metro LP in, to and under the shareholders’
agreement governing ▇▇▇▇▇▇▇ ▇▇;
“▇▇▇▇▇▇▇ ▇▇” means ▇▇▇
Ltd., a corporation governed by the laws of Manitoba, the general partner
of
▇▇▇▇▇▇▇ ▇▇;
“▇▇▇▇▇▇▇ Liabilities”
means all Liabilities
of Metro LP:
(a)
under the shareholders’ agreement governing
▇▇▇▇▇▇▇ ▇▇; and
(b)
in respect of
the Partnership Interest in ▇▇▇▇▇▇▇ ▇▇ held by Metro LP, as a
limited partner;
“▇▇▇▇▇▇▇ ▇▇” means
▇▇▇▇▇▇▇ Laboratories Limited Partnership, a limited partnership governed
by the
laws of Manitoba;
“Transferable Licences”
means, in respect
of a Person, all rights and interest in and to all Licences
issued to such Person which are transferable, with or without the consent
of a
Governmental Authority;
“▇▇▇▇” means ▇▇▇▇
Investments Ltd., a corporation governed by the laws of British Columbia;
“Unaccounted Excluded
Refund” has the meaning set forth in Section 7.4;
“Victoria Assets” means
100 common shares of Victoria Labs held by Metro LP;
“Victoria Labs” means
Metropolitan Laboratories of Victoria Ltd., a wholly-owned subsidiary of
Metro
LP, amalgamated under the laws of British Columbia;
“Warranty Rights” means,
in respect of a Person, the full benefit of all warranties, warranty rights,
guarantees, indemnities, undertakings and similar covenants (implied, express
or
otherwise) against manufacturers or sellers held by such Person or to which
such
Person is entitled;
“Working Capital” means,
as at any time, the sum of ▇▇▇▇▇ Cash, Accounts Receivable, Inventory,
Prepaid
Expenses and instalments, refunds or other recoverables in respect of Taxes
(other than income Taxes) of the MDS Diagnostics Division in British Columbia
at
that time, determined in accordance with Sections 3.2 and 3.3, less the
amount of accounts payable or accrued current Liabilities of the MDS Diagnostics
Division in British Columbia that would be included in or provided in a
balance
sheet under GAAP at that time but excluding any provision for income Taxes
under
GAAP and the current portion of long term debt;
“Working Capital Adjustment
Date” has the meaning set forth in Subsection 3.2(d); and
“149 Person” has the
meaning set forth in Section 4.2.6.
(a)
Unless specified otherwise, reference in this Agreement to a statute refers
to
that statute as it may be amended, or to any restated or successor legislation
of comparable effect.
(b)
All accounting and financial terms used herein, unless specifically provided
to
the contrary, shall be interpreted and applied in accordance with GAAP.
(c)
The division of this Agreement into articles, sections, subsections and
schedules and the insertion of headings are for convenience of reference
only
and shall not affect the construction or interpretation of this Agreement.
The article, section, subsection and schedule headings in this Agreement
are not
intended to be full or precise descriptions of the text to which they refer
and
are not to be considered part of this Agreement. All uses of the words
“hereto”, “herein”, “hereof”,
“hereby”
and
“hereunder”
and
similar
expressions refer to this Agreement and not to any particular section or
portion
of it. References to an Article, Section, Subsection or Schedule refer to
the applicable article, section, subsection or schedule of this Agreement.
(d)
In this Agreement, words in the singular include the plural and vice-versa
and
words in one gender include all genders.
(e)
This Agreement is the joint product of MDS and Buyer, has been subject
to mutual
consultation, negotiation and agreement of the Parties and shall not be
construed for or against any Party.
(f)
Reference in this Agreement to the term “including” shall mean
“including without limitation” and shall not be construed to limit any general
statement which it follows to the specific or similar items or matters
immediately following it.
(g)
If there is any conflict or inconsistency between the provisions of this
Agreement and the provisions of any Regional Purchase Agreement, the provisions
of this Agreement shall govern.
(h)
Reference in Subsection 5.2.1 to the Buyer using “best efforts”
to obtain one or more Regulatory Consents, in the time
stipulated in this
Agreement, shall mean that the Buyer shall, if necessary or advantageous
to
securing such Regulatory Consents within such time period and without limiting
its general obligations to use best efforts, (i) agree to such undertakings
as
may be required by the applicable Governmental Authority as a condition
of
granting its consent, approval or non-disapproval; and (ii) propose to
the
applicable Governmental Authority, and negotiate, offer to take, and, if
such
offer is accepted, effect by consent order, undertaking and/or otherwise
to:
(i)
restructure the transaction as now contemplated in this Agreement prior
to or at
BC Closing to the satisfaction of the Governmental Authority (such as the
sale
of some of the assets, shares and/or other ownership interests that are
the
subject of this Agreement to a third party), but only with the consent
of MDS,
acting reasonably;
(ii)
divest post-BC Closing certain assets, shares and/or other ownership interests;
and/or
(iii)
agree to abide by post-BC Closing conduct requirements as specified by
the
Governmental Authority.
(i)
For greater certainty, each reference in this Agreement to the term
“Primarily”, notwithstanding any reference to the “Diagnostics
Business” immediately following, is intended by the Parties to relate to the
Diagnostics Business alone or together with any part or portion of the
Ontario
Diagnostics Business, with the intention that any applicable Purchased
Asset
that meets the test set forth in the definition of “Primarily”, either excluding
its use in the Ontario Diagnostics Business or as a result of the inclusion
of
its use in the Ontario Diagnostics Business where its use as at the BC
Closing
Date is predominantly in the Diagnostics Business, shall be conveyed to
the
Buyer pursuant to this Agreement.
This Agreement, the confidentiality agreement
between MDS and Buyer, dated December 6, 2005, as amended by agreement
of even
date herewith (the “Confidentiality Agreement”), a letter of
even date from Buyer or an Affiliate thereof to MDS, the Closing Documents
and
the Ontario Documents constitute the entire agreement between the Parties
pertaining to the subject matter hereof and thereof, respectively, and
supersede
all prior agreements, negotiations, discussions and understandings, written
or
oral, between the Parties. There are no representations, warranties, conditions,
other agreements or acknowledgements, whether direct or collateral, express
or
implied, that form part of or affect this Agreement, or which induced any
Party
to enter into this Agreement or on which reliance is placed by any Party,
except
as specifically set forth in this Agreement, the Confidentiality Agreement
and
the Closing Documents.
Subject to Section 2.2, this Agreement
may be amended, modified or supplemented only by a written agreement signed
by
the Parties.
Any waiver of, or consent to depart from,
the
requirements of any provision of this Agreement shall be effective only
if it is
in writing and signed by the Party giving it, and only in the specific
instance
and for the specific purpose for which it has been given. No failure on
the part of any Party to exercise, and no delay in exercising, any right
under
this Agreement shall operate as a waiver of such right. No single or
partial exercise of any such right shall preclude any other or further
exercise
of such right or the exercise of any other right.
The following Schedules are incorporated
by
reference into and form part of this Agreement:
|
Schedule
|
Description of
Schedule
|
|
Schedule 2.5
|
Transaction Structure and Closing
Sequence
|
|
Schedule 3.1
|
Holdback Amount
|
|
Schedule 3.8
|
Purchase Price Allocation
|
|
Schedule 6.1.5(b)
|
Closing Conditions in favour of
Buyer
|
|
Schedule 6.2.4(b)
|
Closing Conditions in favour of
MDS
|
|
Schedule 9.3
|
Rules of Procedure for
Arbitration
|
This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws in force in the Province
of Ontario (excluding any rule or principle of the conflict of laws which
might
refer such interpretation to the laws of another jurisdiction). Subject to
Article 9, each Party irrevocably submits to the non-exclusive jurisdiction
of
the courts of Ontario with respect to any matter arising hereunder or related
hereto. The Parties expressly exclude the application of the United
Nations Convention on Contracts for the International Sale of Goods.
Unless specified otherwise, all statements
of
or references to dollar amounts in this Agreement are to Canadian
currency.
If any action is required to be taken
pursuant
to this Agreement on or by a specified date which is not a Business Day,
then
such action shall be valid if taken on or by the next succeeding Business
Day.
In this Agreement, a period of days shall
be
deemed to begin on the first day after the event which began the period
and to
end at 6:00 p.m. (Toronto time) on the last day of the period. If,
however, the last day of the period does not fall on a Business Day, the
period
shall terminate at 6:00 p.m. (Toronto time) on the next Business Day.
If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal
or
unenforceable in any respect, such determination shall not impair or affect
the
validity, legality or enforceability of the remaining provisions hereof,
and
each provision is hereby declared to be separate, severable and distinct.
Nothing in this Agreement is intended
expressly or by implication to, or shall, confer upon any Person other
than MDS,
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇, Metro LP and Metro GP, Buyer, to the extent applicable,
any of the Designated Buyer Affiliates and the Designated MDS Affiliates
and,
solely in respect of Article 8, their respective Representatives any rights
or
remedies of any kind. MDS accepts each covenant in favour of Metro LP and
▇▇▇▇▇▇ ▇▇ and the Representatives of MDS, ▇▇▇▇▇▇ ▇▇ and Metro LP, as agent
and
trustee of that Person and MDS shall be responsible for and liable for
such
covenants and may enforce such covenant on behalf of itself, ▇▇▇▇▇▇ ▇▇,
Metro LP
and theirRepresentatives.
(a)
Subject to Section 2.2, MDS agrees to sell and transfer the Purchased Assets
owned by it and the Replacement Contracts and the ▇▇▇ Assets to be acquired
by
it under this Agreement and the ▇▇▇ Agreement, respectively, and to cause
each
of Metro LP and Metro GP to sell and transfer the Purchased Assets and
the
Replacement Contracts owned by it and, [REDACTED] and ▇▇▇▇▇▇ ▇▇ agrees
to sell
and transfer the Mether Assets, to Buyer (and, as applicable, one or more
Designated Buyer Affiliates), and Buyer agrees to acquire and pay for (and/or,
as applicable, to cause one or more Designated Buyer Affiliates to acquire
and
pay for) the Purchased Assets, the Replacement Contracts and the ▇▇▇ Assets,
assume the Assumed Liabilities and [REDACTED], on the terms and subject
to the
conditions contained in this Agreement.
(b)
Buyer
acknowledges that any one or more of (i) the entering into of this Agreement
by
MDS, (ii) the transfer of the MDS Metro Assets, the Mether Assets and the
▇▇▇
Assets and the associated Assumed Liabilities (including the ▇▇▇ Liabilities)
to
Buyer and/or any Designated Buyer Affiliate, (iii) the change of control
of
[REDACTED], and (iv) [REDACTED], may require certain consents or approvals
(including, in certain cases, consent or approval to enter into this Agreement,
and, in certain cases, consents or approvals may be unreasonably or arbitrarily
withheld) and/or trigger rights of certain third parties. To facilitate
the BC Closing, seek to obtain the required consents or approvals of such
third
parties and, where applicable, trigger the third party rights with respect
to
such Regional Assets (and the associated Assumed Liabilities), the Parties
shall
take commercially reasonable efforts to comply with the agreements and
constating documents governing each Regional Asset, including, as required
to
trigger the third party rights, execution and delivery on October 27, 2006
(or
such earlier date as mutually agreed between the Parties, acting reasonably)
of
a purchase and sale agreement with respect to one or more of the Regional
Assets
on terms mutually agreed to between Buyer and MDS, acting reasonably (each
a
“Regional Purchase Agreement”). [REDACTED].
(c)
[REDACTED].
(d)
Buyer agrees that the transfer of the Purchased Assets, the Replacement
Contracts and the ▇▇▇ Assets shall be on an “as is, where is basis” and MDS does
not make, nor will any Operator or Non-Controlled Operator make, any
representation or warranty and there are no conditions, including as to
title,
merchantability, fitness for purpose, value or condition, except as expressly
set forth herein and in the Regional Purchase Agreements.
(c)
Notwithstanding Subsection 2.2(b), if following the BC Closing Time, in
respect
of a Consent Exclusion, the required third party consent or approval (or
waiver
thereto) to the change of control of the applicable Regional Asset is obtained
or waived or, in respect of a ROFR Exclusion, the rights of all applicable
third
parties to acquire the applicable Regional Asset are waived, no longer
apply or
expire without having been exercised, Subsection 2.2(b) shall no longer
apply in
respect of such Regional Asset, such Regional Asset shall no longer be
an
Excluded Asset and Buyer shall, as soon as practicable, purchase such Regional
Asset on the terms and conditions hereof applicable to such Regional Asset.
(a)
Neither this Agreement nor any Closing Document shall constitute an assignment
or an attempted assignment of any Non-Assignable Contract. MDS agrees to
assign and to cause Metro LP and Metro GP to assign any Non-Assignable
Contracts
to Buyer or the applicable Designated Buyer Affiliate when such assignment
is
permitted and as Buyer or the applicable Designated Buyer Affiliate may
from
time to time direct. MDS shall use, shall cause Metro GP to use and, prior
to Closing, shall cause Metro LP to use, commercially reasonable efforts
to
obtain all consents required for the assignment to Buyer or the applicable
Designated Buyer Affiliate of the Contracts, the Equipment Leases, the
Warranty
Rights and Transferable Licences included in the Purchased Assets. Neither
MDS nor any Operator shall, however, be obliged to commence arbitration
or any
other legal proceeding or make any payments to third parties other than
any
administrative, processing or similar fee or any other amounts contemplated
by
the particular Contract, Equipment Lease, Warranty Rights or Transferable
Licence to be payable in connection with the assignment thereof to the
Buyer
pursuant hereto. Buyer and each Designated Buyer Affiliate shall
co-operate with and assist MDS and each Operator in their efforts to obtain
such
consents.
(b)
In respect of Non-Assignable Contracts other than Leases, to the extent
permitted by Applicable Law and the provisions of such Non-Assignable Contract:
(i) if any of the Non-Assignable Contracts are not assignable by the terms
thereof or consents to the assignment thereof have not been obtained prior
to
the BC Closing Time, such Non-Assignable Contracts shall be held by MDS
or Metro
GP (without any additional expense to MDS or Metro GP whatsoever) in trust
for
Buyer or the applicable Designated Buyer Affiliate and the covenants and
obligations thereunder shall be performed by Buyer or the applicable Designated
Buyer Affiliate in the name of MDS or Metro GP and all benefits and obligations
existing thereunder shall be for the account of Buyer or the applicable
Designated Buyer Affiliate (without any additional expense to MDS whatsoever);
and (ii) MDS and Metro GP shall take or cause to be taken such reasonable
action in its name or otherwise as Buyer or the applicable Designated Buyer
Affiliate may reasonably require so as to provide Buyer or the applicable,
Designated Buyer Affiliate with the benefits thereof and MDS shall and
shall
cause Metro GP to promptly pay over or deliver to Buyer or the applicable
Designated Buyer Affiliate all money or other consideration, if any, received
by
MDS or Metro GP in respect of all such Non-Assignable Contracts. Upon the
BC Closing, MDS shall and shall cause Metro GP to authorize Buyer or the
applicable Designated Buyer Affiliate, to the extent permitted by Applicable
Law
and the terms of such Non-Assignable Contracts, at the expense of Buyer
or the
applicable Designated Buyer Affiliate, to perform all of MDS’ or Metro GP’s
obligations arising under such applicable Non-Assignable Contracts after
the BC
Closing Time. MDS shall continue to use and cause Metro GP to continue to
use commercially reasonable efforts to obtain and deliver all remaining
consents
required for the assignment to Buyer or the applicable Designated Buyer
Affiliate of the remaining Non-Assignable Contracts after the BC Closing
Time. If a Non-Assignable Contract is not validly assigned to Buyer or the
applicable Designated Buyer Affiliate within twelve (12) months after the
BC
Closing Date, such Non-Assignable Contract shall be deemed to be an Excluded
Asset and all obligations of MDS and Metro GP to Buyer or the applicable
Designated Buyer Affiliate and all obligations hereunder of Buyer and the
applicable Designated Buyer Affiliate to MDS or Metro GP, in either case,
with
respect to such Non-Assignable Contract shall terminate.
(i)
if the landlord’s consent to the assignment of the Non-Assigned Lease has not
been obtained prior to the BC Closing Time, the applicable Lease shall
remain in
the name of Metro GP and such party shall continue to pay the rents and
otherwise observe and perform the covenants and obligations of the tenant
under
the provisions of the applicable Non-Assigned Lease (including without
limitation, maintenance and repair obligations and insurance
requirements);
(ii)
on the BC Closing, to the extent permitted by Applicable Law and the provisions
of such Non-Assigned Lease, Metro GP and the Buyer or the applicable Designated
Buyer Affiliate shall enter into a sublease, licence or other occupancy
agreement relating to such premises on terms and conditions mutually acceptable
to the Parties, acting reasonably, pending the delivery of the landlord’s
consent to the assignment of the applicable Non-Assigned Lease, and MDS
shall
cause Metro GP to take or cause to be taken such reasonable action in its
name
or otherwise as Buyer or the applicable Designated Buyer Affiliate shall
reasonably require so as to provide Buyer or the applicable Designated
Buyer
Affiliate with, and/or not deprive Buyer or the applicable Designated Buyer
Affiliate of, the benefit of quiet and uninterrupted use and possession
of the
applicable premises for its conduct of the Diagnostics Business;
(iii)
on the BC Closing, to the extent permitted by Applicable Law and the provisions
of such Non-Assigned Lease, the Buyer or the applicable Designated Buyer
Affiliate shall access and occupy the applicable premises under such sublease,
licence or other form of occupancy agreement, shall comply with the obligations
of the occupant of the applicable premises under the provisions of the
applicable Non-Assigned Lease (including without limitation, repair of
any
damage to the premises caused by the Buyer or the applicable Designated
Buyer
Affiliate, and insurance for its own operations) and shall, provided access
and
occupancy is obtained and during the period that the Buyer or the applicable
Designated Buyer Affiliate enjoys and/or is not deprived of the benefit
of quiet
and uninterrupted use and possession of the applicable Leased Premises
(other
than as a result of force majeure or a default by the Buyer or Designated
Buyer
Affiliate under the applicable sublease, licence or other form of occupancy
agreement or the applicable landlord under the Non-Assigned Lease) for
the
conduct of the Diagnostics Business from such premises, promptly reimburse Metro
GP for or, at the written direction of Metro GP, pay directly to the landlord
the rents (including any applicable Taxes) and all other amounts payable
by the
tenant under the Non-Assigned Lease, including utility costs, realty Taxes
and
common area charges, in respect of the applicable premises accruing from
and
after the BC Closing Time, but for greater certainty shall not be responsible
for the payment of any amount due by the tenant prior to the BC Closing
Time, or
in respect of obtaining the consent, or the consequences of the failure
to
obtain the consent, of the landlord to the assignment of the Non-Assigned
Lease;
(iv)
MDS shall and shall cause Metro GP to continue to use commercially reasonable
efforts to obtain and deliver the applicable landlord’s consent to the
assignment to the Buyer or the applicable Designated Buyer Affiliate of
the
applicable Non-Assigned Lease, and in the event that such consent is not
obtained and delivered within eighteen (18) months after the BC Closing
Date,
then, at the option of the Buyer or the applicable Designated Buyer Affiliate,
the foregoing interim occupancy arrangement shall come to an end on the
last day
of the eighteenth (18th) month following the BC Closing Date, the
Buyer or the applicable Designated Buyer Affiliate shall remove all of
the
Purchased Assets from the applicable premises, the applicable Non-Assigned
Lease
shall be deemed to be an Excluded Asset, and all obligations of the Buyer
or the
applicable Designated Buyer Affiliate with respect to such Non-Assigned
Lease
shall terminate; and
(v)
Buyer shall have reasonable access to all MDS personnel, information and
data as
may be reasonably required or requested by Buyer in connection with the
obligations of MDS to obtain and deliver the applicable landlord’s consent to
the assignment of the applicable Non-Assigned Lease to the Buyer or the
applicable Designated Buyer Affiliate. From and after this date, MDS shall
keep Buyer apprised of its activities concerning its obtaining and delivering
such applicable landlord consents, including, without limitation providing
the
Buyer with monthly reports identifying which additional consents have been
obtained, whether there were any changes in the status of discussions with
the
landlords, and identifying the parties contacted and the statements made
in
connection with all outstanding consents. MDS shall consult with and
provide Buyer with all reasonable opportunities to assist MDS in such activities
and agrees to consider, in good faith, all Buyer input and requests provided
in
the course of the aforementioned activities of MDS in respect of such applicable
landlord consents and not to unreasonably refuse to take into account any
reasonable Buyer requests or input received.
(i)
if the landlord’s consent to the assignment of the Non-Assigned Lease has not
been obtained prior to the BC Closing Time, the applicable Lease shall
remain in
the name of the applicable Operator to the extent permitted by its terms
or
shall be assigned and transferred by the applicable Operator, and such
party
shall continue to pay the rents and otherwise observe and perform the covenants
and obligations of the tenant under the provisions of the applicable
Non-Assigned Lease (including without limitation, maintenance and repair
obligations and insurance requirements);
(ii)
on the BC Closing, to the extent permitted by Applicable Law and the terms
of
such Non-Assigned Lease, the Buyer or the applicable Designated Buyer Affiliate
shall cause the applicable Operator to enter into a sublease, licence or
other
occupancy agreement with the Buyer or the applicable Designated Buyer Affiliate
relating to such premises in a form mutually acceptable to the Parties,
pending
the delivery of the landlord’s consent to the assignment of the applicable
Non-Assigned Lease, and the applicable Operator shall take or cause to
be taken
such reasonable action in its name or otherwise as the Parties shall mutually
agree so as to provide Buyer or the applicable Designated Buyer Affiliate
with,
and/or not deprive Buyer or the applicable Designated Buyer Affiliate of,
the
benefit of quiet and uninterrupted use and possession of the applicable
premises
for its conduct of the Diagnostics Business;
(iii)
on the BC Closing, to the extent permitted by Applicable Law and the terms
of
such Non-Assigned Lease, the Buyer or the applicable Designated Buyer Affiliate
shall access and occupy the applicable premises under the sublease, licence
or
other form of occupancy agreement, shall comply with the obligations of
the
occupant of the applicable premises under the provisions of the applicable
Non-Assigned Lease (including without limitation, repair of any damage
to the
premises caused by the Buyer or the applicable Designated Buyer Affiliate,
and
insurance for its own operations); and
(iv)
MDS and Buyer shall continue to use commercially reasonable efforts to
obtain
and deliver the applicable landlord’s consent to the assignment by the
applicable Operator to the Buyer or the Designated Buyer Affiliate of the
applicable Non-Assigned Lease and, from and after the BC Closing Time,
Buyer
shall keep MDS apprised of its activities concerning its obtaining and
delivering such applicable landlord consents, including, without limitation
providing MDS with monthly reports identifying which additional consents
have
been obtained, whether there were any changes in the status of discussions
with
the landlords, and identifying the parties contacted and the statements
made in
connection with all outstanding consents. Buyer shall consult with and
provide MDS with all reasonable opportunities to assist Buyer in such activities
and agrees to consider, in good faith, all MDS input and requests provided
in
the course of the aforementioned activities of Buyer in respect of such
applicable landlord consents and not to unreasonably refuse to take into
account
any reasonable MDS requests or input received.
(e)
In respect of each Non-Assigned Lease in the name of any Operator other
than
Metro GP for which the landlord’s consent is required to the change of control
of the applicable Operator contemplated herein in respect of such Non-Assigned
Lease, if the landlord’s consent has not been obtained prior to the BC Closing
Time, to the extent permitted by Applicable Law and the provisions of the
applicable Non-Assigned Lease, upon the mutual agreement of the Parties
the
Non-Assigned Lease shall be assigned and transferred by the applicable
Operator
to Metro GP prior to the BC Closing and the provisions of Subsection 2.3(c)
shall apply.
The BC Closing shall take place at the
BC
Closing Time at the offices of Fasken ▇▇▇▇▇▇▇▇▇ DuMoulin LLP, Toronto,
Ontario,
or at such other place as may be agreed upon by the Parties.
Notwithstanding any provision herein to
the
contrary, the transactions comprising the BC Closing shall be effective
in the
sequence contemplated in Schedule 2.5.
Article 3
CONSIDERATION FOR PURCHASED ASSETS
CONSIDERATION FOR PURCHASED ASSETS
(b)
The Parties covenant and agree that the Holdback Amount shall be calculated
under, governed by the principles set forth in, and released and paid to
MDS
subject to the terms and conditions prescribed by, Schedule 3.1.
(a)
Forthwith
following the BC Closing Time, MDS shall cause its auditor, Ernst & Young
LLP, to conduct an audit of the MDS Diagnostics Division in order to prepare
the
Closing Balance Sheet. Based on the Closing Balance Sheet, MDS shall
prepare the unaudited Closing Regional Balance Sheet and the calculation
of the
Working Capital of the MDS Diagnostics Division in British Columbia as
at the BC
Closing Time. The Closing Balance Sheet, the Closing Regional Balance
Sheet and such calculation of Working Capital shall be prepared on a combined
basis in accordance with GAAP, applied on a basis consistent with the Financial
Statements. Buyer shall co-operate with MDS and Ernst & Young LLP and
shall provide to such Persons copies of all financial and other records
and
access to all necessary personnel required to conduct the audit and prepare
the
Closing Balance Sheet, the Closing Regional Balance Sheet and calculation
of
Working Capital. At the request of MDS, Buyer shall provide assistance in
the preparation of the Closing Balance Sheet, the Closing Regional Balance
Sheet
and the calculation of Working Capital. Forthwith following the BC
Closing Time, and for the purposes of Subsection 3.4(c), MDS shall prepare
a
balance sheet for each of Victoria Labs, ▇▇▇▇▇▇▇ Labs, and
Mether Properties (collectively, the “BC Sub Balance
Sheets”), as at the BC Closing Time, which shall be prepared in
accordance with GAAP, applied on a basis consistent with prior periods.
(b)
MDS shall co-operate with Buyer in conducting such audit and will provide
to
Buyer and its auditor copies of all working papers prepared by MDS for
review. Representatives of Buyer or Buyer’s auditor are permitted to be
present at, and to participate in, any inventory counts and any other procedures
used in preparing the Closing Balance Sheet, Closing Regional Balance Sheet,
the
BC Sub Balance Sheets and calculation of Working Capital. A copy of the
Closing Balance Sheet, Closing Regional Balance Sheet, the BC Sub Balance
Sheets
and Working Capital calculation shall be delivered to each Party within
seventy-five (75) days of the BC Closing Date.
(c)
If Buyer objects to any of the Closing Balance Sheet, the Closing Regional
Balance Sheet, the BC Sub Balance Sheets and the calculation of Working
Capital,
then Buyer shall prepare and deliver to MDS a statement (an “Objection
Notice”) setting forth the matters that are the subject of Buyer’s
objection and Buyer’s position including reasonable details of calculations on
or before the thirtieth (30th) day after the delivery of such statements
and
calculation. The Parties shall then use reasonable efforts to resolve such
objection for a period of twenty (20) days following the delivery of the
Objection Notice. If the matter is not resolved by the end of such twenty
(20) day period, then the matters remaining in dispute will be referred
to the
CEO of each Party to attempt to resolve within ten (10) days after the
date of
referral. If the matter is not resolved within such ten (10) day period,
then the items remaining in dispute shall be submitted by the Parties to
arbitration in accordance with Article 9. If Buyer fails to deliver an
Objection Notice within the thirty (30) day period, it shall be deemed
to have
agreed to the Closing Balance Sheet, the Closing Regional Balance Sheet,
the BC
Sub Balance Sheets and Working Capital calculation which shall then be
final and
binding upon the Parties.
For the purposes of Section 3.4,
(a) Inventory shall be valued at the lower of actual cost or market value
determined in accordance with GAAP, applied on a basis consistent with
the
Financial Statements; and (b) the value of the Accounts Receivable at the
BC Closing Time shall be the amount included in the Closing Balance Sheet,
(and
the Closing Regional Balance Sheet) less an amount equal to the balance
of
Accounts Receivable owed by Persons other than a Governmental Authority
or
hospital that are older than 90 days and for which no provision has been
made in
the Closing Balance Sheet (and the Closing Regional Balance Sheet) and
less the amount of any Accounts Receivable excluded as an asset in the
definition of MDS Operating Assets and Metro Operating Assets.
For greater certainty, in determining
Working
Capital and any amount under Subsection 3.4(c), any Liability for Taxes
arising
from or in connection with or the implementation of the Buyer Purchase
Structure
shall be valued at zero.
On the Working Capital Adjustment Date,
the
Purchase Price shall be adjusted in accordance with Section 3.5 and as
follows:
(b)
the Purchase Price shall be increased, on a dollar for dollar basis, by
the
amount that the cash, marketable securities and other cash equivalents
as set
forth on the Closing Balance Sheet (and the Closing Regional Balance Sheet)
exceeds the ▇▇▇▇▇ Cash included in the Working Capital of the MDS Diagnostics
Division in British Columbia; and
and the aggregate or net payment required
under this Section 3.4 shall be made by the appropriate Party to the
applicable Party on the Working Capital Adjustment Date.
The Parties shall make, without duplication,
and provided that such adjustments are not already provided for on the
Closing
Balance Sheet and the Closing Regional Balance Sheet, the usual adjustments
relating to the sale of the Purchased Assets as of the BC Closing Time
and such
adjustments shall be readjusted, if necessary, on the Working Capital Adjustment
Date. Adjustments shall include:
(b)
Charges Under Leases. All amounts paid or payable to or
by MDS or an Operator under the Leases included in the Purchased Assets
including, without limitation, rental (including percentage rental, prepaid
rent
and security deposits), Taxes (including contributions by lessees to real
estate
Taxes), common area maintenance charges or contributions towards operating
expenses, utilities charges, business Taxes, merchant’s association and
advertising fees and occupancy costs;
Notwithstanding the foregoing, no adjustment
shall be made in respect of any one of the aforementioned class of items
specified in Subsections 3.5(a) through (c) and (e) unless the particular
adjustment amount (the “Threshold Adjustment”) in respect of an
item in such class is at least $25,000. Any readjustments and payment
therefor shall be made by Buyer or MDS, as applicable, to the other Party
on the
Working Capital Adjustment Date. Without limiting the foregoing, in
respect of Leases, the Parties acknowledge that certain adjustments and
payments
therefor under each Lease included in the Purchased Assets such as common
area
charges, realty Taxes and contributions towards operating expenses, shall
be
made when the lessor under that Lease provides to Buyer or the applicable
Designated Buyer Affiliate a final adjustment amount in respect of such
Lease
for the lease years for which no such adjustment has been given to MDS
at the
Working Capital Adjustment Date. Once the Threshold Adjustment is obtained
in
respect of any one of the aforementioned items, Buyer or the applicable
Designated Buyer Affiliate shall provide to MDS a copy of the adjustment(s)
received from the applicable third party within ten (10) days of receipt
of same
and the payment of any readjustment between the Parties based upon the
information contained in such third party’s adjustments shall be made by the
appropriate Party promptly thereafter.
(a)
On the Working Capital Adjustment Date, the Closing Cash Amount and Assumed
Liabilities shall be adjusted as follows: (i) the Assumed Liabilities
shall be decreased and the Closing Cash Amount shall be increased by the
amount
that the Assumed Long-Term Liabilities in British Columbia as at the BC
Closing
Time is less than the Estimated Long-Term Liabilities; and (ii) the Assumed
Liabilities shall be increased and the Closing Cash Amount shall be decreased
by
the amount that the Assumed Long-Term Liabilities in British Columbia as
at the
BC Closing Time exceeds the Estimated Long-Term Liabilities, each on a
dollar
for dollar basis and the aggregate or net payment required under this
Section 3.6 shall be made by Buyer or MDS, as applicable, to the other
Party on the Working Capital Adjustment Date.
Any adjustments to the Purchase Price
payable
in accordance with Sections 3.4 and 3.5 and any amount payable pursuant to
Section 3.6 shall bear interest at the Prime Rate calculated from the
earlier of the date the adjustment is due or 120 days after the BC Closing
Date
to the date of payment of the adjustment.
The Parties shall allocate $1,000 to the
Non-Competition Agreement and the balance of the Purchase Price among the
Purchased Assets, the Replacement Contracts and the ▇▇▇ Assets as mutually
agreed and as set forth in Schedule 3.8 - Purchase Price Allocation.
The Parties agree that the amount of the
Purchase Price allocated to each Purchased Asset, Replacement Contract,
Non-Competition Agreement and ▇▇▇ Assets is the fair market value thereof
and
agree to file all returns and forms, and provide all information, under
the ITA
and any applicable taxing statute or regulation, on the basis of the agreed
allocation.
If the Purchase Price is adjusted pursuant
to
the terms of this Agreement, appropriate adjustments shall be made by the
Parties jointly to the allocations set forth in this Section 3.8. The
Parties shall file their respective Tax Returns in a manner that reflects
and is
consistent with the foregoing. The Parties agree to amend any Tax filings
or elections as may be required or as may be reasonable to reflect any
revisions
to the allocations under this Section 3.8.
At the BC Closing Time, Buyer or the
applicable Designated Buyer Affiliate shall pay and satisfy the Purchase
Price
as follows:
(a)
Buyer or the applicable Designated Buyer Affiliate shall assume, pay, perform
and discharge the Assumed Liabilities in accordance with their terms;
(c)
As to the Holdback Amount, by release and payment of all or such portions
thereof in accordance with Schedule 3.1 to or to the order or at the direction
of MDS in accordance with Schedule 3.1.
in full satisfaction thereof, subject
to the
adjustments to be made pursuant to Sections 2.2, 3.1(a)(iv), 3.4, 3.5 and
3.6 and Schedule 3.1.
(a)
Where permitted by Applicable Law, Buyer or the applicable Designated Buyer
Affiliate and Metro LP will execute on the BC Closing and file a joint
election
under section 22 of the ITA and the corresponding provisions of any other
applicable taxing statute or regulation, within the prescribed time periods,
in
respect of the Accounts Receivable of Metro LP included in the Metro Operating
Assets and shall designate in such election an amount equal to the portion
of
the Purchase Price allocated to such Accounts Receivable as the consideration
paid by Buyer therefor.
(b)
To the extent that Metro LP has received an amount in respect of services
not
rendered or goods not delivered and has an Assumed Liability arising therefrom
and Metro Operating Assets having a fair market value equal to such amounts
are
transferred to Buyer or the applicable Designated Buyer Affiliate as payment
for
such Assumed Liabilities, MDS shall cause Metro LP to, and Buyer or the
applicable Designated Buyer Affiliate shall execute on the BC Closing and
file
an election pursuant to the provisions of section 20(24) of the ITA and the
corresponding provisions of any applicable taxing statute or regulation
within
the prescribed time periods.
(d)
Where permitted by Applicable Law, Metro LP and Buyer or the applicable
Designated Buyer Affiliate shall, at the BC Closing, elect jointly pursuant
to
the provisions of subsection 167(1) of the Excise Tax Act (Canada)
and under any similar provision of any applicable provincial legislation
in the
form prescribed for the purposes of that provision, in respect of the sale
and
transfer of the Metro Operating Assets that for purposes of such legislation
no
GST (and any comparable provincial Taxes) is payable on the purchase of
the
Metro Operating Assets, provided, however, that Buyer or the applicable
Designated Buyer Affiliate shall be responsible and indemnify and hold
harmless
MDS and Metro GP for any GST (and any comparable provincial Taxes) to the
extent
payable notwithstanding this election plus any interest and/or penalties
payable
as a consequence thereof.
Neither Buyer nor any Designated Buyer
Affiliate shall assume or have any obligation to discharge, perform or
fulfill
any Liabilities of MDS of any kind whatsoever other than the Assumed Liabilities
(collectively, the “Excluded Liabilities”), all of which shall
remain obligations of MDS.
Article 4
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
MDS represents and warrants to Buyer as
set
forth in the following Subsections of this Section 4.1. Buyer
acknowledges that all representations and warranties made by MDS in this
Agreement are qualified in their entirety by the information and exceptions
disclosed in the Disclosure Letter and the schedules thereto. Without
limiting the foregoing, all representations and warranties of MDS with
respect
to the assets, the Liabilities, employees, Benefit Plans and other labour
matters, Taxes and business and operations of the Operators are qualified
to the
extent of any action taken or omitted to be taken or Liability incurred
in
connection with or in any way related to the implementation of the Buyer
Purchase Structure.
4.1.1
Corporate Matters
(c)
MDS has all necessary corporate power and capacity to execute and deliver
and
perform its covenants and obligations under this Agreement and the Closing
Documents to which it will be a party. MDS has taken all corporate action
necessary to authorize the execution and delivery of, and the observance
and
performance of its covenants and obligations under, this Agreement and
the
Closing Documents to which it will be a party. ▇▇▇▇▇▇ ▇▇ has all necessary
power
and capacity to execute and deliver and perform its covenants and obligations
under this Agreement and the Closing Documents to which it will be a
party. ▇▇▇▇▇▇ ▇▇ has or will have prior to the BC Closing Time taken all
action under the limited partnership agreement governing ▇▇▇▇▇▇ ▇▇ necessary
to
authorize the execution and delivery of, and the observance and performance
of
its covenants and obligations under, this Agreement and the Closing Documents
to
which it will be a party.
(d)
This Agreement has been duly executed and delivered by each of MDS and
▇▇▇▇▇▇ ▇▇
and the Closing Documents to be entered into by MDS, ▇▇▇▇▇▇ ▇▇, Metro LP
or
Metro GP will be duly executed and delivered by MDS, ▇▇▇▇▇▇ ▇▇, Metro LP
or
Metro GP. This Agreement constitutes a valid and binding obligation of
each of MDS and ▇▇▇▇▇▇ ▇▇ enforceable against MDS and ▇▇▇▇▇▇ ▇▇, as applicable,
in accordance with its terms and each such Closing Document will constitute
a
valid and binding obligation of MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP enforceable
against
MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP in accordance with its terms.
(e)
MDS is a corporation duly incorporated and validly existing under the laws
of
its jurisdiction of incorporation. No proceedings have been taken or
authorized by MDS, or, to the best of MDS’ knowledge, by any other Person, with
respect to the bankruptcy, insolvency, liquidation, dissolution or winding
up of
MDS. MDS has all necessary corporate power and capacity to own or lease
the
Purchased Assets owned or leased by it, to own the Replacement Contracts
once
acquired thereby and to own the ▇▇▇ Assets upon completion of the ▇▇▇ Closing
and to carry on the Diagnostics Business as presently carried on by it.
Neither the nature of the Diagnostics Business nor the location or character
of
any of the Purchased Assets or ▇▇▇ Assets requires MDS to be registered,
licensed or otherwise qualified as an extra-provincial or foreign corporation
or
partnership or to be in good standing in any jurisdiction other than (i)
jurisdictions where it is duly registered, licensed or otherwise qualified
and
in good standing for such purpose or (ii) to the extent that any failure
to be
so qualified either individually or in the aggregate, would not have a
Material
Adverse Effect.
4.1.2
Absence of Conflicting Agreements
None of the execution and delivery of,
or the
observance and performance by MDS, ▇▇▇▇▇▇ ▇▇, Metro LP or Metro GP of,
any
covenant or obligation under this Agreement or any Closing Document to
which
MDS, ▇▇▇▇▇▇ ▇▇, Metro LP or Metro GP is or will be a party:
(a)
contravenes or results in, or will contravene or result in, a violation
of or a
default under (with or without the giving of notice or lapse of time, or
both)
or in the acceleration of any obligation under:
(i)
subject to the consents to the within transactions and the rights of the
third
parties contemplated in Subsection 2.1(b), the articles or by-laws of MDS,
each Corporate Operator or the partnership agreement governing a Partnership
Operator;
(ii)
except for the Leases, the Equipment Leases and the Contracts included
in the
Purchased Assets and the Shared Contracts, the consent to the assignment
or
transfer of which or a change of control of the party thereto which may
be
required from landlords or other third parties thereunder in connection
with the
BC Closing, the consents to the within transactions and the rights of the
third
parties contemplated in Subsection 2.1(b) as set forth in, and in addition
to the others set forth in, Subsection 4.1.2 of the Disclosure Letter, the
provisions of any material agreement, lease, mortgage or security document
to
which MDS or any Operator is a party; except, in each case any contravention,
violation, default under or acceleration of any obligations under any such
agreement, lease, mortgage or security document that would not have a Material
Adverse Effect individually or in the aggregate;
(iii)
Applicable Law; or
(b)
will result in the creation or imposition of any material Encumbrance on
an
Operator or any of the Purchased Assets or Other Assets, as applicable,
or will
result in the creation or imposition of any material Encumbrance on a ▇▇▇
Asset
after the ▇▇▇ Closing, except as set forth in Subsection 4.1.2 of the
Disclosure Letter.
4.1.3
Regulatory Approvals
Except as set forth in Subsection 4.1.3
of the Disclosure Letter, no consent, approval, or authorization of, or
registration or filing with, any Governmental Authority is required by
MDS, any
Operator or, to the knowledge of MDS, any Non-Controlled Operator in connection
with the execution and delivery by MDS of this Agreement or by MDS, ▇▇▇▇▇▇
▇▇,
Metro LP or Metro GP of any Closing Document to which it will be a party
or the
observance and performance by MDS, ▇▇▇▇▇▇ ▇▇, Metro LP or Metro GP of its
respective obligations under this Agreement or such Closing Documents to
which
it will be a party other than the Regulatory Consents and other than those
consents, approvals, authorizations, registration, declarations or filings
with
any Governmental Authority which are routine post-closing notifications
or
filings or those the absence of which will not have a Material Adverse
Effect.
(a)
The Persons set forth in Subsection 4.1.4 of the Disclosure Letter are the
registered and beneficial owners of the Real Property, with good and marketable
title thereto and MDS, ▇▇▇▇▇▇ ▇▇, Metro LP and Metro GP collectively are
the
legal and beneficial owners of the remaining Purchased Assets and, upon
MDS and
the applicable third party entering into a Replacement Contract, such
Replacement Contract, and, on completion of the ▇▇▇ Closing, MDS will be
the
beneficial owner of the ▇▇▇ Assets, in each case with good and valid title
thereto free and clear of any Encumbrances, except for Permitted
Encumbrances. The Operators other than ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇, Metro LP and
Metro GP collectively are the legal and beneficial owners of the Other
Assets,
with good and valid title thereto, free and clear of any Encumbrances,
except
for Permitted Encumbrances.
(b)
Notwithstanding Subsection (a), MDS or the applicable Operator, as the
case may
be in respect of each of the Purchased Assets comprising Technical Information,
is the legal and beneficial owner of the Technical Information with good
and
valid title thereto, free and clear of any Encumbrances, except for Permitted
Encumbrances, and has a valid and legally enforceable right in Canada and
the
United States to use (inclusive of the right to commercially exploit and
further
license and convey) the Technical Information free from third party
interference.
(c)
Notwithstanding Subsection (a), MDS or the applicable Operator, as the
case may
be in respect of each of the Purchased Assets comprising Proprietary IP,
is the
sole and exclusive owner in Canada and the United States of all Proprietary
IPincluded in the Purchased Assets, free and clear of all Encumbrances,
except
for Permitted Encumbrances.
4.1.5
No Options
Except as set forth in Subsection 4.1.5
of the Disclosure Letter, no Person other than Buyer has, or will have
in
respect of the ▇▇▇ Assets after the ▇▇▇ Closing, any written agreement,
option,
warrant, privilege or right, or any right capable of becoming any of the
foregoing for the purchase from MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP of any of the
Purchased Assets, the Replacement Contracts or ▇▇▇ Assets.
4.1.6
Litigation
Except as set forth in Subsection 4.1.6
of the Disclosure Letter, there is no claim, demand, suit, action, cause
of
action, dispute, proceeding, investigation, inquiry, litigation, grievance,
arbitration, governmental proceeding or other proceeding including appeals
and
applications for review, in progress against, by or relating to or affecting
the
Purchased Assets, the Replacement Contracts, the ▇▇▇ Assets, the Other
Assets or
the Diagnostics Business, nor, to the knowledge of MDS are any of the same
threatened, which if decided adversely to MDS or an Operator would have
a
Material Adverse Effect. There is no Order outstanding against MDS or any
Operator that affects the Diagnostics Business or any of the Purchased
Assets,
the ▇▇▇ Assets or the Other Assets, except those that would not have a
Material
Adverse Effect.
4.1.7
The Financial Statements
(a)
The Financial Statements and Quarterly Statements:
(i)
have been prepared in accordance with Generally Accepted Accounting Principles,
applied on a basis consistent with that of the preceding periods; and
(ii)
present fairly, in all material respects, the assets, Liabilities (whether
accrued, absolute or contingent) and the financial position of the MDS
Diagnostics Division and the results of the operations of the MDS Diagnostics
Division as at the dates thereof and for the periods covered thereby in
accordance with GAAP.
(b)
The Regional Financial Statements:
(i)
have been prepared in accordance with Generally Accepted Accounting Principles,
applied on a basis consistent with that of the Financial Statements; and
(ii)
present fairly, in all material respects, the assets, Liabilities and the
financial position of the MDS Diagnostics Division in British Columbia
and the
results of the operations of the MDS Diagnostics Division in British Columbia
as
at the dates thereof and for the period covered thereby in accordance with
GAAP.
4.1.8
Absence of Changes
Except as set forth in Subsection 4.1.8
of the Disclosure Letter or as contemplated by this Agreement, since the
date of
the Financial Statements:
(a)
MDS, each Operator and, to the knowledge of MDS, each Non-Controlled Operator
has conducted the Diagnostics Business carried on by it in the ordinary
course;
(b)
there has not been any material change in the condition of the Diagnostics
Business, the Purchased Assets, the Replacement Contracts or Other Assets,
as
applicable, or the financial position or results of operations of MDS
Diagnostics Division in British Columbia other than changes reflected in
the
Quarterly Statements and changes in the ordinary course of business, and
such
changes have not, either individually or in the aggregate, had a Material
Adverse Effect;
(c)
there has not been any damage, destruction, loss, technology failure, labour
dispute, organizing drive, application for certification or other event,
development or condition of any character (whether or not covered by insurance)
which has had or would reasonably be expected to have a Material Adverse
Effect.
4.1.9
Absence of Unusual Transactions
Except as set forth in Subsection 4.1.9
of the Disclosure Letter or as contemplated by this Agreement, since the
date of
the Financial Statements:
(a)
neither MDS nor any Operator has increased (or offered to increase) the
compensation paid or payable to the Employees or increased (or offered
to
increase) the benefits to which the Employees are entitled under any benefit
or
pension plan of such Person or created (or offered to create) any new benefit
or
pension plan for the Employees or entered into any Contract with an Employee,
in
each case other than in the ordinary course of business;
(b)
neither MDS nor any Operator has created any Encumbrance on any of the
Purchased
Assets, the Replacement Contracts and the ▇▇▇ Assets or suffered or permitted
any such Encumbrance that has arisen on the Purchased Assets or the Replacement
Contracts since that date to remain, other than Permitted Encumbrances;
(c)
no Operator (excluding ▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇▇ ▇▇) has:
(i)
changed its accounting practices or policies in any material respect;
(ii)
modified, amended or terminated any Contract to which it is or was a party,
or
waived or released any right which it has or had, other than in the ordinary
course of its business or that has not individually or in the aggregate
had or
would reasonably be expected to have a Material Adverse Effect;
(iii)
incurred any material debt, liability or obligation for borrowed money,
or
incurred any other material debt, liability or obligation, except in the
ordinary course of its business;
(iv)
nor MDS relating to the Diagnostics Business has, suffered an operating
loss or
any unusual or extraordinary loss, or entered into any commitment or transaction
not in the ordinary course where such loss, commitment or transaction is
or
would be material in relation to the Purchased Assets or the Diagnostics
Business;
(v)
except as set forth in Subsection 4.1.9 of the Disclosure Letter, nor MDS
relating to the Diagnostics Business, has hired or dismissed any senior
Employees;
(vi)
except as set forth in Subsection 4.1.9 of the Disclosure Letter, nor MDS
relating to the Diagnostics Business has, directly or indirectly, engaged
in any
transaction, made any loan or entered into any arrangement with any officer,
director, partner, shareholder, Employee (whether current or former or
retired),
consultant, independent contractor or agent of an Operator, except in the
ordinary course and consistent with past practice; and
(vii)
except as set forth in Subsection 4.1.9 of the Disclosure Letter, nor MDS
relating to the Diagnostics Business, has deferred any capital expenditures
or
commitments therefor which were budgeted for in the capital expenditure
budgets
of the Diagnostics Business for the current fiscal year or would have been
made
in the ordinary course;
(d)
no Corporate Operator nor, to the knowledge of MDS, any Non-Controlled
Corporate
Operator, has issued or sold any shares, bonds or other securities of any
type
whatsoever;
(e)
no Partnership Operator nor, to the knowledge of MDS, any Non-Controlled
Other
Operator, has issued or sold any units, partnership interests or other
securities of any type whatsoever;
(f)
neither MDS nor the Operators have authorized, agreed or otherwise become
committed to do any of the matters set forth in paragraphs (c), (d) and
(e)
above; and
(g)
to the knowledge of MDS, no Non-Controlled Operator has authorized, agreed
or
otherwise become committed to do any of the matters set forth in paragraphs
(d)
and (e) above.
4.1.10
Compliance with Applicable Law
MDS, each Operator and, to the knowledge
of
MDS, each Non-Controlled Operator has operated that part of the Diagnostics
Business presently operated by it and currently operates such Diagnostics
Business in compliance with all Applicable Laws in all material respects.
4.1.11
Sufficiency of Purchased Assets
The Purchased Assets and Other Assets
owned,
leased or otherwise held by MDS and the Operators are, together with the
▇▇▇
Assets, the Replacement Contracts and the Limited Trade ▇▇▇▇ Licence, sufficient
to carry on the Diagnostics Business as presently conducted by MDS and
each such
Operator, subject to clauses (b), (e), (l), (p) and, to the extent used
in the
Diagnostics Business, (f) of the definition of the Excluded Assets, all
Employees, and any services to be provided by MDS or a third party to the
Buyer
and/or any Designated Buyer Affiliates after the BC Closing under the Migration
Agreement. It being acknowledged that the Parties have agreed to the
Replacement Contracts under Sections 5.8 and 5.11 and MDS makes no
representation or warranty as to the sufficiency of the Replacement Contracts
and shall have no liability therefor. Except as set forth in Schedule F1
to the Disclosure Letter, Schedule F to the Disclosure Letter lists all
employees necessary to carry on the Diagnostics Business as presently conducted
by each such Operator and MDS. Each of the Excluded Assets, other than
Bow
Valley Medical Laboratories Ltd., set forth in paragraph (c) of the definition
for such term herein are of nominal value to the Operators and the Diagnostics
Business, as currently conducted or are in respect of Persons that do not
constitute or have business activities or operations relating to the Diagnostics
Business.
4.1.12
Licences
Except as set forth in Subsection 4.1.12
of the Disclosure Letter, each of MDS, the Operators and, to the knowledge
of
MDS, the Non-Controlled Operators, possesses all Licences material to the
conduct of the Diagnostics Business carried on by it and each such Licence
of
MDS, any Operator and, to the knowledge of MDS, a Non-Controlled Operator
is in
full force and effect and, each of MDS, the Operators and, to the knowledge
of
MDS, the Non-Controlled Operators is in compliance with the terms and conditions
of such Licences in all material respects and, to the knowledge of MDS,
no
proceeding is pending or threatened to revoke or limit any such Licence.
Each Licence of MDS or an Operator material to the conduct of the Diagnostics
Business carried on by it is listed in Subsection 4.1.12 of the Disclosure
Letter.
4.1.13
Employees, Labour Matters
(a)
Schedule F annexed to the Disclosure Letter contains as at August 28,
2006:
(i)
the employee identification number and titles of all Employees together
with the
location of their employment;
(ii)
the date each Employee was hired;
(iii)
a list of all employment offers made by MDS or an Operator to an executive
Employee or an Employee with a total annual salary which exceeds $150,000;
(iv)
the rate of annual remuneration or hourly wage of each Employee at the
date
hereof and all bonuses, incentive schemes, benefits and all other compensation
to which such Employee is entitled;
(v)
the amount of vacation pay to which each Employee is entitled on the date
hereof; and
(vi)
the contractor identification letter of all independent contractors that
regularly provide material services to an Operator (or, to the extent the
services relate exclusively to the Diagnostics Business, MDS) pursuant
to a
consulting arrangement and their annual remuneration.
(b)
Except as disclosed in Subsection 4.1.13 of the Disclosure Letter, no
Employee is employed under a contract which cannot be terminated by his
or her
employer with appropriate notice and there are no retention, change of
control
or deal bonuses or other compensation or benefits payable by the Buyer
or the
Operators pertaining to the sale of the Diagnostics Business. MDS and each
Operator has withheld and remitted or paid to the relevant Governmental
Authority all income Taxes, employment insurance contributions, Canada
Pension
Plan contributions and any Taxes or other amounts which it is required
by
statute to withhold and remit or pay to any Governmental Authority in respect
of
its Employees.
(d)
There are no outstanding notices of assessment, provisional assessment,
reassessment, supplementary assessment, penalty assessment or increased
assessment (collectively, “assessments”) which MDS or any
Operator has received from any workers’ compensation board or similar authority
and there are no material assessments which are unpaid on the date hereof
or
which will be unpaid at the BC Closing Time.
4.1.14
Collective Agreements
The only collective agreements to which
MDS or
an Operator is a party and which relate to the Diagnostics Business are
those
listed in Subsection 4.1.14 of the Disclosure Letter. Except as
described in Subsection 4.1.14 of the Disclosure Letter, no trade union,
council of trade unions, employee bargaining agency or affiliated bargaining
agent holds bargaining rights with respect to any Employees of MDS or any
of the
Operators by way of certification, interim certification, voluntary recognition,
or successor rights, or, to the knowledge of MDS, has applied or threatened
to
apply to be certified as the bargaining agent of any of such employees. To
the knowledge of MDS, no material work stoppage or other material labour
dispute
in respect of the Diagnostics Business is pending or threatened. There are
no outstanding arbitration awards, labour grievances or arbitration proceedings
under such collective agreements that, if decided against MDS or the applicable
Operator, are reasonably likely to have a Material Adverse Effect.
(a)
Subsection 4.1.15 of the Disclosure Letter contains a true and complete
list of all Benefit Plans of the Diagnostics Business and identifies which
of
such Benefit Plans is a Pension Plan. Except as disclosed at
Subsection 4.1.15 of the Disclosure Letter, neither MDS nor any Operator
has a formal plan or commitment to create any additional Benefit Plan or
to
modify, amend or change any existing Benefit Plan that would affect any
Employee
or former employee of the Diagnostics Business, except such modification,
amendment or change as may be required to be made to secure the continued
registration of any existing Benefit Plan with any applicable Governmental
Authority or to reflect annual premium changes in the ordinary course of
business. Except as disclosed at Subsection 4.1.15 of the Disclosure
Letter, none of the Benefit Plans in which Employees will continue to
participate after the BC Closing provide for benefit increases or the
acceleration of, or an increase in, funding obligations that are contingent
upon
or will be triggered by the entering into of this Agreement or the completion
of
the transactions contemplated herein.
(b)
With respect to each of the Benefit Plans, MDS and Metro LP have made available
to Buyer true, correct and complete copies of each of the following
documents:
(i)
a copy of the current and, for the BC Retirement Plans only, the predecessor
terms of the Benefit Plan;
(ii)
if the Benefit Plan is funded through a trust or any third party funding
arrangement, a copy of the current and, for the BC Retirement Plans only,
the
predecessor trust or other funding agreement (including all amendments
thereto)
and the most recent financial statements thereof;
(iii)
all current material Contracts relating to the Benefit Plan with respect
to
which MDS or an Operator may have any Liability, including insurance contracts,
investment management agreements, subscription and participation agreements
and
record keeping agreements;
(iv)
the most recent financial, accounting, actuarial valuation or other report,
as
applicable, of each Benefit Plan whether or not such report is required
by
Applicable Law; and
(v)
the most recent annual information returns filed with Governmental Authorities
in respect of each Benefit Plan for which such filing is required by Applicable
Law.
(c)
Except as disclosed in Subsection 4.1.15 of the Disclosure Letter, no
material changes have occurred in respect of any Benefit Plan since the
date of
the most recent financial, accounting, actuarial or other report, as applicable,
issued in connection with any Benefit Plan, which could reasonably be expected
to adversely affect the relevant report (including rendering it misleading
in
any material respect), other than changes arising as a result of the experience
of the Benefit Plan or changes in the assumptions or methods used in the
most
recent report.
(d)
Neither MDS nor Metro LP has received, or applied for, any payment of surplus
out of any Benefit Plan or any payment in respect of the demutualization
of the
insurer of any Benefit Plan.
(e)
Except as disclosed in Subsection 4.1.15 of the Disclosure Letter, there
have been no withdrawals or transfer of assets from any BC Retirement Plan
that
required regulatory approval and, where so disclosed, such withdrawals
or
transfers of assets were in accordance with the terms of such Benefit Plan
and
all Applicable Laws.
(f)
All Employee data necessary to administer each Benefit Plan is in the possession
of MDS or the Operators, will be included in the Purchased Assets or Other
Assets and is complete, correct and in a form which is sufficient for the
proper
administration of the Benefit Plan in accordance with its terms and all
applicable laws.
(g)
None of the Benefit Plans require or permit a retroactive increase in premium
or
payments or require additional premiums or payments upon termination of
the
Benefit Plan or any insurance contract relating thereto, and the level
of
insurance reserves, if any, under any insured Benefit Plan is reasonable
and
sufficient to provide for all incurred but unreported claims.
(h)
The Liabilities of the Diagnostics Business in respect of all Benefit Plans
are
properly reflected in the Financial Statements according to GAAP, other
than
Liabilities related to the MDS Option Plan which are not reflected on the
Financial Statements.
(i)
None of the Pension Plans in which the BC Employees participate is registered
as
a multi-employer pension plan as defined under the provisions of any applicable
federal or provincial pension standards legislation.
(i)
coverage required by Applicable Law,
(ii)
death or retirement benefits under any Pension Plan,
(iii)
deferred compensation benefits accrued as Liabilities in the Financial
Statements, or
(iv)
benefits the full cost of which is borne by the Employee or former employee
(or
his beneficiary).
(k)
All employer contributions required to be made by MDS or an Operator that
are
due under Applicable Law to the Pension Plans as of the date hereof have
been
made or properly accrued. All employee contributions to such Pension Plans
required to be contributed prior to the most recent pay period ending prior
to
the date hereof have been properly withheld by MDS or the applicable Operator
and have been fully paid into the funding arrangements for the respective
Pension Plan.
4.1.16
Residence
MDS is not a non-resident of Canada within
the
meaning of the ITA and each of Metro LP and ▇▇▇▇▇▇ ▇▇ is a “Canadian
partnership” for the purposes of the ITA.
4.1.17
Insurance
The Purchased Assets and Other Assets
owned or
used by MDS and the Operators in the operation of the Diagnostics Business
are
insured pursuant to the insurance policies listed at Subsection 4.1.17 of
the Disclosure Letter. All such policies of insurance are in full force
and effect and neither MDS nor an Operator is in material default, whether
as to
the payment of premium or otherwise, under the terms of any such policy.
All claims of MDS or any Operator relating to the Diagnostics Business
under
such insurance policies and other policies held over the past three (3)
years
and all losses covered by any insurance policy deductible or self insurance
are
listed at Subsection 4.1.17 of the Disclosure Letter.
(c)
Except pursuant to the license agreements disclosed on Schedule D to the
Disclosure Letter, neither MDS nor Metro LP has licensed or granted any
material
interest in or right to use, access or exploit all or any portion of any
Proprietary IP to any other Person.
(d)
All registrations and filings necessary to preserve the rights of MDS or
Metro
LP in and to such Proprietary IP, in each case federally in Canada and
in the
United States, as at the date hereof have been made other than those that
the
failure to make has not had and would not reasonably be expected to have
a
Material Adverse Effect. Except as set forth in Schedule E to the
Disclosure Letter, there have been no patents applied for and no other
intellectual property registrations of any nature made, by MDS or an Operator,
in any jurisdiction concerning all or any part of the Proprietary IP.
(e)
To the knowledge of MDS, none of: (i) the Proprietary IP; (ii) MDS’ or an
Operator’s ownership, use, operation, copying, licensing or other commercial
exploitation of the Proprietary IP; and (iii) the carrying on of the Diagnostics
Business infringes, violates or breaches the intellectual property or other
proprietary rights in Canada or the United States of any other Person. MDS
is not aware of any misappropriation, breach, violation or material interference
with such Proprietary IP by any third parties and neither MDS nor any Operator
has received any written notice expressly claiming that any Proprietary
IP is,
or may be, invalid or unenforceable other than where such claim, if decided
adversely to any of MDS and an Operator, would not have a Material Adverse
Effect.
(f)
Except as disclosed in Schedule E to the Disclosure Letter:
(i)
all of the Proprietary IP are in full force and effect and have not been
used or
enforced or failed to be used or enforced in a manner that would result
in their
abandonment, cancellation or unenforceability; and
(ii)
all of the Proprietary IP consisting of issued registrations, or in the
case of
inventions, issued patents, are valid and enforceable (with respect to
Canadian
registrations and issued patents, in Canada, and, with respect to U.S.
registrations and issued patents, in the United States).
(g)
The Proprietary IP was developed either by contractors retained by MDS
or an
Operator or by employees of MDS or an Operator and, to the knowledge of
MDS,
does not: (i) contain any third party software, technology or third party
intellectual property or other proprietary rights or property; and (ii)
require
any other Person’s license, authorization, consent or waiver of any kind in
connection with the use or commercial exploitation of the Proprietary IP
by
Buyer (or any transferee of all or substantially all of the MDS Diagnostics
Division) in the carrying on of the diagnostics business after the BC Closing
Time.
(h)
Intentionally deleted.
(i)
Neither MDS nor any Operator is a party to any claim (i) for trade ▇▇▇▇,
trade
name, industrial design, patent or copyright, trade secret or other intellectual
property right infringements as to any services provided, or any products
produced or sold by, or concerning the Software of, MDS or an Operator
in the
Diagnostics Business; or (ii) relating to trade marks, trade names, industrial
designs, patents or copyrights, trade secret or other intellectual property
right owned or licensed by any of MDS and an Operator exclusively in connection
with the Diagnostics Business.
(j)
MDS and the applicable Operators have:
(i)
not intentionally incorporated, and the Software does not to the knowledge
of
MDS, contain any disabling mechanisms or protection features, including
computer
viruses, time locks or any code, instruction or device which are designed
to or
may disrupt or prevent the use of the Software or computer hardware or
render
any data inaccessible or that may be used without authority to access,
modify or
delete or damage any of the Software or computer hardware data in the Software;
and
(ii)
implemented industry standard software to detect computer viruses.
(k)
MDS and the applicable Operators have taken commercially reasonable steps
to
safeguard and maintain the proprietary rights of MDS and the Operators
in and to
the Proprietary IP and the trade secrets and confidential information of
the
Diagnostics Business.
(l)
To the knowledge of MDS, the Software is free from defects or deficiencies
that
would materially interfere with the ordinary course operation of the
Software.
(m)
MDS or the applicable Operators have registered each of the domain names
set
forth in Schedule E to the Disclosure Letter and have paid all fees required
to
maintain each registration, and there are no other domain names used in
the
Diagnostics Business except as set forth in Schedule E. None of such
domain names have been placed “on hold”.
4.1.19
Environmental Matters
(b)
Neither MDS nor any Operator has used or, since the date of ownership by
the
applicable Operator or MDS, permitted to be used, except in material compliance
with all Environmental Laws, the Real Property and the Leased Premises
included
in the Purchased Assets or in the Other Assets to generate, manufacture,
process, distribute, use, treat, store, dispose of, transport or handle
any
Hazardous Materials except for any non-compliance that has not had and
would not
reasonably be expected to have any Material Adverse Effect. Except as set
forth in Subsection 4.1.19 of the Disclosure Letter, to the knowledge of
MDS, no underground storage tanks are located on the Real Property included
in
the Purchased Assets, the Leased Premises or Other Assets of the Operators
or
MDS.
(c)
Within the last 36 months, neither MDS nor any Operator has received any
written
notice of, or been prosecuted for, non compliance of any Environmental
Law in
respect of the Diagnostics Business or the Purchased Assets or Other Assets
owned or used by it. There are no outstanding written notices, orders or
directions relating to environmental matters requiring, or notifying MDS
or any
Operator that it is or may be responsible for, any containment, clean up,
remediation or corrective action to be made under Environmental Laws with
respect to the Diagnostics Business, the Purchased Assets or Other Assets
owned
or used by it in the Diagnostics Business. To the knowledge of MDS, there
are no material proceedings or investigations in progress or threatened
relating
to environmental matters in respect of the Diagnostics Business, the Real
Property or the Leased Premises.
(d)
Neither MDS nor any of the Operators has caused, nor to the knowledge of
MDS,
has there been, any Release in contravention of any Environmental Law on,
in, or
from the Real Property or the Leased Premises included in the Purchased
Assets
or Other Assets, as applicable, that has resulted in or would reasonably
be
expected to result in a Material Adverse Effect. All Hazardous Materials
used in whole or in part by MDS or an Operator in connection with the
Diagnostics Business or resulting from the Diagnostics Business have been
disposed of, treated and stored by such Person in material compliance with
all
Environmental Laws except for any non-compliance that has not had and would
not
reasonably be expected to have any Material Adverse Effect.
(e)
MDS has provided to the Buyer a copy of all environmental audits, studies
or
reports on the Real Property and, to the knowledge of MDS, the Leased Premises
included in the Purchased Assets or Other Assets of the Operators in the
possession of MDS.
4.1.20
Real Property
(a)
All Land included in the Purchased Assets or Other Assets of an Operator
is
listed in Subsection 4.1.20 of the Disclosure Letter including the legal
description thereof.
(c)
Except as set forth in Subsection 4.1.20 of the Disclosure Letter, to the
knowledge of MDS, the Buildings included in the Purchased Assets or Other
Assets
have not been insulated with urea formaldehyde foam insulation, nor have
they
been fireproofed or insulated with any asbestos fibre product nor are there
PCB’s stored on any such Real Property.
(d)
With respect to the Real Property included in the Purchased Assets or Other
Assets:
(i)
to the knowledge of MDS, the Land has unobstructed access to and from adjoining
public highways, streets and/or roads;
(ii)
the Land is adequately serviced by public or private utilities or its own
services to permit the Diagnostics Business operated at the Lands to be
carried
on substantially as currently carried on; and
(iii)
save as set forth in Subsection 4.1.20 of the Disclosure Letter, there are
no leases, subleases, licenses, concessions, or other agreements, written
or
oral, granting to any Person other than an Operator the right of use or
occupancy of any portion of such Real Property.
4.1.21
No Expropriation
No Operator or MDS has received any written
notice of expropriation of all or any material part of the Purchased Assets
or
Other Assets and MDS is not aware of any expropriation proceeding pending
or
threatened in respect of any of the Purchased Assets, ▇▇▇ Assets or the
Other
Assets.
4.1.22
Leases
Except as set forth in Subsection 4.1.22
of the Disclosure Letter, each of the Leases included in the Purchased
Assets or
the Other Assets is listed in Schedule C annexed to the Disclosure Letter
and is
in full force and effect. No Operator or MDS nor, to the knowledge of MDS,
the lessor, is currently in breach of any material provision of any such
Lease
and each such Lease is otherwise in good standing. MDS has made available
to Buyer true, complete and correct copies of all such Leases. The
possession and quiet enjoyment by MDS or Operator of the Leased Premises
has not
been disturbed in any material respectand there are no material disputes
with
the lessors under any of the Leases included in the Purchased Assets.
Except as set forth in Subsection 4.1.22 of the Disclosure Letter, there
are no subleases, licenses or other rights of occupation which have been
granted
by MDS or any Operator to any Person other than an Operator the right to
use or
occupy any such Leased Premises or any portion thereof.
4.1.23
Material Contracts
Each of the material Contracts to which
MDS or
the Operators are party, including for greater certainty the partnership
agreements of ▇▇▇▇▇▇▇ ▇▇, Excelleris LP, Prince ▇▇▇▇▇▇ Labs and the
shareholders’ agreements of ▇▇▇▇▇▇▇ Labs, Excelleris GP and ▇▇▇▇▇▇▇ ▇▇ included
in the Purchased Assets or Other Assets, as applicable is listed in Schedule
D
annexed to the Disclosure Letter. Neither MDS nor an Operator is currently
in breach of any material provision of such material Contract and each
such
material Contract is otherwise in good standing. To the knowledge of MDS,
there exists no condition, event or fact that, with giving of notice or
lapse of
time or both, would constitute a material default of any such material
Contract. MDS has made available to Buyer true, complete and correct
copies of all such material Contracts. Except as set forth in
Subsection 4.1.23 of the Disclosure Letter, none of MDS, Metro LP or ▇▇▇▇▇▇
▇▇ is a party to or bound by any guarantee, surety or similar obligation
which
pertains to or affects the Diagnostics Business or the Purchased Assets.
4.1.24
Books and Records
The Books and Records of MDS and Metro
LP
included in the Purchased Assets fairly and correctly set out and disclose
the
financial position of the MDS Diagnostics Division of MDS and Metro LP
as at the
date hereof in all material respects, and all material financial transactions
of
MDS and Metro LP relating exclusively to the Diagnostics Business have
been
accurately recorded in such Books and Records. The Books and Records of
the Operators other than Metro LP fairly and correctly set out and disclose
the
financial position of the Diagnostics Business carried on by such Persons
as at
the date hereof in all material respects, and all material financial
transactions of such Persons have been accurately recorded in such Books
and
Records.
4.1.25
Accounts Receivable
Metro LP has the full right and authority
to
assign to Buyer the Accounts Receivable of Metro LP included in the Purchased
Assets, subject to the required approval of the applicable Governmental
Authority. The Accounts Receivable of Metro LP reflected in the Quarterly
Statements are bona fide, enforceable and fully collectible (subject to
a
reasonable allowance, consistent with past practice, for doubtful accounts
as
reflected in the Quarterly Statements in accordance with GAAP). Except
as
disclosed in Section 4.1.25 of the Disclosure Letter, such Accounts Receivable
are not subject to any defence, set-off or counterclaim.
(a)
Each Corporate Operator (other than ▇▇▇▇▇▇ ▇▇ and Metro GP) (the
“Purchased Corporate Operators”) has filed or caused to be
filed all Tax Returns required to be filed by it, except for those Tax
Returns
the failure of which to file would not give rise to any material penalty,
interest, assessment or other charge, and all of which returns were correct
in
all material respects.
(b)
Since the date of the Financial Statements, no material Tax Liability not
reflected in such statements or otherwise provided for has been assessed,
or to
the knowledge of MDS, proposed to be assessed, incurred or accrued in respect
of
a Purchased Corporate Operator, except in the ordinary course of business.
(c)
Each Purchased Corporate Operator has paid, or caused to be paid, all Taxes
that
are shown on its Tax Returns to be due and payable or that have been assessed
against it and has provided adequate accruals in accordance with Generally
Accepted Accounting Principles, which are reflected in the Quarterly Statements,
for any Taxes for the period covered by the Quarterly Statements that have
not
been paid, whether or not shown as being due on any Tax Returns.
(d)
There are no Encumbrances, other than Permitted Encumbrances, on account
of
Taxes on the Purchased Assets.
(f)
Each Operator (other than ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇ and Metro GP) (each a
“Purchased Operator”) has duly and timely withheld all material
Taxes in respect of the Diagnostics Business carried on by it (including
Taxes
in respect of any amount paid or credited or deemed to be paid or credited
by it
to or for the account or benefit of any Person, including any Employees,
officers or directors and any non-resident Person), and has duly and timely
remitted to the appropriate Governmental Authority such Taxes.
(g)
Each Purchased Operator has duly and timely collected all material amounts
on
account of sales or transfer Taxes in respect of the Diagnostics Business
carried on by it, including GST and provincial or territorial sales Taxes,
required by Applicable Law to be collected by it and has duly and timely
remitted to the appropriate Governmental Authority any such amounts required
by
Applicable Law to be remitted by it.
4.1.27
GST Registration
Each of Metro LP, Victoria Labs and Mether
Properties is registered for purposes of Part IX of the Excise Tax Act
(Canada) and its GST Registration Number is [REDACTED], respectively.
4.1.28
Authorized Capital
The authorized and issued capital of Prince
▇▇▇▇▇▇ Labs and ▇▇▇▇▇▇▇ Labs is as set forth in Subsection 4.1.28 of the
Disclosure Letter.
4.1.29
Subsidiaries and Joint Venture Interests
Except as set forth in Subsection 4.1.29
of the Disclosure Letter, no Purchased Operator owns any shares in or securities
of any other body corporate nor is any Purchased Operator a partner, member,
owner, proprietor or equity investor of or in any partnership, joint venture,
co
tenancy or other similar jointly-owned business undertaking nor has it
agreed to
become any of the foregoing.
4.1.30
Privacy Matters
Except as set forth in Subsection 4.1.30
of the Disclosure Letter, neither MDS nor any Operator has received any
written
complaint or notice of any complaint, breach or violation of any Privacy
Law in
respect of the Diagnostics Business carried on by it which has had a Material
Adverse Effect.
4.1.31
Condition of Purchased Assets
To the knowledge of MDS, except as set
forth
in Subsection 4.1.31 of the Disclosure Letter, the Buildings included in
the Purchased Assets or Other Assets are free from significant mechanical,
electrical and structural defects and the material Equipment and other
tangible
personal property included in the Purchased Assets and Other Assets are
in good
working order, subject to reasonable wear and tear. To the knowledge of
MDS, except as set forth in Subsection 4.1.31 of the Disclosure Letter,
none of such Buildings or Equipment or other tangible personal property
material
to the operation of the Diagnostics Business are in need of maintenance
or
repairs except for maintenance and repairs in the ordinary course of
business.
4.1.32
Related Party Transactions
Except as set forth in Subsection 4.1.32
of the Disclosure Letter, all Contracts included in the Purchased Assets
have
been entered into on arm’s length terms (within the meaning of the ITA).
Any accounts due and payable by the Operators to MDS or any Affiliate of
MDS, or
by MDS or any Affiliate of MDS to any Operator, are recorded on the Books
and
Records of the Operators at their fair market value. Since the date of the
Financial Statements, there has been no forgiveness or similar release
or,
except in the ordinary course of business, repayment of a debt owed by
or to a
Person not at arms-length with the Operators or MDS.
Buyer represents and warrants to MDS and
▇▇▇▇▇▇ ▇▇ as set forth in the following Subsections of this
Section 4.2.
4.2.1
Incorporation
Buyer is a corporation duly incorporated
and
validly existing under the laws of its jurisdiction of incorporation. No
proceedings have been taken or authorized by Buyer or, to the best of Buyer’s
knowledge, by any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of Buyer.
4.2.2
Corporate Power and Due Authorization
Buyer has all necessary corporate power
and
capacity to execute and deliver, and to observe and perform its covenants
and
obligations under, this Agreement and the Closing Documents to which it
will be
a party. Buyer has taken all corporate action necessary to authorize the
execution and delivery of, and the observance and performance of its covenants
and obligations under, this Agreement and such Closing Documents.
4.2.3
Absence of Conflicting Agreements
None of the execution and delivery of,
or the
observance and performance by Buyer of any covenant or obligation under,
this
Agreement or any Closing Document to which it will be a party contravenes
or
results in or will contravene or result in a violation of or a default
under
(with or without the giving of notice or lapse of time, or both) or in
the
acceleration of any material obligation under:
(a)
the articles or by-laws of Buyer;
(b)
any agreement, lease, mortgage, security document, obligation or instrument
to
which Buyer is a party or by which Buyer or its assets is affected or bound;
or
(c)
any Applicable Law.
4.2.4
Enforceability of Obligations
This Agreement has been, and the Closing
Documents to be entered into by Buyer will be, duly executed and delivered
by
Buyer and this Agreement constitutes and each such Closing Document will
constitute a valid and binding obligation of Buyer enforceable against
Buyer in
accordance with its terms.
4.2.5
Investment Canada Act
Buyer is not a “non-Canadian” for the purposes
of the Investment Canada Act and no approval or consent is required under
such
Act in connection with the execution, delivery and performance of this
Agreement
by Buyer.
None of the Buyer or any Designated Buyer
Affiliate is or will be a Person the taxable income of which is exempt from
income Tax under Part I of the ITA by virtue of subsection
149(1) of the ITA (a “149 Person”), and where a
Designated Buyer Affiliate is a partnership, its partners will be (i) entities
other than 149 Persons, or (ii) partnerships the partners of which are
persons
other than 149 Persons.
4.2.7
GST Registration
Buyer is registered for purposes of Part
IX of
the Excise Tax Act (Canada). Buyer’s GST Registration Number is
[REDACTED].
4.2.8
Consents and Approvals
Other than the Regulatory Consents, no
consent, approval, or authorization of or registration or filing with any
Governmental Authority is required by Buyer in connection with the execution
and
delivery by Buyer of this Agreement or any of the Closing Documents to
be
entered into by Buyer, or the observance and performance by Buyer of its
obligations under this Agreement or such Closing Documents.
4.2.9
Financing
Buyer is able to finance the entire Purchase
Price from its existing cash on hand, liquid assets, credit facilities
and other
binding financial commitments.
4.2.10
Eligibility
Buyer is able to satisfy each of the
representations and warranties required to be given by it in order to become
a
shareholder of ▇▇▇▇▇▇▇ Labs as set forth in the shareholders’ agreement or
constating documents governing such Operator.
Each Party represents and warrants to
the
other Party that the other Party will not be liable for any brokerage
commission, finder’s fee or other like payment in connection with the
transactions contemplated hereby because of any action taken by, or agreement
or
understanding reached by, that Party.
Any representation or warranty made by
a Party
as to the enforceability of this Agreement or any Closing Document against
a
Person is subject to the following qualifications:
(a)
specific performance, injunction and other equitable remedies are discretionary
and, in particular, may not be available where damages are considered an
adequate remedy; and
(b)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other laws generally affecting enforceability
of creditors’ rights.
All representations and warranties made
by MDS
in this Agreement and in any Closing Document shall survive the BC Closing
for a
period of eighteen (18) months after the BC Closing Date other than
representations and warranties of MDS set forth in Subsection 4.1.4
regarding title of Purchased Assets which representations and warranties
shall
survive the BC Closing for a period of six years after the BC Closing
Date. The representations and warranties of MDS set forth in
Subsection 4.1.26 shall, to the extent it relates to a particular Tax
Liability of a Person survive closing until 90 days after the expiration
of the
limitation period contained in the applicable Tax laws subsequent to the
expiry
of which an assessment or reassessment or other form or recognized document
assessing such Tax Liability cannot be issued. After each such period, MDS
shall have no further liability hereunder with respect to such representations
and warranties except with respect to claims properly made pursuant to
Article 8
hereof within such period.
All representations and warranties made
by
Buyer in this Agreement and in any Closing Document shall survive for a period
of eighteen (18) months after the Closing Date. After such period, Buyer
shall have no further liability hereunder with respect to such representations
and warranties except with respect to claims properly made pursuant to
Article 8
hereof within such period.
Where any representation or warranty contained
in this Agreement, other than one regarding a Non-Controlled Operator,
is
expressly qualified by reference to the “knowledge” or “awareness” of MDS, it
shall be deemed to refer to the actual knowledge or awareness of any one
of (i)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice-President, Corporate Development and
General
Counsel, ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Executive Vice-President and Chief Financial
Officer, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice-President, Finance and Global Controller,
▇▇▇
▇▇▇▇▇▇▇, Senior Vice-President, Corporate Development, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Director,
Strategic Initiatives, Corporate Development, ▇▇▇▇ ▇. ▇▇▇▇▇▇, President,
MDS
Diagnostics Services, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice-President, MDS Diagnostics
Legal, and ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice-President, Finance, MDS Diagnostics
Services, in each case without any enquiry other than reasonable enquiry
of
appropriate senior officers of Metro LP and ▇▇▇▇▇▇ ▇▇ in respect of the
Diagnostics Business and the Purchased Assets; (ii) ▇▇▇▇▇▇ ▇▇▇▇▇, General
Manager BC, MDS Diagnostic Services, ▇▇▇▇ Filipopoulos, Senior Vice-President,
Human Resources, MDS Diagnostic Services, ▇▇▇▇▇ ▇▇▇▇▇▇, Leasing Manager,
Maurizio Laudisa, Senior Vice-President, Information Technology and ▇▇▇▇▇
▇▇▇▇▇▇▇, Vice-President, BC Operations in respect of that portion of the
operations of the Diagnostics Business that such individual is responsible
for,
without any enquiry; and (iii) ▇▇▇ without any enquiry. Where any
representation or warranty contained in this Agreement regarding a
Non-Controlled Operator is expressly qualified by reference to the “knowledge”
or “awareness” of MDS, it shall be deemed to refer to the actual knowledge or
awareness of ▇▇▇▇▇▇ ▇▇▇▇▇ after reasonable enquiry and ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇ without any enquiry.
Any matter or thing done or omitted to
be done
prior to the BC Closing by MDS or any Operator in substantial compliance
with
the request of or with the informed approval of Buyer or any of its
Representatives or as contemplated by this Agreement or the Ontario Purchase
Agreement, shall not constitute a breach of any representation, warranty,
covenant or other provision of this Agreement.
Article 5
OTHER COVENANTS OF THE PARTIES
OTHER COVENANTS OF THE PARTIES
During the Interim Period, the Parties
shall
act as set forth in this Section 5.1.
5.1.1
Conduct Business in Ordinary Course
Except as otherwise contemplated or permitted
by this Agreement, the Ontario Purchase Agreement, the Migration Agreement
or
set forth in the Disclosure Letter, MDS shall, and shall cause the Operators
(other than ▇▇▇▇▇▇ ▇▇) to, and ▇▇▇▇▇▇ ▇▇ shall, do the following:
(a)
use commercially reasonable efforts to:
(i)
preserve and protect the Diagnostics Business and its income and the goodwill
and reputation of such Diagnostics Business;
(ii)
retain or cause to be retained the Employees necessary for the operation
of the
Diagnostics Business in the manner it is currently being operated;
(iii)
maintain its and the material business relationships of the Operators with
their
respective customers, suppliers, landlords, governments and the BCMA, and
promote and preserve for Buyer such relationships;
(iv)
ensure that any material Contracts entered into or amended by MDS or the
Operators with respect to the Diagnostics Business shall include provisions
permitting the assignment of such Contracts to the Buyer or a Designated
Buyer
Affiliate and a change of control of the Diagnostics Business as a result
of the
transactions contemplated hereunder, as applicable, without having to obtain
the
consent of any other party to such Contracts, the payment of any fee, penalty
or
liquidated damages or any other limitation or restriction;
(b)
carry on the Diagnostics Business with reasonable diligence and in the
ordinary
course and not make any material modification in its accounting or management
practices;
(c)
confer with Buyer concerning operational matters of a material nature relating
to the Diagnostics Business;
(d)
promptly inform Buyer in writing of (i) any material change in the Purchased
Assets, the ▇▇▇ Assets, the Replacement Contracts, the Migrating Assets,
the
Assumed Liabilities, business, affairs, operations, financial condition,
or
capital of the Diagnostics Business, and (ii) any fact, change, condition,
circumstance or occurrence of any event that MDS believes will, or is reasonably
likely to, result in a failure to satisfy the conditions in favour of Buyer
hereunder to be complied with or satisfied by MDS; provided, however, that
the
delivery of any such notice pursuant to this paragraph shall not limit
or
otherwise affect the remedies available hereunder to Buyer;
(f)
except for any Permitted Proposals, MDS shall, and shall use commercially
reasonable efforts to cause the officers, directors, employees, representatives
and agents of MDS and the Operators to, cease immediately all discussions
and
negotiations regarding any proposal that constitutes, or may reasonably
be
expected to lead to, an Acquisition Proposal;
(g)
ensure that its officers, directors, Employees, representatives and agents
and
those of the Operators are aware of the provisions of Subsection 5.1.1(e),
and it shall be responsible for any breach of Subsection 5.1.1(e) by such
officers, directors, Employees, representatives or agents, other than ▇▇▇
or ▇▇▇
Labs or any nominees, representatives or agents of ▇▇▇ or ▇▇▇ Labs; and
(h)
not enter into any new Leases or offers to lease in respect of the Diagnostics
Business or any renewal or extension of an existing Lease without the prior
written consent of Buyer, which shall not be unreasonably withheld or
delayed.
Notwithstanding the foregoing, Buyer
acknowledges and agrees that, on or prior to the BC Closing Time, MDS or
an
Operator may, whether conditional upon the BC Closing or not, (A) terminate
certain related party agreements as set forth at Subsection 5.1.1 of the
Disclosure Letter; and (B) wind up, dissolve or divest (or take steps in
furtherance of any of the foregoing) certain Persons in which MDS holds
an
interest either directly or indirectly as more fully described in
Subsection 5.1.1 of the Disclosure Letter.
5.1.2
Action to Satisfy the BC Closing Conditions
Each Party shall take all such commercially
reasonable action as is within its power to control, and shall use its
commercially reasonable efforts to cause other actions to be taken which
are not
within its power to control, so as to ensure compliance with all conditions
which are for the benefit of any Party. Subject to and in compliance with
Applicable Law, including the Competition Act, and the Confidentiality
Agreement, the Parties will co-operate in exchanging such information and
providing such assistance as may be reasonably required in connection with
the
foregoing.
5.1.3
MDS’ Consents and Waivers
MDS shall, and shall cause Metro LP to,
at its
own expense, subject to obtaining all commercially reasonable co-operation
and
assistance of Buyer, use all commercially reasonable efforts to obtain
by the BC
Closing Time all consents or waivers of applicable third parties, including
other shareholders and partners, required to transfer the Regional Assets
owned
by them and all material consents or waivers of the landlords and other
third
parties in respect of the Non-Assignable Contracts and the Non-Assigned
Leases
and all required consents and approvals of the applicable Governmental
Authorities in respect of the transfer and sale, as contemplated herein,
of the
Accounts Receivable of Metro LP included in the Purchased Assets, and shall
provide and deliver all notices, if any, required by the terms of the Contracts,
Leases, Equipment Leases, the Warranty Rights and the Transferable Licences
included in the Purchased Assets or the Other Assets in connection with
the
transactions contemplated herein. For greater certainty, this subsection
shall not obligate MDS or an Operator to make payment to any such shareholder,
partner or other third party nor any payment, other than to cover
administrative, processing or similar fees or any other amounts contemplated
in
any Non-Assignable Contracts in connection with the assignment thereof,
to any
landlord or other third party or to institute legal or arbitration or other
proceedings to obtain such consents or waivers.
MDS and Buyer acknowledge and agree that
certain information provided to Buyer or any Designated Buyer Affiliate
in
connection with the transactions contemplated hereunder constitutes Personal
Information (the “Disclosed Personal Information”) the
disclosure of which is necessary for the purposes (the
“Purposes”) of both determining if Buyer or the Designated
Buyer Affiliate shall proceed with, and completing, the transactions, and
thereafter for carrying on the Diagnostics Business and that:
(a)
the Disclosed Personal Information may not be used or disclosed by Buyer
or the
Designated Buyer Affiliate for any purpose other than the Purposes;
(b)
the Disclosed Personal Information must be kept strictly confidential and
Buyer
or the Designated Buyer Affiliate shall ensure that access to the Disclosed
Personal Information shall be restricted to those representatives of Buyer
who
have a bona fide need for access to the Disclosed Personal Information
for the
Purposes and shall instruct those representatives to protect the confidentiality
of such information in a manner consistent with the obligations of Buyer
and or
the Designated Buyer Affiliate hereunder and under the Confidentiality
Agreement;
(c)
if the transactions contemplated hereby do not proceed or are not completed,
Buyer and the Designated Buyer Affiliate shall destroy or return to MDS,
as
directed by MDS, the Disclosed Personal Information; and
(d)
if the transactions contemplated hereby are completed, Buyer and the Designated
Buyer Affiliate shall only use or disclose the Disclosed Personal Information
for the same purposes for which it was collected, used or disclosed by
MDS or
Operator.
5.1.5
Injunctions
If any court having jurisdiction over
the
Parties, ▇▇▇▇▇▇ ▇▇ or Metro LP issues any injunction, decree or similar
order
before the BC Closing Time which would prohibit or materially restrict
or hinder
the BC Closing, the Parties shall use their respective commercially reasonable
efforts to have such injunction, decree or order dissolved or otherwise
eliminated as promptly as possible and, in any event, prior to the BC Closing
Time.
(c)
From and after the BC Closing Date, neither MDS nor ▇▇▇▇▇▇ ▇▇ will disclose
to
anyone or use for any purpose any confidential information concerning the
Purchased Assets, the Replacement Contracts, the ▇▇▇ Assets or the Diagnostics
Business purchased by Buyer pursuant to this Agreement and will hold all
such
information in the strictest confidence, in each case except, upon prior
notice
to Buyer, to defend any claim or other proceeding as contemplated in
Section 7.2, the filing of Tax Returns or dealing with any other matters
contemplated in Section 7.4 or 7.5, or as required by Applicable Law.
Buyer shall use its best efforts to obtain
Competition Act Clearance. Buyer shall co-operate with MDS and keep MDS
informed as to the status of the proceedings related to all applications,
notifications and filings relating to Competition Act Clearance. MDS will
co-operate with Buyer and provide reasonable assistance to Buyer in obtaining
Competition Act Clearance.
Without limiting the generality of the
foregoing, as soon as practicable and in any event within ten (10) Business
Days
after the date of this Agreement (or within such other period of time as
the
Parties may agree), on the written election of Buyer, the Parties will
prepare
and file with the Commissioner:
(a)
an application for an advance ruling certificate under section 102 of the
Competition Act in respect of the transactions contemplated by this Agreement,
together with a request that a No-Action Letter be issued and a waiver
under
subsection 113(c) of the Competition Act be granted if an advance ruling
certificate is not issued. Where a waiver under subsection 113(c) of the
Competition Act is not granted, on the written election of Buyer given
at any
time, Buyer and MDS shall promptly prepare and file a short-form pre-merger
notification (and if the Commissioner requests a long-form, they shall
prepare
and file a long-form in addition to or in lieu of a short-form) pursuant
to Part
IX of the Competition Act in respect of the transactions contemplated by
this
Agreement; or
(b)
a short-form pre-merger notification (and if the Commissioner requests
a
long-form, they shall file a long-form in addition to or in lieu of a
short-form) pursuant to Part IX of the Competition Act in respect of the
transactions contemplated by this Agreement, together with a competitive
impact
submission and a request that an advance ruling certificate or No-Action
Letter
be issued.
5.2.2
Competition Act Clearance Process
Buyer and MDS shall promptly furnish to
the
Commissioner, or her authorized representative under the Competition Act,
any
additional information required or reasonably requested under the Competition
Act. All requests and enquiries from the Commissioner or her authorized
representative under the Competition Act will be dealt with by MDS and
Buyer in
consultation with the other. MDS and Buyer will:
(a)
not extend or consent to any extension of any waiting period under the
Competition Act or enter into any agreement with the Commissioner, or her
authorized representative under the Competition Act, to not consummate
any of
the transactions contemplated in this Agreement, including under any Regional
Purchase Agreement, except with the consent of the other;
(b)
promptly notify the other of written communications of any nature from
the
Commissioner, or her authorized representative under the Competition Act,
relating to such transactions and provide the other with copies thereof,
except
to the extent of competitively sensitive information, which competitively
sensitive information will be provided only to the external legal counsel
and/or
external expert of the other and will not be shared by such counsel or
expert
with any other Person;
(c)
permit the other to review in advance any proposed written communications
of any
nature with the Commissioner, or her authorized representative under the
Competition Act, relating to such transactions, and provide the other with
final
copies thereof, except to the extent of competitively sensitive information,
which competitively sensitive information will be provided only to the
external
legal counsel and/or external expert of the other and will not be shared
by such
counsel with any other Person; and
(d)
not participate in any substantive meeting or discussion (whether in person,
by
telephone or otherwise) with the Commissioner, or her authorized representative
under the Competition Act, in respect of any filings, investigation or
inquiry
concerning such transactions unless it consults with the other in advance
and
gives the other the opportunity to attend and participate thereat (except
where
the Commissioner, or her authorized representative under the Competition
Act,
expressly requests that the other should not be present at the meeting
or
discussion or part or parts of the meeting or discussion).
5.2.3
Filing Fees
The responsibility for payment of the
required
filing fees and applicable Taxes thereon payable in connection with the
Competition Act Clearance will be for the account of Buyer and such expenses
will include any fines, penalties and other costs resulting from the failure
to
make any such filings as a result of the Buyer’s actions or failure to
act.
5.2.4
Other Regulatory Consents
In addition to its obligations in respect
of
Regulatory Consents under the Competition Act, Buyer shall, at its own
expense,
subject to obtaining the reasonable cooperation and assistance of MDS,
use all
commercially reasonable efforts to obtain by the BC Closing Time all other
Regulatory Consents in respect of the Diagnostics Business. MDS shall
cause the Operators (other than ▇▇▇▇▇▇ ▇▇) to, and ▇▇▇▇▇▇ ▇▇ shall, reasonably
co-operate with and assist Buyer during the Interim Period in order to
permit
Buyer to obtain such Regulatory Consents. Subject to Applicable Law and
the
Confidentiality Agreement, the Parties will coordinate and co-operate with
one
another in exchanging such information and supplying such assistance as
may be
reasonably requested by each in connection with the foregoing including
providing each other with all notices and information supplied or filed
with any
Governmental Authority after the date hereof (except for notices and information
which MDS or Buyer in each case acting reasonably, considers confidential
and
competitively sensitive which may be filed on a confidential basis) and
all
notices or correspondence received from any Governmental Authority.
(b)
Until the BC Closing Time, Metro LP and MDS shall be responsible for all
wages,
bonuses, earned vacations, sick leave, termination and severance pay, and
other
remuneration and benefits for all of their Employees. On and after the BC
Closing Time, Buyer or the applicable Designated Buyer Affiliate shall
be
responsible for all wages, bonuses, earned vacations, sick leave, termination
and severance pay and other remuneration and benefits under Buyer’s Benefits
Plans with respect to the Offer Employees who accept Buyer’s or the applicable
Designated Buyer Affiliate’s offer of employment as well as for all unionized
Employees. For greater certainty, MDS shall be responsible for all
termination and severance costs related to the termination of any of the
non-unionized Offer Employees who refuse the offer of employment made in
accordance with Subsection 5.3.1(a).
(c)
If Buyer, a Designated Buyer Affiliate or an Operator acquired by Buyer
or a
Designated Buyer Affiliate terminates any Employee within six (6) months
of the
BC Closing Time, Buyer shall, or shall cause the applicable Designated
Buyer
Affiliate or Operator to, provide such Employee with termination and severance
pay at least as favourable as that for which such Employee would have been
entitled to receive under the severance policy or employment contract applicable
to such Employee immediately prior to the BC Closing Time other than with
respect to any entitlement under an employee stock option plan or employee
share
purchase plan or any retention, change of control or deal bonus pertaining
to
the sale of the Diagnostics Business.
5.3.2
Co-operation
Buyer shall co-operate with and assist
MDS,
▇▇▇▇▇▇ ▇▇ and Metro LP during the Interim Period in order to permit the
BC
Closing to be consummated. In particular, Buyer shall provide to the applicable
third party partners and shareholders in respect of the Regional Assets
and the
lessors and other third parties under the Leases, Equipment Leases and
Contracts
included in the Purchased Assets and the Other Assets all such information
relating to Buyer and the applicable Designated Buyer Affiliate including
financial information, information relating to its business experience
and the
business experience of the individuals who ultimately control and operate
Buyer
and the applicable Designated Buyer Affiliate and with respect to their
ability
to perform their obligations under the applicable partnership agreement
and
shareholders’ agreement relating to such Purchased Assets and such Leases,
Equipment Leases and Contracts and operate the Diagnostics Business, as
may be
reasonably required by such Persons in order to obtain the consents of
such
Persons to the transfer of such Purchased Assets to Buyer or the applicable
Designated Buyer Affiliate or the change of control of an Operator or entity
in
which an Operator has an interest.
(a)
Effective as of the BC Closing Time, Metro LP shall assign and transfer
to Buyer
or the applicable Designated Buyer Affiliate, and Buyer or the applicable
Designated Buyer Affiliate shall assume, all of the rights, obligations
and
Liabilities of Metro LP with respect to the BC Retirement Plans and the
respective pension funds of the BC Retirement Plans. Effective as of the
BC Closing Time, Buyer or the applicable Designated Buyer Affiliate shall
accept
such assignments and transfers and Buyer or the applicable Designated Buyer
Affiliate shall assume all of Metro LP’s obligations, Liabilities, duties and
responsibilities under the BC Retirement Plans and the related pension
funds
pursuant to the terms thereof and all Applicable Law and at all times thereafter
shall discharge, satisfy, perform and fulfill in a timely manner and to
the
complete exoneration of MDS and Metro LP, all of the employer’s and
administrator’s obligations arising under or related to the BC Retirement
Plans. Buyer or the applicable Designated Buyer Affiliate agree and MDS
agree to do or cause to be done all things necessary to effect the assignment
and transfer of the BC Retirement Plans from Metro LP to Buyer or the applicable
Designated Buyer Affiliate. Buyer or the applicable Designated Buyer
Affiliate and MDS shall co-operate and execute all instruments and do all
things
that shall be necessary or desirable to effect the assumption of the BC
Retirement Plans by Buyer or the applicable Designated Buyer Affiliate,
including, for greater certainty but without limitation, the submission
to the
applicable Governmental Authority of all amendments required to substitute
Buyer
or the applicable Designated Buyer Affiliate for Metro LP as participating
employer in and sponsor and administrator of the BC Retirement Plans and
any
other documentation as may be required to establish Buyer or the applicable
Designated Buyer Affiliate as the employer and administrator of the BC
Retirement Plans and to transfer to Buyer or the applicable Designated
Buyer
Affiliate all of Metro LP’s rights, title and interest in and to all assets held
in connection with the BC Retirement Plans and all contracts or arrangements
related thereto.
(b)
Buyer or the applicable Designated Buyer Affiliate and MDS shall further
co-operate and take such actions as are necessary to substitute Buyer or
the
applicable Designated Buyer Affiliate for Metro LP as a party to any funding
or
other agreement in respect of each BC Retirement Plan effective as of the
BC
Closing Date.
(d)
Effective as of the BC Closing Time, each non-unionized Offer Employee
who is a
participant in any BC Retirement Plan who does not accept an offer of employment
from Buyer or a Designated Buyer Affiliate shall cease to be an active
participant in such BC Retirement Plan and MDS shall be responsible for
any
benefits accrued by or payable to any Employee under such Benefit Plan
up to the
BC Closing Time. Effective at the BC Closing Time, each non-unionized
Offer Employee who is a participant in any Benefit Plan who accepts an
offer of
employment from the Buyer or a Designated Buyer Affiliate shall cease to
be an
active participant in such Benefit Plan (other than a BC Retirement Plan)
and
MDS and, to the extent of a corresponding Liability on the Closing Balance
Sheet
that is included in Working Capital, Metro LP, as applicable, shall be
responsible for any benefits accrued by or payable to any Employee under
such
Benefit Plan up to the BC Closing Time.
(e)
Effective as of the BC Closing Time, MDS and Metro LP shall assign to Buyer
or
the applicable Designated Buyer Affiliate, and Buyer or the applicable
Designated Buyer Affiliate shall assume all of MDS’ and Metro LP’s Liabilities
and responsibilities with respect to death or medical benefits (whether
or not
insured), with respect to Offer Employees who accepted the Buyer’s or applicable
Designated Buyer Affiliate’s, as the case may be, offer of employment beyond
retirement or other termination of service.
MDS agrees to cause Metro GP, ▇▇▇▇▇▇ ▇▇
agrees
and MDS agrees to use commercially reasonable efforts to have ▇▇▇▇▇▇ ▇▇
change
its corporate name or partnership name, as applicable, to a name that does
not
include the words Metro ▇▇▇▇▇▇ or Mether within thirty (30) days of the
BC
Closing Date.
At the BC Closing Time and conditional
upon
the BC Closing, MDS and Buyer and/or the Designated Buyer Affiliates shall
execute and deliver a non-competition and non-solicitation agreement (the
“Non-Competition Agreement”) in the form of agreement attached
as Schedule 5.8 to the Ontario Purchase Agreement.
Prior to the BC Closing, the Parties agree
to
co-operate in structuring the sale of the Purchased Assets as set forth
in
Schedule 2.5 and, to the extent necessary, any amendments made thereto
prior to
the BC Closing Time, subject to the following:
(a)
the Buyer shall be solely responsible for any and all costs and expenses
(including, without limitation, legal fees and disbursements) actually
incurred
by MDS up to a maximum of $125,000and any and all Taxes, costs and expenses
(including, without limitation, legal fees and disbursements) actually
incurred
by the Operators in connection with or in any way related to the implementation
of closing steps 1, 11 and 12(“Buyer Purchase Structure”) as
set forth in Schedule 2.5 or the termination or unwinding of such steps
of the
Buyer Purchase Structure should the BC Closing not occur (unless Closing
does
not occur as a result of the failure of MDS to satisfy any conditions precedent
within its reasonable control), and the Buyer shall indemnify and reimburse
MDS
and the Operators forthwith, on an as incurred basis, for any and all costs
and
expenses up to such maximum amount (and in the case of any Operators, all
Taxes)
so incurred;
(b)
without restricting the application of paragraph (a) above, MDS agrees
to
reasonably cooperate with Buyer in respect of any required or desired amendment
to Schedule 2.5 following the date of this Agreement; provided, however,
that
(i) if MDS or any of the Operators incurs incremental Taxes in connection
with
or in any way related to the subject matter of the amendment or (ii) if
such
amendment materially increases the risk for liability to Tax to MDS or
any of
the Operators, and MDS or any of the Operators incurs Taxes in connection
with
or in any way related to the subject matter of such amendment, in both
(i) and
(ii) as determined by MDS, acting reasonably, Buyer shall be solely responsible
for such Taxes. In the event of any such amendment, Buyer shall be
responsible for all costs and expenses (including, without limitation,
all legal
fees and disbursements) actually incurred by MDS or any of the Operators
in
connection with or in any way related to implementation of the subject
matter of
any such amendment to Schedule 2.5. Buyer shall indemnify and reimburse
each of
MDS and the Operators forthwith, on an as incurred basis, for any and all
such
Taxes, costs and expenses so incurred;
(c)
without restricting the application of paragraph (a) above, Buyer agrees
to
reasonably cooperate with MDS in respect of any required or desired amendment
to
Schedule 2.5 following the date of this Agreement; provided, however, that
(i)
if Buyer or any Designated Buyer Affiliate incurs incremental Taxes in
connection with or in any way related to the subject matter of the amendment
or
(ii) if such amendment materially increases the risk for liability to Tax
to
Buyer or any Designated Buyer Affiliate, and Buyer or any Designated Buyer
Affiliate incurs Taxes in connection with or in any way related to the
subject
matter of such amendment, in both (i) and (ii) as determined by Buyer,
acting
reasonably, MDS shall be solely responsible for such Taxes. In the event
of any such amendment, MDS shall be responsible for all costs and expenses
(including, without limitation, all legal fees and disbursements) actually
incurred by Buyer or any Designated Buyer Affiliate in connection with
or in any
way related to implementation of the subject matter of any such amendment
to
Schedule 2.5. MDS shall indemnify and reimburse each of Buyer or any Designated
Buyer Affiliate forthwith, on an as incurred basis, for any and all such
Taxes,
costs and expenses so incurred; and
(d)
the obligations of the Parties set forth in this Section 5.7 shall,
notwithstanding any other provision of this Agreement to the contrary,
survive
completion or termination of this Agreement and the transactions contemplated
hereby and shall continue in full force and effect for the benefit of the
other
Party until 60 days after the expiration of the period during which, in
the
absence of any waiver or other document extending such period, an assessment,
reassessment or other form of recognized document assessing liability for
Taxes
could be issued under applicable Tax laws.
Buyer and MDS shall use commercially
reasonable efforts to cause each of the Shared Contracts to be split into
two
contracts, one with respect to the rights relating to the Diagnostics Business
in favour of Buyer or the applicable Designated Buyer Affiliate and the
other
with respect to the rights not relating to such Diagnostics Business in
favour
of MDS. Each Shared Contract will only be split upon the mutual agreement
of MDS, Buyer (or, as applicable, the Designated Buyer Affiliate) and the
applicable third party as to the terms of each of the contracts resulting
from
the split thereof. Subject to the foregoing, the Parties acknowledge and
agree that: (i) each of the Parties (and in the case of Buyer, any Designated
Buyer Affiliate, as applicable) shall co-operate and work together with
the
other Party and the applicable third party to achieve such splitting; (ii)
neither MDS nor any Operator shall be obliged to commence arbitration or
any
other legal proceeding or make any payments to third parties other than
any
administrative, processing or similar fee in connection with such splitting;
(iii) for any Shared Contract, the Parties may not be able to obtain terms
and
conditions in each of the contracts resulting from a split thereof that
are
identical to or as favourable as the terms and conditions of such Shared
Contract prior to the split; and (iv) neither MDS nor any Operator shall
be
obligated to amend, terminate, extend, renew or replace any Shared Contract
to
effect any split of such Shared Contract until such time as it is satisfied
as
to the terms and conditions of such amendment or new, extended, renewed
or
replacement contract, if any, as the case may be. Each reference in this
Agreement relating to the assignment or non-assignment of Non-Assignable
Contracts shall, as it pertains to Shared Contracts, be deemed to be a
reference
to the intended splitting of such Shared Contracts as described in this
Section.
Notwithstanding anything in this Agreement,
including Subsection 5.1.1, in proceeding to seek any necessary consent
to the
assignment of any Contracts contemplated in Subsection 6.1.5(b), if, in
MDS’
reasonable estimation, after having made commercially reasonable efforts
to do
so (which efforts shall not include commencing arbitration or any other
legal
proceeding), the applicable third party to any particular Contract other
than,
for the avoidance of doubt, a Lease (a “Subject Contract”) will
not, on or prior to the BC Closing Time, provide its consent to the assignment
of the Subject Contract to Buyer or the applicable Designated Buyer Affiliate
or
will not provide such consent without requiring MDS to pay any amount other
than
an amount contemplated to be payable by MDS under Section 2.3, then MDS may
satisfy the condition in Subsection 6.1.5(b) by securing, on or prior to
the BC
Closing, an equivalent substitute for such Subject Contract and assigning
such
equivalent substitute Contract to the Buyer or the applicable Designated
Buyer
Affiliate on the BC Closing and the provisions of Subsection 2.3(b) shall
not
apply to such Subject Contract. Whether MDS shall have secured, on or
before the BC Closing, an equivalent substitute for a Subject Contract
shall be
(i) determined by the President, Senior Vice-President, Finance and, in
respect
of a Subject Contract pertaining to information technology, by the Senior
Vice-President, Information Technology of the management team of the MDS
Diagnostics Division, and (ii) evidenced by the delivery to Buyer on or
before
the BC Closing of an officers’ certificate executed by each of such Persons
certifying such determination in their respective view. Each such Person
shall act reasonably in his determination under this Section.
Article 6
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT
Subject to Section 2.2, Buyer shall be
obliged to complete the BC Closing only if each of the conditions precedent
set
forth in the following Subsections of this Section 6.1 have been satisfied
in full at or before the BC Closing Time and the BC Closing is completed
on or
before March 15, 2007. Each of such conditions precedent is for the
exclusive benefit of Buyer and Buyer may waive any of them in whole or
in part
in writing.
At the BC Closing Time, all of the
representations and warranties of MDS made in or pursuant to this Agreement
shall be true and correct in all material respects as if made at and as
of the
BC Closing Time, except: (i) with respect to Subsection 4.1.19(a) only, to
the extent that any inaccuracy thereof does not individually or in the
aggregate
have a Material Adverse Effect; (ii) as such representations and warranties
may be affected by events or transactions expressly permitted by this Agreement
or the Ontario Purchase Agreement or by Buyer including, for greater certainty,
the implementation by MDS or the Operators of the Buyer Purchase Structure;
(iii) that the representations and warranties of MDS made in Subsections
4.1.13(c), 4.1.15(l), 4.1.20(b) and 4.1.26(e) shall be true and correct
as if
made at and as of the BC Closing Time subject to any changes in the disclosure
contained in the Disclosure Letter with respect to such representations
which
shall have been disclosed in writing to the Buyer prior to the Ontario
Closing;
and (iv) in respect of the Real Property described in
Subsection 6.1.5(c), that the representations and warranties of MDS made in
Section 4.1 pertaining to such Real Property shall be true and correct in
all material respects as if made at and as of the BC Closing Time, subject
to
any changes disclosed by the corresponding survey of such Real Property
delivered to the Buyer under Subsection 6.1.5(c). At the BC Closing
Time, MDS shall have observed or performed in all material respects all
of the
obligations, covenants and agreements that it must perform at or before
the BC
Closing Time. Buyer shall have received immediately prior to the BC
Closing Time a certificate from a senior officer of MDS (without personal
liability) certifying, to the best of such officer’s knowledge, information and
belief that the conditions in this Subsection 6.1.1 have been
satisfied.
6.1.2
Receipt of the BC Closing Documentation
All documentation relating to the due
authorization of the sale of the Purchased Assets, the Replacement Contracts
and
▇▇▇ Assets by MDS, ▇▇▇▇▇▇ ▇▇ and Metro LP under this Agreement and the
Closing
Documents to which each is a party shall be mutually satisfactory to the
Parties, acting reasonably.
6.1.3
Transfer of Real Property
The transfers of the Real Property included
in
the Purchased Assets shall be in such forms as are customary for conveyances
of
real property on an “as is, where is” basis. Buyer shall pay the cost of
registration of the transfers to it and any land transfer Taxes payable
with
respect thereto. This Agreement is subject to compliance with the
subdivision control provisions of Applicable Law, and MDS covenants to
comply
and to cause Metro LP to comply with such provisions and obtain at its
own
expense any consents required in that regard prior to the BC Closing.
6.1.4
Ontario Closing
The Ontario Closing shall have been
completed.
6.1.5
Consents and Other Conditions
(a)
All Regulatory Consents shall have been obtained or made on or before the
BC
Closing Time.
(b)
Subject to Section 5.11, MDS shall have given or obtained, as the case
may be,
all of the notices, consents and approvals described in Schedule 6.1.5(b),
in all cases in form and substance satisfactory to the Buyer, acting
reasonably.
(i)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
(ii)
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇; and
(iii)
▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
(d)
Each of the transactions included in Schedule 2.5 that are to have occurred
prior to the BC Closing Time shall have been completed in the sequence
contemplated therein to the satisfaction of the Buyer, acting reasonably.
(e)
MDS shall have obtained all required consents and approvals of the applicable
Governmental Authority to the transfer and sale, as contemplated under
this
Agreement, of the Accounts Receivable of Metro LP included in the Purchased
Assets.
(f)
MDS shall have caused Metro GP to be registered for GST purposes prior
to the BC
Closing Time.
6.1.6
Litigation
There shall not be in force any Applicable
Law
or Order, and there shall not have been any action taken under any Applicable
Law or by any Governmental Authority, that makes it illegal or otherwise
restrains, enjoins or prohibits the BC Closing contemplated herein in accordance
with the terms hereof in any material respect.
6.1.7
Material Adverse Change
No change which would constitute a Material
Adverse Effect shall have occurred since the date hereof and Buyer shall
have
received immediately prior to the BC Closing Time a certificate from a
senior
officer of MDS (without personal liability) confirming to the best of his
knowledge, information and belief that no Material Adverse Effect has
occurred. For avoidance of doubt, the failure to obtain the necessary
consent from the applicable third parties in respect of the transfer to
Buyer of
any of the Regional Assets or the exercise by any such third party of any
right
of first refusal shall not constitute a Material Adverse Effect.
6.1.8
Deliveries of MDS
At the BC Closing Time, MDS shall or,
where
applicable, ▇▇▇▇▇▇ ▇▇ shall, and MDS shall cause Metro LP to, execute and
deliver to Buyer in form and substance mutually satisfactory to the Parties,
acting reasonably, all certificates, agreements, documents and instruments
as
required under this Agreement including the following:
(a)
a statutory declaration of MDS, ▇▇▇▇▇▇ ▇▇ and Metro LP that it is not a
non-resident of Canada within the meaning of the ITA and that ▇▇▇▇▇▇ ▇▇
and
Metro LP is a “Canadian partnership” within the meaning of the ITA;
(b)
the Land transfers, together with all duplicate keys, combinations and
codes in
the possession or control of MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP to the locks in
the
buildings, offices, security devices and storage facilities relating to
the Real
Property (other than those pertaining to the office occupied by ▇▇▇ in
any of
the Real Property) and all permits, licences, contracts, agreements, records,
drawings, plans, drawings, operating manuals, reports, studies, warranties
and
all other documents and information relating to the operation, maintenance
and
repair of the Real Property in the possession or control of MDS;
(e)
assignments duly executed by MDS and Metro LP for the Intellectual Property
Rights and Transferable Licences of MDS or Metro LP included in the Purchased
Assets in appropriate form for registration;
(f)
an application for transfer of the motor vehicle registration permit duly
executed by MDS or Metro LP, as applicable, for each motor vehicle used
exclusively in the Diagnostics Business and registered in the name of MDS
or
Metro LP;
(g)
the Non-Competition Agreement;
(h)
subject to Subsection 2.1(b) and Section 2.2, the stock transfers,
Partnership Interest transfers, resignations, releases and other documents
to be
delivered by MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP to Buyer on the BC Closing Date
under
the Regional Purchase Agreements;
(i)
an opinion of counsel to MDS customary for a transaction of this nature;
(j)
such other certificates, instruments of conveyance and documents as may
be
reasonably requested by Buyer prior to the BC Closing Date to carry out
the
intent and purposes of this Agreement.
Subject to Section 2.2, MDS shall be
obliged to complete the BC Closing only if each of the conditions precedent
set
forth in the following Subsections of this Section 6.2 has been satisfied
in full at or before the BC Closing Time and the BC Closing is completed
on or
before March 15, 2007. Each of such conditions precedent is for the
exclusive benefit of MDS and MDS may waive any of them in whole or in part
in
writing.
At the BC Closing Time, all of the
representations and warranties of Buyer and each Designated Buyer Affiliate
made
in or pursuant to this Agreement shall be true and correct in all material
respects as if made at and as of the BC Closing Time, except as such
representations and warranties may be affected by events or transactions
expressly permitted by this Agreement. At the BC Closing Time, Buyer and
each Designated Buyer Affiliate shall have observed or performed in all
material
respects all of the obligations, covenants and agreements that it must
perform
at or before the BC Closing Time. MDS shall have received immediately
prior to the BC Closing Time a certificate from a senior officer of Buyer
certifying, to the best of such officer’s knowledge, information and belief, and
without personal liability, that the conditions in this Subsection 6.2.1
have been satisfied.
6.2.2
Receipt of the BC Closing Documentation
All documentation relating to the due
authorization of the purchase of the Purchased Assets and the Replacement
Contracts by the Buyer and each Designated Buyer Affiliate under this Agreement
and the Closing Documents to which it is a party shall be mutually satisfactory
to the Parties, acting reasonably.
6.2.3
Litigation
There shall not be in force any Applicable
Law
or Order, and there shall not have been any action taken under any Applicable
Law or by any Governmental Authority, that makes it illegal or otherwise
restrains, enjoins or prohibits the BC Closing contemplated herein in accordance
with the terms hereof in any material respect.
(a)
All Regulatory Consents shall have been obtained or made on or before the
BC
Closing Time.
(c)
Each of the transactions included in Schedule 2.5 that are to have occurred
prior to the BC Closing Time shall have been completed in the sequence
contemplated therein to the satisfaction of MDS, acting reasonably.
(d)
The Buyer Purchase Structure shall not have resulted in any incremental
Taxes for MDS or any Operator as a result of any change effective on or
before 11:59 p.m. on the day prior to the Ontario Closing in any applicable
Tax law or the interpretation thereof by any applicable Governmental
Authority.
6.2.5
Deliveries of Buyer
At the BC Closing Time, Buyer and each
Designated Buyer Affiliate as applicable shall execute and/or deliver to
MDS,
▇▇▇▇▇▇ ▇▇ and/or Metro LP in form and substance mutually satisfactory to
the
Parties, acting reasonably, all certificates, agreements, documents and
instruments as required under this Agreement including the following:
(a)
payment of the Closing Cash Amount in accordance with
Subsection 3.9(b);
(b)
the General Conveyance;
(c)
a GST undertaking and indemnity regarding the self-assessment and remittance
of
GST applicable to the purchase of the Lands, as applicable, in lieu of
the
payment of GST on the Lands to Metro LP;
(d)
the Assignment and Assumption Agreements together, if required by a party
to any
Lease, Contract or Equipment Lease, with the agreement of Buyer directly
with
such party to assume all obligations thereunder from and after the BC Closing
Time;
(e)
the Non-Competition Agreement;
(f)
subject to Subsection 2.1(b) and Section 2.2, the assumption agreements in
respect of the partnership agreements and shareholders’ agreements and other
documents to be delivered by Buyer to MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP on the
BC
Closing under the Regional Purchase Agreements;
(g)
the opinion of counsel to Buyer and Designated Buyer’s Affiliate, as applicable;
and
(h)
such other certificates, instruments of conveyance and documents as may
be
reasonably requested by MDS prior to the BC Closing Date to carry out the
intent
and purposes of this Agreement.
6.2.6
Ontario Closing and ▇▇▇ Closing
The Ontario Closing shall have been completed
and all conditions precedent to the ▇▇▇ Closing shall have been satisfied
or
waived, as applicable, save and except solely for the payment of money
under the
promissory notes to be delivered by MDS pursuant to the ▇▇▇ Agreement.
Any Party may waive, by written notice
to the
other Party(ies), any condition set forth in this Article 6 which is for
its
sole benefit. No waiver by a Party of any condition, in whole or in part,
shall operate as a waiver of any other condition.
Subject to Section 2.2, if any condition
set forth in Section 6.1 or 6.2 is not satisfied at the BC Closing Time, or
if it becomes apparent that any such condition cannot be satisfied at the
BC
Closing Time, the Party entitled to the benefit of such condition (the
“First Party”) may terminate this Agreement by notice in
writing to the other Party and in such event:
(a)
unless the other Party can show that the condition or conditions which
have not
been satisfied and for which the First Party has terminated this Agreement
are
reasonably capable of being performed or caused to be performed by the
First
Party or have not been satisfied by reason of a default by the First Party
hereunder, the First Party shall be released from all obligations hereunder,
except as contemplated in Section 10.10; and
(b)
unless the First Party can show that the condition or conditions which
have not
been satisfied and for which the First Party has terminated this Agreement
are
reasonably capable of being performed or caused to be performed by the
other
Party or have not been satisfied by reason of a default by the other Party
hereunder, then the other Party shall also be released from all obligations
hereunder, except as contemplated in Section 10.10.
Article 7
POST-CLOSING PROVISIONS
POST-CLOSING PROVISIONS
The provisions of this Article 7 shall
apply conditional upon the BC Closing.
Until the BC Closing Time, the Purchased
Assets, the Replacement Contracts and the Diagnostics Business will remain
at
the risk of MDS and the Operators. During the Interim Period, MDS shall
continue to enforce all policies of insurance maintained by, or for the
benefit
of, MDS and the Operators in respect of the Diagnostic Business and give
all
notices and present claims pertaining to the Diagnostic Business under
all
insurance policies in a timely fashion. From and after the BC Closing
Time, MDS shall maintain (or shall otherwise be responsible as if MDS had)
insurance equivalent to that provided by the existing primary insurance
coverage
for the Diagnostic Business for matters and incidents that occur prior
to the BC
Closing Time, which are reported within two (2) years of the BC Closing
Date and
give all notices and present claims pertaining to the Diagnostic Business
in a
timely fashion. From and after the BC Closing Time, Buyer shall place its
own insurance on the Purchased Assets and the Replacement Contracts conveyed
at
that time and the Diagnostics Business, and none of MDS, Metro GP, ▇▇▇▇▇▇
▇▇ or
▇▇▇▇▇▇ ▇▇ shall have any obligation or Liabilities in respect of the Purchased
Assets, the Replacement Contracts, the Diagnostics Business or the Assumed
Liabilities thereafter, except as otherwise expressly provided in this
Agreement. For greater certainty, any Liabilities of MDS or the Operators
arising within two (2) years of the BC Closing Date in respect of any fact,
condition or circumstance existing or occurring on or prior to the BC Closing
Time for which MDS or the Operators, as the case may be, has, as at the
BC
Closing Time, a policy of insurance or self insurance in place with respect
to
such risk shall be an Excluded Liability (“Post Closing Insured Claim
Liability”), subject to a deductible of $150,000 per claim and an
aggregate deductible of $600,000 in respect of such claims and subject
to the
policy limits and exclusions in such policy (“Post Closing Insured
Claim”). In respect of any Post Closing Insured Claim, Buyer will
allow and will cause the applicable Designated Buyer Affiliates to allow
MDS and
its insurers and their agents reasonable access to the premises and access
to
any books and records that may be in the possession of Buyer or the applicable
Designated Buyer Affiliate relating to the Diagnostics Business to facilitate
any insurance recovery by MDS. For greater certainty, if as a result of
this Agreement, Buyer becomes the employer of former employees of MDS and
Operators that are reasonably required for the processing and completion
of the
insurance claim of MDS, then Buyer will provide the services of such employees
on a commercially reasonable basis so that MDS may complete its insurance
claim. Any Post Closing Insured Claim Liabilities arising in respect of
Post Closing Insured Claims which individually are less than or equal to
the
aforementioned deductible of $150,000 or, in the aggregate, are less than
the
aggregate deductible of $600,000, or which are excluded from coverage or
in
excess of policy limits under the existing MDS insurance policies in respect
of
the Diagnostics Business and any claims in respect of the Diagnostics Business
which are commenced after the second anniversary date of the BC Closing
Date
relating to any facts, conditions or circumstances, existing or occurring
on or
prior to the BC Closing Time shall be an Assumed Liability and the
responsibility of Buyer.
Buyer and the applicable Designated Buyer
Affiliate shall reasonably co-operate with MDS but, subject to the terms
of
Article 8, at the expense of MDS in order that MDS may properly defend
any
claim, demand, suit, action, cause of action, dispute, proceeding, litigation,
investigation, grievance, arbitration, governmental proceeding or other
proceeding including appeals and applications for review, in progress against,
by or relating to MDS with respect to the Purchased Assets, the Replacement
Contracts, the ▇▇▇ Assets, the Excluded Liabilities or the Diagnostics
Business
(including with respect to the partnerships and corporations in which MDS
holds
an interest directly or indirectly) or any diagnostics business formerly
operated by MDS or any of its Affiliates or in which MDS or an Affiliate
thereof
had any equity interest prior to the BC Closing Time in respect of a period
of
time prior to the BC Closing Time, whether brought before or after the
BC
Closing Time. In this connection, Buyer shall make reasonably available to
MDS those Employees knowledgeable about the matter in question and all
books and
records relating thereto and shall permit such employees to testify in
all
proceedings with respect thereto.
After the BC Closing, upon reasonable
notice,
Buyer and the applicable Designated Buyer Affiliate and MDS will give,
or cause
to be given, to the Representatives of the other, access, during normal
business
hours, to the books and records which relate exclusively to the Diagnostics
Business (including with respect to the underlying partnerships and corporations
of the Diagnostics Business) for the periods prior to the BC Closing Time,
and
will permit such persons to examine and copy such books and records to
the
extent reasonably requested by the other Party in connection with the
preparation of Tax and financial reporting matters, audits, legal proceedings,
governmental investigations and other business purposes. Each of Buyer and
the applicable Designated Buyer Affiliate and MDS will preserve or cause
to be
preserved such books and records for a period of seven years from BC Closing
Date, or such longer period as is required by Applicable Law or a Governmental
Authority in connection with a Licence or related audit. However, none of
such Persons shall be obligated to take any action pursuant to this subsection
that would unreasonably disrupt the normal course of its business, violate
the
terms of any contract to which it is a party or to which it or any of its
assets
is subject or grant access to any of its proprietary, confidential or classified
information. MDS, Buyer and any Designated Buyer Affiliate will co-operate
with one another in the conduct of any Tax audit or similar proceedings
involving or otherwise relating to the Diagnostics Business (or the income
therefrom or assets thereof).
To the extent a rebate, refund, royalty,
credit or other amount contemplated by Subsection (n) of the definition
of
“Excluded Assets” (each a “Excluded Refund”) is paid to Buyer,
a Designated Buyer Affiliate or an Operator and such Excluded Refund is
not
included in the Accounts Receivable on the Closing Balance Sheet and has
not
been received by MDS or Operator prior to the BC Closing Time (an
“Unaccounted Excluded Refund”), and the Buyer, applicable
Designated Buyer Affiliate or an Operator, or other Person to which the
applicable Diagnostics Business has been transferred receives the Unaccounted
Excluded Refund, directly or indirectly, after the BC Closing Time, Buyer,
the
applicable Designated Buyer Affiliate, Operator or other Person shall receive
such Unaccounted Excluded Refund in trust for MDS, to the extent of the
interest
of MDS therein, and shall promptly notify MDS of such payment, provide
to MDS an
accounting of such Unaccounted Excluded Refund and pay to MDS all money
received
by such Person in respect of such Unaccounted Excluded Refund without any
deduction, withholding or off set.
(b)
After the BC Closing, Buyer or the applicable Designated Buyer Affiliate
shall
provide, and cause the Purchased Corporate Operators to provide, to MDS
such
information and assistance as is reasonably requested by MDS for the purposes
of
preparing the Tax Returns referred to in Subsection 7.5(a) and determining
MDS’ (or its Affiliates) liability for Taxes. Without limiting the
generality of the foregoing, Buyer or the applicable Designated Buyer Affiliate
shall provide to MDS copies of any Tax Returns of the Purchased Corporate
Operators that are filed after the BC Closing in respect of periods that
end on
or before the BC Closing Time or that include the BC Closing Time no later
than
ten (10) days after the filing of such Tax Returns.
(c)
After the BC Closing Date, each Party shall provide to the other Party(ies),
at
such other Party’s expense, such information and assistance as is reasonably
requested by the other Party for the purpose of completing and filing any
Tax
Returns, claiming any refunds or credits and responding to, defending against
or
conducting any action, suit, proceeding, audit, investigation or claim
in
respect of Taxes.
(d)
Except to the extent required by Applicable Law, Buyer and each Designated
Buyer
Affiliate shall not, and shall cause each Purchased Operator to not, without
the
prior written consent of MDS which consent shall not be unreasonably withheld,
conditioned or delayed, amend, rescind or refile any Tax Return or election
filed by any such Purchased Operator, or settle any audit, examination
or other
proceeding in connection with Taxes of or with respect to any such Purchased
Operator for any period, or portion thereof, ending on or before the BC
Closing
Time or waive any assessment periods.
(e)
After the BC Closing Date, as between the Parties, MDS shall exercise at
its
expense, complete control over the handling, disposition and settlement
of any
audit, investigation or similar proceeding in respect of any Taxes due
or
payable by an Operator for which MDS may be liable or against which MDS
may be
required to indemnify Buyer. Buyer and each Designated Buyer Affiliate
shall notify MDS in writing promptly upon receiving written notice of any
such
audit, investigation or similar proceeding and shall provide to MDS such
information and assistance as is reasonably requested by them in respect
thereof.
(f)
Buyer shall not initiate or cause an Operator to initiate any net income,
net
loss or Tax adjustment, for any period ending on, before or that includes
the BC
Closing Time without the prior written consent of MDS not to be unreasonably
withheld, conditioned or delayed.
Buyer and each Designated Buyer Affiliate
shall notify the employees, customers, patients, directors, officers,
securityholders and other Persons whose Personal Information is included
within
the Disclosed Personal Information that the BC Closing has taken place
and
Personal Information about them has been disclosed to Buyer and each Designated
Buyer Affiliate to the extent and in the manner required by Applicable
Law.
MDS shall, at the expense and reasonable
request of Buyer, diligently enforce any and all rights and remedies available
to it or its Affiliates under the terms of the Other Confidentiality Agreements
in respect of confidential information of the Diagnostics Business purchased
by
Buyer hereunder including by injunction or specific performance.
(a)
After the BC Closing Time, in the event that any of MDS, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇ or
Metro GP receives payment of any amount on account of any Accounts Receivable
or
Prepaid Expenses of the MDS Diagnostics Division reflected on the Closing
Balance Sheet, it shall receive such payment in trust for Buyer or the
applicable Designated Buyer Affiliate and shall, within fifteen (15) Business
Days after the end of each month in which any such payment was received,
notify
the Buyer or the applicable Designated Buyer Affiliate of such payment
and pay
to the Buyer or the applicable Designated Buyer Affiliate an amount equal
to
such payment received by MDS or Metro GP without any deduction, withholding
or
off set.
(b)
After the BC Closing Time, in the event that any of MDS, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇ or
Metro GP makes a payment of any amount on account of any Assumed Liability
reflected on the Closing Balance Sheet, including for greater certainty
any
Employee wages, health, dental or other benefits and other remuneration,
MDS,
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇ or Metro GP, as the case may be, shall provide Buyer
or the
applicable Designated Buyer Affiliate with evidence of such payment and
Buyer or
the applicable Designated Buyer Affiliate shall, within fifteen (15) Business
Days of receipt of such evidence, reimburse MDS, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇ or
Metro
GP, as the case may be, an amount equal to such amount paid without any
deduction, withholding or off set.
Buyer and the applicable Designated Buyer
Affiliate shall not extend the term of any Lease or renew any Lease included
in
the Purchased Assets or the Replacement Contracts acquired in connection
with
this Agreement without the prior written consent of MDS unless neither
MDS nor
Metro GP shall have any Liability thereunder surviving beyond a period
of twelve
(12) months following Closing.
All covenants and agreements of the Parties
set forth in this Agreement to be performed after the BC Closing Date shall
survive the BC Closing and remain in full force and effect indefinitely
until
fully performed.
Article 8
INDEMNIFICATION
INDEMNIFICATION
As used in this Article 8:
“Claim” means any act,
omission or state of facts and any demand, action, investigation, inquiry,
suit,
proceeding, claim, assessment, judgment or settlement or compromise relating
thereto which may give rise to a right to indemnification under Section 8.2
or 8.3;
“Direct Claim” means any
Claim by an Indemnified Party against an Indemnifier which does not result
from
a Third Party Claim;
“Indemnifier” means any
Party obligated to provide indemnification under this Agreement;
“Indemnified Party”
means any Person
entitled to indemnification under this Agreement;
“Indemnity Payment”
means any amount
of Loss required to be paid pursuant to this Article 8;
“Loss” means any and all
loss, Liability, damage, cost, expense, charge, fine, penalty or assessment,
suffered or incurred by the Person seeking indemnification directly resulting
from or arising out of any Claim, including the costs and expenses of any
action, suit, proceeding, investigation, inquiry, arbitration award, grievance,
demand, assessment, judgment, settlement or compromise relating thereto,
but (i)
excluding loss of profits, indirect, incidental, special, punitive and
consequential damages (which, for greater certainty, are deemed to include
any
Taxes payable by the Indemnified Party as a consequence of the receipt
of an
amount pursuant to Article 8 hereof and provided that a Loss shall not
be deemed
an indirect Loss solely because the Loss is incurred by Buyer through a
diminution in the value of its direct or indirect investment in an Operator);
(ii) excluding any contingent Liability until it becomes actual; (iii)
reduced
by any net Tax benefit; and (iv) reduced by any recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any
claim,
recovery, settlement or payment by or against any other Person;
“MDS-▇▇▇ Agreements”
means the ▇▇▇ Agreement
and any other agreement entered into among MDS and one
or more of the ▇▇▇ Parties in connection with any such agreement;
“▇▇▇-Buyer Obligations”
means all present
and future Liabilities at any time due or accruing due or
owing by any of the ▇▇▇ Parties to Buyer or to one or more Designated Buyer
Affiliates pursuant to any claims for Losses made by Buyer or any Designated
Buyer Affiliate under the ▇▇▇ Indemnification Agreement;
“Subordinated
Obligations” means all present and future Liabilities at any time due
or accruing due or owing by any of the ▇▇▇ Parties to MDS pursuant to the
MDS-▇▇▇ Agreements or any claims made by MDS under the MDS-▇▇▇ Agreements,
excluding, for avoidance of doubt, any Liability of the ▇▇▇ Parties under
Section 3.2 of the ▇▇▇ Agreement; and
“Third Party Claim”
means any Claim
asserted against an Indemnified Party by any Person who is not a
Party or an Affiliate of such a Person.
Subject to Section 8.11 and the limits
set forth in Section 8.10, MDS shall indemnify, defend and save harmless
Buyer, each Designated Buyer Affiliate and the Representatives of the Buyer
and
Designated Buyer Affiliate from and against any and all Loss suffered or
incurred by any of them, as a result of, or arising in connection with:
(b)
any failure by MDS, ▇▇▇▇▇▇ ▇▇ or Metro LP to observe or perform any covenant,
agreement or obligation of MDS or ▇▇▇▇▇▇ ▇▇ contained in this Agreement
or in
any Closing Document or Metro LP to be observed or performed prior to the
BC
Closing under this Agreement or any Closing Document; or
(c)
any Excluded Liability including, for greater certainty, all claims for
severance or termination pay made by any Offer Employee who does not accept
Buyer’s offer of employment made in accordance with Subsection 5.3.1.
Buyer shall indemnify, defend and save
harmless MDS and the Representatives of MDS from and against any and all
Loss
suffered or incurred by any of them, as a result of, or arising in connection
with:
(a)
subject to Section 4.6, any misrepresentation or breach of any warranty
made or given by Buyer or any Designated Buyer Affiliate in this Agreement
or in
any Closing Document;
(b)
any failure by Buyer or any Designated Buyer Affiliate to observe or perform
any
covenant, agreement or obligation of Buyer or such Designated Buyer Affiliate
contained in this Agreement or in any Closing Document; or
(c)
any Assumed Liability, including for greater certainty, those resulting
from any
Claim, which may be asserted by any non-unionized Offer Employee who accepts
Buyer’s or the applicable Designated Buyer Affiliate’s offer of employment or
any unionized Employee, against MDS in respect of the employment or termination
of employment of such Employee by Buyer or the applicable Designated Buyer
Affiliate or an Operator or any changes to the duties, terms and conditions
of
their employment at or after the BC Closing Time.
Each Party agrees that it accepts each
indemnity in favour of any of its Representatives as agent and trustee
of that
Representative. Each Party agrees that a Party may enforce an indemnity in
favour of any of that Party’s Representatives on behalf of that
Representative.
If an Indemnified Party receives notice
of the
commencement or assertion of any Third Party Claim, the Indemnified Party
shall
give the Indemnifier reasonably prompt written notice thereof, but in any
event
no later than 30 days after receipt of such notice of such Third Party
Claim. Such notice to the Indemnifier shall describe the Third Party Claim
in reasonable detail and shall indicate, if reasonably practicable, the
estimated amount of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifier shall have the right to participate in
or, by giving notice to that effect to the Indemnified Party not later
than 30
days after receipt of such notice of such Third Party Claim and subject
to the
rights of any insurer or other third party having potential liability therefor,
to elect to assume the defence of any Third Party Claim at the Indemnifier’s own
expense and by such Indemnifier’s own counsel, and the Indemnified Party shall
co-operate in good faith in such defence. The Indemnified Party shall have
the right to participate in the defence of any Third Party Claim assisted
by
counsel of its own choosing at the Indemnified Party’s expense. The
Indemnified Party shall not settle or compromise any Third Party Claim
without
the prior written consent of the Indemnifier.
The Indemnifier and the Indemnified Party
will
use all reasonable efforts to make available to the Party which is undertaking
and controlling the defence of any Third Party Claim,
(a)
those employees whose assistance, testimony or presence is necessary to
assist
such Party in evaluating and in defending any Third Party Claim; and
(b)
all documents, records and other materials in the possession of such Party
reasonably required by such Party for its use in defending any Third Party
Claim,
and shall otherwise co-operate with the
Party
defending such Third Party Claim. The Indemnifier shall be responsible for
all reasonable expenses associated with making such documents, records
and
materials available and for all reasonable expenses of any employees made
available by the Indemnified Party to the Indemnifier hereunder, which
expense
shall be equal to an amount to be mutually agreed upon per person per hour
or
per day for each day or portion thereof that such employees are assisting
the
Indemnifier but such expenses shall not exceed the actual direct out-of
pocket
cost to the Indemnified Party associated with such employees.
If an Indemnifier elects to assume the
defence
of any Third Party Claim as provided in Section 8.5, the Indemnifier shall
not be liable for any legal expenses subsequently incurred by the Indemnified
Party in connection with the defence of such Third Party Claim. However,
if the Indemnifier fails to take reasonable steps necessary to defend diligently
such Third Party Claim within 15 days after receiving notice from the
Indemnified Party that the Indemnified Party bona fide believes on reasonable
grounds that the Indemnifier has failed to take such steps, the Indemnified
Party may, at its option, elect to assume the defence of and to compromise
or
settle the Third Party Claim assisted by counsel of its own choosing and
the
Indemnifier shall be liable for all reasonable costs and expenses paid
or
incurred in connection therewith; provided that the Indemnified Party shall
not
enter into any compromise or settlement of any Third Party Claim without
the
prior written consent of the Indemnifier, which shall not be unreasonably
withheld, delayed or conditioned.
Any Direct Claim shall be asserted by
giving
the Indemnifier reasonably prompt written notice thereof, but in any event
not
later than 30 days after the Indemnified Party becomes aware of such Direct
Claim. The Indemnifier shall then have a period of 15 days within which to
respond in writing to such Direct Claim. If the Indemnifier does not so
respond within such 15 day period, the Indemnifier shall be deemed to have
rejected such Claim, and in such event the Indemnified Party shall be free
to
pursue such remedies as may be available to the Indemnified Party.
A failure to give timely notice as provided
in
this Article 8 shall not affect the rights or obligations of the Indemnifier
or
Indemnified Party except and only to the extent that, as a result of such
failure, any such party which was entitled to receive such notice was deprived
of its right to recover any payment under its applicable insurance coverage
or
was otherwise directly and materially damaged as a result of such failure
or
whose rights were materially prejudiced by such failure.
Claims for indemnification made by Buyer,
any
Designated Buyer Affiliate or the Representative of Buyer or a Designated
Buyer
Affiliate against MDS shall be limited as follows:
(a)
in respect of Claims (other than a Claim resulting from a misrepresentation
or
breach of warranty in respect of a representation or warranty in
Subsection 4.1.26) made under Subsection 8.2(a), no Losses shall be
recoverable until the aggregate of all Losses suffered or incurred by Buyer,
any
Designated Buyer Affiliate or the Representative of Buyer or a Designated
Buyer
Affiliate in respect of all misrepresentations or breaches of warranty
made or
given in this Agreement or in any Closing Document by MDS exceeds 0.37625%
of
the Purchase Price in which event the amount of all such Losses in excess
of
such amount may be recovered by Buyer or the applicable Designated Buyer
Affiliate or Representative, as applicable;
(b)
the maximum aggregate liability of MDS to Buyer, any Designated Buyer Affiliate
and their Representative for Losses shall not exceed 75.25% of the Losses;
(c)
the maximum aggregate liability of MDS to Buyer, any Designated Buyer Affiliate
and their Representatives for Losses pursuant to Section 8.2 shall not
exceed 22.575%of the Purchase Price, other than Losses resulting directly
from
the intentional breach of this Agreement or any Closing Document by MDS
or MDS’
fraudulent or deceitful act; and
(d)
if any Applicable Law would give Buyer, any Designated Buyer Affiliate
or the
Representative of Buyer or a Designated Buyer Affiliate the right,
notwithstanding the express terms of Section 4.5 or 8.2 to the contrary, to
make a claim in respect of a breach of a representation or warranty made
or
given by MDS in this Agreement or in any Closing Document after the expiry
of
the survival period set forth in Section 4.5 with respect to such
representation and warranty, the Parties agree that the aggregate Losses
suffered or incurred by Buyer, any Designated Buyer Affiliate or the
Representative of Buyer or a Designated Buyer Affiliate as a result of,
or
arising in connection with, any such Claim shall be deemed to be limited
to
$1.00 and Buyer and each Designated Buyer Affiliate hereby forever waives,
releases and discharges MDS from any Loss in excess of such deemed amount.
(a)
Notwithstanding anything herein contained, the Parties agree that in respect
of
any Loss suffered or incurred by the Buyer, Buyer shall have recourse to
the ▇▇▇
Parties under the ▇▇▇ Indemnification Agreement and Buyer shall be entitled
to
recover 24.75% of such Loss from the ▇▇▇ Parties. At the request of MDS,
Buyer shall provide MDS with a written summary of the ▇▇▇-Buyer Obligations
including the status of any claims giving rise to the ▇▇▇-Buyer Obligations
and
the amount owing to Buyer. After commencing any claim giving rise to a
▇▇▇-Buyer Obligation, Buyer shall notify MDS in writing reasonably promptly
after such ▇▇▇-Buyer Obligations in respect of such claim have been satisfied
and paid in full.
(b)
From and after this date, MDS covenants and agrees that the Subordinated
Obligations shall for all purposes and in all events and circumstances
be, and
shall at all times remain, inferior, junior and subordinate to the ▇▇▇-Buyer
Obligations.
(c)
No payment, distribution or other transfer of funds or property (in each
case,
howsoever described) shall be received by MDS from any of the ▇▇▇ Parties
on
account of, or in respect of, any of the Subordinated Obligations until
the ▇▇▇
Parties shall have satisfied and paid in full the ▇▇▇-Buyer Obligations.
(d)
All payments or distributions on account of, or in respect of, the Subordinated
Obligations which are received by MDS contrary to the provisions hereof
shall be
received in trust for the benefit of Buyer and shall be promptly paid over
to
Buyer in the same form as received (with any necessary endorsement).
(e)
MDS shall not enforce performance or payment of or recover or collect any
the
Subordinated Obligations until the date that Buyer has notified MDS in
writing
that the ▇▇▇-Buyer Obligations have been satisfied and paid in full; provided,
however, that nothing herein shall limit or preclude MDS from making demand
or
commencing any action, suit, arbitration or other legal proceeding against
any
of the ▇▇▇ Parties under the MDS ▇▇▇ Agreements, including an action for
specific performance, or from filing a proof of claim and voting such claim
in
any bankruptcy or insolvency proceeding in respect of any of the ▇▇▇ Parties
or
any proceeding for the liquidation, dissolution or winding up of any of
the ▇▇▇
Parties.
If the amount of any Loss incurred by
an
Indemnified Party at any time subsequent to the making of an Indemnity
Payment
is reduced by
(a)
any net Tax benefit to the Indemnified Party; or
(b)
any recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by
or
against any other Person,
the Indemnified Party shall promptly notify
the Indemnifier in writing of the nature and amount of such reduction (and
any
costs, expenses (including Taxes) or premiums incurred in connection therewith),
and the amount of such reduction (less any such costs, expenses (including
Taxes) or premiums) shall promptly be repaid by the Indemnified Party to
the
Indemnifier. Upon making an Indemnity Payment, the Indemnifier shall, to
the extent of such Indemnity Payment, be subrogated to all rights of the
Indemnified Party against any third party in respect of the Loss to which
the
Indemnity Payment relates. Until the Indemnified Party recovers full
payment of its Loss, any and all claims of the Indemnifier against any such
third party on account of such Indemnity Payment shall be postponed and
subordinated in right of payment to the Indemnified Party’s rights against such
third party.
The rights of indemnity set forth in this
Article 8 are the sole and exclusive remedy of Buyer and each Designated
Buyer
Affiliate on the one hand and MDS on the other in respect of any
misrepresentation, breach of warranty or breach of covenant by the other
hereunder or under any Closing Document (other than the rights of termination
in
Section 6.4 or a claim for specific performance or injunctive
relief).
Nothing in this Agreement shall in any
way
restrict or limit the general obligation at law of an Indemnified Party
to
mitigate any Loss which it may suffer or incur by reason of the breach
by an
Indemnifier of any representation, warranty or covenant of the Indemnifier
hereunder or under any Closing Document. If any Loss can be reduced by any
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against
any
other Person, the Indemnified Party shall take all appropriate steps to
enforce
such recovery, settlement or payment.
An Indemnifier shall have no liability
to an
Indemnified Party hereunder or under any Closing Document:
(a)
for any Liability which arises solely by reason of a proposed or actual
enactment or change of any applicable Tax legislation or any proposed or
actual
change in the interpretation or administration of such legislation after
the
date hereof;
(b)
for any Liability that arises as a result of any legislation not in force
on the
date hereof which takes effect retrospectively or occurs as a consequence
of a
change in the interpretation of the law after the date hereof;
(c)
in respect of any matter or thing done or omitted to be done by or at the
direction or with the consent of the Indemnified Party;
(d)
in respect of any Claim in connection with or in any way related to the
implementation by the Indemnifier (and in the case of MDS, including the
Operators) of the Indemnified Party’s structuring of the purchase and sale of
the Purchased Assets as contemplated herein;
(e)
in respect of more than one representation, warranty or covenant that relates
to
the same matter or thing in this Agreement or a Closing Document;
(f)
for any Loss or matter to the extent arising from a change in the accounting
policies or practices of the Operator after the BC Closing;
(g)
to the extent that MDS is unable to challenge or dispute any Claim due
to the
loss or destruction, in each case by Buyer, a Designated Buyer Affiliate
or an
Operator, of any relevant Books and Records;
(h)
for any Loss or matter to the extent accrued, provided for or reserved
for, or
otherwise taken into account in the Closing Balance Sheet or an adjustment
to
the Purchase Price (otherwise than under Section 8.16); and
(i)
for any Loss for a breach of or inaccuracy in any representation or warranty
if
the Indemnified Party was aware, at or before the BC Closing Date, of the
facts
as a result of which such representation or warranty was breached or
inaccurate.
For greater certainty, the amount of any
payment required to be made by an Indemnifier to an Indemnified Party shall
be
deemed to constitute an adjustment to the Purchase Price and the Parties
agree
to allocate the adjustment to the appropriate Purchased Asset, acting
reasonably.
Article 9
ARBITRATION
ARBITRATION
Any dispute between the Parties concerning
any
matter arising under or in connection with Sections 3.4, 3.5 and 3.6 and
Schedule 3.1 of this Agreement shall be submitted to arbitration in accordance
with the provisions of this Article.
The law to be applied in connection with
the
arbitration shall be the law of Ontario, including its conflict of law
rules.
The arbitration shall be governed by the
Rules
of Procedure (the “Rules”) set forth in Schedule 9.3. The
rules and procedures of the Arbitration Act, 1991 (Ontario) shall apply
except to the extent that they are modified by the express provisions of
this
Article or such Rules. The decision of the arbitrator shall be conclusive,
final and binding on the Parties and no appeal shall lie therefrom.
Article 10
GENERAL
GENERAL
Except as set forth in this Agreement,
each
Party shall pay all expenses it incurs in authorizing, preparing, executing
and
performing this Agreement and the Closing Documents and the transactions
contemplated under this Agreement and the Closing Documents, whether or
not the
BC Closing occurs, including all fees and expenses of its legal counsel,
bankers, investment bankers, brokers, accountants or other representatives
or
consultants.
Time is of the essence of each provision
of
this Agreement.
Any notice, demand or other communication
(in
this Section, a “notice”) required or permitted to be given or made hereunder
shall be in writing and shall be sufficiently given or made if:
(a)
delivered in person during normal business hours of the recipient on a
Business
Day and left with a receptionist or other responsible employee of the recipient
at the applicable address set forth below; or
(b)
sent by any electronic means of sending messages, including facsimile
transmission (excluding e-mail), which produces a paper record
(“Transmission”) during normal business hours on a Business
Day;
in the case of a notice to MDS, addressed
to it at:
Attention:
Executive Vice-President,
Corporate Development and General Counsel
Corporate Development and General Counsel
Fax No.:
(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not
constitute notice):
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Dominion ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Dominion ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
in the case of a notice to ▇▇▇▇▇▇
▇▇,
addressed to it at:
Attention:
Executive Vice-President,
Corporate Development and General Counsel
Corporate Development and General Counsel
Fax No.:
(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not
constitute notice):
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Dominion ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Dominion ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and in the case of a notice to Buyer
or
any applicable Designated Buyer Affiliate, addressed to it at:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇
Royal Bank Plaza, South Tower
Toronto, ON
M5J 2J2
▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇
Royal Bank Plaza, South Tower
Toronto, ON
M5J 2J2
Attention:
President and Chief Executive
Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not
constitute notice):
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each notice sent in accordance with this
Section shall be deemed to have been received:
(a)
on the day it
was delivered in person as aforesaid;
(b)
on the same day
that it was sent by Transmission, or on the first Business Day
thereafter if the day on which it was sent by Transmission was not a Business
Day or if it was sent after normal business hours on a Business Day.
Any Party may change its address for notice
by
giving notice to the other Parties.
(a)
Buyer (and, as applicable, any Designated Buyer Affiliate) may, without
the
consent of MDS but upon prior written notice to MDS, assign this Agreement
and
its rights and obligations hereunder, in whole or in part, to one or more
Affiliates of Buyer or OMERS Administration Corporation. Upon notification
to MDS of any such assignment by Buyer (or, as applicable, any Designated
Buyer
Affiliate), the applicable Affiliate (to which such assignment is made)
shall
become liable for the performance of the obligations assigned by Buyer
(or, as
applicable, any Designated Buyer Affiliate) to it. Notwithstanding the
foregoing, Buyer shall remain jointly and severally liable with such designated
Affiliates of Buyer or OMERS Administration Corporation (or, as applicable,
any
Designated Buyer Affiliate) and shall cause all of its covenants and obligations
hereunder to be observed and performed by such Affiliates. Notwithstanding
the
foregoing, any assignee which will acquire property pursuant to Section
2.1 must
satisfy the conditions in Section 5.9(a).
(b)
MDS may, without the consent of Buyer (and, as applicable, any Designated
Buyer
Affiliate), but upon prior written notice to Buyer, assign this Agreement
and
its rights and obligations hereunder, in whole or in part, to one or more
direct
or indirect subsidiaries of MDS. Upon notification to Buyer (and, as
applicable, any Designated Buyer Affiliate) of any such assignment by MDS,
the
designated subsidiary of MDS shall become liable for the performance of
the
obligations assigned to them. Notwithstanding the foregoing, MDS shall
remain jointly and severally liable with such designated subsidiaries of
MDS and
shall cause all of its covenants and obligations hereunder to be observed
and
performed by such subsidiaries.
(c)
Subject to paragraphs (a) and (b),
(i)
no Party may assign any rights or benefits under this Agreement to any
Person;
(ii)
each Party agrees to perform its obligations under this Agreement itself,
and
not to arrange in any way for any other Person to perform those obligations;
and
(iii)
no assignment of benefits or arrangement for substituted performance by
one
Party shall be of any effect against the other Party, except to the extent
that
the other Party has consented to it in writing.
(d)
This Agreement shall enure to the benefit of and be binding upon the Parties
and
their respective successors (including any successor by reason of amalgamation
or statutory arrangement of any Party) and permitted assigns.
Each Party shall do such acts and shall
execute such further documents, conveyances, deeds, assignments, transfers,
elections and the like, and will cause the doing of such acts and will
cause the
execution, filing and registration of such further documents as are within
its
power, as the other Parties may in writing at any time and from time to
time
reasonably request be done and or executed, in order to give full effect
to the
provisions of this Agreement and each Closing Document.
Subject to Applicable Law, no Party shall
make
or cause to be made, any public statement or public announcement or issue
any
press release or otherwise communicate with any news media concerning this
Agreement or the transactions contemplated by this Agreement without the
prior
written consent of the other Parties, and the Parties shall co-operate
as to the
timing and content of any such press release, public announcement or
communication. Notwithstanding the foregoing, Buyer acknowledges that MDS
is a reporting issuer under Applicable Laws and is obligated to make immediate
public disclosure of the entering into of this Agreement and the material
terms
hereof and will be required to file a copy of this Agreement on the System
for
Electronic Document Analysis and Retrieval (SEDAR) and ▇▇▇▇▇, and Buyer
consents
to the making of such disclosure and such filing and any related communications
(including in connection with analyst conference calls) and shall co-operate
in
the content of such disclosure provided, however, that Buyer has a reasonable
opportunity to comment on the disclosure related to such filing.
This Agreement may be executed in any
number
of counterparts. Each executed counterpart shall be deemed to be an
original. All executed counterparts taken together shall constitute one
agreement.
To evidence the fact that it has executed
this
Agreement, a Party may send a copy of its executed counterpart to the other
Parties by Transmission. That Party shall be deemed to have executed this
Agreement on the date it sent such Transmission. In such event, such Party
shall forthwith deliver to the other Parties the counterpart of this Agreement
executed by such Party.
Nothing contained in this Agreement shall
be
deemed in any way or for any purpose to constitute any Party a partner
or agent
or legal representative of the other Parties in the conduct of any business
or
otherwise or a member of a joint venture or joint enterprise with the other,
or
to authorize one Party to bind the other or to create any fiduciary relationship
between them.
Notwithstanding any provision herein to
the
contrary, Subsections 5.1.4, 5.1.6(a), 5.1.6(b) and 5.7 and Articles 1, 8
and 10 shall survive the termination of this Agreement.
[The
remainder of this page is intentionally left blank.]
TO WITNESS THEIR AGREEMENT,
the Parties have duly executed this Agreement.
|
|
|
||
|
Per:
|
/s/▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
||
|
|
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
||
|
|
Title:
Chief Executive Officer
|
||
|
Per:
|
/s/▇▇▇
▇▇▇▇▇▇
|
||
|
|
Name:
▇▇▇ ▇▇▇▇▇▇
|
||
|
|
Title:
Executive Vice President and Chief Financial Officer
|
||
|
|
|
We
have the authority to bind the Corporation.
|
|
|
|
|
METHER
PROPERTIES LIMITED PARTNERSHIP, by its general partner, Mether
Management
Ltd.
|
|
|
Per:
|
/s/
▇▇▇▇ ▇▇▇▇
|
||
|
|
Name:
▇▇▇▇ ▇▇▇▇
|
||
|
|
Title:
Director, Finance
|
||
|
Per:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
|
Name:
▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
|
Title:
Vice President and Treasurer
|
||
|
|
|
We
have the authority to bind the Limited
Partnership.
|
|
|
|
|
BOREALIS
INFRASTRUCTURE MANAGEMENT INC.
|
|
|
Per:
|
/s/
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
|
Name:
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
|
Title:
Senior Vice President
|
||
|
Per:
|
/S/
▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
|
Title:
Secretary
|
||
|
|
|
We
have the authority to bind the Corporation.
|
|
Schedule
2.5
Transaction Structure and Closing Sequence
Transaction Structure and Closing Sequence
[REDACTED]
Schedule
3.1
Holdback Amount
Holdback Amount
[REDACTED]
Schedule
3.8
Purchase Price Allocation
Purchase Price Allocation
[REDACTED]
Schedule
6.1.5(B)
Closing
Conditions in favour of Buyer
[REDACTED]
Schedule
6.2.4(B)
Closing
Conditions in favour of MDS
[REDACTED]
Schedule
9.3
Rules of Procedure for Arbitration
Rules of Procedure for Arbitration
The following rules and procedures shall
apply
with respect to any matter to be arbitrated by the Parties under the terms
of
the Agreement.
1.
INITIATION OF ARBITRATION PROCEEDINGS
(a)
If any Party
to this Agreement wishes to have any dispute under
Sections 3.4, 3.5 and 3.6 and Schedule 3.1 arbitrated in accordance with
the provisions of this Agreement, it shall give notice to the other Party
hereto
specifying particulars of the matter or matters in dispute and proposing
the
name of the person it wishes to be the single arbitrator. Within 15 days
after receipt of such notice, each of the other Parties to this Agreement
shall
give notice to the first Party advising whether such Party accepts the
arbitrator proposed by the first Party. If such notice is not given within
such 15 day period, the other Party shall be deemed to have accepted the
arbitrator proposed by the first Party. If the Parties do not agree upon a
single arbitrator within such 15 day period, either party may request that
the
ADR Institute of Canada, Inc. select a single arbitrator (the
“Arbitrator”).
(b)
The individual
selected as Arbitrator shall be qualified by education and
experience to decide the matter in dispute. The Arbitrator shall be at
arm’s length from the Parties and shall not be a member of the audit or legal
firm or firms who advise a Party, nor shall the Arbitrator be an individual
who
is, or is a member of a firm, otherwise regularly retained by a Party.
2.
SUBMISSION OF WRITTEN STATEMENTS
(a)
Within 30 days
of the appointment of the Arbitrator, the Party initiating the
arbitration (the “Claimant”) shall send the Party at issue (the
“Respondent”) a Statement of Claim setting out
in sufficient
detail the facts and any contentions of law on which it relies, and the
relief
that it claims and shall provide the other Party with a copy of such Statement
of Claim.
(b)
Within 30 days
of the receipt of the Statement of Claim, the Respondent shall
send the Claimant (with a copy to the other Party) a Statement of Defence
stating in sufficient detail which of the facts and contentions of law
in the
Statement of Claim it admits or denies, on what grounds, and on what other
facts
and contentions of law it relies.
(c)
Within 15 days
of receipt of the Statement of Defence, the Claimant may send the
Respondent a Statement of Reply (with a copy to the other Party).
(d)
All Statements
of Claim, Defence and Reply shall be accompanied by copies (or,
if they are especially voluminous, lists) of all essential documents on
which
the Party concerned relies and which have not previously been submitted
by any
Party.
(e)
After submission
of all the Statements, the Arbitrator will give directions for
the further conduct of the arbitration.
3.
MEETINGS AND HEARINGS
(a)
The arbitration
shall take place in the City of Toronto, Ontario or in such
other place as the Claimant and the Respondent shall agree upon in writing
within 5 days after the Statements of Claim, Defence and Reply have been
delivered. The arbitration shall be conducted in English unless otherwise
agreed by such Parties and the Arbitrator. Subject to any adjournments
which the Arbitrator allows, the final hearing will be continued on successive
working days until it is concluded.
(b)
All meetings
and hearings will be in private unless the Parties otherwise
agree.
(c)
Any Party may
be represented at any meetings or hearings by legal counsel.
(d)
Each Party may
examine, cross-examine and re-examine all witnesses at the
arbitration.
4.
THE DECISION
(a)
The Arbitrator
will make a decision in writing and, unless the Parties otherwise
agree, will set out reasons for the decision in the decision.
(b)
The Arbitrator
will send the decision to the Parties as soon as practicable
after the conclusion of the final hearing, but in any event no later than
45
days thereafter, unless that time period is extended for a fixed period
by the
Arbitrator on written notice to each Party because of illness or other
cause
beyond the Arbitrator’s control.
(c)
The provisions
of this Agreement and this Schedule requiring the determination
of certain disputes of arbitration shall not operate to prevent recourse
to the
court by any Party as permitted by the Arbitration Act, 1991 (Ontario)
with
respect to injunctions, receiving orders and orders regarding the detention,
preservation and inspection of property, or whenever enforcement of an
award by
the sole arbitrator reasonably requires access to any remedy which an arbitrator
has no power to award or enforce.
(d)
The decision
of the Arbitrator shall be conclusive, final and binding on the
Parties and no appeal shall lie therefrom.
5.
JURISDICTION AND POWERS OF THE ARBITRATOR
(a)
By submitting
to arbitration under these Rules, the Parties shall be taken to
have conferred on the Arbitrator the following jurisdiction and powers,
to be
exercised at the Arbitrator’s discretion subject only to these Rules and the
relevant law with the object of ensuring the just, expeditious, economical
and
final determination of the dispute referred to arbitration.
(b)
Without limiting
the jurisdiction of the Arbitrator at law, the Parties agree
that the Arbitrator shall have jurisdiction to:
(i)
determine any
question of law arising in the arbitration including claims in
tort, contract or relating to the validity of the Agreement or any Closing
Document;
(ii)
determine any
question as to the Arbitrator’s jurisdiction;
(iii)
determine any
question of good faith, dishonesty or fraud arising in the
dispute;
(iv)
order any Party
to furnish further details of that Party’s case, in fact or in
law;
(v)
proceed in the
arbitration notwithstanding the failure or refusal of any Party
to comply with these Rules or with the Arbitrator’s orders or directions, or to
attend any meeting or hearing, but only after giving that Party written
notice
that the Arbitrator intends to do so;
(vi)
receive and
take into account such written or oral evidence tendered by the
Parties as the Arbitrator determines is relevant, whether or not strictly
admissible in law;
(vii)
make one or
more interim awards;
(viii)
hold meetings
and hearings, and make a decision (including a final decision) in
Ontario or elsewhere with the concurrence of the Parties thereto;
(ix)
order the Parties
to produce to the Arbitrator, and to each other for
inspection, and to supply copies of, any documents or classes of documents
in
their possession or power which the Arbitrator determines to be relevant;
(x)
order the preservation,
storage, sale or other disposal of any property or thing
under the control of any of the Parties;
(xi)
make interim
orders to secure all or part of any amount in dispute in the
arbitration; and
(xii)
make an award
of interest in respect of any amount determined to be owing and
make an award as to costs of the arbitration.