Exhibit 4.7
Purchase and Sale Agreement (Shares of Seaway TLC Inc.)
▇▇▇▇ ▇. ▇▇▇▇▇▇,
CORCIA FAMILY IRREVOCABLE TRUST, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
RESTATED REVOCABLE TRUST, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇,
as the Vendors and each a Vendor
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
MARSULEX INC.
as the Purchaser
-------------------------------------------------------------------------------
PURCHASE AND SALE AGREEMENT
June 29, 2005
-------------------------------------------------------------------------------
STIKEMAN ELLIOTT LLP
PSA-1
TABLE OF CONTENTS
Section 1 Preamble..........................................................................5
Section 2 Definitions, Exhibits and Interpretation..........................................5
Section 3 Purchase and Closing.............................................................10
Section 4 Purchase Price, Working Capital and Purchase Price Adjustments...................10
Section 5 Representations and Warranties of the Vendors....................................12
Section 6 Representations, Warranties and Additional Covenants of the Purchaser............22
Section 7 Conduct of Business Prior to Closing.............................................23
Section 8 Exclusive Dealing................................................................23
Section 9 Request for Consents.............................................................23
Section 10 Risk of Loss.....................................................................23
Section 11 Conditions Precedent.............................................................24
Section 12 Acknowledgement by the Purchaser.................................................26
Section 13 Survival of Representations and Warranties.......................................27
Section 14 Indemnification..................................................................27
Section 15 Notices..........................................................................29
Section 16 Concluding Provisions............................................................30
ADDENDA
EXHIBIT 2(1)(u) Financial Statement
EXHIBIT 2(1)(z) Interim Financial Statement
EXHIBIT 2(1)(bb) Lease Agreement
EXHIBIT 4(1) Purchase Price Allocation Among the Vendors
EXHIBIT 4(1) Escrow Agreement
EXHIBIT 4(3)(b) Working Capital/Actual Working Capital
EXHIBIT 4(5) Employment Agreement and Non-Competition Agreement for ▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT 4(7) Non-Competition Agreement for the Vendors
EXHIBIT 5(1)(c) Constating Documents of Seaway, Stablex and Gulfstream
EXHIBIT 5(1)(d) Offices or Establishments Outside Quebec
EXHIBIT 5(1)(e) Authorized Capital
EXHIBIT 5(1)(g) Shareholders Agreement
EXHIBIT 5(1)(l)(ii) Increases in Compensation
EXHIBIT 5(1)(p) Permits
EXHIBIT 5(1)(q) Intellectual Property Rights
EXHIBIT 5(1)(r) Compliance with Laws
EXHIBIT 5(1)(s) Litigation
EXHIBIT 5(1)(t) Insurance
EXHIBIT 5(1)(u) Surety Bonds
EXHIBIT 5(1)(v)(i) Environmental Studies
PSA-2
EXHIBIT 5(1)(v)(ii) Trust Account
EXHIBIT 5(1)(w)(i) Tax Liabilities
EXHIBIT 5(1)(w)(ii) Tax Returns
EXHIBIT 5(1)(x)(i) Employees
EXHIBIT 5(1)(x)(iii) Termination of Employment
EXHIBIT 5(1)(y)(i) Labour Relations
EXHIBIT 5(1)(y)(ii) Collective Agreements
EXHIBIT 5(1)(z) Benefit Plans
EXHIBIT 5(1)(bb) Related Party Property or Contracts
EXHIBIT 5(1)(cc) Contracts
EXHIBIT 5(1)(dd) Escrow Agreement
EXHIBIT 5(1)(ee) Contract Liability
EXHIBIT 5(1)(ff) Form of Purchase Order and Customer Documents
EXHIBIT 5(1)(jj) List of Customers
EXHIBIT 11(1)(k) Engagement Letter
EXHIBIT 11(1)(l) Regulatory approvals
EXHIBIT 11(1)(m) Consents and authorizations
EXHIBIT 11(1)(p) Capital Expenditures
EXHIBIT 11(1)(q) Transfer of Assets of Gulfstream
EXHIBIT 11(3)(a) Consents, approvals and waivers
PSA-3
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement is made as of the 29 day of June, 2005.
AMONG:
Corcia Family Irrevocable Trust, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇;
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Restated Revocable Trust, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇;
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇;
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇;
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇ ▇▇▇▇-▇▇-▇'▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇;
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
(each of them hereinafter referred to as a "Vendor" and collectively
referred to as the "Vendors");
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇;
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇; and
Marsulex Inc., a company duly constituted under the laws of Ontario,
having its principal offices at 111 ▇▇▇▇▇▇ ▇▇▇▇▇ Road, Suite 300, North
York, Ontario, Canada, M2H 3R1 (hereinafter referred to as the
"Purchaser").
WHEREAS the Vendors are the registered and beneficial owner of all the
issued and outstanding shares in the capital stock of Seaway TLC Inc.
("Seaway") and Seaway is the registered and beneficial owner of all of the
issued and outstanding shares in the capital stock of Stablex Canada Inc.
("Stablex") and Gulfstream TLC, Inc. ("Gulfstream");
WHEREAS prior to the Closing contemplated by this Agreement,
Gulfstream will have transferred the assets of Gulfstream to ▇▇▇▇ ▇. ▇▇▇▇▇▇ as
referred to in Section 11(1)(q);
WHEREAS the Purchaser wishes to purchase and the Vendors wish to sell
all of the issued and outstanding shares in the capital stock of Seaway on the
terms and conditions herein contained;
PSA-4
WHEREAS as part of the consideration for the purchase of their shares
in the capital of Seaway, certain of the Vendors have agreed to execute and
deliver non-competition agreements and the Purchaser has agreed to pay to ▇▇▇▇
▇▇▇▇▇▇▇▇ certain additional consideration for such non-competition agreement;
and
WHEREAS in consideration of the payment of consideration provided for
in this agreement, ▇▇▇▇ ▇. ▇▇▇▇▇▇ has agreed to execute and deliver a
non-competition agreement.
NOW THEREFORE, the Parties hereby covenant and agree as follows:
Section 1 Preamble.
The preamble of this Agreement shall form an integral part hereof.
Section 2 Definitions, Exhibits and Interpretation.
(1) Whenever used herein:
(a) "Accounts Receivable" means all accounts receivable, notes
receivable and other debts due or accruing due to the
Corporation;
(b) "Actual Working Capital" has the meaning ascribed to in
Section 4(3)(b);
(c) "Agreement" means this Purchase and Sale Agreement and all
exhibits attached hereto;
(d) "Assets" means all property and assets of the Corporation of
every nature and kind and wheresoever situate including (i)
the Property and the buildings and fixtures located thereon,
(ii) all machinery, equipment, furniture, accessories and
supplies of all kinds including those described in Section
5(1)(n), (iii) all trucks, cars and other vehicles, (iv) all
inventories, (v) all Accounts Receivable and the full benefit
of all security for the Accounts Receivable, (vi) all prepaid
expenses, (vii) the leasehold interest of the Corporation in
and to the Leased Lands, (viii) all right, title and interest
of the Corporation in and to the Intellectual Property owned
by, licensed to or used by the Corporation, (ix) the full
benefit of all Contracts to which the Corporation is a party
and the Leases, and (x) the Books and Records;
(e) "Balance Sheet Date" means December 31, 2004;
(f) "Benefit Plan" means any bonus, deferred compensation,
pension, profit sharing, retirement, severance, stock option,
insurance, hospitalization, medical, disability, death
benefit, welfare or other employee benefit plan, arrangement
or policy whether formal or informal, for the benefit of any
of its employees or former employees;
(g) "Books and Records" means all information in any form
relating to the business, including books of account,
financial and accounting information and records, personnel
records, tax records, sales and purchase records, customer
and supplier lists, lists of potential customers, referral
sources, research and development reports and records,
manifests and manifest reports and records, laboratory
reports and records, regulatory and compliance reports and
records, production reports and records, equipment logs,
operating guides and manuals, business reports, plans and
projections, marketing and advertising materials and all
other documents, files, correspondence and other information
(whether in written, printed, electronic or computer printout
form, or stored on computer discs or other data and software
storage and media devices);
PSA-5
(h) "Business Day" means any day, other than a Saturday, Sunday
or other day on which the Canadian chartered banks located in
Montreal, Canada, are not generally open for business during
normal banking hours;
(i) "Canadian G.A.A.P." means generally accepted accounting
principles, as recommended in the handbook of the Canadian
Institute of Chartered Accountants;
(j) "Closing" means the completion of the transaction of purchase
and sale contemplated in this Agreement;
(k) "Closing Balance Sheet" means the balance sheet as of the
close of business on the Closing Date;
(l) "Closing Date" means August 16, 2005;
(m) "Consents" means the consent of a contracting party or any
Governmental Entity to a change of control of the Corporation
if required by the terms of any Contract and of a regulatory
authority if required by the terms of any Permit, or as
regards any Governmental Entity, under Environmental Law;
(n) "Constating Documents" means, in respect of any corporation,
its articles of incorporation and articles of amendment and
by-laws;
(o) "Contract" means any agreement, contract, licence,
undertaking, engagement or commitment of any nature, written
or oral, including any (i) lease of personal property; (ii)
unfilled purchase order; (iii) forward commitment for
supplies or materials entered into in the Ordinary Course; or
(iv) restrictive agreement or negative covenant agreement;
(p) "Corporation" means collectively Seaway, Stablex and
Gulfstream;
(q) "Dollars", all references to dollar amounts herein are in US
dollars unless otherwise noted;
(r) "Environment" means surface waters, ground water, subsurface
water, drinking water supply, land surface, subsurface soil,
subsurface strata, ambient air, both inside and outside the
buildings and the sewer system;
(s) "Environmental Law" shall include all laws, statutes,
principles of civil law, regulations, by-laws, codes,
directives, guidelines, standards, policies, requirements
(including those in any Permits issued in relation to any
Environmental Law), provided such codes, directives,
guidelines, standards, policies and requirements have the
force of law, as well as orders, ordinances, decrees, rules
having the force of law, judgments or injunctions issued,
promulgated, approved or entered by any federal, provincial,
local or municipal entity or any agency, authority, board,
ministry, bureau, district, department, commission or
instrumentality (including any court or other tribunal) of
any of the foregoing in any way pertaining principally to the
protection of the Environment or the regulation of human
health as affected by the Environment;
(t) "Final Arbiter" has the meaning ascribed to in Section
4(3)(d);
(u) "Financial Statement" means the audited consolidated
financial statements of the Corporation for the periods and
as defined in Section 5(1)(w)(iii) annexed as Exhibit
2(1)(u);
PSA-6
(v) "Governmental Entity" means any federal, provincial, local or
municipal entity or any agency, authority, board, ministry,
bureau, district, department, commission or instrumentality
(including any court or other tribunal);
(w) "Gulfstream" means Gulfstream TLC, Inc.;
(x) "Intellectual Property" has the meaning ascribed to it in
Section 5(1)(q);
(y) "Interim Balance Sheet Date" means March 31, 2005;
(z) "Interim Financial Statement" means the unaudited
consolidated financial statements of the Corporation as at
the Interim Balance Sheet Date consisting of a balance sheet
and the accompanying unaudited statement of income and cash
flow of the Corporation for the three month period ending
March 31, 2005, a copy of which is annexed as Exhibit 2(1)(z)
herein;
(aa) "Interim Period" means the period between the close of
business on the date of this Agreement and the Closing Date;
(bb) "Lease" means the Lease between Stablex and the Government of
Quebec dated November 25, 1996, for the Lease Lands and any
amendments thereto, a true and complete copy of which is set
forth in Exhibit 2(1)(bb) herein;
(cc) "Lease Lands" means the placement site property described in
the Lease;
(dd) "Material Adverse Effect" means any event, occurrence, fact,
condition, change or effect that is materially adverse to the
financial condition of the Corporation;
(ee) "Net Debt" has the meaning ascribed to it in Section 4;
(ff) "Objection Notification Date" has the meaning ascribed to it
in Section 4(3)(c);
(gg) "Operating Permit" means the five year renewal permit under
the Quebec Environment Quality Act and issued to Stablex on
October 9, 2003 together with any amendments thereto prior to
the Closing Date, all as specifically identified in Exhibit
5(1)(p);
(hh) "Ordinary Course" means, with respect to an action taken by a
Person, that such action is consistent with the past
practices of the Person and is taken in the ordinary course
of the normal day-to-day operations of the Person;
(ii) "Parties" means the Vendors and the Purchaser and any other
Person who is or may become a party to this Agreement;
(jj) "Permits" has the meaning ascribed to in Section 5(1)(p);
(kk) "Permitted Encumbrances" means (i) undetermined or inchoate
Title Defects that arise by operation of applicable law or
that are incidental to the construction or improvement of an
immovable, as well as Title Defects imposed by applicable law
including, without limitation, governmental, carrier's,
material men's, mechanics', warehousemen's, landlord's and
other like liens arising in the Ordinary Course of business,
(ii) liens for Taxes, if the same are not yet due and payable
or are being contested in good faith by appropriate
proceedings, (iii) Title Defects incurred or deposits made in
the Ordinary Course of business in connection with workers'
compensation, unemployment insurance, pensions and other
types of social security,
PSA-7
or to secure the performance of statutory obligations, (iv)
title exceptions consisting of zoning restrictions,
easements, servitudes, charges or other encumbrances or
restrictions on the use of the Property, provided that such
items do not restrict the use of the Property by Stablex or
reduce the value of the Property in a manner that constitutes
a Material Adverse Effect, (v) non-consensual Title Defects
not otherwise permitted hereby that are removed within 60
days after attachment thereof, (vi) reservations,
limitations, provisions and conditions expressed in any
original grants from the Crown, (vii) any Title Defect in
connection with movable property which is given or assumed or
arises by operation of law to secure, at the time of
acquisition of any such movable Property: (a) payment of not
more than the cost of such movable property (and only such
property), or (b) the financing of the cost of such movable
property (including capital leases), (viii) Title Defects
which do not constitute a Material Adverse Effect, and (ix)
Title Defects disclosed on the Financial Statements; (ll)
"Person" means a natural person, partnership, limited
partnership, limited liability partnership, corporation,
limited liability corporation, unlimited liability company,
joint stock company, trust, unincorporated association, joint
venture or other entity or Governmental Entity, and pronouns
have a similarly extended meaning;
(mm) "Property" means the land and building bearing civic number
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇,
and any other improvements thereto;
(nn) "Purchase Price" has the meaning ascribed to in Section 4(1);
(oo) "Purchased Shares" means the 5826 Shares in the capital stock
of Seaway held by the Vendors, to be delivered at Closing to
the Purchaser;
(pp) "Seaway" means Seaway TLC Inc.;
(qq) "Stablex" means Stablex Canada Inc.;
(rr) "Tax" means all federal, state, provincial, country, local,
foreign and other taxes (including, without limitation,
income, profit, corporation, business excise, sales, goods
and services, value-added, withholding, capital, transfer,
stamp, unemployment compensation, payroll related taxes,
property taxes and import duties), whether or not measured in
whole or in part by net income, and including interest and
penalties with respect thereof;
(ss) "Tax Claims" means claims based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any
representation or warranty contained in Section 5(1)(w);
(tt) "Title Defect" means any mortgage, lien, pledge, security
interest, hypothec, prior claim, charge, restriction, option,
right of first refusal, easement, servitude, encroachment or
other survey or Title Defect or encumbrance whatsoever
affecting title;
(uu) "To the Best of its Knowledge" means the actual knowledge of
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as to the facts or
circumstances to which such qualification relates, after
making reasonable inquiries to determine the truthfulness and
accuracy of the representations and warranties contained in
Section 5 and the Exhibits relating thereto;
(vv) "Vendors" means ▇▇▇▇ ▇. ▇▇▇▇▇▇, Corcia Family Irrevocable
Trust, ▇▇▇▇▇ ▇▇▇▇,
PSA-8
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Restated Revocable Trust, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and any one of them,
a "Vendor"; and
(ww) "Working Capital" means current assets (excluding for such
purposes, income tax receivables and future tax assets) minus
current liabilities (including for such purposes, all accrued
current tax liabilities and tax reserves) of the Corporation
calculated in accordance with Canadian G.A.A.P. (except to
the extent set forth in Exhibit 4(3)(b) applied on a
consistent basis in accordance with the Corporation's
practices and calculated as set forth in 4(3)(b); and
(xx) "Working Capital Notice " has the meaning ascribed to in
Section 4(3)(b).
(2) The following are the exhibits annexed to and incorporated in to this
Agreement and deemed to be a part hereof:
Exhibit 2(1)(u) Financial Statement
Exhibit 2(1)(z) Interim Financial Statement
Exhibit 2(1)(bb) Lease Agreement
Exhibit 4(1) Purchase Price Allocation Among the Vendors
Exhibit 4(1) Escrow Agreement
Exhibit 4(3)(b) Working Capital/Actual Working Capital
Exhibit 4(5) Employment Agreement and Non-Competition
Agreement for ▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit 4(7) Non-Competition Agreement for the Vendors
Exhibit 5(1)(c) Constating Documents of Seaway, Stablex and
Gulfstream
Exhibit 5(1)(d) Offices or Establishments Outside Quebec
Exhibit 5(1)(e) Authorized Capital
Exhibit 5(1)(g) Shareholders Agreement
Exhibit 5(1)(l)(ii) Increases in Compensation
Exhibit 5(1)(p) Permits
Exhibit 5(1)(q) Intellectual Property Rights
Exhibit 5(1)(r) Compliance with Law
Exhibit 5(1)(s) Litigation
Exhibit 5(1)(t) Insurance
Exhibit 5(1)(u) Surety Bonds
Exhibit 5(1)(v)(i) Environmental Studies
Exhibit 5(1)(v)(ii) Trust Account
Exhibit 5(1)(w)(i) Tax Liabilities
Exhibit 5(1)(w)(ii) Tax Returns
Exhibit 5(1)(x)(i) Employees
Exhibit 5(1)(x)(iii) Termination of Employment
Exhibit 5(1)(y)(i) Labour Relations
Exhibit 5(1)(y)(ii) Collective Agreements
Exhibit 5(1)(z) Benefit Plans
Exhibit 5(1)(bb) Related Party Property or Contracts
Exhibit 5(1)(cc) Contracts
Exhibit 5(1)(dd) Escrow Agreement
Exhibit 5(1)(ee) Contract Liability
Exhibit 5(1)(ff) Form of Purchase Order and Customer Documents
Exhibit 5(1)(jj) List of Customers
Exhibit 11(1)(k) Engagement Letter
Exhibit 11(1)(l) Regulatory approvals
Exhibit 11(1)(m) Consents and authorizations
Exhibit 11(1)(p) Capital Expenditures
Exhibit 11(1)(q) Transfer of Assets of Gulfstream
Exhibit 11(3)(a) Consents, approvals and waivers
PSA-9
Each capitalized term used in the Exhibits which is not otherwise
defined therein has the meaning ascribed or referred thereto in this
Agreement. All references in the Exhibits to Sections are to Sections
of this Agreement, unless otherwise noted. In some instances, the
information called for by this Agreement may be provided by
cross-reference or other reference from one Exhibit to another Exhibit.
In addition, disclosure of any matter in any of the Exhibits shall
constitute disclosure to the Purchaser for all purposes with respect to
this Agreement (including, without limitation, the Exhibits) and any
agreement ancillary thereto or referred to therein.
(3) The division of this Agreement into Sections, Subsections and insertion
of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
(4) Each Party acknowledges that it and its legal counsel have reviewed and
participated in settling the terms of this Agreement, and the Parties
hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting Party shall not be
applicable in the interpretation of this Agreement.
Section 3 Purchase and Closing.
(1) Upon and subject to the terms and conditions hereof, each of the
Vendors shall sell to the Purchaser and the Purchaser shall purchase
from each of the Vendors, such Vendor's portion of the Purchased Shares
on the Closing Date provided that the Vendors will collectively
transfer to the Purchaser all of the Purchased Shares on the Closing.
(2) The closing of the transactions contemplated by Section 3(1) (the
"Closing") will take place at 9:00 A.M. at the offices of ▇▇▇▇▇▇
Blaikie LLP on the Closing Date.
Section 4 Purchase Price, Working Capital and Purchase Price
Adjustments.
(1) Subject to Section 4(3) and Section 4(4) and the terms and conditions
herein, as consideration for the acquisition of the purchased Shares,
the Purchaser shall pay the purchase price (the "Purchase Price") ,
namely US$47,743,000 less an amount sufficient to repay all
indebtedness for borrowed money after taking into account cash on hand
in excess of that required pursuant to Section 4(3)(a)) of any of
Seaway, Stablex or Gulfstream (the "Net Debt") plus CDN $13,734,000
(such amounts to be allocated among the Vendors as set forth in
Exhibit 4(1)), such amount to be paid as to US$46,310,710 less the Net
Debt and CDN $13,321,980 on the Closing by way of certified cheque or
bank draft or at the Vendors' option by wire transfer of immediately
available funds to an account specified by the Vendors, and the
balance namely, US$1,432,290 and CDN $412,020 to be held in escrow
pursuant to the terms of the escrow agreement set forth in Exhibit
4(1) herein. The Vendors acknowledge that the Purchase Price assumes
that Seaway, Stablex and Gulfstream will be free of indebtedness for
borrowed money and that immediately following the Closing, the
Purchaser will contribute to the surplus of Seaway an amount equal to
the Net Debt which in turn shall contribute such amount to the surplus
of Stablex. Immediately following Closing, Stablex will use such
amount to repay in full, the Net Debt. Each of the Vendors shall
jointly and severally indemnify the Purchaser from any claims of the
holder of the indebtedness for borrowed money for payment owed to it
in excess of the Net Debt.
(2) The Purchaser shall pay to ▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of the United
States, US$1,400,000 payable in 18 monthly instalments of US$77,778
each on the first day of the month following the month in which the
Closing occurs and on the first day of each month thereafter.
(3)
(a) Working Capital Adjustment. The Purchase Price has been
agreed between the
PSA-10
Vendors and the Purchaser on the assumption that the Working
Capital as at the Closing Date will be an amount of
CDN$500,000, and the Parties therefore have agreed to adjust
the Purchase Price as set out in this Section 4(3) in the
event that the Working Capital as of the Closing Date is
other than CDN$500,000.
(b) Working Capital Notice. Within 30 days after the Closing
Date, the Purchaser shall deliver to the Vendors a notice
(the "Working Capital Notice") setting forth the Purchaser's
calculation of the actual Working Capital calculated in the
manner set forth on Exhibit 4(3)(b) hereto (the "Actual
Working Capital"). The calculation of Actual Working Capital
set forth in the Working Capital Notice shall be binding upon
the Parties, except to the extent that the Vendors object to
such notice in accordance with Section 4(3)(c).
(c) Objection. If, within 10 Business Days after the Purchaser
delivers the Working Capital Notice to the Vendors, the
Vendors notify the Purchaser of any objections to the
calculation by the Purchaser of the Actual Working Capital
(the date upon which the Vendors notify the Purchaser of any
such objections shall be referred to herein as the
"Objection Notification Date"), the Purchaser and the
Vendors will attempt in good faith to agree upon a
resolution to the objection prior to or on the date that is
15 days after the Objection Notification Date. The Purchaser
shall permit the Vendors to review all work papers and
computations used by the Purchaser in preparing the Working
Capital Notice.
(d) Dispute Resolution. If the Purchaser and the Vendors do not
agree prior to or on the date that is 15 days after the
Objection Notification Date to a resolution of the Vendors'
objections, either Party may submit, to the exclusion of the
jurisdiction of the civil courts, the matters in dispute
(but no other matters) to Deloitte & Touche LLP or, if that
firm declines to act as provided in this paragraph, another
firm of independent public accountants mutually acceptable
to the Purchaser and the Vendors (in either case, the "Final
Arbiter"), which firm shall make a final and binding
determination as to all matters in dispute with respect to
the calculation of the Actual Working Capital within 45 days
after its appointment. The Final Arbiter shall send its
written determination of Actual Working Capital to the
Purchaser and the Vendors, at which point the determination
of the Final Arbiter and the calculation of the Actual
Working Capital, shall be binding on the Purchaser and the
Vendors, absent fraud or manifest error. The fees and
expenses of the Final Arbiter shall be borne equally by the
Purchaser and the Vendors.
(e) Final Adjustment. On or before the fifth Business Day after
determination of the Actual Working Capital (whether agreed
to by the Purchaser and the Vendors as contemplated in
Section 4(3)(c), determined by the Final Arbiter as
contemplated by Section 4(3)(d), or as a result of no
objection by the Vendors as contemplated by Section 4(3)(b)):
(i) if the Actual Working Capital is greater than CDN
$500,000, the Purchaser shall pay to the Vendors such
excess amount; or
(ii) if the Actual Working Capital is less than CDN
$500,000, the Vendors shall pay to the Purchaser such
deficit amount.
Any payment due by a Party to the other Party pursuant to
this Section 4(3) shall accrue interest from the Closing Date
to the due date of payment (the "Due Date") at a rate per
annum equal to 3%, which interest shall be paid at the same
time and manner as the payment contemplated by this Section
4(3) and thereafter shall accrue
PSA-11
interest from the Due Date until payment is made at a rate
per annum equal to 10%, without limiting the recourses of a
Party against the defaulting Party. All payments made
pursuant to this Section 4(3) shall be paid by wire transfer,
certified or bankers cheque or bank draft drawn upon a
Canadian chartered bank.
(4)
(a) If the Corporation receives any cash refund of Taxes
subsequent to Closing, in respect of any period prior to the
Closing Date (a cash refund being the difference between any
overpayment of Taxes relating to the period prior to Closing
net of any amount deducted therefrom by Canada Revenue
Agency, the Ministere du Revenu du Quebec or any other
competent taxation agency for Taxes owing for the period
prior to Closing to the extent not included in tax reserves
of the Corporation), the Corporation shall pay the amount of
such cash refund to the Vendors within 10 Business Days of
receiving the fund.
(5) In consideration of the payment referred to in Section 4(2), on
Closing, ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall execute and deliver a non-competition
agreement in the form of Exhibit 4(5).
(6) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall provide such consulting services to the Purchaser
for a period of three years following Closing as the Purchaser may
request provided that in no event will ▇▇▇▇ ▇▇▇▇▇▇▇▇ be obliged to
provide more than 10 hours per month of consulting services. In
consideration of the performance of such consulting services, the
Purchaser shall cause Stablex to pay to ▇▇▇▇ ▇▇▇▇▇▇▇▇ US$36,000 payable
in 36 monthly instalments of US$1,000 each on the first day of the
month following the month in which the Closing occurs and on the first
day of each month thereafter and in addition, US$300 for each hour of
consulting services provided.
(7) In consideration of the payment to each of the Vendors of the Purchase
Price referred to in Section 4, on Closing, each of the Vendors shall
execute and deliver a non-competition agreement substantially in the
form of Exhibit 4(7).
Section 5 Representations and Warranties of the Vendors.
(1) Each of the Vendors, jointly and not solidarily, hereby represents and
warrants to the Purchaser that the following representations and
warranties are true and accurate:
(a) Authority of the Vendors to enter into this Agreement. Each
of the Vendors has the capacity and authority to enter into
this Agreement and consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
performance of obligations of such Vendor hereunder will not,
with or without the giving of notice and/or the passage of
time:
PSA-12
(i) violate any provision of law applicable to such
Vendor, with which the failure to comply would be
material to the transactions contemplated hereby;
(ii) require any consent or approval of, or any filing
with or notice to, any governmental authority under
any provision of law applicable to such Vendor which
has not been previously obtained and in respect of
which the failure to obtain same would be material to
the transactions contemplated hereby;
(iii) conflict with or result in a default of any provision
of any agreement or instrument, which would be
material to the transactions contemplated hereby, to
which such Vendor or either of Seaway, Stablex or
Gulfstream is a party or by which such Vendor or
either of Seaway, Stablex or Gulfstream may be bound;
(iv) conflict with any rights of any third party which
would be material to the transactions contemplated;
or
(v) conflict with any order, writ, injunction, decree,
statue, rule or regulation applicable to such Vendor
or either Seaway, Stablex or Gulfstream.
(b) Corporate Organization and Authority. Each of Seaway, Stablex
and Gulfstream is a validly existing corporation, current and
not in default with respect to filings required under the
laws of its jurisdiction of incorporation and has all of the
requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now being
conducted.
(c) Constating Documents. The Constating Documents of each of
Seaway, Stablex and Gulfstream are as set forth in Exhibit
5(1)(c), none of which has been amended, other than as
reflected in said Exhibit and there is no application pending
for the amendment of any of same. The Vendors have made
available to the Purchaser the existing written minutes
contained in the minute books of each of Seaway, Stablex and
Gulfstream, which are complete and accurate in all material
respects.
(d) Qualifications. None of Seaway, Stablex or Gulfstream has any
office or other establishment outside of the Province of
Quebec to which any employee reports other than as set forth
in Exhibit 5(1)(d) and have not received any written notice
or other written communication from any applicable
governmental authority to the effect that any of them is not
permitted to carry on business in any jurisdiction where it
is carrying on business as of the date of this Agreement.
(e) Capital Stock. The authorized capital of each of Seaway,
Stablex and Gulfstream is as set forth in Exhibit 5(1)(e), of
which only (i) the Purchased Shares for Seaway, (ii) 502
shares and 50,000 preferred shares for Stablex all of which
are owned beneficially and of record by Seaway and (iii) 100
shares for Gulfstream, all of which are owned beneficially
and of record by Seaway, are issued and outstanding, each of
which is fully paid and non-assessable and has been duly
authorized and validly issued.
(f) Options. Other than the Purchaser's rights hereunder, there
are no outstanding (written or oral) subscriptions, options,
warrants or other rights to purchase or subscribe (i) for any
shares of the capital stock of the Corporation or convert any
obligation into any shares in the capital stock of the
Corporation, and the Corporation has not agreed to issue or
sell any shares of its capital stock or any securities of any
PSA-13
kind; or (ii) to purchase any assets owned by Seaway or
Stablex or Gulfstream other than pursuant to purchase order
in the Ordinary Course.
(g) Shareholder Agreements. None of the Purchased Shares are
subject to any declaration of the sole shareholder,
shareholders' agreement, voting trust, escrow agreement or
other similar agreement with the exception of the
Shareholders Agreement described in Exhibit 5(1)(g).
(h) No Violation. The execution and delivery of this Agreement
and the performance of the transactions contemplated hereby
will not, with or without the giving of notice and/or the
passage of time:
(i) violate any provision of law applicable to either of
Seaway or Stablex or Gulfstream with which the
failure to comply would constitute a Material Adverse
Affect;
(ii) require any consent, license, approval or other
authorization of, or any filing with or notice to,
any governmental or regulatory authority under any
provision of law applicable to either of Seaway or
Stablex or Gulfstream which has not been previously
obtained and in respect of which the failure to
obtain same would constitute a Material Adverse
Effect; or
(iii) conflict with or result in a default of any provision
of any material agreement to which either of Seaway
or Stablex or Gulfstream is a party or by which any
of them is bound that would constitute a Material
Adverse Effect.
(i) Shares Free and Clear. Each of the Vendors are the legal and
beneficial owners of the Purchased Shares registered in its
name with good and marketable title, free and clear of any
Title Defect.
(j) Share Certificates. The share certificates representing the
Purchased Shares are genuine and valid.
(k) Financial Statements. The Financial Statements and the
Interim Financial Statements have been prepared from the
Books and Records of the Corporation on a consolidated basis
in accordance with Canadian G.A.A.P., applied on a consistent
basis with those of previous fiscal years and each present
fairly the financial position, the assets and the liabilities
of the Corporation as at the respective dates of the relevant
statements and the sales and earnings of the Corporation on a
consolidated basis during the period covered by such
statements. Except to the extent reflected or reserved
against in the Financial Statements and Interim Financial
Statements, the Corporation does not have any liabilities or
obligations of any nature whatsoever, whether accrued,
absolute, contingent or otherwise, other than those incurred
by the Corporation in the Ordinary Course of business since
the Balance Sheet Date, which would have a Material Adverse
Effect
(l) Subsequent Activities. Without in any way limiting the
generality of the foregoing, since the Balance Sheet Date
none of Seaway, Stablex or Gulfstream has, directly or
indirectly,
PSA-14
(i) except for the purchase by Seaway of 49 shares from
Serge St-Laurent on February 25, 2005, declared or
paid any dividends on its capital stock or redeemed,
purchased or otherwise acquired any shares of its
capital stock or otherwise reduced its paid-up
capital;
(ii) except for increases paid in the Ordinary Course of
its business, as set forth in Exhibit
5(1)(l)(ii)increased the salary, fringe benefits or
other compensation of its officers, directors or
employees, or made any bonus or profit sharing
distribution or similar payment of any kind;
(iii) issued, sold, purchased, redeemed, or repaid, or
issued options or rights to subscribe for, or entered
into any contracts to sell or purchase any bonds,
notes, debentures or other evidences of indebtedness,
with the exception of the redemption or repayment by
Stablex to certain of the Vendors prior to the
Closing Date of an amount of approximately US
$244,000 plus interest accrued thereon, representing
the repayment in full in capital and interest of
amounts advanced to Stablex by such Vendors under
Junior Subordinated Notes dated as of June 23, 1995;
(iv) increased its indebtedness for borrowed money or made
any loan or advance;
(v) authorized agreed or otherwise committed whether or
not in writing, to do any of the things described in
Section 5(1)(l)(i), Section 5(1)(l)(ii) and Section
5(1)(l)(iii) (inclusively), except as permitted
therein;
(vi) suffered any damage or destruction or extraordinary
loss which would constitute a Material Adverse
Effect, whether or not covered by insurance;
(vii) compromised or settled any litigation;
(viii) made any capital expenditures exceeding CDN $
3,000,000;
(ix) cancelled or waived any material claims or rights;
(x) sold any assets outside Ordinary Course of business;
(xi) written off as uncollectible any Accounts Receivables
which in the aggregate is material to the Corporation
or in excess of $10,000;
(xii) conducted operations otherwise than in accordance
with the Ordinary Course of its business.
(m) Ownership of Assets. Each of Seaway, Stablex and Gulfstream
has good and marketable title to and owns and possesses all
its properties and assets reflected as being owned in their
respective financial Books and Records free and clear of any
Title Defect, other than Permitted Encumbrances.
(n) Machinery and Equipment. Each of Seaway, Stablex and
Gulfstream is the owner of all machinery and equipment
reflected as being owned in their respective financial Books
and Records used by them for their business, all of which, in
the case of Stablex, is located at the Property. The
machinery and equipment presently being used by each of
Seaway, Stablex and Gulfstream is, in all material respects,
in good working order and free of apparent defect, the
Vendors make no representation or warranty herein with
respect to latent defects.
PSA-15
(o) Real Property. Stablex conducts its business solely at the
Property and on the Lease Lands, Seaway conducts its business
solely at the Property and Gulfstream conducts its business
solely at the leased premises listed at Exhibit 5(1)(d), and
none of such parties use or occupy any other real or
immovable property, nor have Gulfstream, Stablex or Seaway
granted any other person any lease or other right of
occupancy with respect to the Property. All Permits required
have been issued to Stablex, Seaway, or Gulfstream as set out
in Section 5(1)(p) hereof and in Exhibit 5(1)(p) hereof, to
enable the real property to be lawfully occupied and used by
the Corporation for the purposes for which they are currently
occupied and used, the absence of which would have a Material
Adverse Effect, have been lawfully issued and are in full
force and effect, in all material respects. The Lease is in
full force and effect and is valid and binding on all parties
to the Lease and all rents and additional rents have been
paid and following completion of the transaction contemplated
herein Stablex will not be in breach of the terms and
conditions of the Lease and the Lease will still be in full
force and effect and be valid and binding on all parties to
the Lease.
(p) Permits. The Corporation owns or holds, unencumbered, all
licenses, permits, franchises, approvals, authorizations,
certificates of authorization, decrees, certificates of
occupancy and similar rights and privileges required by any
Governmental Entity (collectively "Permits") necessary for
the conduct of the business, where presently carried on,
except for those in respect of which the failure to hold same
would not constitute a Material Adverse Effect. The Permits,
if any, for each of Stablex, Seaway and Gulfstream are
identified in Exhibit 5(1)(p). All such Permits and more
particularly, but without limitation, the Operating Permit
with respect to Stablex, will remain with the relevant
Corporation upon the Closing Date and the consummation of the
transactions contemplated herein or therein will not create
any right of modification, limitation, termination or
revocation on the part of a third party granting such
Permits. None of Seaway, Gulfstream or Stablex is in
violation of or in default under any Permit except for any
violations or infringements which would not in the aggregate
constitute a Material Adverse Effect and except as disclosed,
if any, in Exhibit 5(1)(p).
(q) Intellectual Property Rights. Exhibit 5(1)(q) is a complete
and accurate list of all registered and unregistered
trademarks, service marks, trade names, patents, inventions,
trade secrets, copyrights, service marks, industrial designs,
applications for the registration thereof and other
industrial and intellectual property (collectively
"Intellectual Property") owned or licensed by the
Corporation, if any, and it does not use any other
Intellectual Property in connection with the conduct of its
business. To the Best of its Knowledge, the Corporation is
not infringing upon any Intellectual Property belonging to
any other Person and To the Best of its Knowledge, no person
is infringing upon the Intellectual Property owned by any of
them.
(r) Compliance with Laws. The conduct by the Corporation of its
business does not and has not violated or infringed any
applicable law, except for violations or infringements which
would not in the aggregate constitute a Material Adverse
Effect except as disclosed in Exhibit 5(1)(r).
(s) Litigation. Except as disclosed in Exhibit 5(1)(s), there
are no suits, written claims, actions (arbitration or
legal) or administrative or other proceedings or notice of
governmental investigations pending or, To the Best of its
Knowledge, threatened against the Corporation, its business
or any of their assets directly or indirectly before any
court or administrative agency or office. To the Best of
its Knowledge, there are no facts or circumstances which
could reasonably form
PSA-16
the basis of any such suits, claims, actions, proceedings, or
render the Corporation subject to any investigation or
proceedings by any governmental or regulatory authority.
(t) Insurance. Exhibit 5(1)(t) contains a list and brief
description of all insurance policies currently maintained by
the Corporation. The Corporation has not been refused
insurance coverage in the past and the Corporation has not
received any notice from any insurer, written or verbal, that
the current policies will not as regards the next renewal be
renewed on terms at least as favourable as the terms
currently applicable or which would have a Material Adverse
Effect. The Corporation is not in default with respect to
premium payments and has not failed to give any notice or
present any claims under any insurance policy in a due and
timely fashion. Part of Exhibit 5(1)(t) is a list of all
material claims with reasonable particulars made under any
policies of insurance maintained by the Corporation over the
past five calendar years.
(u) Surety. Exhibit 5(1)(u) contains a list and brief description
of all surety bonds posted by or on behalf of the
Corporation. Such bonds are in a form and amount satisfactory
to the Obligee thereof, constitute the only obligations of
the Corporation to provide surety bonds or any other like
financial assurance, and no surety has declined to issue, or
given notice of intent not to maintain or renew, any surety
bond.
(v) Environmental Matters.
(i) Environmental Studies. The conduct by each of
Stablex, Seaway and Gulfstream of their respective
businesses does not violate any applicable
Environmental Laws, except for violations which
would not constitute a Material Adverse Effect and
except as disclosed in the documents listed in
Exhibit 5(1)(v)(i). To the Best of its Knowledge,
the properties and buildings currently or formerly
owned, leased or used, if any, by each of Stablex,
Seaway and Gulfstream (other than the waste
disposal site and the plant site) has never had
asbestos, asbestos containing materials, PCBs,
radioactive substances other than in their
naturally occurring state, or aboveground or
underground storage systems, active or abandoned,
located on, at or under them. The Corporation holds
all Permits required under applicable Environmental
Laws in connection with the operation of the
business and in accordance with Section 5(1)(p)
hereof and held by each of Seaway, Gulfstream and
Stablex as set forth in Exhibit 5(1)(p) hereof, the
absence of which would constitute a Material
Adverse Effect. To the Best of its Knowledge and
except as disclosed in the documents listed in
Exhibit 5(1)(v)(i), neither Stablex, Seaway or
Gulfstream is under any obligation to remedy
conditions pursuant to any applicable Environmental
Law and none has received any demand relating
thereto. None of the persons referred to in Section
2(1)(uu) has any knowledge that the properties
adjacent to the Property are contaminated. To the
Best of its Knowledge and except for instances
which would have no Material Adverse Effect on the
Corporation, there are no known or apprehended
conditions at or related to the Lease Lands that
would result in a violation of any Permits or that
would result in increased costs of, or reductions
in, operations conducted thereat by Stablex. To the
Best of its Knowledge and except for instances
which would have no Material Adverse Effect on the
Corporation (i) no properties adjacent to the
Property are contaminated as the result of any
action and/or omission by any of Stablex, Seaway or
Gulfstream; (ii) neither Stablex, Seaway or
Gulfstream has transported, removed or disposed of
any waste to a location
PSA-17
outside of Canada except as permitted or required by
Environmental Laws; (iii) except as permitted by
Environmental Laws for industrial use sites and
except as authorized under Environmental Laws for
Stablex, there are no contaminants located in the
ground or in ground water under the Property, and
(iv) Stablex has in place comprehensive
environmental management policies and Stablex is
complying, in all material respects, with all such
policies. The Vendors have heretofore delivered to
or given Purchaser access to the true and complete
copies of any environmental studies, surveys,
memorandums, annual reports to the Ministere de
l'Environnement du Quebec or other reports relating
to the Property or the business commissioned by or
requested or furnished to the Corporation during
the preceding five (5) year period preceding the
date of this Agreement, all of which are listed on
Exhibit 5(1)(v)(i), and none of the Vendors nor the
Corporation has possession or has a copy of any
other such environmental studies, surveys,
memorandums or other reports than those listed in
Exhibit 5(1)(v)(i); and
(ii) Trust. Exhibit 5(1)(v)(ii) contains details of the
trust account established in the name of the Ministere
de l'Environnement du Quebec, pursuant to an agreement
therewith dated December 16, 1986 amended September
10, 1990 and November 16, 1994, which trust is fully
funded for all waste and contaminated soil treated by
Stablex up to the Closing Date, is in good standing
with the Ministere de l'Environnement du Quebec as at
the Closing Date, and is the only trust or trust
account required to be established by and in
connection with the operations conducted by Stablex.
(w) Financial Statements, Tax Liabilities and Tax Returns.
(i) Tax Liabilities. The Corporation does not have any
liability, obligation or commitment for the payment of
Taxes, except those as are disclosed in the Financial
Statements or the Interim Financial Statement or such
Taxes not yet due as have arisen since the Balance
Sheet Date in the usual and Ordinary Course of
business and for which adequate provisions in the
accounts of the Corporation has been made, and they
are not in arrears with respect to any required
withholdings or instalment payments of any Tax of any
kind. Neither Revenue Canada Taxation nor any other
Canadian or U.S. taxing authority is now asserting or
threatening to assert any deficient or claim for
additional Taxes against the Corporation and there are
no disputes as to any Taxes payable by the Corporation
nor as to any matter which would have the Material
Adverse Effect of reducing any Tax loss carry forward
that may be available to either of them. There are no
actions, suits, proceedings, investigations or claims
now threatened or pending against the Corporation in
respect of Taxes nor are there any matters under
discussion with any Governmental Entity with respect
to Taxes, other than as set forth in Exhibit
5(1)(w)(i).
(ii) Tax Returns. The Corporation has prepared and filed
with the appropriate governmental authorities all Tax
returns required to be filed and such returns are
correct and complete in all material respect; the
Corporation has paid or made provision for the payment
of all Taxes shown on such returns to be payable or
which have or may become due pursuant to any
assessment heretofore received by any of them, and the
provisions for all Taxes including, without
limitation, income taxes, reserved on its most recent
audited balance sheet are sufficient to cover all such
Taxes which have been assessed or reassessed against
any of them in respect of their business,
PSA-18
operations and property during the periods covered
thereby and all prior periods other than as set forth
in Exhibit 5(1)(w)(ii). The Corporation has not
executed or filed with any taxing authority any
agreement extending the period for assessment or
collection of any income or other Taxes. The
Corporation has withheld from each payment made to
their employees, officers and directors all deductions
required to be made therefrom and have paid same to
the proper Tax or other authorities.
(iii) Financial Statements. The Vendors have delivered to
the Purchaser (a) the audited financial statements
of the Corporation for the periods ended December
31, 2004, 2003, and 2002 (hereinafter collectively
referred to as the "Financial Statements"); and (b)
the Interim Financial Statement. The Financial
Statements and the Interim Financial Statement have
been prepared in accordance with Canadian G.A.A.P.
consistently applied and reflect accurately the
transactions entered into the books and accounts of
the Corporation, as at the dates thereof.
(x) Employees.
(i) Exhibit 5(1)(x)(i) sets forth, inter alia, the names,
ages, years of service with the Corporation and total
annual compensation of each employee as of the date of
this Agreement (including a breakdown of salary and
bonus, if any, and any accrued rights under any
Benefit Plan that would terminate pursuant to the
execution hereof and the consummation of the
transaction set out herein). All amounts due or
accrued due for all salary, wages, bonuses,
commissions, vacation with pay, pension benefits or
other employee benefits are reflected in the Interim
Financial Statements.
(ii) The Purchaser has taken cognizance of Exhibit
5(1)(x)(i) and acknowledges that the Corporation will
maintain the current salary levels and will recognize
the years of service with the Corporation. The
foregoing provision shall not mitigate or affect the
right of the Corporation and/or the Purchaser's right
to modify compensation arrangements (whether base
salary, bonus, pension or other benefits) or terminate
the employment of any employees of any of them in
accordance with the provisions of the Quebec Civil
Code and/or the Quebec Labour Standards Act and/or
applicable U.S. legislation pertaining to verbal
employment agreements of indeterminant terms.
(iii) The Purchaser acknowledges and agrees that each of the
Vendors make no representation or warranty that any
such person will not resign or voluntarily terminate
employment with the Purchaser with the exception of
those persons identified in Exhibit 5(1)(x)(iii).
(y) Labour Relations.
(i) To the Best of its Knowledge, other than as set
forth in Exhibit 5(1)(y)(i), there are no
outstanding complaints, grievances, claims, work
orders or investigations relating to employment and
employment practices, terms and conditions of
employment, and wages and hours.
(ii) Except as set forth in Exhibit 5(1)(y)(ii), there is
no collective agreement, written employment or
consulting agreement or severance contract,
arrangement or understanding to which the
Corporation is a party as of the date of this
Agreement and no collective bargaining
PSA-19
agreement is currently being negotiated with any
employees of the Corporation. No union representation
question exists respecting employees, and there is no
labour strike, dispute, work slowdown or work stoppage
pending or involving the Corporation.
(z) Benefit Plans.
(i) The list and description of Benefit Plans in Exhibit
5(1)(z) is a complete and accurate list and
description of all Benefit Plans applicable to
employees of the Corporation or Stablex together with
all amendments that have been made to such plans since
their inception and all of the employee benefit
booklets relating thereto.
(ii) There are no outstanding defaults or violations by the
Corporation of any obligation required to be performed
by any of them in connection with any Benefit Plan
listed in Exhibit 5(1)(z), except for defaults or
violations, which would not constitute a Material
Adverse Effect. All Benefit Plans have been duly
registered where required by, and are in good standing
under, all applicable legislation and the Corporation
has fulfilled its funding obligations under all such
plans and no past service funding liabilities exist
thereunder and each Benefit Plan which is a funded
plan is fully funded on a solvency basis and has a
deficiency of $126,000 and no more on a going concern
basis. There are not written notices of any pending
investigations by any Governmental Entity, termination
proceedings or other written claims (except claims for
benefits payable in the normal operation of the
Benefit Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan, and To the
Best of its Knowledge, there is no basis for any such
claims, suits or proceedings.
(iii) No promises or commitments have been made by the
Corporation or the Vendors to amend any Benefit Plan
in any material respect or to provide increased
benefits thereunder or to create any additional
Benefit Plan.
(aa) Suppliers and Customers. Since the Balance Sheet Date, no
supplier or customer of any of the Corporation has
terminated, or threatened in writing to terminate, its
relationship with any of the Corporation, which would have a
Material Adverse Effect on any of them.
(bb) Relations with Related Parties. Except as disclosed on
Exhibit 5(1)(bb), none of the Vendors nor any party with whom
such Vendor does not act at arm's length (as such term is
defined in the Income Tax Act (Canada)) (i) owns any material
properties, tangible or intangible, which are or have been
used by the Corporation in the conduct of its business; or
(ii) sells, leases or otherwise provides any material goods
or services to the Corporation, or vice versa.
(cc) Contracts. Exhibit 5(1)(cc) is a true and complete list and
description as at the date hereof of all written contracts
and commitments (excluding purchase orders or supply
contracts of less than CDN $200,000) to which the Corporation
is a party or by which any of them is bound and which is:
(i) any Contract having a value or requiring expenditure
annually in excess of CDN$200,000;
PSA-20
(ii) any continuing Contract for the purchase of materials,
supplies, equipment or services involving in the case
of any such Contract more than CDN$200,000 over the
life of the Contract;
(iii) any Contract which expires or may be renewed at the
option of any person other than the Corporation so as
to expire more than one year after the date of this
Agreement;
(iv) any trust indenture, mortgage, promissory note, loan
agreement or other Contract for the borrowing of
money, any currency exchange, interest rate,
commodities or other hedging arrangement or any
leasing transaction of the type required to be
capitalized in accordance with GAAP;
(v) any confidentiality, secrecy or non-disclosure
Contract (except for any such Contract with suppliers
and customers entered into in the ordinary course,
which contain confidentiality, secrecy or
non-disclosure provisions) or any Contract limiting
the freedom of the Corporation to engage in any line
of business, compete with any other Person, solicit
any Persons for any purpose, operate its assets at
maximum production capacity or otherwise conduct its
business;
(vi) any Contract pursuant to which the Corporation is a
lessor of any machinery, equipment, motor vehicles,
office furniture, fixtures or other personal property;
(vii) any Contract with any Person with whom the Corporation
or the Vendor does not deal at arm's length within the
meaning of the Tax Act;
(viii) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar
commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other Person; and
(ix) any Contract made out of the Ordinary Course.
The Corporation and each of the other Parties have performed
all obligations to be performed under all Contracts, and
neither of the Corporation nor any other party thereto is in
default under any provision of such Contracts, and no event
has occurred which constitutes, or which with the passage of
time or the giving of notice or both will constitute, a
breach or default under any provision thereof or which would
permit the acceleration or termination of any obligation of
any party thereto or the creation of any lien or encumbrance
upon any asset of the Corporation or which would give rise to
any of the foregoing upon the giving of notice or lapse of
time or both. The copies of each of the Contracts delivered
by the Vendors to the Purchaser represent the full and
complete text thereof and have not been amended or modified,
nor have any provisions thereof or rights of any party
thereto been waived. Each of the Contracts was entered in a
bona fide transaction in the Ordinary Course of the business
of the Corporation.
(dd) Canadian Resident. Each of the Vendors is a resident of
Canada within the meaning of the Income Tax Act (Canada),
with the exception of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ Family
Irrevocable Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Restated Revocable Trust,
▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ with respect to which the tax
certificates under Section 116 of the Income Tax Act (Canada)
and the equivalent provincial certificates, if required, will
be obtained prior to Closing failing which withholding
amounts shall be kept in escrow in accordance with applicable
laws and further pursuant to the terms of the escrow
agreement set forth in Exhibit 5(1)(dd) herein.
PSA-21
(ee) Contract Liability. Except as disclosed in Exhibit 5(1)(ee),
there is not and there has not been during the past three
years any action, suit, written inquiry, proceeding or
investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or,
To the Best of its Knowledge, threatened against or involving
the Corporation relating to any service alleged to have been
rendered or sold by the Corporation and alleged to have been
improperly rendered or sold, and none of the Vendors nor any
of the Corporation knows or has any reason to know of any
basis for any such action, proceeding or investigation.
(ff) Purchase Orders and Customer Documents. Attached hereto as
Exhibit 5(1)(ff) is (a) a copy of each form of purchase order
used by Stablex during the past three years which sets forth
terms and conditions for the purchase of services, and (b)
each Stablex standard form used for customer's contract,
quotation, order acknowledgement and invoice used by Stablex
during the past three (3) years which sets forth terms and
conditions for the sale of services.
(gg) No Broker's Fee. The Corporation has not incurred any
obligation or liability for broker's or finder's fees with
respect to the transaction contemplated hereby.
(hh) Subsidiaries. None of Seaway, Stablex or Gulfstream has,
directly or indirectly, any ownership or other interest in,
or control of any corporation, partnership, joint venture,
business association or other entity.
(ii) Accounts Receivable. All Accounts Receivable are bona fide,
and, subject to an allowance for doubtful accounts that has
been reflected on the books of the Corporation in accordance
with Canadian G.A.A.P. and consistent with past practice,
collectible without set-off or counterclaim.
(jj) List of Customers. Exhibit 5(1)(jj) is a true and correct
list of the top 25 customers of the Corporation for the 2004
financial year and the first quarter of 2005 by dollar amount
of sales and of all the sales contracts, commitment letters
and purchase orders entered into with such customers; true
and complete copies of such sales contracts, commitment
letters and purchase orders have been delivered to the
Purchaser
Section 6 Representations, Warranties and Additional Covenants
of the Purchaser.
The Purchaser hereby represents and warrants to the Vendors
that the following representations and warranties are true
and accurate:
(a) Corporate organization and authority. The Purchaser is a
validly existing corporation, is current with respect to
filings required under the laws of its jurisdiction of
incorporation and has all of the requisite corporate power
and authority to own, lease and operate its properties and
carry on its business as now being conducted.
(b) Authority of the Purchaser to enter into Agreement. The
Purchaser has the legal power, capacity and authority to
enter into this Agreement and consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the performance of obligations of the Purchaser
hereunder will not, with or without the giving of notice
and/or the passage of time:
(i) violate any provision of law applicable to the
Purchaser or its Constating Documents, with which
the failure to comply would be material to the
transactions contemplated hereby;
PSA-22
(ii) require any consent or approval of, or any filing
with or notice to, any governmental authority under
any provision of law applicable to the Purchaser,
which has not been previously obtained and in
respect of which the failure to obtain same would
be material to the transactions contemplated
hereby;
(iii) conflict with or result in a default of any
provision of any agreement or instrument, which
would be material to the transactions contemplated
hereby, to which the Purchaser is a party or by
which the Purchaser may be bound. This Agreement
constitutes a valid and binding obligation of the
Purchaser enforceable against the Purchaser in
accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws
relating to or affecting the enforcement of
creditors' rights generally, and principles of
equity.
(c) Investment Canada Act. The Purchaser is not a non-Canadian
within the meaning of the Investment Canada Act.
(d) No Broker's Fees. The Purchaser has not incurred any
obligation or liability for broker's fees or finder's fees
with respect to the transaction contemplated hereby.
Section 7 Conduct of Business Prior to Closing.
During the Interim Period, the Vendors will cause the Corporation to
conduct the business in the Ordinary Course. Without limiting the generality of
this Section 7, the Vendors will cause the Corporation to:
(a) Subject to the representation and warranty in Section
5(1)(x)(iii), use its best efforts to preserve intact the
current business organization of the Corporation, keep
available the services of the present employees and agents of
the Corporation and maintain good relations with, and the
goodwill of, suppliers, customers, landlords, creditors,
distributors and all other Persons having business
relationships with the Corporation;
(b) confer with the Purchaser concerning operational matters of a
material nature;
(c) use reasonable efforts consistent with past practice to
retain possession and control of its Assets and preserve the
confidentiality of any confidential or proprietary
information of the business or the Corporation;
(d) conduct the business in such a manner that on the Closing
Date, the representations and warranties of the Vendors
contained in this Agreement shall be true, correct and
complete as if such representations and warranties were made
on and as of such date; and
(e) otherwise periodically report to the Purchaser concerning the
state of the business and the Corporation.
Section 8 Exclusive Dealing.
During the Interim Period, the Vendors shall not, directly or indirectly,
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits
of any inquiries or proposals from, any Person (other than the Purchaser)
relating to any transaction involving the sale of any shares of the Vendors or
PSA-23
the Corporation or any of them or the sale of the business or any of the Assets
(other than as permitted in this Agreement).
Section 9 Request for Consents.
The Vendors will use all reasonable efforts to obtain, prior to Closing,
all Consents. Such Consents shall be upon such terms as are acceptable to the
Purchaser, acting reasonably. The Purchaser will co-operate in obtaining such
Consents.
Section 10 Risk of Loss.
If, prior to the Closing, all or any material part of the Assets are
destroyed or damaged by fire or any other casualty or are appropriated,
expropriated, seized or operations thereof or thereat are required to cease by
any Governmental Entity, the Purchaser shall have the option, exercisable by
notice in writing given within four Business Days of the Purchaser receiving
notice in writing from the Vendors of such destruction, damage, expropriation
or seizure:
(a) to reduce the Purchase Price by an amount equal to the cost of
repair, or, if destroyed or damaged beyond repair, by an
amount equal to the replacement cost of the Assets so damaged
or destroyed and to complete the purchase provided all
proceeds of insurance, including, but not limited to, all
proceeds of any business interruption insurance, for such
damage, destruction and business loss for any period prior to
the Closing Date are paid to the Vendors immediately upon
receipt;
(b) to complete the transaction contemplated in this Agreement
without reduction of the Purchase Price, in which event (i)
all proceeds of any insurance (other than business
interruption insurance as provided in (ii) below) or
compensation for expropriation or seizure shall be retained by
the Corporation, and (ii) all proceeds of any business
interruption insurance which compensates for business lost
during the Interim Period less the sum of all deductibles on
all other insurance shall be paid to the Vendors immediately
upon receipt; or
(c) of terminating this Agreement and not completing the
transaction contemplated in this Agreement, in which case all
obligations of the Purchaser and the Vendors shall terminate
immediately upon the Purchaser giving notice as required
herein.
Section 11 Conditions Precedent.
(1) The obligation of the Purchaser to proceed with the Closing is subject
to each of the conditions hereinafter set forth, all of which are
agreed to be material and are inserted for the exclusive benefit of
the Purchaser, and may be waived in whole or part by the Purchaser,
provided that any waiver, to be effective, must be in writing:
(a) the Purchaser shall have been furnished with an opinion of the
counsel of the Vendors, dated the Closing date, acceptable to
the Purchaser and the Purchaser's counsel, acting reasonably;
(b) all requisite action of the Vendors and the Corporation shall
have been taken to approve the transfer of the Purchased
Shares and all the directors and officers of the Corporation
shall have resigned;
(c) the Shareholders Agreement referred to in Section 5(1)(g)
shall be terminated;
(d) the Management Services Agreement between Stablex and
Gulfstream shall have been terminated;
PSA-24
(e) the Purchaser shall have received a certificate, dated the
Closing Date, confirming that the representations and
warranties of the Vendors in this Agreement are true and
accurate as if made at and as of the Closing, and that the
Vendors have complied with all the covenants and agreements
and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing;
(f) the Vendors, Seaway, Stablex and Gulfstream and the resigned
directors and officers shall have executed and delivered
mutual releases to the satisfaction of the Parties;
(g) each of the Vendors having delivered an executed copy of a
letter of agreement acknowledging such Vendor's commitment set
forth in Section 14(6) of this Agreement;
(h) estoppel certificate or landlord's acknowledgement in
connection with the Lease;
(i) the settlement of all outstanding obligations (i) with the
Vendors, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under existing
employment agreements and compensation arrangements,
including, without limitation, the termination thereof and
resignation from employment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and (ii) under
any transaction advisors contract (except for such contracts
with Serge St-Laurent and ▇▇ ▇▇▇▇▇▇▇) and termination of said
agreements and delivery of mutual releases prior to Closing
without cost to Seaway, Stablex, Gulfstream or the Purchaser;
(j) execution of an employment agreement and non-competition
agreement in the form of Exhibit 4(5) by ▇▇▇▇ ▇. ▇▇▇▇▇▇, the
execution and delivery of a non-competition agreement with
each Vendor and with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ substantially in the form
of Exhibit 4(7) and the execution of an employment agreement
with ▇▇▇▇▇ ▇▇▇▇;
(k) Purchaser having received financing by way of debt financing,
sufficient to complete the transaction on terms satisfactory
to Purchaser; a copy of the executed engagement letter
delivered to the Vendors on the date of execution hereof is
attached hereto as Exhibit 11(1)(k);
(l) necessary regulatory approvals, if any, having been obtained
on terms satisfactory to Purchaser, such approvals being
listed in Exhibit 11(1)(l);
(m) all consents and authorizations having been obtained on terms
acceptable to Purchaser, such approvals being listed in
Exhibit 11(1)(m);
(n) no Material Adverse Effect having occurred during the Interim
Period;
(o) Purchaser being satisfied with the repayment of all
indebtedness for borrowed money and the release and discharge
of all related security interests of each of Seaway, Stablex
and Gulfstream on or prior to Closing and any other financial
instrument, to be settled prior to Closing including any swap
instruments;
(p) satisfaction by Purchaser that the business has been conducted
in the Ordinary Course of business during the Interim Period
including, without limitation, not having completed, incurred,
or committed to any distributions of dividends or bonuses,
sale of assets out of the Ordinary Course, capital
expenditure, (other than those capital expenditures disclosed
in Exhibit 11(1)(p)), increase in wages, settlement of
litigation or reduced insurance coverage;
PSA-25
(q) the transfer of the assets of Gulfstream described in Exhibit
11(1)(q) to ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the assumption by ▇▇▇▇ ▇.
▇▇▇▇▇▇ of the Gulfstream office space lease shall have been
completed on terms satisfactory to the Purchaser;
(r) Purchaser being satisfied that the minute book deficiencies
have been rectified.
(2) In the event that any of the conditions precedent set forth in Section
11(1) shall not have been fulfilled or performed on or prior to the
Closing Date, otherwise than as a result of a cause attributable to
the Purchaser, the Purchaser shall have the option either to terminate
the Agreement, on or prior to the Closing Date, by notice in writing
to the Vendors, or proceed with the Closing provided that the waiver
of any condition shall be without prejudice to any other right of the
Purchaser hereunder or at law. Notwithstanding the preceding, either
party shall have the option to postpone the Closing Date for a maximum
of 15 days in order to fulfill and/or perform the conditions set forth
in Section 11(1) to the extent that such conditions are capable of
being fulfilled and/or performed.
(3) The Vendors' obligation to proceed with the Closing is subject to the
conditions hereinafter set forth, all of which are agreed to be
material and are inserted for the Vendors' exclusive benefit, and may
be waived in whole or part by the Vendors, provided that any waiver,
to be effective, must be in writing:
(a) all consents, approvals and waivers required for the Closing,
in the opinion of the Vendors, shall have been obtained, such
consents, approvals and waivers being listed in Exhibit
11(3)(a);
(b) all requisite corporate actions of the Purchaser shall have
been taken to approve the transfer of the Purchased Shares;
(c) the Vendors shall have been furnished with an opinion of the
Purchaser's counsel, dated the Closing Date, acceptable to
Vendors and Vendors' counsel, acting reasonably;
(d) the Vendors, Seaway, Stablex and Gulfstream and the resigned
directors and officers shall have executed and delivered
mutual releases to the satisfaction of the Parties;
(e) the Corporation and the Vendors shall have executed mutual
releases to the satisfaction of the Parties, such releases to
exclude the performance of any obligations stipulated herein
or in any document referred to or contemplated hereby or
necessary or useful for the transactions set out herein;
(f) the Vendors shall have received a certificate from the
Purchaser, dated the Closing Date, confirming that the
representations and warranties of the Purchaser in this
Agreement are true and accurate as if made at and as of the
Closing, and that the Purchaser has complied with all the
covenants and agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing.
(4) In the event that any of the conditions precedent set forth in Section
11(3) shall not have been fulfilled and/or performed on or prior to
the Closing Date, otherwise than as a result of the Vendors' default,
the Vendors shall have the option either to terminate the Agreement,
on or prior to the Closing Date, by notice in writing to the
Purchaser, or proceed with the Closing, provided that the waiver of
any condition be without prejudice to any other rights of the Vendors
hereunder or at law. Notwithstanding the preceding, either party shall
have the option to postpone the Closing Date for a maximum of 15 days
in order to fulfill and/or perform the conditions set forth in Section
11(3) to the extent that such conditions are capable of being
fulfilled and/or performed.
PSA-26
Section 12 Acknowledgement by the Purchaser.
(1) The Purchaser hereby acknowledges that it has been permitted by the
Vendors to conduct an examination of the Books and Records,
operations, property, contracts and prospects of the Corporation, as
well as the information contained in the Confidential Information
Memorandum dated and current as of August 14, 2003 prepared by the
Corporation, and further acknowledges having been supplied with all
additional information requested by it. The Purchaser has not
formulated the opinion that any of the representations and warranties
set forth in Section 5 hereof are incorrect in any material respect
but the Purchaser makes no representation or warranty that information
received or due diligence completed does not or will not disclose,
result in or give rise to a misrepresentation or a breach of warranty
by the Vendors. Purchaser undertakes to advise Vendors immediately if
any information or due diligence received by it prior to the Closing
Date constitutes or could, immediately or with the passing of time,
constitute a breach of any representation or warranty hereunder. The
Purchaser hereby further acknowledges that the aforementioned
information supplied to it, whether verbally or in writing, does not
in any way extend, add to or modify the representations and warranties
of the Vendors contained in this Agreement or in any certificate
delivered to the Purchaser pursuant hereto.
(2) The Vendors hereby acknowledge that such examinations and information
undertaken by the Purchaser or its agents shall not serve to diminish
the liability of the Vendors occasioned by the Vendors' breach of any
representations and warranties made by the Vendors pursuant to the
provisions of this Agreement, or otherwise prevent the Purchaser from
enforcing the obligations of the Vendors pursuant to this Agreement,
it being understood and agreed that the Purchaser's purchase of the
Purchased Shares pursuant to this Agreement shall be in reliance upon
such representations and warranties.
Section 13 Survival of Representations and Warranties.
All representations, warranties, covenants, obligations and agreements of each
of the Parties and in any certificate to be delivered pursuant hereto shall
survive the Closing as follows:
(a) subject to Section 13(c), the representations and warranties
relating to any Tax Claim as set out in Section 5(1)(w) shall
survive until the later of (i) the date upon which the
liability to which any such Tax Claim may relate is barred by
all applicable prescription or statutes of limitation (after
taking into account any extensions, provided same have not
been requested by the Purchaser or the Corporation subsequent
to the date hereof), and (ii) the date upon which any claim
for refund or credit related to such Tax Claim is barred by
all applicable prescription or statutes of limitations. After
such period, neither of the Parties shall have any further
liability hereunder with respect to such representations and
warranties except with respect to Tax Claims made within such
period in accordance with the terms of this Agreement;
(b) subject to Section 13(c), all of the other representations and
warranties contained in this Agreement shall survive for a
period of two (2) years from the Closing Date;
(c) any representation and warranty involving fraud or fraudulent
misrepresentation by the Party giving that representation and
warranty will survive and continue in full force and effect
without limitation of time; and
(d) all covenants, obligations and agreements of the Parties
contained in this Agreement shall survive the Closing in
accordance with the terms and conditions applicable thereto
and in accordance with applicable laws.
PSA-27
After the end of such applicable time periods specified herein
relating to representations and warranties, neither of the Parties
shall have any further liability hereunder with respect to such
representations and warranties except with respect to claims made in
writing within such applicable time period in accordance with the
terms of Section 14.
Section 14 Indemnification.
(1) Subject to Section 13, in the event of any inaccuracy in or breach of
any representation or warranty contained in Section 5 or in the
certificate to be delivered to the Purchaser pursuant to Section
11(1)(e), or any failure of the Vendors to duly perform or observe any
obligation, term, provision or condition on its part to be performed
or observed pursuant to or in connection with the Agreement, the
Vendors hereby agree to indemnify and save and hold the Purchaser free
and harmless from and against any direct liability, damage or loss
(including reasonable legal fees and other costs and expenses
incidental to any suit, action or proceeding instituted against the
Purchaser or the Corporation) in connection therewith or resulting
therefrom.
(2) Subject to Section 13, in the event of any inaccuracy in or breach of
any representation or warranty contained in Section 6, or any failure
of the Purchaser to duly perform or observe any obligation, term,
provision or condition on its part to be performed or observed
pursuant to or in connection with the Agreement, the Purchaser agrees
to indemnify and save and hold the Vendors free and harmless from and
against any direct liability, damage or loss (including reasonable
legal fees and other costs and expenses incidental to any suit, action
or proceeding instituted against the Vendors) in connection therewith
or resulting therefrom.
(3) The Party seeking indemnification shall notify the indemnifying party
in writing, with due diligence. Any failure to promptly notify the
indemnifying party of any such claim shall reduce the obligation of
the indemnifying party hereunder only if, and to the extent that, the
indemnifying party is prejudiced by such failure. The indemnifying
party may elect to compromise or defend, at its own expense and by its
own counsel, any liability, damage or loss for which indemnification
is sought hereunder, provided that the indemnifying party agrees in
writing that such liability, damage or loss is entirely within the
ambit and covered by the indemnification herein provided. The
indemnifying party may make such election by giving written notice to
the Party seeking indemnification within 30 days of its receipt of
written notice from the Party seeking indemnification. The Party
seeking indemnification shall cooperate, at the expense of the
indemnifying party, in the compromise of, or defence against, any
asserted claim of liability, damage or loss that the indemnifying
party elects to defend or compromise. Notwithstanding the foregoing,
the indemnifying party may not compromise any asserted claim of
liability, damage or loss without the prior written Consent of the
Party seeking indemnification, unless the terms of such compromise (i)
include as a condition thereof the complete release of the Party
seeking indemnification and (ii) do not require the Party seeking
indemnification to undertake any action other than the execution and
delivery of mutual releases, a stipulation of settlement and similar
documents. If the indemnifying party elects not to compromise or
defend the asserted claim of liability, damage or loss, fails to
notify the Party seeking indemnification of its election as provided
herein or contests its obligation to indemnify, the Party seeking
indemnification may pay, compromise or defend such asserted claim of
liability, damage or loss, without prejudice to the right of the
indemnifying party to dispute its obligation to indemnify hereunder.
Notwithstanding anything to the contrary in this Section 14, the
indemnifying party (if it elects not to participate in the defence of
an asserted claim of liability, damage or loss and provided that the
Party seeking indemnification elects to defend an asserted claim of
liability, damage or loss) shall have the right, at its option and at
its expense, to participate in (but not control) the defence and
settlement of any asserted claim of liability, damage or loss
hereunder. In the event of any claim which may involve potential
liability for both the Purchaser and the Vendors, both the Purchaser
and the Vendors shall be entitled to participate jointly in the
defence of such claim and neither the Purchaser nor the Vendors shall
compromise or settle any such claim without
PSA-28
the consent of the other (which consent shall not be unreasonably
withheld). The Purchaser hereby agrees to cause to be made available to
the Vendors all files, records and information under the control of the
Purchaser and the Corporation and provide, and cause the Corporation to
provide, all such co-operation that may reasonably be required by the
Vendors in connection with any claim for indemnification.
(4) In the event that any claim contemplated herein is covered by
insurance, the right to dispute and contest such claim shall avail
first to such insurer. In calculating the amount of any liability,
damage or loss with respect to which either Party seeks
indemnification hereunder, the amount of such liability, damage or
loss shall be reduced by the amount, if any, of any payments made
under any insurance policies maintained by the Corporation or the
Purchaser with respect to such liability, damage or loss.
(5) Notwithstanding anything contained herein, the Purchaser shall not be
entitled to indemnification pursuant to this Section 14 in respect of
any breach of any representation or warranty of the Vendors to the
Purchaser pursuant hereto, until the amount payable by the Vendors in
connection with its indemnification obligations under this Section 14
exceeds the sum of US $477,430 plus CDN $137,340 in the aggregate, and
once it exceeds such the aggregate sum, the Vendors shall be liable
from the first dollar of all claims including for such aggregate
amount of US $477,430 plus CDN $137,340. In calculating the amount of
any claims pursuant to Section 14 for purposes of determining whether
the amount of such claims exceeds the sum of US $477,430 plus CDN
$137,340 in the aggregate, the amount of any such claim shall be
determined without regard to Material Adverse Effect, material or
other words limiting a particular representation and warranty. In no
event shall Vendors be liable to pay Purchaser any amount exceeding
the amount of the sum of US $4,774,300 plus CDN $1,373,400. Further,
in no event shall any Vendor be liable to pay Purchaser more than his,
her or its pro rata portion of such amount.
(6) Each of the Vendors covenants with the Purchaser that, for a period of
two years following Closing he, she or it, as the case may be, shall
not transfer by way of gift or otherwise an amount exceeding the sum
of US $42,968,700 plus CDN $12,360,600 of the aggregate Purchase Price
received or to be received by such Vendor without having first
received full consideration for any such excess amount transferred by
such Vendor based on the fair market value of the assets received by
such Vendor as consideration for the transfer of any such excess
amount.
(7) With the exception of claims based upon fraud, the indemnification
provisions contained in this Section 14 constitute the sole and
exclusive remedies and recourse of each Party with respect to the
inaccuracy in or breach of any representation or warranty of, or any
failure to duly perform or observe any term, provision or condition
by, the other Party hereto.
(8) The Parties agree to provide each other with such assistance as may
reasonably be requested in connection with Tax matters relating to any
taxable period including, without limitation, providing information
with respect to the preparation of any Tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceeding relating to liability for Taxes, or any Tax Claim. The
Purchaser will cause the Corporation to retain all Books and Records
that relate to any Tax return, audit or examination, proceedings, or
determination of the Corporation or Stablex for a period of not less
than six years following the filing date of such Tax return, shall
thereafter give the Vendors at least 30 days' notice prior to
destroying any such records and shall, at the request and expense of
the Vendors, turn over any such records to the Vendors instead of
destroying them.
(9) Notwithstanding anything contained herein, there shall be no
indemnification with respect to any liability, damage or loss arising
as a consequence of the retroactive effect, to any period of time
prior to the Closing Date, of any federal, state, provincial, local,
municipal or foreign laws, principles of civil law, regulations or
codes, or orders, decrees, rules (having the force
PSA-29
of law), judgments or injunctions issued, promulgated, approved or
entered into on, or at any time subsequent to, the Closing Date.
Section 15 Notices.
Any notice, or other communication to be given hereunder shall be
deemed to have been received the next working day if sent by facsimile
transmission or three days after remitting for delivery to Federal Express or
any other recognized international messenger service, at the following
addresses:
----------------------------------------------------------------------
| if to the Vendors: | Seaway TLC Inc. |
| | ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, |
| | ▇▇▇▇▇ ▇▇▇ |
| | ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
| | |
| | Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
| | Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ |
| | E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇ |
| | |
| -----------------------------|- -------------------------------------|
| if to the Purchaser: | Marsulex Inc. |
| | ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ |
| | ▇▇▇▇▇ ▇▇▇ |
| | ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ |
| | |
| | Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
| | Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ |
| | E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ |
----------------------------------------------------------------------
Either Party may change at any time its address by notice to the other
Party given in accordance with this Section.
Section 16 Concluding Provisions.
(1) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Quebec, and the federal
laws of Canada applicable therein.
(2) Except as provided for in Section 4(3)(d), any litigation based on or
arising in connection with this Agreement shall be brought and
maintained exclusively in the courts of the Province of Quebec or the
federal courts of Canada, in Montreal. Each Party hereto hereby
expressly and irrevocably submits to the jurisdiction of the aforesaid
courts for the purpose of any such litigation. The Purchaser hereby
expressly and irrevocably waives any objection which it may now or
hereafter have to such choice of venue including, without limitation,
any objection based on such choice being an inconvenient forum.
(3) The Parties agree to perform such acts and execute and deliver such
writings as may be necessary or desirable from time to time in order
to give full effect to the provisions hereof including, without
limitation, the timely filing and diligent prosecution of all
applications and notices and the timely furnishing of all information
required to obtain such consents and authorizations as are necessary
or desirable for the Closing.
(4) The provisions hereof shall be binding upon and inure to the benefit
of the Parties and their respective successors and assigns, however,
none of the Parties may assign or transfer any of its rights or
obligations hereunder without the express prior written consent of the
other.
PSA-30
(5) The provisions hereof and the confidentiality agreement previously
signed and dated January 13, 2005 between the Parties constitute the
entire understanding and agreement between the Parties in connection
with the matters contemplated herein. All previous communications
between the Parties, whether written or verbal, relative to the
subject matter hereof (other than the confidentiality agreement
referred to hereinabove), are superseded and replaced hereby. Without
in any way limiting the generality of the foregoing, the Parties
acknowledge that there are no representations, warranties, promises or
covenants, whether express or implied, legal or conventional, relating
to the matters contemplated herein, not embodied herein, which are of
any force or effect. No modification of the terms hereof shall be
binding upon a Party unless made in writing and signed by such Party.
(6) Unless the text thereof has been approved by the Parties, acting
reasonably, no announcement or disclosure of the transaction
contemplated hereby or the details thereof shall be made by either
Party, other than for such announcements and disclosures as are
required by its senior management, legal, accounting and other
professional advisors (all of whom the Purchaser shall cause to agree
to be bound by the provisions of this Section) and the appropriate
governmental agencies, or are required by applicable law (provided
that the Party under such legal obligation shall have provided the
other Party and its counsel such time as is appropriate in the
circumstances to review any proposed public disclosure).
(7) If any provision of this Agreement is held by a competent court to be
invalid or unlawful for any reason or in any respect whatsoever, such
provision shall not affect any other provisions of this Agreement and
this Agreement shall be construed as if such invalid or unlawful
provision had not been contained herein.
(8) This Agreement may be signed in counterparts, all of which shall be
deemed to form one Agreement.
(9) This Agreement is written in English at the express request of the
Parties. Ce contrat est redige en anglais a la demande expresse des
parties.
IN WITNESS WHEREOF, duly authorized officers of the Parties
hereto have executed duplicate copies of this Agreement.
CORCIA FAMILY IRREVOCABLE TRUST
------------------------------ By:
Witness -------------------------------
Authorized Signing Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ RESTATED
REVOCABLE TRUST
------------------------------ By:
Witness -------------------------------
Authorized Signing Officer
PSA-31
Witness
------------------------------ --------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇ ▇▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇
PSA-32
------------------------------ --------------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------ --------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
MARSULEX INC.
By:
------------------------------
Authorized Signing Officer
PSA-33