SHARE
PURCHASE AGREEMENT
THIS
AGREEMENT made the 1st day of February, 2005.
B
E T W E E N:
ENERNORTH
INDUSTRIES INC.,
a corporation
organized
and existing under the laws of the
Province
of Ontario,
(hereinafter
referred to as the "Vendor")
OF
THE FIRST PART
-
and -
SPECTRUM
SCIENCES & SOFTWARE HOLDINGS CORP.,
a
corporation organized and existing under the laws of the State of
Delaware,
(hereinafter
referred to as the "Purchaser")
OF
THE SECOND PART
-
and -
M&M
ENGINEERING LIMITED,
a corporation
organized
and existing under the laws of the
Province
of Newfoundland and Labrador,
(hereinafter
referred to as the "Corporation")
OF
THE THIRD PART
WHEREAS:
(1) The
Vendor is the registered and beneficial owner of 274 common shares, being all
the issued and outstanding common shares, and 3,857 preferred shares in the
capital of the Corporation which it wishes to sell;
(2) The
Purchaser wishes to purchase the said issued and outstanding shares in the
capital of the Corporation owned by the Vendor, all upon and subject to the
terms and conditions hereinafter set forth;
NOW
THEREFORE THIS AGREEMENT WITNESSES
that for good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged by each of the parties hereto) the parties make the
agreements and acknowledgments hereinafter set forth:
ARTICLE
I
INTERPRETATION
1.1 Definitions -
Whenever used in this Agreement, unless there is something in the subject matter
or context inconsistent therewith, the following words and terms shall have the
respective meanings ascribed to them as follows:
| (a) |
"Agreement"
means this Share Purchase Agreement and all instruments supplemental
hereto or in amendment or confirmation hereof; "hereof", "hereto", and
"hereunder" and similar expressions mean and refer to this Agreement and
not to any particular Article or Section; "Article", "Section",
"paragraph" or "clause" means and refers to the specified article,
section, paragraph or clause of this Agreement; |
| (b) |
"Balance
Sheet"
means the balance sheet of the Corporation as at June 30, 2004 prepared in
accordance with Canadian GAAP, forming part of the Financial
Statements; |
| (c) |
"Business"
means the business presently and heretofore carried on by the Corporation
consisting of construction, mechanical contracting and steel fabrication
in Atlantic Canada; |
| (d) |
"Business
Day"
means a day other than a Saturday, Sunday or any other day on which the
principal commercial banks located at the City of Toronto are not open for
business during normal banking hours; |
| (e) |
"Canadian
GAAP"
means financial information prepared on a consistent basis in accordance
with the Canadian Institute of Chartered Accountant's Handbook and
following the same accounting policies and methods of computation as the
audited consolidated financial statements of the Corporation for the year
ended June 30, 2004. |
| (f) |
"Closing"
means the completion of the sale and purchase of the Purchased Shares
hereunder by the transfer and delivery of documents of title thereto and
the payment of the purchase price therefor as contemplated
herein; |
| (g) |
"Closing
Date"
means the 26th
of January, 2005, or such other date as the parties hereto may agree as to
the date upon which the Closing shall take place; |
| (h) |
"Closing
Time"
means 3:00 o'clock in the afternoon on the Closing Date or such other time
on the Closing Date as the parties hereto may agree as to the time on the
Closing Date which the Closing shall take place; |
| (i) |
"Financial
Statements"
means (i) the audited consolidated financial statements of the Corporation
for the fiscal year ended June 30, 2004 prepared in accordance with
Canadian GAAP, consisting of the Balance Sheet and the statements of
income, retained earnings and source and application of funds and all
notes thereto as reported upon by Messrs. BDO Dunwoody, LLP, Chartered
Accountants, and (ii) the unaudited interim consolidated financial
statements of the Corporation for the six months ended December 31, 2004
prepared in accordance with Canadian GAAP, consisting of the Balance Sheet
and the statements of income, retained earnings and sources and
application of funds, copies of which are annexed as Schedule
4.1(k); |
| (j) |
"Port-aux-Basque
Properties"
means 10915 Newfoundland Limited and 11123 Newfoundland Limited, each of
which is 100% owned by the Corporation, and each of which holds real
property with a building situated on each property having a book value of
$1 and $100,000 respectively, as more fully described in Schedule
4.1(p); |
| (k) |
"Purchased
Shares"
means
274
common shares representing all of the issued and outstanding shares in the
capital of the Corporation and 2,857 preferred shares, being the issued
and outstanding preferred shares in the capital of the Corporation held by
the Vendor, after giving effect to the retraction contemplated by Section
3.2(a) hereof; |
| (l) |
"Shareholder
Approval"
means the approval of the sale of the Purchased Shares by a majority of at
least 66 2/3 % of the votes cast at a meeting of the shareholders of the
Vendor scheduled for January 26, 2005; |
| (m) |
"Subsidiary"
means, with respect to the Corporation, any corporation the shares, to
which are attached more than 50% of the voting rights ordinarily
exercisable at meetings of the shareholders of such corporation, of which
are beneficially owned, directly or indirectly, by the Corporation;
and |
| (n) |
"Working
Capital"
means, all current assets less all current liabilities, excluding non-cash
future tax accruals, prepared in accordance with Canadian
GAAP. |
1.2 Headings -
The division of this Agreement into Articles and Sections and the insertion of
headings are for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.3 Number -
In this Agreement and unless the context otherwise requires, words importing the
singular number only shall include the plural and vice versa, words importing
the neuter gender shall include the masculine and feminine genders and vice
versa and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations and vice
versa.
1.4 Accounting
Principles -
Wherever in this Agreement reference is made to generally accepted accounting
principles, such reference shall be deemed to be the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date on
which such calculation is made or required to be made in accordance with
generally accepted accounting principles.
1.5 Schedules -
The following are the Schedules annexed hereto and incorporated by reference and
deemed to be part hereof:
|
Schedule |
4.1(g) |
- |
Articles
of Incorporation, and Issued Share Capital of
Subsidiaries |
|
Schedule |
4.1(h) |
- |
Authorized
Share Capital |
|
Schedule |
4.1(k) |
- |
Financial
Statements |
|
Schedule |
4.1(l) |
- |
Undisclosed
Liabilities |
|
Schedule |
4.1(p) |
- |
Port-aux-Basque
Properties |
|
Schedule |
4.1(q) |
- |
Manufacturing
Equipment, Tools and Equipment, Office Equipment and Vehicles
|
|
Schedule |
4.1(r) |
- |
Equipment
under Capital Leases |
|
Schedule |
4.1(s) |
- |
Intellectual
Property and Related Documents |
|
Schedule |
4.1(u) |
- |
Leases
and Licences of Real Property |
|
Schedule |
4.1(v) |
- |
Real
Property |
|
Schedule |
4.1(x) |
- |
Employees,
Officers and Directors |
|
Schedule |
4.1(y) |
- |
Employment,
Employee Benefit, Pension, Group Insurance and Other Similar Agreements
and Plans |
|
Schedule |
4.1(z) |
|
Union
Contract |
|
Schedule |
4.1(ee) |
- |
Litigation |
|
Schedule |
4.1(gg) |
- |
Bank
Accounts and Powers of Attorney |
|
Schedule |
4.1(ii) |
- |
Tax
Data |
|
Schedule |
4.1(kk) |
- |
Insurance |
|
Schedule |
4.1(ll) |
- |
Bonds,
Debentures, Guarantees, Encumbrances, Demand Loans, Notes and Long Term
Indebtedness |
|
Schedule |
4.1(mm) |
- |
Non-Arm's
Length Contracts, Agreements or other Arrangements |
|
Schedule |
4.1(nn) |
- |
Payments
and Loans with Directors, Officers, etc. |
|
Schedule |
4.1(ss) |
- |
Other
Material Contracts, Agreements and Documents |
|
Schedule |
8.4(n) |
- |
Opinion
of Counsel for the Vendor and the Corporation |
|
Schedule |
8.4(o) |
- |
Form
of Release |
|
Schedule |
8.5(c) |
- |
Opinion
of Counsel for the Purchaser
|
1.6 Currency -
All payments required hereunder to be made and all currency mentioned herein
shall be in and refer to Canadian dollars.
1.7 Reference
to Statutes -
All references contained in this Agreement to a statute shall be deemed to be
made to such statute as now enacted or as the same may from time to time be
amended, re-enacted or replaced, and in the case of any such amendment,
re-enactment or replacement, such reference herein to a provision of such
statute shall be read as a reference to such amended, re-enacted or replaced
provision.
ARTICLE
II
DEPOSIT
2.1 Deposit -
Concurrently with the execution hereof the Purchaser shall deliver to the Vendor
a refundable deposit in the amount of Five Hundred Thousand Dollars ($500,000)
in the form of a certified cheque or bank draft made payable to WeirFoulds LLP,
in trust, such deposit to be held pending Closing and, in the event of the
completion of the transaction, to be applied on Closing in satisfaction of an
equivalent amount of the purchase price payable in respect of the Purchased
Shares hereunder.
2.2 Refund
of Deposit -
If the transaction of purchase and sale is not completed for any reason other
than the default of the Purchaser, the full amount of the said deposit shall be
returned forthwith by the Vendor to the Purchaser, without
interest.
2.3 Forfeiture
of Deposit -
If the transaction of purchase and sale is not completed by reason of the
default of the Purchaser hereunder, the full amount of the said deposit shall
thereupon be forfeited to become the property of and be retained by the Vendor
as liquidated damages and not as a penalty.
2.4
Exclusive
Remedy of Vendor -
The forfeiture of the deposit by the Purchaser shall be the exclusive remedy
which the Vendor may have against the Purchaser in respect of such default by
the Purchaser.
ARTICLE
III
PURCHASE
AND SALE
3.1 Action
by Vendor and Purchaser -
Subject to the terms and conditions of this Agreement, at the Closing
Time:
| (a) |
Purchase
Price
- The Vendor shall sell and the Purchaser shall purchase the Purchased
Shares for an aggregate purchase price of Seven Million, Three Hundred and
Sixty-One Thousand Nine Hundred and Ninety-Nine Dollars
($7,361,999). |
| (b) |
Delivery
of Certificates, etc.
- The Vendor shall deliver to the Purchaser at the Closing certificates or
documents of title or other evidences of ownership of the Purchased Shares
to be sold and purchased hereunder duly endorsed for transfer, or
accompanied by irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of record thereof, with
the signatures thereon guaranteed by a Canadian bank or trust company or a
firm having membership in The Toronto Stock Exchange or otherwise
guaranteed to the satisfaction of the Purchaser, all in form and substance
sufficient to permit the recording or registration of the Purchaser as the
new owner of record of the Purchased Shares in compliance with all
applicable requirements, provisions and procedures relating to the
recording or registration of such ownership. The Vendor shall also deliver
to the Purchaser certified copies of the resolutions of the board of
directors and shareholders of the Vendor, as the case may be, required to
approve the transfer of the Purchased Shares by the Vendor to the
Purchaser. |
| (c) |
Payment
to the Vendor
- The Purchaser shall pay the balance of the purchase price, namely the
sum of Six Million, Eight Hundred and Sixty-One Thousand Nine Hundred and
Ninety-Nine Dollars ($6,861,999) to or to the order of the Vendor, by
certified cheque or bank draft made payable in lawful money of Canada,
delivered to or to the order of the Vendor at the Closing
Time. |
3.2 Adjustments
to Purchase Price -
The Purchase Price provided for in Section 3.1 of this Agreement will be
adjusted as follows:
| (a) |
Retraction
of Preferred Shares
- On Closing, the Vendor shall cause the Corporation to redeem or retract
One Million Dollars ($1,000,000) of Preferred Shares that it holds in the
capital stock of the Corporation. |
| (b) |
Purchase
of Preferred Shares by the Purchaser
- On Closing the Purchaser shall subscribe for One Million Dollars
($1,000,000) of Preferred Shares in the capital stock of the
Corporation. |
| (c) |
Working
Capital
- At Closing, after giving effect to the Preferred Share retraction and
subscription described in subsections 3.2(a) and 3.2(b) above, the
Corporation shall have Working Capital of not less than Three Million,
Eight Hundred Thousand Dollars ($3,800,000) in the aggregate. To the
extent that the Working Capital is less than Three Million, Eight Hundred
Thousand Dollars ($3,800,000) (the "Working
Capital Deficiency"),
the Working Capital Deficiency shall be subtracted from the Purchase Price
provided for in Section 3.1, and the amount payable in subsection 3.1(c)
shall be reduced accordingly. |
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE VENDOR
4.1 The
Vendor hereby covenants, represents and warrants to the Purchaser
that:
| (a) |
Right
to Sell
- The Vendor is the sole registered and beneficial owner of the Purchased
Shares, which shares constitute in the aggregate all the issued and
outstanding common shares and, after giving effect to Section 3.2(a) and
prior to giving effect to Section 3.2(b), 100% of the preferred shares in
the capital stock of the Corporation, free and clear of all liens,
charges, pledges, security interests, demands, adverse claims, rights, or
other encumbrances whatsoever and no person, firm or corporation now has
or at Closing will have any right, option, agreement or arrangement
capable of becoming an agreement for the acquisition of any of the
Purchased Shares or any interest therein from the
Vendor. |
| (b) |
Due
Authorization, etc.
- Each of the Vendor and the Corporation has all necessary corporate
power, authority and capacity to enter into this Agreement and the
agreements and other instruments contemplated herein and to perform its
respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and the agreements and other instruments
contemplated herein and the consummation of the transactions contemplated
hereunder and thereunder have been duly authorized by all necessary
corporate action on the part of the Vendor and the
Corporation. |
| (c) |
Valid
and Binding Obligation
- This Agreement constitutes and the agreements and other instruments
contemplated herein when executed will constitute valid and binding
obligations of the Vendor and the Corporation enforceable against each of
them in accordance with the terms hereof and thereof subject, however, to
limitations with respect to enforcement imposed in connection with laws
affecting the rights of creditors generally including, without limitation,
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which
they are sought. |
| (d) |
Organization
and Good Standing of Vendor
- The Vendor is a corporation duly incorporated and organized, validly
existing, in good standing and is up to date in all of the filings and
registrations required under the laws of the Province of
Ontario. |
| (e) |
No
Violation
- The disposition of the Purchased Shares and the entering into and
performance of this Agreement and the agreements and other instruments
contemplated herein will not violate, contravene, breach or offend against
or result in any default under any security agreement, indenture,
mortgage, lease, order, undertaking, licence, permit, agreement,
instrument, charter or by-law provision, resolution of shareholders
(subject to Shareholder Approval) or directors, statute, regulation,
judgment, decree or law to which the Vendor or the Corporation is a party
or by which it may be bound or affected and neither the Vendor nor the
Corporation are, or will be at Closing, party to or subject to or bound by
the terms of any unanimous shareholder agreement that restricts the
transfer of shares in the capital of the Corporation. No licenses,
agreements or other instruments or documents will terminate or require
assignment as a result of the entering into of this Agreement or the
consummation of the transactions contemplated
hereby. |
| (f) |
Organization
and Good Standing of the Corporation
- The Corporation is a corporation duly incorporated, duly organized,
validly existing, in good standing and is up to date in all of the filings
and registrations required under the laws of the Province of Newfoundland
and Labrador and has all necessary corporate power, authority and capacity
to own or lease its property and assets (including, without limitation,
the property and assets shown in the Balance Sheet, with the exception of
the assets held as the Port-aux-Basques Properties) and to carry on the
Business as presently conducted by it. Neither the nature of the Business
nor the location or character of the property owned or leased by the
Corporation requires the Corporation to be registered, recorded, licensed
or otherwise qualified as an extra- provincial or foreign corporation or
to be in good standing in any jurisdiction other than in the Province of
Newfoundland and Labrador where it is duly registered, recorded, licensed
or otherwise qualified and in good standing for such purpose. No such
registration, record, licence or qualification contains any burdensome
term, provision, condition or limitation which has or may have an adverse
effect on the operation of the Purchased
Business. |
| (g) |
Subsidiaries
- The Corporation has no Subsidiaries except as set forth in Schedule
4.1(g). Each Subsidiary is a corporation duly incorporated, duly organized
and validly existing under the laws of its jurisdiction of incorporation,
has all necessary corporate power, authority and capacity to own or lease
its property and assets and to carry on the business as presently
conducted by it, and is in good standing in each jurisdiction in which the
nature of its business or the location or character of the property owned
or leased by it makes such qualification necessary. The respective
jurisdictions of incorporation of the Subsidiaries, the respective
jurisdictions in which each of them is registered, recorded, licensed or
otherwise qualified as an extra-provincial or foreign corporation and the
shares in the capital of such Subsidiaries authorized, issued, optioned or
otherwise agreed to be issued are set forth in Schedule 4.1(g). Any such
issued shares (and no more) have been duly and validly allotted and issued
and are outstanding as fully paid and non-assessable shares in the capital
of the respective Subsidiaries and the Corporation is the registered and
beneficial owner of such shares free and clear of all liens, charges,
security interests, adverse claims, pledges, demands, rights, and other
encumbrances whatsoever (except as disclosed in this Agreement including
the Schedules hereto). |
| (h) |
Authorized
Capital
- The authorized capital of the Corporation is listed in Schedule 4.1(h).
|
| (i) |
Issued
Shares
- Of the authorized capital of the Corporation, 274 common shares (and no
more) have been duly and validly issued and are outstanding as fully paid
and non-assessable common shares in the capital of the Corporation, and
3,857 preferred shares (and no more) have been duly and validly issued and
are outstanding as fully paid and non-assessable preferred shares in the
capital of the Corporation. The certificates evidencing such shares do not
contain any reference to a restriction on the transfer of the Purchased
Shares (other than set out in the Articles of Incorporation), a unanimous
shareholder agreement, a lien in favour of the Corporation or an
endorsement regarding a dissenting shareholder under s.184(ii) of the
Business
Corporations Act,
(Ontario), and bear no restrictive legends. Neither the constating
documents or by-laws of the Corporation nor any agreement contain or
provide for restrictive legends thereto. |
| (j) |
No
Options
- No options, warrants, convertible obligations or other rights to
purchase or acquire shares or other securities of the Corporation have
been authorized, allotted or agreed to be issued or are
outstanding. |
| (k) |
Financial
Statements
- The Financial Statements which are attached hereto as Schedule 4.1(k)
including the Balance Sheets, the statements of income, retained earnings
and source and application of funds therein contained and the notes
thereto are true and correct and have been prepared in accordance with
Canadian GAAP applied on a basis consistent with those of preceding
periods and present fairly: |
| (l) |
all
of the assets, liabilities (whether accrued, determinable, absolute,
contingent or otherwise) and the financial condition of the Corporation as
at June 30, 2004 and December 31, 2004, respectively;
and |
| (i) |
the
sales, earnings and results of operations of the Corporation during the
period(s) covered by such Financial Statements. |
| (ii) |
Absence
of Undisclosed Liabilities
- Except to the extent reflected or reserved against in the most recent
Balance Sheet (including the notes thereto) or incurred subsequent to the
date thereof and disclosed in Schedule 4.1(l) or elsewhere in this
Agreement (including the Schedules hereto) and except for unsecured
current obligations and liabilities incurred in the ordinary and usual
course of the Business and which are not materially adverse to the nature
and manner of conducting the Business, or the operations, assets,
properties, future prospects or financial condition of the Corporation,
the Corporation does not have any outstanding indebtedness or any
liabilities or obligations (whether accrued, determinable, absolute,
contingent or otherwise) in respect of which the Corporation or the
Purchaser may be liable on or after the completion of the transactions
contemplated by this Agreement. |
| (m) |
[Intentionally
Deleted] |
| (n) |
Tax
Matters
- Except to the extent reflected in or reserved against in the most recent
Balance Sheet, or relating to the Port-aux-Basques Properties, the
Corporation is not liable for any Canadian federal, provincial or
municipal or local taxes, levies, assessments or other taxes in respect of
its income, business or property or for the payment of any tax instalment
due in respect of its current taxation year and, except as aforesaid, no
such taxes, assessments or penalties are required to be reserved against.
The Corporation has duly and completely filed in a timely manner all tax
returns required to be filed by it (including all information returns as
to which the non-filing or late filing could result in interest or
penalties) and has duly paid all taxes due from it to the federal,
provincial or local taxing authorities including without limitation, those
due in respect of its properties, income, franchises, licences, sales, use
of property and payrolls). Other than in relation to the Port-aux-Basques
Properties, there are no tax liens upon any of the properties or assets,
real, personal or mixed, tangible or intangible, of the Corporation,
whether or not recorded or made subject of a lien or public notice. There
are no questions relating to, or claims asserted for, taxes or assessments
against the Corporation and the Corporation and the Vendor know of no
basis for any such question or claim. The Canadian federal revenue tax
liability of the Corporation has been reviewed and determined by Revenue
Canada for the financial years ending in June 30, 2003 (and all amounts
owing thereunder have been paid) and only subsequent financial years are
open for assessment or reassessment. The Corporation has made adequate
provision for the taxes which are payable during the current fiscal period
for which tax returns are not yet required to be filed. There are no
agreements, waivers or other arrangements providing for an extension of
time with respect to the assessment or reassessment of income tax or the
filing of any tax return by, or payment of any tax by, or levying of any
governmental charge against, the Corporation. There are no actions,
audits, assessments, reassessments, suits, proceedings, investigations or
claims now threatened or pending against the Corporation in respect of
taxes or governmental charges or any matters under discussion with any
governmental authority relating to taxes or governmental charges asserted
by any such authority. The Corporation has withheld from each payment made
by it the amount of all taxes and other deductions required to be withheld
therefrom and has paid the same to the proper taxing or other authority
within the time prescribed under any applicable legislation or
regulation. |
| (o) |
Business
Carried on in Ordinary Course
- The Business has been carried on in the ordinary and usual course since
the date of the most recent Balance Sheet and there has been no change in
the affairs, business, prospects, operations or condition of the Business,
financial or otherwise, or arising as a result of any legislative or
regulatory change, revocation of any licence or right to do business,
fire, explosion, accident, casualty, labour problem, flood, drought, riot,
storm, act of God or otherwise, except changes occurring in the ordinary
and usual course of the Business and which, in the aggregate, have not
materially adversely affected and will not materially adversely affect the
nature and manner of conducting the Business, or the operations, assets,
properties, future prospects or financial condition of the
Corporation. |
| (p) |
Title
to and Use of Properties
- Except as set out in Schedule 4.1(p), the Corporation has good and
marketable title to all its properties and assets, interests in properties
and assets, real and personal, tangible and intangible, including without
limitation those reflected in the most recent Balance Sheet or acquired
since the date of the most recent Balance Sheet (except as since
transferred, sold or otherwise disposed of in the ordinary and usual
course of business in compliance with this Agreement), free and clear of
all mortgages, security interests, charges, adverse claims, rights,
pledges, demands, liens, title retention agreements, or other encumbrances
of any nature or kind except as shown in Schedule 4.1(ll). The uses to
which any real property of the Corporation (including leasehold property)
have been put are not in breach or violation in any respect of any
statute, by-law, ordinance, regulation, covenant, governmental restriction
or official plan, municipal or otherwise. No notice of a public taking has
been given regarding any real estate or properties owned or occupied by
the Corporation. During the period of ownership of the properties of the
Corporation (including leasehold properties) there has been no handling or
discharge of any hazardous substance, waste or pollutant not in compliance
with applicable laws or regulations. There are no applicable laws or
regulations (whether of an environmental nature or otherwise) which would
require that any condition regarding such properties be remedied or
cleared up. The Corporation does not have any agreements, options or other
right or obligation to acquire any additional real property. The
Corporation has neither agreed to sell, transfer or otherwise dispose of
any real property owned by it nor has it granted to any person any right
or privilege capable of becoming an agreement to acquire any such real
property. None of the buildings, structures or improvements (including
fences, if any) presently on the Vendor's real property encroaches on any
land not owned by the Vendor. |
| (q) |
Condition
and Description of the Corporation's Assets
- All facilities, machinery and equipment owned and used by the
Corporation in connection with the Business are in good operating
condition, are in a state of good repair and maintenance, reasonable wear
and tear excepted, are useable in the ordinary course of the Business and
are in compliance with all applicable laws, regulations, by-laws,
ordinances and orders. All such equipment owned or used by the Corporation
are described in Schedule 4.1(q). |
| (r) |
Tangible
and Intangible Properties
- The Corporation is entitled to use in connection with the Business all
equipment, other personal property and fixtures in the possession or
custody of the Corporation which, as of the date hereof, are leased,
rented, acquired under a conditional sales contract or other title
retention document, or are held under licence or similar arrangement, a
list of which and of the leases, rental agreements, conditional sales
contracts, title retention documents, licences, agreements or other
documentation relating thereto is set forth in Schedule
4.1(r); |
| (s) |
Industrial
Property Rights
- The Corporation is not infringing any patent, trade mark, trade name,
copyright, proprietary or similar right, domestic or foreign, of any other
person, firm or corporation. There is included in Schedule 4.1(s) a list
(including, where applicable, applications for registration and
registration particulars) of all registered service marks, registered
copyrights, trade names, industrial designs, trade marks, and patents,
both domestic and foreign, which are owned or used by the Corporation and
the same are in good standing and duly registered in all appropriate
offices to preserve the right thereof and thereto. There are neither any
royalty payments or licence fees payable to or by the Corporation nor any
licence, registered user or other agreements in respect
thereof. |
| (t) |
Collectability
of Accounts Receivable
- All accounts receivable, book debts and other debts due or accruing to
the Corporation are bona fide and either have been collected or are good
and collectible at the aggregate recorded amounts thereof (subject to no
defence, counterclaim or set off) subject to an allowance for doubtful
accounts taken in accordance with generally accepted accounting principles
and recorded on the books and records of the
Corporation. |
| (u) |
Leases
or Licences of Real Property
- The Corporation is not a party to or bound by any leases or licences of
real property or agreements in the nature of leases or licences of real
property, either as lessor or lessee, or agreements to enter into such
leases or licences, other than those referred to in Schedule 4.1(u) (in
which is specified the parties, their dates of execution and expiry dates,
any options to renew, the location of any leased or licensed lands or
premises and the rental payments thereunder) and all interests held by the
Corporation as lessor, lessee, licensor or licensee under such leases,
licences or agreements are free and clear of any and all mortgages,
security interest, charges, adverse claims, rights, pledges, demands,
liens, title retention agreements and other encumbrances of any nature or
kind whatsoever. All rental and other payments required to be paid by or
to the Corporation pursuant to such leases, licences or agreements have
been duly paid and the Corporation is not otherwise in default in meeting
its obligations under any such leases, licences or agreements. There does
not exist under any such leases, licences or agreements any right of
offset or any adverse claim and the completion of the transactions
contemplated by this Agreement will not afford any of the parties thereto
(other than the Corporation) the right to terminate such leases, licences
or agreements. There are no events or circumstances which could give rise
to such parties claiming default by the Corporation under such leases,
licences or agreements. No consent of any parties to such leases, licences
or agreements (other than the Corporation) is required by reason of the
transactions contemplated hereby except as specified in Schedule 4.1(u)
nor will such transactions impose any more onerous obligations on the
Corporation under such leases, licences or
agreements. |
| (v) |
Real
Property
- Particulars of all real property (including legal description) owned by
the Corporation or in which the Corporation has an interest are set forth
in Schedule 4.1(v). None of the buildings, structures or improvements
(including fences, if any) present on the Vendor's real property
encroaches on any land not owned by the Vendor. The Vendor shall, if
requested by the Purchaser at the Purchaser's sole discretion, cause
surveys to be made by a Newfoundland Land Surveyor at the Vendor's sole
cost and expense. |
| (w) |
Compliance
with Contracts
- The Corporation is not in material default under any contract, lease,
licence, engagement agreement, commitment, indenture or other instrument,
whether written or oral, (including, without limitation, those referred to
in the Schedules hereto) to which it is a party and there exists no state
of facts which after notice or lapse of time or both would constitute such
a material default and all such contracts, leases, licence, engagements,
agreements, commitments, indentures or other instruments are now in good
standing and in full force and effect and the Corporation is entitled to
all rights and benefits thereunder. |
| (x) |
Employees,
etc.
- There are set forth in Schedule 4.1(x) the titles of all the directors
and officers of the Corporation, and the titles of all personnel employed
or engaged in the Business thereof whose annual rate of remuneration
exceeds Fifty Thousand Dollars ($50,000), together with particulars of the
material terms and conditions of employment or engagement of such persons,
including rates of remuneration, benefits and positions held. The
Corporation employs a total of approximately 25 full-time and 57 union
persons. |
| (y) |
Employment
Contracts, etc.
- Except as disclosed on Schedule 4.1(y), the Corporation does not have
any written contracts of employment entered into with any employees
employed by the Corporation, any oral contracts of employment which are
not terminable on the giving of reasonable notice in accordance with
applicable law, any management or service agreement other than service
agreements which can be cancelled on not more than thirty (30) days'
notice, any employee benefit, deferred compensation, profit sharing or
other similar agreement or plan, or any union or collective bargaining
agreement. |
| (z) |
Union
Rights and Employee Termination
- Except for the union contract listed on Schedule 4.1(z), no trade union,
council of trade unions, employee bargaining agency or affiliated
bargaining agent: |
| (i) |
holds
bargaining rights with respect to any of the Corporation's employees by
way of certification, interim certification, voluntary recognition,
designation or successor rights, |
| (ii) |
has
applied to be certified as the bargaining agent of any of the
Corporation's employees, or |
| (iii) |
has
applied to have the Corporation declared a related employer pursuant to
labour statutes of Newfoundland and Labrador. |
Other
than as disclosed in Schedule 4.1(z), the Vendor, after due inquiry from the
officers of the Corporation, has no knowledge of any current union organizing
activity among the employees of the Corporation and further the Vendor has no
reason to believe any employee of the Corporation would terminate employment
with the Corporation due to the transactions contemplated by this
Agreement.
| (aa) |
Vacation
Pay, etc.
- All vacation pay, bonuses, commissions and other emoluments for
employees of the Corporation are reflected and have been properly accrued
in the Financial Statements and books of account of the Corporation and
such accruals are adequate to meet any bona fide claims of
employees. |
| (bb) |
Accuracy
of Books and Records
- The books and records of the Corporation, financial and otherwise,
fairly and correctly set out and disclose in all material respects the
financial position of the Corporation and all material financial and other
transactions have been accurately recorded in such books and
records. |
| (cc) |
Pension
Plans
- The only pension plans established by or for the Corporation for its
employees are those disclosed in Schedule 4.1(y). Such plans are duly
registered where required by, and are in good standing under, all
applicable legislation including without limitation, the Income
Tax Act
(Canada) and the Pension
Benefits Act
(Newfoundland and Labrador). The Corporation has made all required
employer contributions or payments thereunder to the date hereof have been
made and the respective pension funds are funded in accordance with the
rules of the pension plans and no past service or experience deficiency
funding liabilities exist thereunder. |
| (dd) |
Absence
of Guarantees
- The Corporation has not given or agreed to give, and is not a party to
or bound by, any indemnity, or any guarantee of indebtedness or other
obligations of third parties or any other commitment by which the
Corporation is or is contingently responsible for such indebtedness or
other obligations, other than those disclosed in Schedule 4.1
(ll). |
| (ee) |
Litigation
and Claims
- Except as disclosed in Schedule 4.1(ee): |
| (i) |
there
is no suit, action, litigation, labour grievance or complaint,
investigation, (including, without limitation, investigations under human
rights or health and safety legislation) or administrative, governmental,
arbitration or other proceeding (whether or not purportedly on behalf of
the Corporation), including without limitation appeals and applications
for review, in progress, pending or, to the best of the knowledge,
information and belief of the Vendor (after due enquiry of the senior
officers of the Corporation) threatened against or relating to the
Corporation, or affecting its respective properties or the Business, or
affecting the Vendor or any of the Purchased Shares, or affecting the
right of the Vendor to enter into this Agreement or perform the Vendor's
obligations hereunder; |
| (ii) |
the
Vendor is not aware (after due enquiry from the senior officers of the
Corporation) of any existing grounds upon which any suit, action,
litigation, labour grievance or complaint, investigation or proceeding
referred to in clause (i) above might be commenced with any reasonable
likelihood of success; |
| (iii) |
there
is not presently outstanding against the Corporation any judgment, decree,
injunction, rule, order or award of any court, governmental department,
commission, board, bureau, agency, instrumentality or arbitrator or any
settlement agreement binding upon it or them; |
| (iv) |
other
than in relation to the Port-aux-Basques Properties, there are no open
files, notices of violation or outstanding work orders relating to the
equipment, building or realty owned or used by the Corporation from or
required by any police, fire department, sanitation, health, worker safety
or factory authorities or any federal, provincial or municipal authority,
or any matters under discussion with any such authority or department
relating to open files, notice of violation or work orders. No order
affecting the Corporation has been issued or is expected to be issued by
the Ministry of Labour, Worker's Compensation Board or any other ministry,
agency or authority; and |
| (v) |
there
are no proceedings, investigations, assessments or claims now in affect or
pending against the Corporation pursuant to the Income
Tax Act
(Canada). |
| (ff) |
Compliance
with Applicable Laws, etc.
- The Corporation is conducting the Business in compliance with all
applicable laws, rules, regulations, by-laws and ordinances of each
jurisdiction in which the Business is carried on and is not in breach of
any such laws, rules, regulations, by-laws and ordinances. Without
limiting the foregoing, the Corporation has obtained all licences, permits
or other governmental authorizations necessary to the ownership of its
assets and properties or the conduct of its Business where a failure to
obtain same might adversely affect the Business, or the operations, assets
or condition (financial or otherwise) of the Corporation. Neither the
Vendor nor the Corporation has offered, paid or agreed to pay directly or
indirectly any money or anything of value to any individual who is or was
an official of any foreign, federal, provincial or local government, or
any agency or instrumentality thereof, or to any individual who is or was
an officer or employee or any present or former customer of the
Corporation or any predecessor thereof, for the purpose of or with the
interest of inducing that individual to use his or her influence to obtain
or maintain significant business for the Corporation or otherwise
significantly affect the Business or the operations, properties or assets
of the Corporation (financial or otherwise). |
| (gg) |
Bank
Accounts, etc.
- There is set forth in Schedule 4.1(gg) the name of each bank or other
depository in which the Corporation maintains any bank account, trust
account or safety deposit box and the names of all persons authorized to
draw thereon or who have access thereto together with each person, firm,
organization or corporation holding a general or special power of attorney
from the Corporation and a summary of the terms
thereof. |
| (hh) |
Residence
of the Vendor
- The Vendor is not a non-resident of Canada for the purposes of Section
116 of the Income
Tax Act
(Canada). |
| (ii) |
Tax
Data
- Information as to the income tax return and notice of assessment for
Corporation for the year ended June 30, 2003 for Canadian income tax
purposes, is set forth in Schedule 4.1(ii). |
| (jj) |
Inventories
- The inventories of the Corporation: |
| (i) |
consist
of items of tangible personal property of the kind and quality regularly
used or produced in the Business by the Corporation and which are of
marketable quality; and |
| (ii) |
are
saleable or useable in the ordinary and usual course of the
Business. |
| (kk) |
Insurance
- The Corporation maintains such policies of insurance, issued by
responsible insurers, as are appropriate to its Business, property and
assets, in such amounts and against such risks as are customarily carried
and insured against by owners of comparable businesses, properties and
assets. Schedule 4.1(kk) lists all such policies together with worker's
compensation coverage presently maintained by the Corporation together
with a brief description of each such policy including the types of
policy, name of insurer, coverage limits, expiration dates and annual
premiums, and attached to which are true and complete copies of the most
recent inspection reports and appraisals (if any) received from the
insurance underwriters as to the condition and insurable value of the
insured assets. All such policies of insurance are in full force and
effect and the Corporation is not in default, whether as to the payment of
premium or otherwise, under the terms of any such policy and has not
failed to give any notice or present any claim under any such insurance
policy in due and timely fashion. No notice of cancellation or non-renewal
with respect to, nor disallowance of any claim under or with respect to
any such policy has been received by the Corporation. The Vendor has no
knowledge (after due enquiry from the officers of the Corporation) of any
circumstances or occurrences which might from the basis of a material
increase in premiums. |
| (ll) |
Long
Term Indebtedness
- Except as set forth in Schedule 4.1(ll), the Corporation does not have
outstanding any bonds, debentures, mortgages or notes, and is not under
any obligation to create or issue any bonds, debentures, mortgages or
notes. Furthermore, except as set forth in Schedule 4.1(ll), the
Corporation does not have any indebtedness maturing more than one year
after the date of its creation or issuance and the Corporation is not
under any agreement or obligation to create, incur or issue any such
indebtedness. |
| (mm) |
Non-Arm's
Length Transactions
- Subsequent to the most recent Balance Sheet date, except as disclosed in
Schedule 4.1(mm), the Corporation is not and has not been since the date
of the Balance Sheet a party to any contract, agreement or arrangement
with any associated or affiliated corporation within the meaning of the
Business
Corporations Act,
(Ontario) or with any of its officers, directors, shareholders or
employees, or former officers, directors, shareholders or employees, or
any other person not dealing at arm's length (as such term is construed
under the Income
Tax Act
(Canada)), with any of the foregoing. |
| (nn) |
Payments
and Loans to Directors, Officers, etc.
- Since the date of the most recent Balance Sheet, the Corporation has not
made or authorized any payment to or conferred or authorized to be
conferred any benefit upon any of its officers, directors, shareholders or
employees, or former officers, directors, shareholders or employees or to
any other person not dealing at arm's length (as such term is construed
under the Income
Tax Act
(Canada)) with any of the foregoing, except in the ordinary and usual
course of the Business and at the regular rates payable to them of salary,
pension, bonuses, rents or other remuneration of any nature and relocation
expenses and reimbursements and except as disclosed in Schedule 4.1(nn).
The Corporation has not made any loans or has any indebtedness outstanding
to any of its officers, directors, shareholders or employees, or former
officers, directors, shareholders or employees or to any other person not
dealing at arm's length (as such term is construed under the Income
Tax Act
(Canada)) with any of the foregoing except as disclosed in Schedule
4.1(nn). |
| (oo) |
Copies
of Agreements, etc.
- True, correct and complete copies of all mortgages, leases, agreements,
instruments and other documents listed in the Schedules hereto have been
delivered to the Purchaser. |
| (pp) |
Corporate
Records
- The corporate records and minute books of the Corporation shall at the
Closing Date contain accurate and complete minutes of all meetings of the
directors and shareholders of the Corporation since the date of
incorporation thereof (all of which meetings were duly called and held)
and copies of all by-laws and resolutions passed by its directors and
shareholders at such meetings. Each of the Corporation's share certificate
books, share registers, transfer registers and other corporate registers
and records will at the Closing Date be complete and
accurate. |
| (qq) |
Changes
to Law and Technology
- There are no proposed environmental, safety, health or other laws, rules
or regulations and no new technological developments of which the Vendor
or the Corporation has any knowledge which might have an adverse effect on
the Business or operations of the Corporation or which might require
substantial new capital investment by the Corporation in the
Business. |
| (rr) |
Absence
of Unusual Transactions
- Since the date of the most recent Balance Sheet and without limiting
anything elsewhere contained in this Agreement the Corporation has
not: |
| (i) |
transferred,
assigned, sold or otherwise disposed of any of the assets shown in the
Balance Sheet or cancelled any debts or claims except in each case in the
ordinary and usual course of the Business and, other than disclosed in
Schedule 4.1(mm); |
| (ii) |
incurred
or assumed any indebtedness, obligation or liability (whether accrued,
determinable, absolute, contingent or otherwise), except those listed in
Schedule 4.1(l) and except unsecured current obligations and liabilities
incurred in the ordinary and usual course of the Business which are not
materially adverse to the nature and manner of conducting the Business, or
the operations, assets, properties, future prospects or financial
condition of the Corporation; |
| (iii) |
issued
or sold any shares in its capital stock or any warrants, bonds, debentures
or other corporate securities of the Corporation or issued, granted or
delivered any right, option or other commitment for the issuance of any
such or other securities other than disclosed in Schedule
4.1(mm); |
| (iv) |
discharged
or satisfied any lien or encumbrance, or paid any obligation or liability
(fixed or contingent) other than current liabilities included in the
Balance Sheet, and current liabilities incurred since the date thereof in
the ordinary and usual course of the Business; |
| (v) |
declared
or paid any dividend or declared or made any other distribution in respect
of its capital stock or purchased, redeemed or otherwise acquired any of
the shares of the Corporation or effected any subdivision, consolidation
or reclassification of or other change to the Corporation's capital stock
other than disclosed in Schedule 4.1 (mm); |
| (vi) |
suffered
an operating loss or any extraordinary loss, or waived any rights of
substantial value, or entered into any commitment or transaction not in
the ordinary and usual course of the Business where such loss, rights,
commitment or transaction materially adversely affects or which will
materially adversely affect the nature and manner of conducting the
Business, or the operations, assets, properties, future prospects or
financial condition of the Corporation; |
| (vii) |
amended
or changed or taken any action to amend or change its charter or
by-laws; |
| (viii) |
except
as disclosed in Schedule 4.1(11), mortgaged, pledged, charged, subjected
to an adverse claim, granted rights in, subjected to a demand, subjected
to a title retention agreement, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or property, whether
tangible or intangible; or |
| (ix) |
except
as disclosed in Schedule 4.1(r) made or authorized or intended to make any
capital expenditures (which, for greater certainty does not include repair
and maintenance expenditures in the ordinary and usual course of the
Business. |
| (ss) |
Other
Material Contracts
- The Corporation has no outstanding contract, lease, licence, agreement,
indenture, engagement, commitment or other instrument, whether written or
oral, of any nature or kind whatsoever (including, without limitation, all
tenders, quotations and orders open for acceptance)
except: |
| (i) |
agreements,
contracts or commitments in the ordinary and usual course of the Business
listed in Schedule 4.1(r); |
| (ii) |
service
contracts of office equipment listed in Schedule 4.1(r); the leases,
rental agreements, conditional sales contracts, title retention documents
and licenses listed in Schedule 4.1(r); |
| (iii) |
leases
and licences of real property listed in Schedule
4.1(u); |
| (iv) |
the
employment, employee benefit, pension, group insurance and other similar
agreements and plans listed in Schedule 4.1(y); |
| (v) |
the
insurance policies described in Schedule 4.1(kk); |
| (vi) |
bonds,
debentures, guarantees, encumbrances, demand loans, notes and long term
indebtedness described in Schedule 4.1(ll); |
| (vii) |
non-arm's'
length contracts, agreements or arrangements listed in Schedule 4.1(mm);
and |
| (viii) |
the
other material contracts, agreements and documents listed in Schedule
4.1(ss). |
The
Corporation has the capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations thereunder.
| (tt) |
Full
Disclosure
- None of the foregoing representations and statements of fact contains
any untrue statement of material fact or omits to state any material fact
necessary to make any such statement or representation not misleading to a
prospective purchaser of the Purchased Shares seeking full information as
to the Corporation and its property, business and affairs. The Vendor has
no information or knowledge of any facts relating to the Business or to
the Purchased Shares which the Vendor has not disclosed to the Purchaser
and which are not within the public domain and which in the aggregate
would have a material adverse effect on the financial condition or
prospects of the Corporation. |
4.2 Reliance -
The Vendor hereby expressly acknowledges that the Purchaser is relying upon the
covenants, representations and warranties of the Vendor contained in this
Agreement or in any agreement, certificate or other document delivered pursuant
hereto in connection with the purchase of the Purchased Shares
hereunder.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
5.1 The
Purchaser hereby covenants, represents and warrants to the Vendor
that:
| (a) |
Organization
and Good Standing
- The Purchaser is a corporation duly incorporated and organized, validly
existing, in good standing and is up to date in all of the filings and
registrations required under the laws of the State of
Delaware. |
| (b) |
Due
Authorization, etc.
- The Purchaser has all necessary corporate power, authority and capacity
to enter into this Agreement and the agreements and other instruments
contemplated herein and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the
agreements and other instruments contemplated herein and the performance
of the transactions contemplated hereunder and thereunder have been duly
authorized by all necessary corporate action on the part of the
Purchaser. |
| (c) |
Valid
and Binding Obligation
- This Agreement constitutes and the agreements and other instruments
contemplated herein when executed will constitute valid and binding
obligations of the Purchaser enforceable against the Purchaser in
accordance with the terms hereof and thereof subject to limitation with
respect to enforcement imposed in connection with laws affecting the
rights of creditors generally including, without limitation, applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws and to
the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are
sought. |
| (d) |
No
Violation
- The Purchaser is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or by-law provision,
statute, regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any default would
occur as a result of the execution and delivery by the Purchaser of this
Agreement or the performance by the Purchaser of any of the terms
hereof. |
| (e) |
Status
under Investment
Canada Act
- The Purchaser is a non-Canadian within the meaning of the Investment
Canada Act
(Canada), and is required to file notification under that legislation
within 30 days of the Closing. |
5.2 Reliance -
The Purchaser hereby expressly acknowledges that the Vendor is relying upon the
covenants, representations and warranties of the Purchaser contained in this
Agreement or in any agreement, certificate or other document delivered pursuant
hereto in connection with the sale of the Purchased Shares
hereunder.
ARTICLE
VI
NO
BROKER
6.1 No
Broker -
Each of the parties hereto represents and warrants to the others that all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried on between them directly and without the intervention of any
other party in such manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee or other like
payment.
ARTICLE
VII
CONDITIONS
PRECEDENT TO THE PERFORMANCE BY THE PURCHASER AND
THE VENDOR OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
7.1 Purchaser's
Conditions -
The obligation of the Purchaser to complete the purchase of the Purchased Shares
hereunder shall be subject to the satisfaction of, or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is hereby acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by the Purchaser in whole or in part):
| (a) |
Due
Diligence - The Purchaser shall have completed its due diligence review of
the total operations of the Corporation in accordance with Section 8.1,
and by January 21, 2005 provided written notice that such due diligence
has been completed to the Purchaser's satisfaction, or that the Purchaser
waives its right to further due diligence review. The due diligence review
shall include but not be limited to the opportunity
for: |
| (i) |
inspection
of the physical property of the Corporation; |
| (ii) |
review
of the financial statements, audit reports and procedures by the
Purchaser's current accounting firm; |
| (iii) |
appropriate
tax due diligence concerning the Corporation; |
| (iv) |
environmental
review of operations and facilities of the Corporation;
and |
| (v) |
legal
due diligence concerning the Corporation. |
| (b) |
Retraction
and Purchase of Preferred Shares
- the Vendor shall have retracted One Million Dollars $1,000,000 of
Preferred Shares in the capital of the Corporation, and the Purchaser
shall have subscribed for One Million Dollars $1,000,000 of Preferred
Shares in the capital of the Corporation. |
| (c) |
Truth
and Accuracy of Representations of Vendor at Closing Time
- All of the representations and warranties of the Vendor made in or
pursuant to this Agreement (including the Schedules hereto) or in any
agreement, certificate or other document delivered or given pursuant to
this Agreement, including, without limitation, the representations and
warranties set forth in Article 4, shall be true and correct in all
material respects as at the Closing Time and with the same effect as if
made at and as of the Closing Time (except as such representations and
warranties may be affected by the occurrence of events or transactions
expressly contemplated and permitted hereby). |
| (d) |
Performance
of Obligations
- The Vendor shall have complied with and performed in all respects its
obligations, covenants and agreements herein. |
| (e) |
Consents,
Authorizations and Registrations
- All consents, approvals, orders and authorizations of any persons or
governmental or administrative authorities in Canada or elsewhere (or
registrations, declarations, filings or recordings with any such
authorities) in form and terms satisfactory to counsel for the Purchaser
and compliance with any conditions thereof required in connection with the
completion of any of the transactions contemplated by this Agreement, the
execution of this Agreement, the Closing or the performance of any of the
terms and conditions hereof shall have been obtained on or before the
Closing Time. |
| (f) |
Legal
Matters
- The title of the Corporation to its assets and undertaking, the form of
and documentation relating to the transfer of the Purchased Shares by the
Vendor to the Purchaser, the legality of the incorporation and
organization of the Corporation, the due creation and issuance as fully
paid of all of the outstanding shares in the capital of the Corporation
and all corporate proceedings of the Corporation, its shareholders and
directors, and all matters which in the reasonable opinion of counsel for
the Purchaser are material in connection with the transactions herein
contemplated shall be subject to the favourable opinion of such counsel
and all relevant documents, records and information shall be supplied by
the Vendor to such counsel for that purpose. |
| (g) |
The
Port-aux-Basque Properties -
The Port-aux-Basque Properties shall have been transferred from the
Corporation to the Vendor or another affiliate of the
Vendor. |
7.2 Vendor's
Conditions -
The obligation of the Vendor to complete the sale of the Purchased Shares
hereunder shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is hereby acknowledged to be inserted for the exclusive benefit of the
Vendor and may be waived by the Vendor in whole or in part):
| (a) |
Shareholder
and Regulatory Approval
- The shareholders of the Vendor shall have given the Shareholder Approval
for the sale of the Purchased Shares by special resolution at the meeting
scheduled for January 26, 2005 or such other date such meeting is held.
The Vendor shall have received any required regulatory approvals to
complete the transfer of the Purchased Shares. |
| (b) |
Release
of the Vendor under Western Surety Company Bonds and
Indemnifications
- The Vendor shall have been fully released from any continuing
obligations under the surety bonds and indemnifications with Western
Surety Company issued in respect of the Corporation's Business, pursuant
to which it acts as guarantor for the
Corporation. |
| (c) |
Truth
and Accuracy of Representations of Purchaser at Closing
Time
- All of the representations and warranties of the Purchaser made in or
pursuant to this Agreement (including the Schedules hereto) or in any
agreement, certificate or other document delivered or given pursuant to
this Agreement, including without limitation the representations and
warranties set forth in Article 5 hereof, shall be true and correct in all
material respects as at the Closing Time and with the same effect as if
made at and as of the Closing Time. |
| (d) |
Performance
of Obligations
- The Purchaser shall have complied with and performed in all respects all
its obligations, covenants and agreements herein. |
7.3 Non-Performance
of Conditions for the Benefit of the Purchaser -
In the event that any of the conditions set forth in Section 7.1 shall not be
fulfilled and/or performed at or before the Closing Time, the Purchaser may
terminate this Agreement by notice in writing to the Vendor, and the Purchaser
shall thereupon be released from all obligations under this Agreement and,
unless the condition or conditions for the non-fulfilment or non-performance of
which the Purchaser has terminated this Agreement are reasonably capable of
being fulfilled and/or performed or caused to be fulfilled or performed by the
Vendor, then the Vendor shall also be released from all obligations under this
Agreement, provided any of the said conditions may be waived in whole or in part
by the Purchaser at any time without prejudice to its right of termination in
the event of a non-fulfilment and/or non-performance of any other condition or
conditions, any such waiver to be binding upon the Purchaser only if the same is
in writing.
7.4 Non-Performance
of Conditions for the Benefit of the Vendor -
In the event that any of the conditions set forth in Section 7.2 shall not be
fulfilled and/or performed at or before the Closing Time, the Vendor may
terminate this Agreement by notice in writing to the Purchaser, and the Vendor
shall thereupon be released from all obligations under this Agreement and,
unless the condition or conditions for the non-fulfilment or non-performance of
which the Vendor has terminated this Agreement are reasonably capable of being
fulfilled and/or performed or caused to be fulfilled or performed by the
Purchaser, then the Purchaser shall also be released from all obligations under
this Agreement, provided any of the said conditions may be waived in whole or in
part by the Vendor at any time without prejudice to its right of termination in
the event of a non-fulfilment and/or non-performance of any other condition or
conditions, any such waiver to be binding upon the Vendor only if the same is in
writing.
7.5 Acceptance
of Notice of Non-Fulfilment
| (a) |
The
Purchaser covenants and agrees that in the event that at the Closing Time,
any condition or conditions for the benefit of the Purchaser set out in
this Article 7 have not been fulfilled and/or performed to the reasonable
satisfaction of the Purchaser and such condition or conditions is or are
not reasonably capable of being fulfilled and/or performed or caused to be
fulfilled and/or performed by the Vendor, and the Vendor has, at or prior
to the Closing Time, made complete and accurate disclosure in writing,
referring specifically to the provisions of this Section 7.5 to the
Purchaser of the facts relating to its failure to fulfil and/or perform
such condition or conditions, and the Purchaser elects to complete the
purchase and sale of the Purchased Shares, except as otherwise agreed by
the Purchaser and the Vendor, the Vendor shall not be liable to the
Purchaser hereunder for breach of any covenant, representation or warranty
in respect of the matter so disclosed. |
| (b) |
The
Vendor covenants and agrees that in the event that at the Closing Time,
any condition or conditions for the benefit of the Vendor set out in this
Article 7 have not been fulfilled and/or performed to the reasonable
satisfaction of the Vendor and such condition or conditions is or are not
reasonably capable of being fulfilled and/or performed or caused to be
fulfilled and/or performed by the Purchaser, and the Purchaser has, at or
prior to the Closing Time, made complete and accurate disclosure in
writing, referring specifically to the provisions of this Section 7.5 to
the Vendor of the facts relating to its failure to fulfil and/or perform
such condition or conditions, and the Vendor elects to complete the
purchase and sale of the Purchased Shares, except as otherwise agreed by
the Purchaser and the Vendor, the Purchaser shall not be liable to the
Vendor hereunder for breach of any covenant, representation or warranty in
respect of the matter so disclosed. |
ARTICLE
VIII
COVENANTS
OF THE VENDOR AND THE PURCHASER
8.1 Investigations -
The Vendor shall cause the Corporation to permit the Purchaser and its
employees, agents, counsel and accountants or other representatives, between the
date hereof and the Closing Time, without interference to the ordinary conduct
of the Business, to have free and unrestricted access during normal business
hours to the premises and personnel of the Corporation, to all the books,
accounts, records and other data of the Corporation (including, without
limitation, all corporate, accounting and tax records, guarantees, agreements,
title documentation, surveys, minute books, share certificate books, tax returns
and related correspondence, and financial statements of the Corporation) and to
the properties and assets of the Corporation, and to furnish to the Purchaser
such financial and operating data and other information with respect to the
Business, legal condition, properties and assets of the Corporation as the
Purchaser shall from time to time consider necessary or desirable to enable
confirmation of the matters represented, warranted and covenanted herein.
Without limiting the generality of the foregoing, it is agreed that the
accounting representatives of the Purchaser shall be afforded ample opportunity
to make a full investigation of all aspects of the financial affairs of the
Corporation.
8.2 Confidentiality -
In the event of the termination of this Agreement without consummation of the
transactions contemplated hereby, the Purchaser will use its best efforts to
keep confidential any information (unless in the public domain) obtained from
the Corporation or the Vendor. If this Agreement is so terminated, promptly
after such termination, all documents, working papers and other written material
obtained from one party in connection with this Agreement and not theretofore
made public (including all copies thereof), shall be returned to the party which
provided such material.
8.3 Non-Waiver -
No investigations made by or on behalf of the Purchaser at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation, warranty or covenant made by the Vendor herein or in any
agreement, certificate or any other document delivered or given pursuant
hereto.
8.4 Covenants
of the Vendor -
The Vendor covenants and agrees that the Vendor shall do the
following:
| (a) |
Corporate
Documents
- Forthwith following the execution of this Agreement the Vendor will
supply the Purchaser with the Certificate of Incorporation and any
Articles of amendment or amalgamation of the Corporation and all minute
and share certificate books of the Corporation. Any deficiencies
discovered by the Purchaser following an investigation of such documents,
and records, shall be corrected to the satisfaction of the Purchaser prior
to the Closing Date. A copy of any resolution or by-law passed or minutes
of any meeting held by the Corporation's directors or shareholders between
the date hereof and the Closing Date shall be delivered to the Purchaser
prior to such date. |
| (b) |
Conduct
Business in Ordinary Course
- Except as otherwise contemplated or permitted by this Agreement, the
Vendor shall cause the Corporation during the period from the date of this
Agreement to the Closing Time, to conduct the Business in the ordinary and
usual course thereto and not, without the prior written consent of the
Purchaser, to enter into any transaction or do any thing which, if
effected before the date of this Agreement, would constitute or would
cause a breach of the covenants, representations and warranties contained
herein. |
| (c) |
Correctness
of Representations and Warranties
- The Vendor shall cause each of the covenants, representations and
warranties of the Vendor contained herein, including, without limitation,
Article 4, to remain true and correct until and at the Closing
Time. |
| (d) |
Continue
Insurance
- The Vendor shall cause the Corporation during the period from the date
of this Agreement to the Closing Time, to continue in force and effect,
and to renew, when necessary, all existing policies of insurance presently
maintained by the Corporation and to take out such additional insurance as
may be reasonably requested by the Purchaser and to give all notices and
present all claims under all such policies of insurance in due and timely
fashion and to promptly advise the Purchaser of any such
claims. |
| (e) |
Perform
Obligations
- The Vendor shall cause the Corporation during the period from the date
of this Agreement to the Closing Time, to comply with all laws and other
obligations affecting the operation of the Business and to pay all
required taxes and tax installments, including without limitation, income,
corporate, retail, excise and realty taxes. |
| (f) |
Transfer
of Purchased Shares
- The Vendor shall take and cause the Corporation to take all necessary
steps and proceedings as approved by counsel for the Purchaser to permit
all of the Purchased Shares to be duly and regularly transferred to the
Purchaser or its nominee(s) at the Closing. |
| (g) |
Resignation
of Directors and Officers
- The Vendor shall cause such directors and officers of the Corporation as
the Purchaser may specify to resign in favour of nominees of the
Purchaser, such resignations to be effective as at the Closing Time, and
shall cause the board of directors and officers of the Corporation at the
Closing Time to be those persons nominated by the
Vendor. |
| (h) |
Evidence
of Payments of Tax and Title
- Upon request, the Vendor shall furnish the Purchaser with evidence
satisfactory to the Purchaser that at the Closing Time there are no
arrears of or liabilities for taxes (including taxes on income), rates,
assessments or other charges adversely affecting the assets of the
Corporation not shown as accruals or allowances on the Financial
Statements except taxes, rates, assessments or other charges accruing in
the ordinary and usual course of the Business subsequent to the date of
the Financial Statements, except in relation to the Port-aux-Basques
Properties, and that at the Closing Time all of the assets of the
Corporation shall be owned by the Corporation with good and marketable
title thereto, free and clear of all mortgages, liens, charges, pledges,
security interests, demands, rights, adverse claims and other encumbrances
of any nature or kind, except as may be otherwise disclosed in this
Agreement (including the Schedules hereto). |
| (i) |
Limitations
on Dispositions
- Except in accordance with agreements to sell entered into prior to the
date hereof and disclosed in this Agreement (including the Schedules
hereto) the Vendor shall not permit the Corporation to sell or otherwise
dispose of any intangible assets or to sell or otherwise dispose of any
other assets having a fair market value in excess of $100,000 in the
aggregate, without the prior written consent of the
Purchaser. |
| (j) |
Representation
Evidence by the Vendor
- The Vendor shall furnish the Purchaser at the Closing Time with evidence
(which may include statutory declarations made by the chief executive
officers of the Vendor and the Corporation) satisfactory to the Purchaser
that the facts with respect to each of the representations and warranties
of the Vendor contained herein or in any Agreement, certificate or any
other document delivered or given pursuant hereto, are true and correct,
provided that the receipt of such evidence and the closing of the
transaction of purchase and sale herein shall not act as a waiver of the
covenants, representations and warranties of the Vendor contained herein
or any agreement, certificate or any other document delivered or given
pursuant hereto, which covenants, representations and warranties shall
continue in full force and effect as provided for
herein. |
| (k) |
Payments
of Taxes
- The Vendor shall cause the Corporation, up to the Closing Date, to duly
and expeditiously file all tax returns required to be filed by it (all
such returns being subject to the prior approval of the Purchaser) and,
except where otherwise specified by the Purchaser, to promptly pay all
taxes, assessments and governmental charges which are claimed by any
governmental authority to be due and owing; not suffer or permit the
Corporation, without the prior consent of the Purchaser, to enter into any
agreement, waiver or other arrangement providing for an extension of time
with respect to the filing of any tax return or the payment or assessment
of any tax, governmental charge or deficiency. |
| (l) |
No
Encumbrances
- The Vendor shall transfer Purchased Shares to the Purchaser at the
Closing Time free and clear of all mortgages, liens, charges, security
interests, adverse claims, pledges, demands, rights and other encumbrances
of any nature or kind. |
| (m) |
Amendments
to Pension Plans
- The Vendor shall cause the Corporation not to amend its pension plans at
or before the Time of Closing. |
| (n) |
Opinion
of Counsel for the Vendor and the Corporation
- The Vendor shall cause to be delivered to the Purchaser at the Closing
Time an opinion dated the Closing Date, from counsel for the Vendor and
the Corporation in the form annexed hereto as Schedule
8.4(n). |
| (o) |
Releases
- The Vendor shall deliver and cause to be delivered to the Purchaser at
the Closing Time executed releases by the Vendor and by each director and
officer of the Corporation and such other persons as the Purchaser may
specify, each such release to be in the form annexed hereto as Schedule
8.4(o). |
8.5 Covenants
of the Purchaser -
The Purchaser covenants and agrees that the Purchaser shall do the
following:
| (a) |
Correctness
of Representations and Warranties
- The Purchaser shall cause each of the covenants, representations and
warranties of the Purchaser contained herein, including, without
limitation, Article 5, to remain true and correct until and at the Closing
Time. |
| (b) |
Representation
Evidence by the Purchaser
- The Purchaser shall furnish the Vendor at the Closing Time with evidence
(which may include a statutory declaration made by the chief executive
officer of the Purchaser) satisfactory to the Vendor that the facts with
respect to each of the representations and warranties of the Purchaser
contained herein are true and correct, provided that the receipt of such
evidence and the closing of the transaction of purchase and sale herein
shall not act as a waiver of the covenants, representations and warranties
of the Purchaser contained herein, which covenants, representations and
warranties shall continue in full force and effect as provided for
herein. |
| (c) |
Opinion
of Counsel for the Purchaser
- The Purchaser shall cause to be delivered to the Vendor at the Closing
Time an opinion dated the Closing Date, from counsel for the Purchaser in
the form annexed hereto as Schedule 8.5(c). |
ARTICLE
IX
SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE VENDOR AND
PURCHASER
9.1 Survival
of Representations, Warranties and Covenants of the Vendor -
The representations, warranties and covenants of the Vendor contained in this
Agreement or in any agreement, certificate or any other document delivered or
given pursuant to this Agreement shall survive the completion of the
transactions contemplated by this Agreement and, notwithstanding such completion
or any investigation made by or on behalf of the Purchaser, shall continue in
full force and effect for the benefit of the Purchaser provided, however, that
subject to Article 10:
| (a) |
the
covenants, representations and warranties of the Vendor other than those
described in subsections (b) and (c) hereof shall terminate at the
expiration of one (1) year from the Closing Date; |
| (b) |
those
covenants, representations and warranties relating to tax liability of the
Corporation for a particular taxation year shall terminate concurrent with
the expiration of the period, if any, during which an assessment,
reassessment or other form of recognized document assessing liability for
tax, interest and/or penalties in respect of such taxation year under
applicable tax legislation could be issued thereunder, provided that if
the Corporation files a waiver or similar document subsequent to the date
hereof extending any such period as otherwise determined such covenants,
representations and warranties shall terminate concurrent with the
expiration of the period as so extended; and |
| (c) |
those
covenants, representations and warranties of the Vendor relating to title
to or ownership of the Purchased Shares or the assets of the Corporation
shall terminate two (2) years from the Closing
Date. |
9.2 Survival
of Representations, Warranties and Covenants of the Purchaser -
The covenants, representations and warranties of the Purchaser contained in this
Agreement or in any agreement, certificate or any other document delivered or
given pursuant to this Agreement shall survive the completion of the
transactions contemplated by this Agreement and, notwithstanding such completion
or any investigation made by or on behalf of the Vendor, shall continue in full
force and effect for the benefit of the Vendor until the expiration of the
period referred to in Section 9.1(a) but subject to Article 10.
ARTICLE
X
INDEMNIFICATION
10.1 Vendor
to Indemnify -
Subject to the limitations hereinafter provided in this Article 10, the Vendor
covenants and agrees to indemnify and save harmless the Purchaser and the
Corporation of and from:
| (a) |
any
loss suffered by the Purchaser or the Corporation as a result of any
breach of any representation, warranty or covenant of the Vendor contained
in this Agreement or in any agreement, certificate or other document
delivered or given pursuant to this Agreement;
and |
| (b) |
all
claims, actions, causes of action, damages, losses, liabilities, demands,
costs and expenses (including legal expenses on a solicitor-client basis)
in respect of the foregoing. |
Subject
to the limitations hereinafter provided in this Article 10, the liability of the
Vendor under this Section 10.1 shall cease upon the expiration of the respective
limitation periods set out in Article 9 unless the Vendor shall have been given
notice by the Purchaser of any claim hereunder pursuant to this Section 10.1
prior to such date in which event the limitation period shall not apply with
respect to such claim.
10.2 Notification
to Vendor -
The Purchaser shall forthwith notify the Vendor of any debts, liabilities,
contracts, engagements, assessments, reassessments or losses, or other amounts
for which the Vendor may be liable under Section 10.1 and the Vendor shall have
the right to participate in any negotiations with respect thereto. If the
Corporation receives an assessment or reassessment in respect of which the
indemnity of the Vendor hereunder may extend or relate, the Purchaser shall
cause the Corporation forthwith after receipt thereof to deliver to the Vendor a
copy of such assessment or reassessment and the Purchaser shall notify the
Vendor of its claim, if any, against the Vendor under the within indemnity
within ninety (90) days after receipt of such assessment or reassessment and the
Purchaser shall take all action necessary to preserve the Corporation's right to
object to the assessment or reassessment. Unless the Purchaser shall have
complied with the provisions of the immediately preceding sentence, the
liability of the Vendor to indemnify the Purchaser or the Corporation with
respect to such assessment or reassessment shall cease provided that general
notice from either the Purchaser or the Corporation that circumstances have
arisen which may lead to an indemnity being sought will be sufficient
notice.
10.3 Right
of Vendor to Defend -
The Vendor shall at all times have the right at its sole and only expense to
participate in any negotiations regarding, and dispute and contest in the name
of the Corporation, any claim for amounts for which the Vendor may be liable
under Section 10.1 and so long as the Vendor is defending such claim in good
faith, the Purchaser shall not settle or compromise the same; provided, however,
that with respect to any assessment or reassessment for income, corporate,
sales, excise or other tax, the right of the Vendor to so contest shall only
apply after the payment of any such assessment or reassessment by the Vendor on
behalf of the Corporation if payment is, at law, a pre-condition to the right to
contest the assessment or reassessment. If the Vendor does not elect to defend
such claim, the Purchaser shall have no obligation to do so. The payment of any
such assessment or reassessment by the Vendor on behalf of the Corporation shall
be repaid to the Vendor if repaid by the taxing authority, together with any
interest thereon paid by the taxing authority; provided, however, that
notwithstanding anything elsewhere contained in this Section 10.3, if any such
contest or settlement shall also involve matters which could affect the future
tax liabilities of the Corporation or the Purchaser, then any such contest or
settlement must be handled or conducted to the mutual satisfaction and agreement
of the Vendor, the Corporation and the Purchaser. The Purchaser will fully
cooperate and will cause the Corporation to fully cooperate with the Vendor and
its counsel in any proceedings with respect to any such amounts and shall give
the Vendor reasonable access to all documents relating thereto.
10.4 Purchaser
to Indemnify -
Subject to the limitations hereinafter provided in this Article 10, the
Purchaser covenants and agrees to indemnify and save harmless the Vendor of and
from:
| (a) |
any
loss suffered by the Vendor as a result of any breach of representation,
warranty or covenant of the Purchaser contained in this Agreement or in
any agreement, certificate or other document delivered or given pursuant
to this Agreement; and |
| (b) |
all
claims, actions, causes of action, damages, losses, liabilities, demands,
costs and expenses (including legal expenses on a solicitor-client basis)
in respect of the foregoing. |
Subject
to the limitations hereinafter provided in this Article 10, the liability of the
Purchaser under this Section 10.4 shall cease upon the expiration of the
respective limitation periods set out in Article 9 unless the Purchaser shall
have been given notice of any claim hereunder by the Vendor pursuant to this
Section 10.4 prior to such date in which event the limitation period shall not
apply with respect to such claim.
10.5 Notification
to Purchaser -
The Vendor shall forthwith notify the Purchaser of any amounts for which the
Purchaser may be liable under Section 10.4 and the Purchaser shall have the
right to participate in any negotiations with respect thereto.
10.6 Right
of Purchaser to Defend -
The Purchaser shall at all times have the right in its sole and only expense to
participate in any negotiations regarding, and dispute and contest in the name
of the Vendor, any claim for amounts for which the Purchaser may be liable under
Section 10.4 and so long as the Purchaser is defending such claim in good faith,
the Vendor shall not settle or compromise the same. If the Purchaser does not
elect to defend such claim, the Vendor shall have no obligation to do so. The
Vendor will fully cooperate with the Purchaser and its counsel in any
proceedings with respect to any such amounts and shall give the Purchaser
reasonable access to all documents relating thereto.
10.7 Limitations
| (a) |
The
Vendor shall not be obligated to make any payment to the Purchaser or the
Corporation in respect of any amount payable by the Vendor to either or
both them under this Article 10 unless, and then only to the extent that,
the aggregate of such amounts exceeds One Hundred Thousand Dollars
($100,000). |
| (b) |
The
Purchaser shall not be obligated to make any payment to the Vendor in
respect of any amount payable by the Purchaser to the Vendor under this
Article 10 unless, and then only to the extent that, the aggregate of such
amounts exceeds One Hundred Thousand Dollars
($100,000). |
| (c) |
Nothing
contained in this Agreement, including without limitation, Section 9.1,
shall limit the liability of the Vendor to the Purchaser or the
Corporation by reason of any fraudulent breach of representation or
warranty contained in this Agreement or in any agreement, certificate or
other document delivered or given pursuant to this Agreement, or limit the
time within which a claim hereunder on account of such fraudulent breach
may be made. |
| (d) |
Nothing
contained in this Agreement, including without limitation, Section 9.2,
shall limit the liability of the Purchaser to the Vendor by reason of any
fraudulent breach of representation or warranty contained in this
Agreement or in any agreement, certificate or other document delivered or
given pursuant to this Agreement, or limit the time within which a claim
hereunder on account of such fraudulent breach may be
made. |
| (e) |
The
remedies available to the Purchaser, the Vendor and the Corporation under
this Agreement are in addition to and without limitation to any other
remedy available at law or in equity. |
ARTICLE
XI
CLOSING
11.1 The
Closing -
The sale and purchase of the Purchased Shares hereunder shall be completed at
the Closing Time at the offices of WeirFoulds LLP, 130 King Street West, Suite
1600, The Exchange Tower, Toronto, Ontario, M5X 1J5 or at such other location as
may be mutually agreed upon by the parties hereto.
11.2 Tender -
Any tender of documents or money hereunder may be made upon the parties hereto
or their respective counsel and money may be tendered by official bank draft
drawn upon a Canadian chartered bank or by negotiable cheques payable in
Canadian funds and certified by a Canadian chartered bank or trust
company.
ARTICLE
XII
GENERAL
12.1 Public
Notices -
The parties hereto hereby agree that all notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and co-ordinated and no party hereto shall act unilaterally in
this regard without the prior approval of the other, such approval not to be
unreasonably withheld, unless such disclosure shall be required to meet timely
disclosure obligations of any party under applicable securities laws and stock
exchange rules in circumstances where prior consultation with the other party is
not practicable.
12.2 Expenses -
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
12.3 Time -
Time shall be of the essence of this Agreement and of every part hereof and no
extension or variation of this Agreement shall operate as a waiver of this
provision.
12.4 Notices -
All payments and communications which may be or are required to be given by
either party to the other herein, shall (in the absence of any specific
provision to the contrary) be in writing and delivered or sent by prepaid
registered mail or telecopier to the parties at their following respective
addresses:
For:
The
Vendor:
EnerNorth
Industries Inc.
2
Adelaide Street West, Suite 301
Toronto,
ON M5H 1L6
Facsimile:
(416) 861-9623
Attention:
President
For:
The
Purchaser:
Spectrum
Sciences & Software Holdings Corp.
91
Hill Avenue
Fort
Walten Beach, Florida
U.S.A.,
32548
Facsimile:
(850) 796-0924
Attention:
President and CEO
For:
The
Corporation:
M&M
Engineering Limited
456
Logy Bay Road
St.
Johns, Newfoundland
A1A
5B2
Facsimile:
(709) 753-0814
Attention:
President
and
if any such payment or communication is sent by prepaid registered mail, it
shall, subject to the following sentence, be conclusively deemed to have been
received on the third business day following the mailing thereof and, if
delivered or telecopied, it shall be conclusively deemed to have been received
at the time of delivery or transmission. Notwithstanding the foregoing
provisions with respect to mailing, in the event that it may be reasonably
anticipated that, due to any strike, lock-out or similar event involving an
interruption in postal service, any payment or communication will not be
received by the addressee by no later than the third (3rd) Business Day
following the mailing thereof, then the mailing of any such payment or
communication as aforesaid shall not be an effective means of sending the same
but rather any payment or communication must then be sent by an alternative
means of transportation which it may reasonably be anticipated will cause the
payment or communication to be received reasonably expeditiously by the
addressee. Either party may from time to time change its address hereinbefore
set forth by notice to the other of them in accordance with this
section.
12.5 Governing
Law -
This Agreement and the rights and obligations and relations of the parties
hereto shall be governed by and construed in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein (but
without giving effect to any conflict of laws rules). The parties hereto agree
that the Courts of Ontario shall have jurisdiction to entertain any action or
other legal proceedings based on any provisions of this Agreement. Each party
hereto does hereby attorn to the jurisdiction of the Courts of the Province of
Ontario.
12.6 Headings -
The index to and headings in this Agreement and in the Schedules hereto are
inserted solely for convenience of reference and do not affect the
interpretation thereof or define, limit or construe the contents of any
provision of this Agreement.
12.7 Assignment -
Neither this Agreement nor any rights or obligations hereunder shall be
assignable by any party hereto without the prior written consent of each of the
other parties, which consent may be unreasonably withheld. Subject thereto, this
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective successors (including any successor by reason of
amalgamation of any party hereto) and permitted assigns.
12.8 Entire
Agreement -
With respect to the subject matter of this Agreement, this Agreement (a) sets
forth the entire agreement between the parties hereto and any persons who have
in the past or who are now representing either of the parties hereto, (b)
supersedes all prior understandings and communications between the parties
hereto or any of them, oral or written, and (c) constitutes the entire agreement
between the parties hereto. Each party hereto acknowledges and represents that
this Agreement is entered into after full investigation and that no party is
relying upon any statement or representation made by any other which is not
embodied in this Agreement. Each party hereto acknowledges that he or it shall
have no right to rely upon any amendment, promise, modification, statement or
representation made or occurring subsequent to the execution of this Agreement
unless the same is in writing and executed by each of the parties
hereto.
12.9 Further
Assurances -
The parties hereto shall with reasonable diligence do all such things and
provide all such reasonable assurances as may be required to consummate the
transactions contemplated hereby, and each party hereto shall provide such
further documents or instruments required by the other party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions whether before, at or after the Closing
Time.
12.10 Counterparts -
This Agreement may be executed in any number of counterparts and all such
counterparts shall for all purposes constitute one agreement, binding on the
parties hereto, provided each party hereto has executed at least one
counterpart, and each shall be deemed to be an original, notwithstanding that
all parties are not signatory to the same counterpart.
12.11 Waiver -
The failure of any party to this Agreement to enforce at any time any of the
provisions of this Agreement or any of its rights in respect thereto or to
insist upon strict adherence to any term of this Agreement will not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. The exercise by any party to this Agreement of any of its
rights provided by this Agreement will not preclude or prejudice such party from
exercising any other right it may have by reason of this Agreement or otherwise,
irrespective of any previous action or proceeding taken by it hereunder. Any
waiver by any party hereto of the performance of any of the provisions of this
Agreement will be effective only if in writing and signed by a duly authorized
representative of such party.
12.12 Negotiation -
This Agreement has been negotiated and approved by counsel on behalf of all
parties hereto and, notwithstanding any rule or maxim of construction to the
contrary, any ambiguity or uncertainty will not be construed against any party
hereto by reason of the authorship of any of the provisions hereof.
IN
WITNESS WHEREOF
the parties hereto have hereunto duly executed this Agreement as of the day and
year first above written.
ENERNORTH
INDUSTRIES INC.
Per:
"J.C.
Cassina"_____________
Title
Chairman
Per:
_"S.J.
Hall"________________
Title
President
SPECTRUM
SCIENCES & SOFTWARE HOLDINGS CORP.
Per:
_"W.H.
Ham"___________
Title
President
Per:
_______________________
Title
M&M
ENGINEERING LIMITED
Per:
_"J.
Brake"_______________
Title
Chairman
and CEO
Per:
_"T.
Warren"______________
Title
Secretary