SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of
earliest event reported): July 31, 1998
WOODHEAD INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-5971 36-1982580
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(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification Number)
Three Parkway North, Suite 550, Deerfield, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 236-9300
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N/A
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 1998, pursuant to an Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of July 2, 1998, by and among S-S Technologies
Inc.("Technologies"), S-S Technologies Holdings Ltd.("Holdings"), the
Registrant, and Woodhead Canada Limited, a wholly owned subsidiary of the
Registrant, Woodhead Canada Limited acquired the business and certain of the
assets of the SST division of Technologies, located in Ontario, Canada, in
exchange for an aggregate purchase price of Can $51,419,342 (approximately US
$34.9 million), consisting of cash of Can $42,453,836 and 400,000 shares of the
Registrant's common stock. The amount of such consideration was determined by
negotiations among the parties and, from the standpoint of the Registrant,
involved consideration of a number of factors, including the financial
condition, earnings and prospects of SST and the nature of SST's business. The
assets acquired consist primarily of software, customer lists and computer and
other office equipment. The funds used to finance the transaction were obtained
under a new credit facility obtained by Woodhead Canada Limited from the Harris
Trust and Savings Bank.
Prior to the transaction, there were no material relationships between
Technologies, Holdings and the Registrant or any of the Registrant's affiliates,
directors or officers or any associates of such directors and officers.
SST manufactures, distributes and sells interface cards, gateways and
related software for connecting devices and controllers to industrial networks.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements of Business Acquired
In accordance with the requirements of Item 7(a) of Form 8-K, the
requisite financial statements will be filed not later than October 14,
1998.
B. Pro Forma Financial Information
In accordance with the requirements of Item 7(b) of Form 8-K, the
requisite pro forma financial information will be filed not later than
October 14, 1998.
2
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C. Exhibits
2.1 Asset Purchase Agreement dated as of July 2, 1998 by and among S-S
Technologies Inc., S-S Technologies Holdings Ltd., the Registrant, and
Woodhead Canada Limited.
2.2 Letter Agreement dated July 31, 1998 between Woodhead Industries,
Inc. and S-S Technologies Inc.
2.3 Credit Agreement dated as of July 30, 1998 between Woodhead
Canada Limited and Harris Trust and Savings Bank.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
On July 31,1998, the Registrant issued a total of 400,000 shares of its
common stock, par value $1.00, in partial consideration for the acquisition of
the business and certain of the assets of the SST division of Technologies. The
shares of the Registrant's stock were issued pursuant to Regulation S and in
connection with the Asset Purchase Agreement. Technologies and Holdings, as
controlling stockholder of Technologies, have represented that neither they nor
any of their beneficial owners are U. S. persons. The sale and issuance occurred
in Canada in an offshore transaction, offering restrictions were implemented
pursuant to the Asset Purchase Agreement, and the transaction was otherwise in
compliance with Regulation S. There were no underwriters or other distributors.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
August 14, 1998 Woodhead Industries, Inc.
By: /s/ C. Mark DeWinter
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C. Mark DeWinter,
Chairman, President and
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
2.1 Asset Purchase Agreement dated 5
as of July 2, 1998, by and among S-S
Technologies Inc., S-S Technologies Holdings
Ltd., the Registrant and Woodhead Canada Limited.
Schedules and exhibits 7.1.8 and 8.1.3 to this
Exhibit have not been filed with this Current
Report on Form 8-K. Registrant agrees to furnish
supplementally to the Securities and Exchange
Commission, upon request, a copy of any omitted
schedule or exhibit.
2.2 Letter Agreement dated July 31, 1998 79
between Woodhead Industries, Inc. and S-S
Technologies Inc.
2.3 Credit Agreement dated as of July 30, 81
1998 between Woodhead Canada Limited and Harris
Trust and Savings Bank. Exhibits B through E of
this Exhibit have not been filed with this Current
Report on Form 8-K. Registrant agrees to furnish
supplementally to the Securities and Exchange
Commission, upon request, a copy of any omitted
exhibit.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT made the 2nd day of July, 1998,
B E T W E E N :
S-S TECHNOLOGIES INC., a corporation incorporated under
the laws of Ontario
(hereinafter called "SST")
- and -
S-S TECHNOLOGIES HOLDINGS LTD., a corporation incorporated
under the laws of Ontario
(hereinafter called "SST's Guarantor")
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WOODHEAD CANADA LIMITED, a corporation incorporated under the
provincial laws of Nova Scotia
(hereinafter called "WC")
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WOODHEAD INDUSTRIES, INC., a corporation incorporated under
the laws of Delaware
(hereinafter called "Woodhead")
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WITNESSES THAT:
WHEREAS SST owns the Product (as hereinafter defined) and carries on
the Business (as hereinafter defined) in Canada and elsewhere;
AND WHEREAS WC wishes to purchase from SST and SST wishes to sell to WC
the Product and the assets of the Business related thereto, all upon and subject
to the terms and conditions contained herein;
NOW THEREFORE in consideration of the mutual terms and covenants herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by each of the parties hereto, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS In this Agreement, including the recitals hereto
and the Schedules hereto annexed, the following words and
expressions shall have the following meanings:
"AFFILIATED CORPORATION" with reference to any Person shall have the
meaning attributed "affiliated body corporate" as set forth in the
Business Corporations Act (Ontario) and, for purposes of this Agreement
shall include any Person "Controlled by", "Controlling", or under
common "Control" with, the Person;
"AGREEMENT" means this asset purchase agreement made the 2nd day of
July, 1998 between WC, Woodhead , SST and SST's Guarantor together with
all Schedules and Exhibits hereto, all as may be amended, supplemented
or restated from time to time;
"APPROVALS" means (i) all governmental and other regulatory,
administrative or court approvals, orders, consents, authorizations or
permits, including all notifications thereto and all filings therewith,
in Canada and elsewhere, required in connection with the completion of
any of the transactions contemplated by this Agreement; and, (ii) if
applicable, any order or decision of any governmental, regulatory or
administrative authority or any court to allow or to not disallow, or
the failure of such authority to disallow, the completion of any of the
transactions contemplated by this Agreement. Where the term "Approvals"
contemplates a governmental, regulatory, administrative or court
approval, order or decision, it shall be deemed to mean an approval,
order or decision granting the approval sought without conditions or on
such conditions as are acceptable to WC acting reasonably, which
approval, order or decision is by its terms final and effective and
from which there is no further appeal permitted.
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"ASSOCIATE" of any particular Person shall have the meaning attributed
to such term in the Business Corporations Act (Ontario);
"ASSUMED EMPLOYEE" means those Employees to whom WC shall offer
employment in accordance with Section 6.2.1 of this Agreement;
"ASSUMED LIABILITIES" has the meaning attributed to that term in
Section 3.1;
"BREACH" has the meaning attributed to that term in Subsection 9.1.1;
"BUSINESS" means the SST Software Division of SST (formerly known as
the Products Division of SS Technologies Inc.);
"BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in the province of Ontario;
"CLAIM" has the meaning attributed to such term in Subsection 9.1.3;
"CLAIMANT" has the meaning attributed to such term in Subsection 9.2.3;
"CLOSING" means the completion of the sale and purchase of the
Purchased Assets as specified in Section 2.5;
"CLOSING DATE" means July 31, 1998, or such other date as the parties
may agree in writing;
"COLLECTIVE AGREEMENT" means any agreement, contract, commitment or
arrangement, either directly or by operation of law with any Union and
includes all letters of understanding, letters of intent, side bar
letters and other written communications between SST and any Union
which imposes obligations on SST or sets out any understanding with
respect to the interpretation of the provisions of such collective
agreement;
"COMMISSION" means the U.S. Securities and Exchange Commission;
"CONTAMINANT" means any substance, gas, liquid, product, element,
radiation, vibration or matter included in any definition of "hazardous
product", "dangerous goods", "waste", "toxic substance", "hazardous
waste", "extremely hazardous waste", "restricted hazardous waste",
"contaminant", "pollutant", "toxic pollutant", "deleterious substance",
or words of similar import under any Environmental Law, or the presence
of which in the environment is likely to affect adversely the quality
of the environment in any way;
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"CONTRACTS" means all orders, contracts, agreements, commitments and
understandings, whether written or oral, to which SST is a party or is
otherwise bound, with respect to the Business, including without
limiting the generality of the foregoing, all quotes, tenders or bids
in respect thereof and the items referred to in Subsection 4.11.1, but
other than the Realty Leases;
"CONSENT" has the meaning attributed to that term in Subsection 4.11.6;
"CONTROL", "CONTROLLED" AND "CONTROLLING" shall have the meaning
attributed thereto in the Business Corporations Act (Ontario);
"DEFENCE NOTICE" has the meaning attributed to that term in
Subsection 9.4.1;
"DESIGN DOCUMENTATION" means all documentation, specifications,
manuals, user guides, promotional material, internal notes and memos,
technical documentation, drawings, flow-charts, diagrams, source
language statements, demo disks, benchmark test results, and other
written materials related to, associated with or used or produced in
the development of the Product;
"EFFECTIVE DATE" means July 31, 1998;
"EFFECTIVE DATE ASSET LIST" means the list of the Purchased Assets
as at July 31, 1998 prepared by SST in consultation with WC and
approved by WC and its auditors;
"EFFECTIVE TIME" means the last moment in time on July 31, 1998;
"EMPLOYEE" means any active or inactive individual, employee, officer
or director of SST, employed in the Business, whether presently or
formerly, including all Assumed Employees;
"EMPLOYMENT LAWS" means all Laws relating to employment and labour,
including without limitation those relating to wages, hours and
employment or labour standards generally, labour or industrial
relations, human rights, pay equity, employment equity, workers'
compensation, or workplace safety and insurance, occupational health
and safety and for greater certainty all Laws dealing with any
substances which are designated substances, Hazardous Material or
regulated biological, chemical or physical agents, employer health tax,
employment or unemployment insurance, income tax withholdings and
Canada Pension Plan applicable to all Employees employed in connection
with the Business;
"ENCUMBRANCES" means mortgages, pledges, liens, charges, security
interests, claims, hypothecs, options, encumbrances, easements, rights
of way, rights of entry, leases, agreements to lease, offers to lease
agreements, restrictions, reservations, rights of third parties and
other claims of any kind and nature whatsoever registered or
unregistered,
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whether created or arising by agreement, statute or otherwise at law,
attaching to property, interest or rights, and whether or not
specific, floating or otherwise;
"ENVIRONMENTAL CLAIM" means any claim, notice, administrative order,
complaint, summons, writ, proceeding or demand relating to remediation,
investigation, monitoring, emergency response, de-contamination,
restoration, or other action under any Environmental Law and any
notice, demand, claim, or other communication alleging or asserting
liability, either direct or indirect, and either in whole or by way of
contribution or indemnity for investigatory, monitoring or clean-up
costs, Governmental Authority response costs, damages, personal
injuries, fines, penalties or for other relief, arising out of, based
on or resulting from (i) the presence or Release into the environment
of any Contaminant; or (ii) any non-compliance or alleged
non-compliance with any Environmental Law;
"ENVIRONMENTAL LAWS" means all applicable statutes, regulations,
ordinances, by-laws, codes, rules, directives, policies, guidelines,
decrees or other pronouncements having the effect of law, whether
federal, provincial, municipal, state or local relating to the
regulation, protection or preservation of the environment, occupational
health and safety or to the regulation of Contaminants, including
without limitation the Environmental Protection Act (Ontario), as
amended from time to time, and similar legislation of other Canadian
Provinces, and the Canadian Environmental Protection Act, as amended
from time to time;
"ENVIRONMENTAL PERMITS" includes all Approvals issued by any
Governmental Authority of competent jurisdiction under Environmental
Laws;
"EXCLUDED ASSETS" has the meaning attributed to that term in
Section 2.2;
"EXCLUDED LIABILITIES" has the meaning attributed to that term in
Section 3.2;
"EXCLUDED CONTRACTS" has the meaning attributed to that term in
Section 2.2;
"FIXED ASSETS" has the meaning attributed to that term in
Subsection 2.1(a);
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means such
recommendations as the Canadian Institute of Chartered Accountants
includes in its handbook concerning Canadian accounting treatment or
statement presentation, and references herein to generally accepted
accounting principles shall be interpreted accordingly;
"GOVERNMENTAL AUTHORITY" means any domestic or foreign government,
including any federal, provincial, state, territorial, municipal or
local government, or any government agency, tribunal, commission or
other authority exercising or purporting to exercise executive,
legislative, judicial, regulatory, administrative functions of, or
pertaining to, government;
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"HAZARDOUS MATERIAL" means any pollutant, contaminant, hazardous or
toxic material used, treated, stored, processed, generated,
manufactured, disposed, handled, transported, released, spilled,
produced, discharged or emitted by SST in the conduct of, relating to
or in any way affecting the Business or the Purchased Assets;
"INTELLECTUAL PROPERTY" means all intellectual or industrial property,
including all trade-marks (whether registered or not), trade names,
service marks, certification marks, patents, copyrights (whether
registered or not), know-how, formulae, processes, inventions,
technical expertise, research data, trade secrets, confidential
information, industrial designs, product designs, mask work of
semiconductor rights and other similar property, and all registrations
and applications for registration thereof, all as used in or with
respect to the Business, and includes all such rights in respect of the
Product;
"ITA" means the Income Tax Act (Canada), the regulations thereunder
and the rules and policies in relation thereto;
"KEY EMPLOYEES" means those employees listed in Schedule 7.1.11
hereto;
"LABOUR DISTURBANCE" means any strike, cessation of work, refusal to
work or to continue to work by Employees in combination or in concert
or in accordance with a common understanding, or a slow down or other
concerted activity on the part of such Employees designed to restrict
or limit output, or any lockout, closing of place of employment,
suspension of work or refusal by SST to continue to employ any
Employees, or any other disturbance or dispute involving Employees.
"LABOUR RELATIONS MATTER" means any matter regarding wages (including
overtime), salaries, bonuses, commissions, hours of work, vacations or
vacation pay, holidays or holiday pay, severance pay, notice or pay in
lieu of notice, termination pay, sick leave, personal days, pension or
other employee benefits, worker's compensation or workplace safety and
insurance, income tax withholdings, employment or unemployment
insurance, Canada Pension Plan or employer health tax, human rights,
pay equity, employment equity, occupational health and safety,
employment standards, or arising under any Employment Laws generally,
including any such matters arising from any Collective Agreement;
"LAW" means any federal, provincial, state, territorial, municipal,
local or other law, statute, regulation, code, ordinance, by-law,
order, rules, directives, decrees, guidelines, restriction, official
plan, rule, notice or stated policy and "Laws" means all of the
foregoing;
"LIABILITIES" means any and all debts, liabilities or obligations of
any nature or kind whatsoever, whether due or to become due, accrued,
absolute, contingent or otherwise;
"LOSS" has the meaning attributed to that term in Subsection 9.1.2;
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"MARCH 31ST ASSET LIST" means the list of the Purchased Assets
attached at Schedule 2.1 as at March 31, 1998 prepared by SST in
consultation with WC and approved by WC and its auditors;
"MATERIAL ADVERSE EFFECT" means, with respect to any Person or thing,
any event or condition including non-compliance or non-disclosure which
has or may be expected to have a material and adverse effect on the
property, assets, liabilities (whether due, to become due, absolute,
accrued, contingent or otherwise), condition (financial or otherwise),
results of operations, business or prospects of such Person;
"NOTICE" has the meaning attributed to that term in Section 10.1;
"ORDINARY COURSE" when used in relation to the conduct by SST of the
Business, means any transaction which constitutes an ordinary
day-to-day business activity of SST with respect to the Business
conducted in a commercially reasonable and businesslike manner and
consistent with the past practices of SST with respect to the Business,
having no unusual or special features, and being such as a corporation
or other entity of a similar nature and size and engaged in a similar
business might reasonably be expected to carry on from time to time;
"OTHER SOFTWARE" means all computer software, patents, trade-marks,
copyrights, or intellectual property other than the Product and
patents, trade-marks, copyrights or other intellectual property used by
SST and necessary to conduct the Business in the ordinary course but
excluding the Excluded Assets;
"PENSION PLAN" means any Plan for the benefit of Employees which is or
is intended to be a registered pension plan as defined in the ITA
and/or is a pension plan registered under any federal or provincial
pension legislation;
"PERMITS" means all of those licences, approvals, certificates,
registrations and permits which SST holds or has made application for
and which are required to own or hold the Purchased Assets or to carry
on the Business as at the Effective Date;
"PERMITTED ENCUMBRANCES" means those Encumbrances described and listed
in Schedule 4.3.1;
"PERSON" includes any individual, partnership, limited partnership,
joint venture, syndicate, sole proprietorship, company or corporation
with or without share capital, unincorporated association, trust,
trustee, executor, administrator or other legal personal
representative, regulatory body or agency, government or governmental
agency, authority or entity however designated or constituted;
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"PLANS" means every bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination
pay, health or other medical, life, disability or other insurance,
supplemental unemployment benefit, profit sharing, pension, retirement,
supplemental retirement and other employee benefit plan, program,
agreement or arrangement, whether written or unwritten, formal or
informal, legally binding or not, maintained or contributed to or
required to be contributed to by any Person for the benefit of any
Employees or their dependents or beneficiaries, as well as the
compensation practices and policies applicable to the Employees
including practices and policies regarding vacations, sick leave,
leaves of absence and all perquisites of employment, other than
employee benefit programs mandated by Law, and including without
limitation any Pension Plan;
"PREMISES" means 50 Northland Road, Waterloo, Ontario;
"PRODUCT" means the SST Software, the description for which is listed
on Schedule 4.13.5 and all other software products developed or owned
by SST and used in the Business including all enhancements, versions,
releases and updates of such products and any other software products
in development for the Business;
"PURCHASE PRICE" has the meaning attributed to that term in
Section 2.3;
"PURCHASED ASSETS" has the meaning attributed to that term in
Section 2.1;
"RATE" means an interest rate equal to the Bank of Montreal prime rate;
"REAL PROPERTY" means the real property, including land and buildings,
structures and improvements thereon, leased by SST and used in the
Business;
"REALTY LEASES" means the leases or agreements in the nature of a lease
of real property, to which SST is a party, whether as lessor or lessee,
relating to the Business and described in Schedule 2.1(h) hereto;
"RELATED PERSONS" has the meaning attributed to that term in the ITA;
"RELEASE" means any release, spill, leak, emission, pumping, injection,
deposit, discharge, dispersal, leaching, migration, spraying,
abandonment, pouring, emptying, throwing, dumping, placing or
exhausting into the environment and when used as a verb has a like
meaning;
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended;
"SST'S INTELLECTUAL PROPERTY" means all Intellectual Property of SST in
existence on the Effective Date which is related to or used in the
Business;
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"SST'S SOLICITORS" means Messrs. Harrison Elwood, 450 Talbot Street,
P.O. Box 3237, London, Ontario N6A 4K3;
"SOFTWARE AUTHOR" means all authors of the Product or any other person
or entity who or which participated in the development of the Product
or any portion thereof or performed any creative work related to the
Product;
"TAX" means all federal, provincial, territorial, state, municipal,
local or other taxes, surtaxes, duties, levies, imposts, rates, fees,
assessments, reassessments, dues and charges of any nature including
without limitation income, sales, capital, goods and services, value
added, excise, custom duties and franchise, real and personal property
and payroll taxes (including tax withholdings, employer health taxes,
workers' compensation assessments and Canada Pension Plan contributions
and Unemployment or Employment Insurance premiums, and remittances),
and fines, penalties, interest and surcharges in respect of any of the
foregoing;
"TIME OF CLOSING" means 11:00 o'clock a.m., Toronto time, or such
earlier or later time as the parties hereto may agree in writing, on
the Closing Date;
"TRADE SECRETS" means the interest of SST in all licences, know-how,
processes, algorithms, formulae, designs, methods, trade secrets,
inventions, proprietary or technical information, pricing lists,
customer lists, and data covering or embodied in any software or other
assets used in the Business;
"UNION" means any labour or trade union, labour or trade organization
or local or branch of a national or international organization or
association of employers that has as one of its purposes the
regulations of relations between employers and employees through
collective bargaining, or any other representative of employees;
"WC'S SOLICITORS" means Messrs. Baker & McKenzie, BCE Place, 181 Bay
Street, Suite 2100, P.O. Box 874, Toronto, Ontario, M5J 2T3; and
"WOODHEAD SHARES" means shares of common stock, U.S. $1.00 par value,
of Woodhead which are listed and posted for trading on NASDAQ.
1.1.1 INTERPRETATION: The following provisions shall be applicable to and
shall govern the interpretation of this Agreement, including any
recitals hereto and any Schedules hereto annexed.
1.1.2 SUBDIVISIONS: The subdivisions in this Agreement are called in
descending order "articles" "sections, "subsections", "paragraphs",
"subparagraphs", "clauses" and "subclauses" and all references in this
Agreement to designated subdivisions are references to designated
subdivisions of this Agreement.
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1.1.3 HEREIN AND HEREUNDER: The words "herein", "hereunder", and other words
of similar import refer to this Agreement as a whole and not to any
particular subdivision. References to Schedules and Exhibits are
references to the Schedules and Exhibits attached to and forming part
of this Agreement, unless the context otherwise requires.
1.1.4 HEADINGS:The headings used in this Agreement are for convenience only
and do not form a part of this Agreement nor are they intended to
interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
1.1.5 INCLUDING- NON-LIMITING LANGUAGE: The word "including" when following
any general statement, term or matter shall not be construed to limit
such general statement, term or matter to the specific items or matters
set forth immediately following such word or similar items or matters
whether or not non-limiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope
of such general statement, term or matter.
1.1.6 SST'S KNOWLEDGE: In this Agreement, the phrase "to the best of SST's
knowledge" or "to SST's knowledge" shall mean any matter which is or
which might reasonably be expected to be in the actual knowledge of the
executive officers of SST either before or after their due and diligent
enquiry.
1.1.7 GENDER AND NUMBER: Words importing the singular number only shall
include the plural and vice versa; words importing gender shall
include all genders, and words importing any particular type of
Person, including individuals, shall include all Persons.
1.1.8 CALCULATION OF TIME: Unless otherwise specifically provided herein, in
calculating the period of time from a reference day within, prior to or
following which any act is to be done or step is to be taken pursuant
to this Agreement, the period of time shall not include such reference
day.
1.1.9 PERFORMANCE ON NON-BUSINESS DAYS: If anything is required to be done
or any action is required to be taken hereunder on or by a day which
is not a Business Day, then such thing may be validly done and such
action may be validly taken on or by the next day that is a
Business Day.
1.1.10 ACCOUNTING TERMS: All accounting terms used herein and not otherwise
defined shall have the meanings assigned to them in accordance with
Generally Accepted Accounting Principles.
1.1.11 CURRENCY: All statements of or references to dollar amounts in this
Agreement, unless otherwise specifically indicated, shall mean lawful
money of Canada.
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1.1.12 APPLICABLE LAW: This Agreement shall be construed and enforced in
accordance with, and the rights of the parties hereto shall be
governed by, the laws of the Province of Ontario and the laws of
Canada applicable therein, including its conflict of law rules. Each
of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of the courts of the Province of Ontario and covenants to
appear before such courts.
1.1.13 ENTIRE AGREEMENT, WAIVER: This Agreement, together with the agreements
and other documents delivered pursuant hereto or in respect of the
transaction contemplated hereby, including without limitation any
officer's certificates, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether
oral or written, of the parties and there are no warranties,
representations or other agreements between the parties in connection
with the subject matter hereof except as specifically set forth herein
and therein. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties
hereto. No waiver of any of the provisions of this Agreement shall be
deemed to constitute or shall constitute a waiver of any other
provision (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
1.1.14 NO MERGER: Each party hereby agrees that all provisions of this
Agreement, other than the conditions precedent in Articles 7 and 8
shall survive the execution and delivery of this Agreement for the
periods of time and subject to any limitations contained herein.
1.1.15 SEVERABILITY: If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon any such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner, to the end
that the transactions contemplated by this Agreement are consummated to
the extent possible.
1.1.16 TIME OF ESSENCE: Unless otherwise specifically provided herein, time
shall be of the essence of this Agreement and each and all of its
provisions.
1.1.17 SCHEDULES: The following are the Schedules attached to and incorporated
in this Agreement by reference, which Schedules are deemed to be part
of this Agreement:
Schedule 2.1 - March 31st Asset List
Schedule 2.1(h) - Realty Leases and Default/Breach
Schedule 2.2(A) - Excluded Assets
Schedule 2.2(B) - Excluded Contracts
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Schedule 2.4 - Allocation of Purchase Price
Schedule 4.1.5 - Location of Operations and Assets
Schedule 4.3.1 - Permitted Encumbrances
Schedule 4.4.2 - Fixed Assets Not Located at the
Premises
Schedule 4.6.1 - Litigation
Schedule 4.7.1 - Permits
Schedule 4.8.1 - Employees
Schedule 4.8.3 - Exceptions to Labour Matters in
Section 4.8.3
Schedule 4.8.4 - Employment Contracts
Schedule 4.9.1 - Plans
Schedule 4.10.5 - Storage Tanks
Schedule 4.11.1 - Material Contracts
Schedule 4.11.4 - Related Party Contracts
Schedule 4.12.1 - Actions Affecting the Business
Schedule 4.12.2 - Actions by SST
Schedule 4.13.1(a)- Exceptions to Copyright and
Trademark Status
Schedule 4.13.2(b)- Exceptions to Patent Status
Schedule 4.13.3 - Trade Secrets
Schedule 4.13.5 - The Product
Schedule 4.13.6 - Defects and Use of Products
Schedule 4.13.7 - Year 2000 Criteria
Schedule 4.13.8 - Other Software
Schedule 7.1.11 - Key Employees
All parties acknowledge and agree that the schedules as attached hereto may
require some revision and authorize WC's Solicitors (upon agreement with SST's
Solicitors) to attach final revised schedules to this Asset Purchase Agreement
as soon as same are completed.
1.1.18 EXHIBITS: The following are the Exhibits attached to and incorporated
in this Agreement by reference, which Exhibits are deemed to be part
of this Agreement:
Exhibit 7.1.8 - Opinion of SST's Solicitors
Exhibit 7.1.9 - Non-Competition and Confidentiality
Agreement
Exhibit 8.1.3 - Opinion of WC and Woodhead's
Solicitors
Exhibit 8.1.4 - Service, Consulting and Licensing
Agreements
All parties acknowledge and agree that the forms of exhibits as attached hereto
remain subject to negotiation.
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ARTICLE 2
PURCHASE AND SALE OF THE PURCHASED ASSETS
2.1 PURCHASE Subject to the terms and conditions of this Agreement, on the
Effective Date and with effect from the Effective Time, SST shall sell,
transfer or assign, as the case may be, to WC, and WC shall purchase
from SST, the Product and the assets owned by SST (including Contracts)
and used by it in the Business as listed on the March 31st Asset List
and attached hereto as Schedule 2.1 plus any additions and less any
deletions resulting from operations in the Ordinary Course from April
1, 1998 to and including the Effective Date (such assets to be
purchased and sold hereunder being referred to herein as the "Purchased
Assets"). Without limiting the foregoing, the Purchased Assets include:
(1) FIXED ASSETS AND EQUIPMENT. The fixed assets listed
on Schedule 2.1, including without limitation
machinery, equipment, tools, office equipment,
furniture and fixtures, vehicles and other items of
personal property, together with all replacements,
improvements and additions thereto (collectively the
"Fixed Assets"), whether located on or in any of
SST's premises or elsewhere;
(2) BOOKS AND RECORDS. Copies of all business and
financial records (regardless of how recorded)
including without limitation all customer and
supplier lists and records, all operating manuals,
all supplies and sundry items, including telephone
numbers, keys and lock combinations, specifications
and other documentation and all information used or
required to conduct the Business with the original
business and financial records lodged in a secure
location and available to both parties during normal
business hours;
(3) PERSONNEL RECORDS. Copies of all personnel and
payroll records relating to all Assumed Employees
with the original personnel and payroll records
lodged in a secure location and available to both
parties during normal business hours;
(4) PREPAYMENTS. The full benefit of all prepaid
expenses, deposits and other credits relating to the
Business provided same are for the ongoing benefit of
the Business and reflected on the March 31st Asset
List;
(5) GOODWILL. All goodwill of or attributable to the
Business including SST's rights to the names "SST",
"SSTechnologies" and the web site located at
"www.sstech.on.ca" and any variations thereof,
whether registered or unregistered and wherever
registered;
(6) RIGHTS AS SUCCESSOR TO SST. The exclusive right to
represent WC as carrying on the Business as successor
to SST;
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(7) WARRANTY RIGHTS. All of SST's warranty rights
against manufacturers or suppliers relating to any
of the Purchased Assets; and
(8) LEASED REAL PROPERTY AND LEASEHOLD IMPROVEMENTS. All
right, title and interest of SST in and to the Realty
Leases (all of which are described on Schedule
2.1(h)), including, without limitation, all prepaid
rent, tenant allowances and security deposits
thereunder and all leasehold improvements owned by
SST and forming part of the leased Real Property.
2.2 EXCLUDED ASSETS AND EXCLUDED CONTRACTS: For the sake of clarity, the
parties acknowledge and agree that SST shall not sell, and WC shall
not purchase the assets listed on Schedule 2.2A (collectively the
"Excluded Assets") and WC shall not assume any of the contracts listed
on Schedule 2.2B (collectively the "Excluded Contracts") nor any of
the obligations or liabilities relating thereto.
2.3 PURCHASE PRICE:
The purchase price for the Purchased Assets (the "Purchase Price")
shall be approximately $51,491,342.00. The foregoing estimate is based upon a
price of $51,399,122.00 for the Purchased Assets as at March 31, 1998 plus a net
adjustment of $92,220.00 for additions, deletions and accrued depreciation for
the period April 1, 1998 to and including the Effective Date.
2.4 PAYMENT OF THE PURCHASE PRICE:
The Purchase Price will be paid at the time of Closing:
(1) by the issuance of Woodhead Shares. SST and WC have agreed
that, as part of the Purchase Price, SST will receive 400,000
Woodhead Shares. In order to determine the subscription amount
for each Woodhead Share (the "Subscription Price"), the
Parties have agreed on the following formula:
1. The daily volume weighted average of the trading
price for a share of Woodhead common stock as
reported on the Nasdaq National Market (as reported
in the Wall Street Journal, Midwest edition) for the
most recent fifteen (15) days that such shares have
traded ending on the trading day two (2) days prior
to the Closing Date will be determined (the "Average
Trading Price");
2. Once such Average Trading Price is determined and
provided such trading price is not greater than US
$22.00 (the "Upper Limit") or less than US $15.00
(the "Lower Limit"), then such Average Trading Price
shall be the
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Subscription Price for the purpose of establishing
how much of the Purchase Price is represented by the
subscription for the 400,000 Woodhead Shares;
3. If the Average Trading Price exceeds the Upper Limit,
SST may, but is not required to, terminate this
agreement unless WC elects to accept the Upper Limit
as the Subscription Price by adjusting the cash
component of the Purchase Price accordingly;
4. If the Average Trading Price is less than the Lower
Limit, then WC may, but is not required to, terminate
this agreement unless SST elects to accept the Lower
Limit as the Subscription Price by adjusting the cash
component of the Purchase Price accordingly.
(2) the balance of the Purchase Price will be paid by certified
cheque or bank wire transfer.
2.4.2 ALLOCATION OF PURCHASE PRICE: WC and SST shall allocate the Purchase
Price to the Purchased Assets based on their fair market value and as
provided on Schedule 2.4. WC and SST agree to co-operate post-Closing
to further allocate the Purchase Price against the Purchased Assets
for the purposes of calculating any provincial sales Taxes on the same.
2.5 TIME AND PLACE OF CLOSING: The completion of the purchase and sale of
the Purchased Assets contemplated by this Agreement (the "Closing")
shall take place at the offices of WC's Solicitors at the Time of
Closing on the Closing Date.
2.6 NON-ASSIGNABLE CONTRACTS: This Agreement and any document delivered
hereunder shall not constitute an assignment or an attempted assignment
of any Contract or Realty Lease contemplated to be assigned to WC
hereunder and not assignable without the consent of a third party if
such consent has not been obtained and such assignment or attempted
assignment would constitute a breach thereof. To the extent that any of
the foregoing items (e.g. Allen Bradley) are not assignable by the
terms thereof or where consents to the assignment thereof cannot be
obtained for Closing as herein provided, then in the event this
Agreement contemplates that such consent will not be obtained or WC
waives any such consent as a condition of Closing and this transaction
closes, such items shall be held by SST in trust for WC and the
covenants and obligations thereunder shall be performed by WC in the
name of SST and all benefits and obligations existing thereunder shall
be for the account of WC. SST shall take or cause to be taken such
action in its name or otherwise as WC may reasonably require so as to
provide WC with the benefits thereof. Upon Closing, SST authorizes WC,
at WC's expense, to perform all of SST's obligations under the
foregoing items.
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ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 ASSUMED LIABILITIES
On the Effective Date, WC shall assume, pay and perform in accordance
with their respective terms those liabilities and obligations of SST
(collectively, the "Assumed Liabilities") under the Contracts (other than the
Excluded Contracts) and Realty Leases arising from and after the Effective Date.
3.2 EXCLUDED LIABILITIES
Save and except for the Assumed Liabilities, WC shall not assume, nor
shall it have any liability or obligation whatsoever with respect to any other
liabilities or obligations of SST, whether accrued, absolute, contingent or
otherwise and whether due or to become due (collectively the "Excluded
Liabilities").
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF SST AND SST'S GUARANTOR
SST hereby represents and warrants to and in favour of WC as follows
and acknowledges that WC is relying upon such representations and warranties in
connection with the purchase of the Purchased Assets:
3.3 CORPORATE STATUS AND AUTHORITY
3.3.1 INCORPORATION, ORGANIZATION, STATUS: SST is a corporation incorporated,
organized and in existence under the laws of the province of Ontario.
3.3.2 POWER AND AUTHORITY: SST has all requisite power and authority and is
duly qualified to own or lease the Purchased Assets and to carry on the
Business in all jurisdictions in which it owns or leases properties
used in the Business and has the corporate power and capacity to enter
into, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by SST of
this Agreement and the consummation of all transactions contemplated
hereby have been duly and validly authorized by SST.
3.3.3 VALID AND BINDING: This Agreement has been duly and validly executed
and delivered by SST and constitutes a valid and binding agreement of
SST, enforceable against SST in accordance
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with its terms subject, as to enforcement, to bankruptcy, insolvency
and other laws affecting creditors rights generally and to general
principles of equity.
3.3.4 RESIDENCE: SST is not a non-resident of Canada within the meaning of
that term contained in the ITA.
3.3.5 OPERATIONS AND ASSETS: Schedule 4.1.5 lists each jurisdiction in which
SST has assets or Employees or in which SST carries on the Business.
3.4 THE FINANCIAL CONDITION OF THE BUSINESS:
3.4.1 FINANCIAL BOOKS AND RECORDS: The books and records of SST accurately
set out and disclose in all material respects the financial condition
of the Business. All financial transactions of SST with respect to the
Business have been accurately recorded in all material respects in such
books and records. Such books and records together with all disclosures
made in this Agreement or in the schedules hereto, present fairly in
all material respects the financial condition and the revenues,
expenses and results of the operations of the Business as of and to the
date of such disclosures.
No information, records or systems pertaining to the operation or
administration of the Business are in the possession of, recorded,
stored, maintained by or otherwise dependent upon any other person.
3.4.2 ASSET LIST: The March 31st Asset List is true and complete in all
material respects.
3.4.3 NO LIABILITIES: Except for the Assumed Liabilities, there are no
liabilities (contingent or otherwise) of SST of any kind whatsoever in
respect of which WC may become liable hereunder.
3.5 TITLE TO THE PURCHASED ASSETS:
3.5.1 TITLE: All of the Purchased Assets are owned solely by SST with good
and marketable title thereto, free and clear of all Encumbrances except
for Permitted Encumbrances, and to the extent not so owned are either
leased or licensed, in each case free and clear of all Encumbrances
other than Permitted Encumbrances. Schedule 4.3.1 contains a true and
complete list and description of all Permitted Encumbrances. Without
limiting the foregoing, to the best of SST's knowledge, SST's
Intellectual Property rights are valid and enforceable.
3.5.2 NO RIGHTS TO ACQUIRE PURCHASED ASSETS: There are no agreements, options
or other rights pursuant to which SST is, or may become, obligated to
sell any of the Purchased Assets to any person other than WC except
for the sale of Products in the Ordinary Course.
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3.5.3 EXISTENCE OF PROPERTY AND ASSETS: Each of the properties and assets
referred to in the March 31st Asset List was in existence and owned by
SST as at the date of such statement.
3.5.4 USE OF PROPERTY AND ASSETS: The uses to which the Purchased Assets are
being put in the conduct of the Business, and the conduct of the
Business itself, are not in breach of any Law which could result in a
Material Adverse Effect on the Business, and SST has the full right,
power and authority to use the Purchased Assets for all operations
conducted by it in respect of the Business.
3.6 ASSETS:
3.6.1 PREPAID EXPENSES: Prepaid expenses included in the accounts of SST in
respect of the Business have been paid in the Ordinary Course on
account of obligations arising in the Ordinary Course and are
reasonable in amount and duration.
3.6.2 FIXED ASSETS: To the best of SST's knowledge, all Fixed Assets are
used and operated in conformity with all applicable Laws and are in
good condition, repair and working order, having regard to the age and
usage thereof, normal wear and tear excepted. Except as noted on
Schedule 4.4.2, all Fixed Assets are located at the Premises.
3.6.3 LEASED FIXED ASSETS: Other than vehicles under lease which have not
been replaced in the Ordinary Course, all leased vehicles are in good
condition, repair and working order, having regard to the age and usage
thereof, normal wear and tear excepted.
3.6.4 REAL PROPERTY:
(1) Owned Real Property - There is no real property owned by SST and
used in the Business.
(2) Leased Real Property - Schedule 2.1(h) sets forth a true and
complete description of all leases of Real Property used in the
Business and all amendments and renewals thereof, to which SST is
a party or otherwise bound. True and complete copies of all such
leases have been provided to WC. All such leases are in full force
and effect, have not been further amended and are valid, binding
leases enforceable by SST. All such leases may be validly and
properly assigned to WC or the premises or any part thereof leased
pursuant to such leases may be subleased by SST to WC subject in
each case to the terms and conditions of such leases and to the
receipt of all consents thereunder. All rental and other payments
required to be paid by SST pursuant to such leases have been duly
paid and SST is not in default or in breach of any material term
or provision of any such lease nor has any event occurred which
with the giving of notice or the lapse of time or both could
constitute such a default or breach except
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as disclosed in Schedule 2.1(h). To the best of SST's knowledge,
no landlord or lessor, is in default or breach of any material
term or provision of any of such leases.
(3) Title to Real Property/No Encumbrances - All interests held by SST
as lessee under leases of Real Property are free and clear of any
and all Encumbrances other than Permitted Encumbrances.
(4) No Condemnation: Neither the whole nor any portion of any Real
Property, including all buildings and fixtures, occupied by
SST with respect to the Business has been condemned, requisitioned,
expropriated or otherwise taken by any public authority and SST
does not know nor does it have any grounds to believe that any
such condemnation, requisition, expropriation or taking is
threatened or contemplated.
(5) No Violation: To the best of SST's knowledge, none of the Real
Property, including all buildings and fixtures, occupied or
operated by SST with respect to the Business, or the occupancy
or operation thereof, is in violation of any Law so as to
constitute a Material Adverse Effect and no notice from any
governmental body, municipality or other Person has been
served upon SST or upon any property, occupied or operated by
SST in respect of the Business claiming any violation of any
Law or requiring, or calling attention to the need for, any
work, repair, construction, alteration, installation or
improvement on or in connection with the said property.
(6) Status of Property: The use by SST of the Real Property is not
in breach of any building, zoning or other Laws so as to
constitute a Material Adverse Effect, and SST has adequate
rights of ingress and egress to and from the Real Property for
the operation of the Business in the Ordinary Course and,
specifically:
(1) no alteration, repair, improvement or other work that
has not been completed has been ordered, directed or
requested in writing by any competent Governmental
Authority to be done in respect of the Real Property
or any of the plumbing, heating, elevating, water,
drainage or electrical systems, fixtures or works;
(2) all accounts for work and services performed and
materials furnished in respect of the Real Property
at the request of SST have been paid and no Person is
entitled to claim a lien under the Construction Lien
Act (Ontario) and similar Laws against the Real
Property or any part thereof, other than for current
accounts in respect of which the due date has not yet
passed; and;
(3) there is nothing owing by SST in respect of the Real
Property to any municipal corporation, or to any
other corporation or commission owning or operating a
public utility for water, gas, electrical power or
energy, steam or hot water,
<PAGE>
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or for the use thereof, other than current accounts
in respect of which the due date has not yet passed
and any immaterial amounts subject to bona fide
dispute.
(7) Work Orders and Deficiencies: There are no outstanding work
orders, non-compliance orders, deficiency notices or other
such notices verbal or written relevant to the Real Property,
the other Purchased Assets or the Business which have been
issued by any police or fire department, sanitation,
environment, labour, health or other Governmental Authority.
There are no matters under discussion with any such department
or authority relating to work orders, non-compliance orders,
deficiency notices or other such notices.
(8) Plants, Facilities and Equipment: To the best of SST's knowledge,
the buildings, fixtures and structures comprising the Real
Property are free of any structural defect having regard to the
age and usage thereof. To the best of SST's knowledge, the heating,
ventilating, plumbing, drainage, electrical and air conditioning
systems and all other systems used in the Real Property leased by
SST and all machinery, equipment, tools, furniture, furnishings
and materials used in the Business are in good working order, fully
operational and free of any defect, having regard to age and usage
thereof, except for normal wear and tear. To the best of SST's
knowledge, such buildings, fixtures and structures are located
completely within the boundaries of the Real Property save and
except for deficiencies in this regard that will not have a
Material Adverse Effect on the ability to grant a security interest
in the subject Real Property, or which will not have a Material
Adverse Effect on the ability of WC to operate its business from
the subject Real Property on substantially the same basis as such
Real Property was used by SST preceding the Effective Date.
(9) Leases: Except as identified on Schedule 2.1(h) there are no
leases, subleases, licenses, concessions or other agreements,
written or oral whereby SST has granted any Person the right
to use or occupy any parcel of Real Property or any portion or
interest thereof.
(10) Options: There are no outstanding options or rights of first
refusal to purchase any parcel of Real Property or any portion
thereof or interest therein except as are contained in the Realty
Leases.
3.7 TAX:
3.7.1 PAYMENT AND PROPER PROVISION: SST has paid, and collected and remitted
as applicable, in full when due all Tax payable (including payments
required to be made by instalment) by it at any time prior to the date
of this Agreement which might result in an Encumbrance against the
Purchased Assets, other than the Permitted Encumbrances.
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3.7.2 NO ACTIONS: There are no actions, suits, proceedings, investigations or
claims now pending, threatened in writing or, to the best of SST's
knowledge, threatened verbally or contemplated against SST in respect
of any Tax, governmental charges, assessments or reassessments or any
matters under discussion with any governmental authority relating to
any Tax, governmental charges, assessments or reassessment or any
claims for additional Tax, governmental charges, assessments or
reassessments asserted by any such authority which would result in an
Encumbrance.
3.7.3 WITHHOLDING: SST has withheld all amounts required by Law to be
withheld from payments made by it with respect to the Business and
Employees, including without limitation, those with respect to
Employee's income tax withholdings, Canada Pension Plan contributions
and Unemployment or Employment Insurance premiums and remittances, and
has remitted such amounts to the appropriate authorities within the
times required by Law.
3.8 LEGAL PROCEEDINGS:
3.8.1 NO ACTIONS: Except as set forth in Schedule 4.6.1, there are no
actions, suits, proceedings, litigation, investigations, inquiries,
grievances, complaints, arbitration proceedings or outstanding claims
or demands, obtained, instituted, pending or, to the best of SST's
knowledge threatened, as the case may be, and there is no fact or facts
existing which could give rise to any, or form the basis for any of the
foregoing, affecting or against:
(1) the Purchased Assets or SST's right to dispose of the Purchased
Assets; or
(2) the Business or SST in respect of the Business,
at law or in equity or of, by or before any federal, provincial, state,
territorial or municipal court, department, agency, commission, board,
bureau or instrumentality, whether domestic, foreign, civil,
quasi-criminal, criminal or otherwise.
3.9 LICENCES, REGISTRATIONS AND PERMITS:
3.9.1 PERMITS: Schedule 4.7.1 describes all of the Permits, in general terms.
The Permits described in Schedule 4.7.1 are held by SST and they are
the only governmental authorizations, licences, registrations or
permits, used in or necessary for the conduct of the Business. All of
the Permits are in full force and effect and no suspension or
cancellation of any of them is threatened in writing nor, to the best
of SST's knowledge, threatened verbally, nor are any parts thereof
subject to loss by reason of dormancy or non-use. No claims have been
made by any Person relating to the Permits, to the best of SST's
knowledge no such claim is contemplated by any Person, nor does there
exist any basis for any such claim.
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3.10 EMPLOYEES
3.10.1 EMPLOYEES: Set forth in Schedule 4.8.1 are the names and titles of all
Employees of SST who perform services on a full or part time basis and
who are currently actively employed in the Business, together with
particulars of their salary, bonuses, commissions, positions held,
location of employment, age and start date with SST and if absent on
pregnancy, parental, maternity or adoption leave, education and
training leave or any other statutory leave of absence, or absent and
in receipt of workers' compensation or workplace safety and insurance
benefits or short or long term disability benefits. Where a written
contract exists for such Employee, same is indicated on Schedule 4.8.1.
3.10.2 SST is not a party to, or bound by, any Collective Agreement.
3.10.3 Except to the extent set forth in Schedule 4.8.3:
(1) no Union claims to represent the Employees or has been certified as
bargaining agent for such Employees;
(2) SST does not have any knowledge of any current Union organizing
activities among its Employees, nor does any question concerning
representation exist concerning such Employees. There are no
applications for certification or any other proceedings in which a
Union is claiming or seeking exclusive authority to bargain
collectively for any Employees threatened, outstanding or pending
against or affecting SST, nor have there been any such activities
within the past 3 years;
(3) there is no unfair labour practice charge or complaint threatened,
outstanding, or pending against or affecting SST;
(4) there is no Labour Disturbance threatened, outstanding or pending,
against or affecting the Business, none of the Employees is
currently engaged in a Labour Disturbance or is in a position to
commence a Labour Disturbance and there has not been any Labour
Disturbance during the past 3 years;
(5) neither SST nor any person acting on behalf of or as a bargaining
agent for SST, has received or sent notice to commence collective
bargaining for the purposes of bargaining a Collective Agreement,
nor agreed to conduct collective bargaining with any Union;
(6) no Employee is on permanent or temporary lay off, leave of absence
for any reason, jury duty or off work receiving workers'
compensation benefits or insurance, short term disability or long
term disability benefits, and no such Employee is entitled to any
special consideration under any agreement with SST;
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(7) there are no written personnel policies, rules or procedures
applicable to employees of SST, true and correct copies of which
have heretofore been delivered to WC;
(8) SST has at all times been in compliance with all obligations under
all Employment Laws; SST is not liable for any assessments,
penalties or other sums for failure to comply with any
Employment Laws;
(9) there are no Claims threatened, outstanding or pending against
SST under any Employment Laws. A summary of current and
historic Claims filed under any Employment Law for the past 3
years prior to the date of this Agreement is included in
Schedule 4.8.3;
(10) SST has not received notice of the intent of any federal,
provincial or local agency responsible for the enforcement of
Employment Laws to conduct an investigation with respect to or
relating to SST and no such investigation is in progress;
(11) SST has prepared and posted a pay equity plan and amended for
proportional value as required under the Pay Equity Act and
any regulations thereunder and has made all required pay
equity adjustments in accordance with its Plan and the Pay
Equity Act and any regulations thereunder;
(12) no Claim with respect to or relating to SST is outstanding,
pending, threatened against or affecting SST before any human
rights commission or tribunal or any other agency responsible
for the prevention of discriminatory or unlawful employment
practices;
(13) there are no Claims threatened, outstanding or pending against
or affecting SST in any forum by or on behalf of any Employee,
any applicant for employment or classes of the foregoing alleging
breach of any actual, express or implied contract of employment,
any Employment Laws, wrongful dismissal or any other
discriminatory, wrongful or tortious conduct in connection with
the employment relationship.
(14) no Employee has suffered any illness, disease, injury or death as
a result of his or her employment in the Business. The Business is
and always has been carried on in accordance with all occupational
health and safety laws;
(15) all current employer contributions, assessments and filings,
including but not limited to, experience rating surcharges and
Workwell surcharges, payroll premiums, non-compliance charges,
contributions, or any other amounts under the Workplace Safety
and Insurance Act and the equivalent legislation in other
jurisdictions in relation to the Business have been paid,
accrued or filed by SST. SST has not been subject to any
special or penalty assessment or surcharge, including but not
limited to,
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experience rating surcharges and Workwell surcharges under such
legislation, and there are no circumstances that would permit or
result in a special or penalty assessment or surcharge under such
legislation or the applicable experience rating plan or program;
(16) SST has no liability of any kind to any Assumed Employee,
except for compensation or remuneration and benefits payable
to such Assumed Employee or to which such Assumed Employee may
be entitled, in the Ordinary Course. Except as noted on
Schedule 4.8.3, there are no outstanding loans or advances
made or granted by SST to any Assumed Employee;
(17) other than common law and statutory rights arising in the
Ordinary Course, the consummation of the transactions contemplated
by this Agreement will not cause or result in the termination of
employment of any Assumed Employees and will not entitle any
Assumed Employee to pay in lieu of notice of termination,
termination pay, severance pay, retiring allowance, retirement
benefit or any other payment under any written or oral agreement
with SST, including any Collective Agreement; and
(18) all obligations of SST, whether arising by operation of law,
contract, past custom or otherwise, for wages, salaries,
remuneration, compensation bonuses, commissions, vacation and
holiday pay, sick pay or leave, termination or severance pay
or pay in lieu of notice of termination, and any other form of
compensation payable to any Employee in respect of the services
rendered by any of them, have been paid when due.
3.10.4 Except as set forth in Schedule 4.8.4 there are no written employment
agreements or contracts, services, agency or consulting agreements,
bonus arrangements, or termination or severance agreements with any
employees of SST or any independent contractors or outside vendors
("Employment Contracts"). All of the written employment agreements or
contracts, services, agency or consulting agreements, bonus
arrangements, or termination or severance agreements with Assumed
Employees or any independent contractors or outside vendors are
enforceable in accordance with their terms and are listed and
summarized in Schedule 3.8.4 and SST has provided WC with a true and
correct copy of each such agreement, contract or arrangement. There
are no oral employment agreements or contracts with any Assumed
Employee which are not terminable by SST upon providing that period of
notice (or at SST's option pay in lieu of notice) required by the
applicable Law or by providing reasonable notice at common law.
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3.11 EMPLOYEE BENEFITS:
3.11.1 PLANS: Schedule 4.9.1 contains a true and complete list of all of the
Plans. Except as disclosed on Schedule 4.9.1, there exists no formal
plan or commitment, whether legally binding or not, to create any
additional Plan or to change any existing Plan that would affect any
Employees or their dependents or beneficiaries.
3.11.2 COPIES OF THE PLANS: SST has delivered to WC true and complete copies
of each of the following documents:
(1) each of the written Plans, as amended as of the date hereof, and a
description of each unwritten Plan;
(2) most recent description of each of the Plans that has been provided
to Employees, and any and all such other descriptive materials
provided to Employees including employee booklets;
(3) any trust agreement, insurance contract or policy, or other funding
or related agreement in relation to each Plan;
(4) the most recent actuarial report filed in respect of any Pension
Plan;
(5) the most recent funding, financial or information return or
statement in respect of any Plan; and
(6) all professional opinions and material correspondence, including
internal memoranda, relating to the Plans.
3.11.3 NO ACTIONS OR VIOLATIONS: There are no outstanding complaints, actions,
suits, investigations, proceedings, grievances, arbitrations, or claims
pending or threatened in writing or, to the best of SST's knowledge,
threatened verbally by any Person relating to any of the Plans. All
obligations regarding the Plans have been satisfied in all material
respects, and there are no outstanding material defaults or violations
by any Person relating to any Plan, and no Tax is owing or exigible
under any of the Plans. SST has not nor has any administrator or
fiduciary of any Plan, nor any agent or employee of any of the
foregoing, taken any action, or failed to take any action, that would
subject SST or any other Person to any liability for any Tax or for a
breach of any statutory or fiduciary duty with respect to or in
connection with any Plan.
3.11.4 OPERATION IN ACCORDANCE WITH LAW: Each of the Plans and the funds
established thereunder has been established, operated, administered,
and invested in all material respects in accordance with its terms and
with the requirements of all applicable Laws and each of the
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Plans has been duly registered where required by, and is in good
standing under, such Laws. No fact or circumstance exists that could
adversely affect the tax-exempt status of any Plan.
3.11.5 FULL PAYMENT: Full payment has been made in a timely fashion of all
contributions, premiums or other amounts required to be paid or
provided by any Person to or under the Plans in accordance with the
terms of each of the Plans and applicable Laws and to the extent
payment thereunder has accrued but is not yet due, same have been
properly accrued by SST and reflected in its books and records.
3.11.6 NO IMPROPER WITHDRAWALS: There have been no improper withdrawals,
applications or transfers of assets from any Plan or the trusts or
other funding media relating thereto.
3.11.7 NO MULTI-EMPLOYER PLANS: None of the Plans is a multi-employer pension
plan as defined in the ITA and any applicable Canadian pension
legislation.
3.11.8 NO NOTIFICATION: No notification is required to be given to any
regulatory authority having jurisdiction over any of the Plans with
respect to the consummation of the transactions contemplated by this
Agreement in relation to such Plans except as contemplated by
Section 6.2.2.
3.11.9 NO POST-RETIREMENT BENEFITS: Except as disclosed on Schedule 4.9.1 or
in the Plans, none of the Plans provides benefits to Employees beyond
their retirement or termination of service, or to the beneficiaries or
dependants of retired Employees.
3.11.10 PLAN PARTICIPANTS: Only Employees are eligible for participation in,
and participate in, the Pension Plans known as the "Staff Pension Plan
for Employees of S-S Technologies Inc. & Affiliated Companies".
3.12 ENVIRONMENTAL MATTERS:
For the purposes of this section 4.10, "to the best of SST's knowledge"
refers to the actual knowledge of the officers and key employees of SST
without further inquiry:
3.12.1 The operation of the Business, the use, ownership, maintenance and
operation of the Purchased Assets and the use of the Real Property by
SST, and to the best of SST's knowledge prior owners, licensees, and
other occupants, have been and are in compliance with all Environmental
Laws and are not subject to any judicial, governmental, regulatory, or
other investigations, inspections, proceedings or inquiries. SST, and
to the best of SST's knowledge prior owners, licensees and other
occupants, have complied with all reporting, monitoring and record
keeping requirements under all Environmental Laws relevant to the
Purchased Assets and the Real Property. SST has not received any notice
of any non-compliance with any Environmental Laws relevant to the
Purchased Assets or Real Property,
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and SST has not been convicted of an offence for non-compliance with
any such Environmental Laws affecting the Purchased Assets or the Real
Property or been fined or otherwise sentenced or settled such
prosecution short of conviction.
3.12.2 There is no pending or written threat of or, to the best of SST's
knowledge, verbal threat of any Environmental Claim against SST or
against any prior owner, licensee or other occupant of the Purchased
Assets or Real Property.
3.12.3 SST does not require any Environmental Permits to conduct the
Businesses and to own, use, maintain and operate the Purchased Assets
and the Real Property.
3.12.4 There are no Contaminants located on or in a Real Property, otherwise
than in accordance with Environmental Laws and no Release of any
Contaminant has occurred on or from a Real Property or has resulted
from the operation of the Business, nor to the best of SST's knowledge,
has there been a Release or alleged Release from a facility or real
property owned or operated by any other person or entity, but with
respect to which SST is alleged to have liability. SST has not used any
of the Purchased Assets to produce, generate, store, handle, transport,
or dispose of any Contaminant except as permitted, and in accordance
with, any Environmental Laws, and none of the Properties has been or is
being used by SST, and to the best of SST's knowledge prior owners,
licensees, and other occupants as a landfill or waste disposal site.
3.12.5 Except as disclosed in Schedule 4.10.5, there are no underground or
surface storage tanks located on or in any of the Real Property.
3.12.6 SST is not and there is no basis upon which SST could become
responsible for any clean-up or corrective action relating to the
Purchased Assets or Real Property under any Environmental Laws. Except
for the Phase I Environmental Audit of the Premises to be delivered
pursuant to this Agreement, SST, and to the best of SST's knowledge
prior owners, licensees, and other occupants, have never conducted or
caused to be conducted, either internally or externally, an
environmental assessment or audit or study or occupational health and
safety reports of any of the Real Property, nor is SST aware of any
such assessments or reports having been conducted by or for any
third party.
3.12.7 SST is not in breach of any Environmental Law applicable to the
Purchased Assets or the Real Property in any jurisdiction in which the
Purchased Assets or Real Property is located, or where SST's Business
is carried on.
3.12.8 SST has delivered to WC true and complete copies of all written
communications between SST and any Governmental Authority relating to
compliance or non-compliance with any Environmental Laws.
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3.13 CONTRACTS
3.13.1 LIST OF CONTRACTS: Schedule 4.11.1 hereto contains a true and complete
list and description of all of the Contracts relating to the Business
including without limitation, (other than Realty Leases, Excluded
Contracts, Employment Contracts and Plans, which have been listed on
Schedules 2.1(h), 2.2(B), 4.8.4 and 4.9.1 respectively):
(1) all Contracts to which SST on the one hand, and any Affiliated
Corporation, Associate of SST or Person of which SST is an
Associate on the other hand, are parties or by which they are
bound;
(2) any Contract that involves significant outstanding obligations of
SST to modify, enhance or otherwise improve or correct any aspects
of the Product;
(3) all contracts involving SST as licencee or licensor of the Product
or Other Software;
(4) any trial or beta test agreement;
(5) all Contracts which create or constitute any Encumbrances against,
or right of any third party with respect to, any of the Purchased
Assets;
(6) all Contracts by which SST leases equipment (other than standard
non-computer office equipment) and all other leases of personal
property involving SST as lessee or lessor with respect to the
Business;
(7) all Contracts relating to commission arrangements with others;
(8) all Contracts with agents, representatives or consultants,
independent or dependent contractors, or sales representatives of
the Business;
(9) all quotations, orders or tenders for any of the foregoing which
remain open for acceptance; and
(10) all conditional sale Contracts and all consignment inventory
agreements.
3.13.2 VALID AND BINDING: All of the Contracts are in full force and effect,
unamended, are valid, binding and enforceable and no breach or default
exists in respect thereof on the part of any of the parties thereto nor
has any event occurred which with the giving of notice or the passage
of time, or both, could constitute such a breach or default.
3.13.3 PERFORMANCE BY SST: SST has fulfilled all obligations required to have
been performed by it pursuant to each of the Contracts.
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3.13.4 RELATED PARTY CONTRACTS: Except as set forth on Schedule 4.11.4 and
other than the Excluded Contracts, SST is not party to any Contract
with any Affiliated Corporation, Associate of SST or Person of which
SST is an Associate which is to be assumed by WC hereunder and SST has
no debts, liabilities or obligations of any kind or nature whatsoever
due or to become due to or from any such Person, relating to or
affecting the Business in any way.
3.15.5 PURCHASE COMMITMENTS: No purchase commitment of SST in respect of the
Business is in excess of the requirements of the Business or at any
excessive price.
3.15.6 CONSENTS REQUIRED: Schedule 4.11.1 and Schedule 2.1(h) list every
Contract and every Realty Lease required to be disclosed in such
Schedules respectively and identify those Contracts and Realty Leases
which require the consent of another party thereto ("Consent") to the
assignment thereof by SST to WC.
3.13.7 CONTINUED BUSINESS OF CUSTOMERS: No customer representing five (5)% or
greater of the revenues of the Business in its last completed fiscal
year has terminated or has advised a senior officer of SST that such
customer is terminating, is intending to terminate, or has threatened
to terminate its business relationship with the Business or, to the
best of SST's knowledge, is planning to reduce its purchases of
services in the next 12-month period.
3.13.8 CONTINUED SUPPLY: No supplier representing five percent (5%) or greater
of the goods or services purchased by the Business in its last
completed fiscal year has terminated or has advised a senior officer of
SST that such supplier is terminating, is intending to terminate, or
has threatened to terminate its business relationship with the Business
or, to the best of SST's knowledge, is planning to reduce its supply of
goods or services in the next 12-month period.
3.13.9 PARTNERSHIP OR JOINT VENTURES: SST is not, in relation to any part of
the Business, a partner or participant in any partnership, joint
venture, profit-sharing arrangement or other association of any kind
and is not party to any agreement under which SST agrees to carry on
any part of the Business in such manner or by which SST agrees to share
any revenue or profit of the Business with any other person.
3.13.10 INSURANCE COVERAGE
3.13.11 FULLY INSURED: The Purchased Assets are insured against loss or damage
by all insurable hazards or risks on a full replacement cost basis.
3.13.12 NO DEFAULT: SST is not in default in any material respect with respect
to any of the provisions contained in any insurance policy obtained by
it and has not failed to give any notice or present any claim under any
such insurance policy in a due and timely fashion.
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3.13.13 NO NOTICE: SST has not received any notice or other communication from
any insurance company within the past three years cancelling or
materially amending or materially increasing the annual or other
premiums payable under any of the insurance policies relating to or
affecting the Business, and no such cancellation, amendment or increase
of premium is threatened which individually or in the aggregate would
have a Material Adverse Effect.
3.14 ABSENCE OF CHANGES:
3.14.1 ACTIONS AFFECTING THE BUSINESS: Except as disclosed in Schedule 4.12.1,
since March 31, 1998 there has not been:
(1) any change in the operations, business, assets or financial
condition of the Business, other than a change in the Ordinary
Course, which has resulted or which will result in any Material
Adverse Effect on the Business;
(2) any damage, destruction or loss, or other event, development
or condition of any material nature (whether or not covered by
insurance) affecting the business, assets, properties or
future prospects of the Business or its ability to be carried
on as now carried on;
(3) any termination of any material relationship or arrangement of SST
with any customers of, or suppliers to the Business; and
(4) any apparent, actual or, to the best of SST's knowledge,
threatened union organizing or representation activities, Labour
Disturbance, or, complaint, claim, proceeding, question, issue or
matter regarding Labour Relations Matters under any Employment
Laws, involving the Employees.
3.14.2 ACTIONS BY SST: Since March 31, 1998, except as disclosed in Schedule
4.12.2, SST has not:
(1) transferred, assigned, sold, licensed or otherwise disposed of (or
agreed to do any of the foregoing) any of the assets shown in
the March 31st Asset List except in the Ordinary Course;
(2) incurred or assumed any debt, obligation or liability with
respect to the Business, whether absolute, accrued, contingent,
due, to become due, or otherwise, except for Permitted Encumbrances
and except unsecured current obligations and liabilities incurred
in the Ordinary Course;
(3) waived any rights of substantial value, or entered into any
commitment or transaction not in the Ordinary Course where such
loss, waiver, commitment or transaction is or would be material in
relation to the Business;
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(4) made, promised or otherwise become committed to provide any
increases in remuneration, commissions, compensation, bonuses or
benefits, in respect of Employees and other than in the Ordinary
Course;
(5) failed to replenish the Business' inventories and supplies in
the Ordinary Course or made any material purchase commitment
with respect to the Business out of the Ordinary Course, or
made any material change in the selling, pricing, advertising
or personnel practices or policies of the Business;
(6) made any material change in the manner of the billing procedures
of the Business, or the credit terms made available to any of the
Business' customers; or
(7) made any write-down of the Business' assets other than in the
Ordinary Course.
3.15 INTELLECTUAL PROPERTY:
3.15.1 COPYRIGHTS AND TRADE-MARKS; Except as set forth in Schedule 4.13.1(a):
(1) SST has good and sole title to all copyrights in and to the
Product, free and clear of any Encumbrances, and to the knowledge
of SST such copyrights are not being challenged in any way;
(2) the Product is an original work. No portion of the Product uses,
copies or comprises the work of any third party, including without
limitation, the structure, sequence and organization of any third
party work, and no royalty or other consideration is due to any
third party arising out of the creation, copying or distribution
of the Product;
(3) SST has obtained no copyright registrations and has made no
application for such registration;
(4) no person or entity has any right of renewal, reversion, or
termination with respect to any copyrights owned by SST or any
rights under such copyrights;
(5) SST has no common law or registered trade-marks, trade-mark
applications, service marks, service mark applications, trade
names or industrial designs (design patents) related to the
Product or any other products or services sold or licensed by
it or which it otherwise uses in the conduct of its Business.
3.15.2 PATENTS. Except as set forth in Schedule 4.13.2(b):
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(1) SST does not own or use any patents or applications for patents
that relate to or affect the Product or any other products sold or
licensed by it or assets owned by it or used in the conduct of its
Business; and
(2) none of the Product or products sold or licensed by SST or other
assets owned by SST or used in the conduct of its Business, and
none of the Trade Secrets (nor any part thereof) comes within the
scope of any claims included in any patent.
3.15.3 TRADE SECRETS. Except as set forth in Schedule 4.13.3, all of the Trade
Secrets are embodied in the Product or Design Documentation, or other
assets owned by SST and there is no other tangible expression of the
Trade Secrets. Except as set forth in Schedule 4.13.3, SST has taken
all reasonable security measures to protect the secrecy,
confidentiality, and value of the Trade Secrets, and any other persons
who have knowledge of or access to information relating to the Trade
Secrets have been put on notice and, if appropriate, have entered into
agreements that the Trade Secrets are proprietary to SST and are not to
be divulged or misused. To the best of SST's knowledge, all of the
Trade Secrets are not part of the public domain, and have not been
used, divulged, or appropriated for the benefit of any persons other
than SST or to the detriment of SST.
3.15.4 NO INFRINGEMENT. To the best of SST's knowledge, SST has not infringed,
and is not infringing any trade-mark, service mark, or trade name of
another person and SST has not infringed, and is not infringing, any
copyright, patent, industrial design (design patent), Trade Secret or
any other intellectual property of another person and there is no claim
pending or threatened against SST with respect to any alleged
infringement of any Intellectual Property or any other intellectual
property owned by another person nor does the operation of the Business
in the manner in which it has heretofore been operated (including the
sale or licensing of the Product) give rise to any such infringement.
Except for OMRON Corporation, SST has no knowledge that any person is
infringing on any Intellectual Property.
3.15.5 PRODUCT. Schedule 4.13.5 contains a complete and accurate list and
description of the Product. SST has good, sole, and marketable right,
title, and interest in and to the Product (including the exclusive
right to make, copy, sell, exploit, and provide to others the use of
the Product and all derivative works thereof) free and clear of any
Encumbrances and adverse rights of every kind, nature, and description.
SST is in actual and sole possession of the complete source code of the
Product and all Design Documentation. Schedule 4.13.5 lists all
Software Authors. Included in Schedule 4.13.5 is a copy of an
assignment of copyrights and waiver of moral rights from each Software
Author who is or was an independent contractor to SST ("Independent
Contractor"). All Software Authors other than independent contractors
made his or her contribution to the Product within the scope of
employment with SST, and was directed by SST to work on the Product.
Except as disclosed in Schedule 4.13.5, the Product and every portion
thereof are an original creation of SST and do not contain any source
code or portions of source code (including any "canned program")
created by any
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parties other than the Software Authors. SST has not, by any of its
acts or omissions, or by acts or omissions of its affiliates,
directors, officers, employees, agents, or representatives caused any
of its proprietary rights in the Product, including copyrights,
trade-marks, and Trade Secrets to be transferred, diminished, or
adversely affected to any material extent. SST's use and development
of the Product is not restricted by the moral rights of any Software
Author.
3.15.6 NO DEFECTS AND USE OF PRODUCTS. Except as set forth in Schedule 4.13.6:
(1) the Product functions substantially in accordance with the
Design Documentation and SST is not aware of any "back door",
"time bomb", "Trojan horse", "worm," "drop dead device," "virus"
(as these terms are commonly used in the computer software
industry), or other software routines or hardware components
designed to permit unauthorized access, to disable or erase
software, hardware, or data, or to perform any other similar type
of functions with respect to the Product;
(2) no person or entity other than SST has any interest of any
kind or nature in or with respect to the Product, including
the right to use, make, copy, sell, exploit and provide to
others the use of, the Product and all derivative works
thereof, and no government funding or university or college
facilities were used in the development of the Product, and
the Product was not developed pursuant to a contract with any
person or entity, and no situation, matter, or agreement
exists that would preclude WC from making any change to the
Product or combining it with other software in any lawful
manner; and
(3) all copies of the Product contain appropriate copyright
legends; SST has no knowledge that any third party is
violating or has violated any of SST's proprietary rights in
the Product or Trade Secrets; no third party has any interest
in, or right to compensation from SST by reason of the use,
exploitation, or sale of the Product; there are no
restrictions on the ability of SST (or a successor or assignee
of SST) to use or otherwise exploit the Product, and such use
or exploitation does not and will not obligate SST (or any
successor or assignee of SST including WC) to pay any royalty,
fee, or other compensation to any person or entity; and SST
has not received any notice and does not have any knowledge of
any complaint, assertion, threat, or allegation inconsistent
with the preceding statements in this paragraph.
3.15.7 PRODUCT WARRANTIES AND REPRESENTATIONS. Any written representations or
warranties made by SST to any of its customers with respect to the
Product, including matters related to Year 2000 compliance, are true
and correct and, no claims have been made by such customers in respect
thereof. The Product is being Year 2000 tested on an ongoing basis
pursuant to the criteria attached hereto as Schedule 4.13.7 and as of
the Effective Date, the Product will pass the attached testing
criteria.
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3.15.8 OTHER SOFTWARE. Schedule 4.13.8 contains (i) a list of Other Software
and (ii) a list of all restrictions on SST's right to use the Other
Software. SST is not in violation of any license, sublicense or
agreement with respect to the Other Software. The execution and
delivery of this Agreement, and the consummation of this transaction,
will not limit in any way SST's ability to use or provide the use to WC
of the Other Software.
3.16 NO VIOLATION OR BREACH, VALIDITY, NOTIFICATION:
3.16.1 NO VIOLATION, BREACH OR CONFLICT: Except for the Approvals and any
consents to assignment by SST of any Contract or Realty Lease, as
provided for therein, the entering into of this Agreement and all other
transactions contemplated by this Agreement by SST and the performance
and compliance by SST with the terms hereof and the terms of all such
other transactions will not:
(1) result in any violation or breach of any of the terms or conditions
of, or constitute a default under, the Articles of Incorporation
or the by-laws of SST;
(2) conflict with, violate or result in any breach of any of the
terms, conditions or provisions of; constitute a default
(including a default which would occur with the giving of
notice or the passage of time, or both) under; result in the
acceleration of any indebtedness under a performance required
by; result in any right of termination of; result in any
increase in any amounts payable under; result in any decrease
in any amounts receivable under; or change any other rights
pursuant to any Contract;
(3) other than compliance with any applicable bulk sales legislation,
result in any violation or breach of any Law; or
(4) result in any violation or breach of any judgment, order, award or
decree of any court or judicial or quasi-judicial tribunal or
authority.
3.16.2 CONTRACTUAL AND REGULATORY APPROVALS: The value of the assets of SST
and its Affiliates equals $20,805,000 and their gross revenues from
sales in, from or into Canada, equals $36,000,000, each determined in
accordance with the provisions of the Notifiable Transactions
Regulations made pursuant to the Competition Act (Canada). The sales
of SST and its Affiliates into the United States attributable to the
Purchased Assets amounted to less than U.S.$25 million in SST's prior
fiscal year.
Except for the Realty Lease Consents listed on Schedule 2.1(h), and the
consents to assign Contracts listed on Schedule 4.11.1, SST is not
under any obligation, contractual or otherwise, to request or obtain
the consent of any Person, and no permits, licences, certifications
authorizations or approvals of, or notifications to, any federal,
provincial,
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municipal or local government or governmental agency, board, commission
or authority are required to be obtained by SST:
(1) in connection with the execution, delivery or performance by SST
of this Agreement or the completion by SST of any of the
transactions contemplated herein;
(2) to avoid the loss of any permit, licence, certification or other
authorization relating to the Business; or
(3) in order that the authority of WC to carry on the Business in the
ordinary course and in the same manner as presently conducted
remains in good standing and in full force and effect as of and
following the Closing.
Complete and correct copies of any agreements or permits or licences in
respect of which SST is obligated to request or obtain any such consent
have been made available by SST to WC.
3.16.3 RESTRICTIONS ON THE BUSINESS: SST is not a party to any agreement,
indenture, mortgage, lease or instrument, or subject to any restriction
in its respective constating documents or subject to any restriction
imposed by regulatory authorities having jurisdiction over it or
subject to any Law or to any writ, judgment, injunction or decree of
any court or federal, provincial, municipal or other governmental
department, commission board or instrumentality which might prevent or
interfere with its use of the Purchased Assets or which may limit or
restrict or otherwise have a Material Adverse Effect on the operations,
properties, assets or financial condition of the Business, other than
(i) statutory provisions and restrictions of general application to the
Business; (ii) the requirement to obtain Approvals; and (iii) the
requirement to obtain Consents.
3.16.4 COMPLIANCE WITH LAWS: The operation, conduct of the Business and the
ownership of the Purchased Assets have at all times been in compliance
with all Laws and all judgments, orders, decisions of any court,
arbitrator or governmental authority in all material respects.
3.16.5 NO FEES OR COMMISSIONS: No person is entitled to any broker, finder,
intermediary or financial advisory fee or other commission in respect
of this Agreement or the transactions contemplated hereby, except for
professional fees incurred by SST, such fees to be paid by SST as the
case may be.
3.16.6 SUBSTANTIALLY ALL PROPERTY: WC, in completing the transactions
contemplated by this Agreement is within the meaning of the Excise Tax
Act (Canada), acquiring from SST ownership, possession, or use of all
or substantially all of the property that can reasonably be regarded as
being necessary for WC to be capable of carrying on the Business. On
Closing,
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SST shall be duly registered for the purposes of the Excise
Tax Act (Canada) and its GST business number is 132418112.
3.17 U.S. SECURITIES INVESTMENT REPRESENTATIONS:
3.17.1 SST has received and reviewed the Woodhead Annual Report to
Shareholders for the fiscal years ended 1996 and 1997, the Woodhead
Annual Report on Form 10-K for the periods ending September 28, 1996
and September 27, 1997 and Woodhead's Quarterly Reports on Form 10-Q
filed since December 27, 1997 (collectively the "Public Reports").
3.17.2 SST or its representatives: (i) have been provided the opportunity to
ask questions of and receive answers from Woodhead or their
representatives, concerning the Woodhead Shares, the terms and
conditions of the transactions contemplated hereby and the operations,
business and financial condition of Woodhead, and all such questions
have been answered to its full satisfaction and any information
necessary to verify such responses have been made available to SST;
(ii) have received such documents, materials and information as it
deems necessary or appropriate for evaluation of the Woodhead Shares,
and further confirms that SST has carefully read and understands these
materials and have made such further investigation as was deemed
appropriate to obtain additional information to verify the accuracy of
such materials; (iii) confirm that the Woodhead Shares were not offered
to it by any means of general solicitation or general advertising; and
(iv) believe that it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of an investment in the Woodhead Shares;
3.17.3 SST: (i) is acquiring the Woodhead Shares as principal for its own
account, for investment purposes only, and not with a view towards the
sale or other distribution thereof, in whole or in part; (ii)
understand that the Woodhead Shares have not been and at the time of
receipt by SST will not be, registered under the securities laws of any
state of the United States, under the U.S. Securities Act of 1933, as
amended (the "Securities Act") or the laws of any other jurisdiction
and may not be offered, transferred or sold in the United States or to
a U.S. Person (as defined in Regulation S of the Securities Act) or in
Canada or to a Canadian person unless (A) such Woodhead Shares are
registered under the Securities Act and under the applicable securities
laws of any state of the United States and Woodhead has complied with
the requirements of the Ontario Securities Act or (B) that exemptions
from such registration requirements under the Securities Act and other
applicable securities laws are available and exemptions from prospectus
and registration requirements of applicable securities laws are
available as confirmed by an opinion of counsel satisfactory to
Woodhead; (iii) understand that the Woodhead Shares have not been, and
at the time of receipt by SST will not be, approved or disapproved by
the Commission or by any other federal, provincial or state agency;
(iv) understand that (A) there are restrictions on the transferability
of the Woodhead Shares; (B) except as otherwise provided herein, owners
of Woodhead Shares have no right to require the Woodhead Shares to be
registered under the Securities Act; and
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(C) it may not be possible for them to sell their Woodhead Shares and
accordingly, they may have to hold the Woodhead Shares, and bear the
economic risk of this investment for an extended period of time;
3.17.4 SST: (i) is a resident of Ontario and is not a U.S. Person (as defined
in Regulation S of the Securities Act) and is not acquiring the
Woodhead Shares for the account or benefit of any such U.S. Person;
(ii) is executing this Agreement outside the United States; (iii) has
received no offer to acquire and has made no offer to sell or transfer
the Woodhead Shares or to any such U. S. person; and (iv) has made no
offer or order to sell the Woodhead Shares in the United States.
3.18 DELIVERIES AND COPIES:
3.18.1 TRUE COPIES: All documents, agreements and other instruments delivered
pursuant to this Agreement or annexed hereto as a Schedule or Exhibit
are true, correct and complete copies of the originals thereof.
3.18.2 DELIVERIES: True, correct and complete copies of all instruments and
documents listed, described or referred to in all the Schedules hereto,
have been delivered to WC.
3.19 NO MISSTATEMENTS OR OMISSIONS DISCLOSURE:
3.19.1 NO MISSTATEMENTS: None of the representations, warranties and
statements of fact made by or on behalf of SST in this Agreement
contains any untrue statement of fact or omits to state any fact
necessary to make any such representation, warranty or statement not
misleading to a prospective purchaser of the Purchased Assets seeking
full information as to SST, the Business and the Purchased Assets.
3.19.2 FULL DISCLOSURE: All information which is known to SST relating hereto
and which has been disclosed to WC as required herein is true and
accurate and complete in all respects, subject to any specific
qualifications or disclosures contained herein. All disclosures herein
are specific to the representation and warranty against which they
are made.
3.20 RECISSION: In the event that on or at any time before Closing it
becomes apparent to WC that SST is in breach of any of its
representations and warranties or any other provision of this
Agreement, WC may without any liability on its part rescind this
Agreement by notice in writing to SST.
3.21 SURVIVAL OF SST'S AND SST'S GUARANTOR'S REPRESENTATIONS AND WARRANTIES:
Each and every representation and warranty of SST and SST's Guarantor
contained in this Agreement shall survive the Closing and shall
continue and remain in full force and effect until the second
anniversary of the Closing Date except:
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3.21.1 PURCHASED ASSETS: any such representation or warranty relating to title
to the Purchased Assets owned by SST, which shall survive indefinitely;
3.21.2 TAX: any such representation or warranty relating to Tax, which shall
remain in full force and effect until the date which is 60 days after
the expiration of all time periods provided for making any assessment
or reassessment of Tax, interest or penalties, including all relevant
appeal periods, for any and all taxation periods of SST completed on or
prior to the Closing Date;
3.21.3 ENVIRONMENTAL - any such representation or warranty relating to
environmental matters which shall remain in full force and effect until
the date that all claims which could give rise to an
environmental-related claim are barred by the applicable statutes of
limitation; and
3.21.4 LABOUR - any such representation or warranty relating to Labour
Relations Matters which shall remain in full force and effect until
the date that all claims which could give rise to a Labour Relations
Matter are barred by the applicable statutes of limitation, provided
that, in each case, any claims with respect to any such representation
or warranty which are asserted prior to such applicable expiration
date shall survive indefinitely.
3.22 SST'S Guarantor hereby represents and warrants to and in favour of WC
as follows and acknowledges that WC is relying upon such
representations and warranties in connection with the purchase of the
Purchased Assets:
3.22.1 INCORPORATION, ORGANIZATION, STATUS: SST's Guarantor is a corporation
incorporated, organized, and in existence under the provincial laws
of Ontario.
3.22.2 POWER AND AUTHORITY: SST's Guarantor has all requisite corporate power
and capacity to enter into, execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery by SST's Guarantor of this Agreement and the consummation of
all transactions contemplated hereby have been duly and validly
authorized by SST's Guarantor.
3.22.3 VALID AND BINDING: This Agreement has been duly and validly executed
and delivered by SST's Guarantor and constitutes a valid and binding
agreement of SST's Guarantor, enforceable against SST's Guarantor in
accordance with its terms subject, as to enforcement, to bankruptcy,
insolvency and other laws affecting creditors rights generally and to
general principles of equity.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WC AND WOODHEAD
4.1 REPRESENTATIONS AND WARRANTIES OF WC:
WC hereby represents and warrants to and in favour of SST as follows
and acknowledges that SST is relying upon such representations and
warranties in connection with the sale of the Purchased Assets:
4.1.1 INCORPORATION, ORGANIZATION, STATUS: WC is a corporation incorporated,
organized, and in existence under the provincial laws of Ontario.
4.1.2 POWER AND AUTHORITY: WC has all requisite corporate power and capacity
to enter into, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by WC of
this Agreement and the consummation of all transactions contemplated
hereby have been duly and validly authorized by WC.
4.1.3 VALID AND BINDING: This Agreement has been duly and validly executed
and delivered by WC and constitutes a valid and binding agreement of
WC, enforceable against WC in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency and other laws affecting
creditors rights generally and to general principles of equity.
4.1.4 SECURITIES LAWS: Assuming that the representations and warranties of
SST contained in section 4.15 are true, the Woodhead Shares to be
transferred as part of the Purchase Price will be transferred by WC to
SST in compliance with all applicable United States and Canadian
securities laws.
4.1.5 NO FEES OR COMMISSIONS: No person is entitled to any broker, finder or
intermediary or financial advisory fee or other commission in respect
of this Agreement or the transactions contemplated hereby, except for
professional fees incurred by WC, such fees to be paid by WC as the
case may be.
4.2 REPRESENTATIONS AND WARRANTIES OF WOODHEAD:
4.2.1 Woodhead hereby represents and warrants to and in favour of SST as
follows and acknowledges that SST in relying upon such representations
and warranties in connection with the sale of the Purchased Assets:
4.2.2 INCORPORATION, ORGANIZATION, STATUS: Woodhead is a corporation
incorporated, organized, and in existence under the state laws of
Delaware.
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4.2.3 POWER AND AUTHORITY: Woodhead has all requisite corporate power and
capacity to enter into, execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery by Woodhead of this Agreement and the consummation of all
transactions contemplated hereby have been duly and validly authorized
by Woodhead.
4.2.4 VALID AND BINDING: This Agreement has been duly and validly executed
and delivered by Woodhead and constitutes a valid and binding agreement
of Woodhead, enforceable against Woodhead in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency and other laws
affecting creditors rights generally and to general principles of
equity.
4.2.5 WOODHEAD SHARES: The Woodhead Shares to be delivered as part of the
Purchase Price, will be duly authorized, validly issued, fully paid and
nonassessable. The Woodhead Shares will be issued to WC in compliance
with all applicable United States and Canadian securities laws.
Specifically, the Woodhead Shares will be issued in accordance with
section 12 (g) of the Securities and Exchange Act of 1934 and Woodhead
will file all applicable documents required to be filed thereunder
within the twelve (12) months prior to the Closing Date.
4.2.6 PUBLIC REPORTS. Woodhead has delivered to SST the Public Reports listed
in Section 4.15.1. As of their respective dates, none of the Public
Reports contained any untrue statement of fact that could have a
Material Adverse Effect to Woodhead or omitted any fact that was
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent that any such statement or omission
has been modified or superseded in a Public Report subsequently filed
with the Commission or in any other document, report, release or
statement that is publicly available and has been delivered to SST.
4.2.7 No notification or filing by WC or Woodhead is required pursuant to the
terms of the Competition Act (Canada) or the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
4.2.8 Except as disclosed in Schedule 5.2.8, since the date of the last
document delivered to SST pursuant to section 5.2.6, there has not
been any change in the operations, business, assets or financial
condition of Woodhead other than a change in the Ordinary Course, which
has resulted or which will result in any Material Adverse Effect to
Woodhead. For the purposes of this section 5.2.8 only, any change or
fluctuation in the price of Woodhead common stock shall not constitute
a Material Adverse Effect.
4.3 SURVIVAL OF WC'S AND WOODHEAD'S REPRESENTATIONS AND WARRANTIES
Each and every representation and warranty of WC and Woodhead contained
in this Agreement shall survive the Closing and shall continue and
remain in full force and effect until the second anniversary of the
Closing Date.
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ARTICLE 5
OTHER AGREEMENTS OF THE PARTIES
5.1 REAL PROPERTY LEASES
5.1.1 ASSIGNMENT, SUBLEASE: Contemporaneously with the Closing, SST shall
execute and deliver to WC assignments or subleases of the leases of
Real Property to be transferred to WC in form and substance acceptable
to WC, acting reasonably.
5.1.2 CONSENTS:All subleases and assignments of leased Real Property shall be
subject to all requisite Consents, which SST hereby agrees to use its
best efforts to obtain on or before the Closing Date.
5.2 EMPLOYEES
5.2.1 Offer of Employment
(1) WC shall make offers of employment to all of the Employees of SST
on terms and conditions substantially similar to those presently
enjoyed by those Employees who are actively employed as of the
Effective Time on the Effective Date. The Key Employees shall be
offered employment with WC pursuant to written employment
agreements to be drafted by WC. Those Employees who are offered
and accept employment with WC shall become employees of WC
immediately following the Effective Date (the "Assumed Employees").
WC shall accord to each Assumed Employee service credit based on
their period of service with SST and any predecessor for purposes
of section 13(2) of the Employment Standards Act (Ontario).
Nothing in this Agreement is intended to, nor does it confer,
any rights and privileges upon any person not a party to this
Agreement. SST shall use its reasonable efforts to ensure that all
Assumed Employees accept such offers of employment, it being
acknowledged by SST that the Key Employees' acceptance of
employment with WC is a condition of Closing for the benefit
for WC.
(2) All items in respect of Assumed Employees which require
adjustment including, without limiting the generality of the
foregoing, premiums for Unemployment or Employment Insurance,
applicable hospital or medical plans or employer health tax,
Union dues, Canada Pension Plan contributions, accrued wages,
salaries, commissions, bonuses, vacation pay or other employee
benefits shall be adjusted to the Effective Date.
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(3) SST shall be responsible for all Claims by or on behalf of
persons who at or prior to the Effective Time on the Effective
Date are or were Employees of SST, whether such liabilities,
obligations or costs are asserted by or after the Effective
Date, in respect of:
(i) any Labour Relations Matter;
(ii) any Labour Disturbance; and
(iii) any severance pay, accrued vacation pay, accrued sick
leave and accrued personal days and any other similar
obligations (the "Termination Costs") relating to the
termination of such Employee's employment, or any
break in service or any other event entitling someone
to payment for such benefits (a "Termination")
which occurs on or prior to the Effective Time on the
Effective Date.
(4) Without limiting the generality of the foregoing, SST covenants and
agrees that with respect to Claims arising prior to the Effective
Time on the Effective Date:
(i) it shall be solely responsible for all liabilities,
obligations or costs arising out of any human rights
Claims arising under any Employment Laws;
(ii) in the event that WC is required to pay any damages,
costs or fees in connection with any human rights
Claims, or to reinstate any current or former
employee having made or filed such a Claim, SST shall
reimburse WC for all damages, costs or fees
associated with such Claim and the resolution,
whether by settlement or adjudication, of same,
including those related to the termination of any
employee of WC required to be terminated because of
the reinstatement; and
(iii) in the event that WC is required to pay any damages,
costs or fees of any kind in connection with any
Labour Disturbance or Labour Relations Matter
regarding any Employees of SST, SST shall reimburse
WC for all damages, costs or fees of any kind
associated with such Labour Disturbance or Labour
Relations Matter and the resolution of same, whether
by settlement or adjudication.
(5) WC covenants and agrees that, subsequent to the Effective Time on
the Effective Date, it shall be responsible for:
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(i) all liabilities, obligations or costs in respect of
each Assumed Employee to the extent such liabilities,
obligations or costs arise or accrue subsequent to
the Effective Date and relate to any Labour Relations
Matter; and
(ii) all Termination Costs relating to a Termination which
occurs after the Effective Date in respect of any
Assumed Employee.
(6) SST shall obtain a Purchase Certificate from the Workplace
Safety and Insurance Board (the "WSIB") prior to the Closing
confirming that, as of the Effective Date, the WSIB waives its
rights under s. 146(2) of the Workplace Safety and Insurance
Act to hold WC liable for any amounts owed by SST under the
Workplace Safety and Insurance Act. SST agrees to indemnify
and hold WC harmless from and against any and all liabilities,
obligations or costs arising out of any Claim which may be
made or brought or levied against WC, or which WC may suffer
or incur, after the Effective Date, brought by any government
agency, including but not limited to the WSIB, with respect to
any outstanding amounts under the Workplace Safety and
Insurance Act.
5.2.2 PENSION PLAN: As of and from the Effective Date, WC shall amend the
Retirement Plan for Employees of Woodhead Canada Limited (the "WC
Plan") to offer membership therein to the Assumed Employees. The
parties acknowledge and agree that they shall take all appropriate
steps to transfer the defined contribution account balances of those
Assumed Employees who are members in the Staff Pension Plan for
Employees of S-S Technologies Inc. & Affiliated Companies as of the
Effective Date to the WC Plan, including all required notifications,
the making and filing of all necessary amendments, and obtaining such
approvals of the appropriate regulatory authorities as may be necessary
in order to give effect to the foregoing.
5.3 SALES AND GOODS AND SERVICES TAX: The Purchase Price is net of and WC
shall be responsible for and indemnify SST in respect of the payment
of any sales or similar taxes, including goods and services tax,
consumption and use and retail sales taxes or land transfer taxes and
duties, payable by WC upon the purchase of the Purchased Assets, which
taxes shall be remitted by WC within 90 days of Closing, with evidence
of same being provided to SST. The parties shall jointly complete and
shall file in a timely fashion the appropriate forms and file their
respective returns to obtain an exemption from the application of the
federal goods and services tax if applicable. On Closing, WC shall be
duly registered for purposes of the Excise Tax Act (Canada) and its
GST business number is 105735021RT.
5.4 RISK AND INSURANCE: Until the Effective Time on the Effective Date, the
Purchased Assets shall be and remain at the risk of SST. If, prior to
the Effective Time on the Effective Date, all or any material part of
the Purchased Assets are destroyed or damaged by fire or any other
casualty, WC shall have the option, exercisable by notice in writing:
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(1) to complete the purchase of the Purchased Assets
without reduction of the Purchase Price in which
event all proceeds of insurance shall be payable to
WC and all right and claim of SST to any such
proceeds not paid by the Effective Date shall be
assigned by SST to WC; or
(2) to terminate this Agreement, in which case all of the
obligations of WC and SST hereunder shall terminate.
5.5 CHANGE OF NAME: Promptly after the Closing, but in any event not later
than twelve (12) months thereafter, SST shall change or cause to be
changed its corporate name and the corporate name of any Affiliated
Corporations which operate or exist in Canada and whose name contains
the words "SST Software", "SST" or "SSTechnologies" or any variations
thereof and as well shall withdraw any business name registrations and
cause all such entities to withdraw any business registrations
incorporating the words "SST Software", "SST" or "SSTechnologies" or
any variation thereof or any name or combination of words which shall
be confusingly similar to the foregoing.
5.6 CONVENANT NOT TO COMPETE: On Closing, SST, SST's Guarantor and SST's
Guarantor's principal shareholder, Richard Brock and any Affiliated
Corporation with either SST, SST's Guarantor or Richard Brock shall
provide WC with a non-competition and confidentiality agreement
substantially in the form of Exhibit 7.1.9.
5.7 BULK SALES WAIVER: SST hereby undertakes to pay all liabilities of the
Business by Closing and shall deliver proof of same to WC. The parties
hereby agree to waive compliance with the Bulk Sales Act (Ontario) and
similar legislation of the other Canadian Provinces. SST hereby
indemnifies WC with respect to any Loss WC may suffer as a consequence
of such non-compliance.
5.8 EFFECTIVE DATE ASSET LIST:
SST undertakes to prepare the Effective Date Asset List and deliver
same to WC within 30 days of the Closing Date. SST undertakes that
there shall be no material differences between the March 31st Asset
List and the Effective Date Asset List other than for differences
expressly approved by WC or occurring in the Ordinary Course.
5.9 POST-CLOSING COOPERATION:
5.9.1 SST will assist WC in assembling data relating to the Business
necessary for the consolidated financial reports of WC and its
Affiliated Corporations for periods through the Effective Date or to
respond to or defend claims against WC and its Affiliated Corporations
relating to such periods. In addition, SST agrees to make its Employees
available to WC at their usual place of employment, at no cost to WC,
for consultation at reasonable times upon reasonable notice
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for a period of up to one year from the Effective Date with respect to
any matters relating to or arising in connection with the transactions
contemplated by this Agreement.
5.9.2 WC will assist SST in assembling data relating to the Business
necessary for the consolidated financial reports of SST and its
Affiliated Corporations for periods through the Effective Date or to
respond to or defend claims against SST and its Affiliated Corporations
relating to such periods. In addition, WC agrees to make its employees
available to SST at their usual place of employment, at no cost to SST,
for consultation at reasonable times upon reasonable notice for a
period of up to one year from the Effective Date with respect to any
matters relating to or arising in connection with the transactions
contemplated by this Agreement.
5.9.3 In connection with any third party legal proceedings relating to the
Business or the Purchased Assets, each of the parties, on its own
behalf and on behalf of its Affiliated Corporations, agrees upon the
reasonable request of the other to make available (i) such information
and documents in its possession and (ii) its employees as may be
reasonably required for consultation or as witnesses (without any
charges except for reasonable out-of-pocket expenses, if any,) in
connection with the preparation for trial or arbitration, governmental
investigation or other legal or administrative proceeding.
5.10 COOPERATION AND EXCHANGE OF INFORMATION: Each party hereto shall, and
shall cause its Affiliated Corporations to, provide to each of the
other parties hereto such cooperation and information as any of them
reasonably may request in filing any Tax return, amended return or
claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include
providing copies of all relevant portions of relevant books and
returns, Tax returns, together with relevant accompanying schedules and
relevant working papers, relevant documents relating to rulings or
other determinations by Governmental Authorities and relevant records
concerning the ownership and Tax basis of property, which any such
party may possess. Each party shall make its employees reasonably
available on a mutually convenient basis at its cost to provide
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file returns pursuant to
this Section 6.10 shall bear all costs of filing such returns.
5.11 PHASE II ENVIRONMENTAL REPORT: If a Phase II Environmental Report of
the Premises is requested by WC, WC and SST shall share the cost of
such report equally.
5.12 RESALE OF WOODHEAD SHARES:
5.12.1 ONE YEAR HOLDING PERIOD. SST agrees that it shall not sell, distribute,
transfer, encumber or dispose of any Woodhead Shares for a period of
one (1) year from the Closing Date ("Restricted Period").
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5.12.2 RULE 144. With a view toward making available to each holder of
Woodhead Shares the benefits of Rule 144 under the Securities Act
(which term as used herein includes the present Rule 144 and any other,
additional, substitute or analogous rule or regulation of the
Commission which may permit a holder to sell securities to the public
without registration), Woodhead agrees, during and after the expiration
of the Restricted Period, to file with the Commission in a timely
manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Exchange Act of
1934, as amended so as to maintain the availability of Rule 144,
notwithstanding that Woodhead would not have to maintain such filing
but for this provision of the Agreement.
5.12.3 REGISTRATION. Provided that SST or Richard Brock will be selling all or
substantially all of the Woodhead Shares, upon the written request of
SST or Richard Brock given no later than six (6) months following the
expiration of the Restricted Period, Woodhead agrees to take all
appropriate action reasonably required to effect the registration for
resale of suchWoodhead Shares held by SST or Richard Brock, PROVIDED,
HOWEVER, that Woodhead shall not be required to register such shares if
(i) in the opinion of its counsel, such shares may be sold within a
twelve month period (whether by compliance with Rule 144, Regulation S,
or otherwise) without the need for compliance with the registration
provisions of the Securities Act or (ii) if Woodhead reasonably
determines that such registration would be inadvisable due to market or
other conditions.
5.12.4 Notwithstanding this section 6.12, additional and/or amended
representations and warranties may be provided by Woodhead to SST
pursuant to a letter agreement dated as of the Closing Date to reflect
the liquidity provisions set forth in the Letter of Intent dated
May 14, 1998 between Woodhead and SST.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF WC
TO COMPLETE THE TRANSACTION
6.1 CONDITIONS PRECEDENT: The obligation of WC to complete the transactions
contemplated by this Agreement on the Closing Date is subject to and
contingent upon the prior satisfaction of or compliance with at or
before the Time of Closing, each of the following conditions precedent,
each of which is hereby acknowledged to be inserted for the exclusive
benefit of WC and which may be waived by it in its sole discretion:
6.1.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF SST: All of the
representations and warranties of SST made in or pursuant to this
Agreement, shall be true and correct in all material respects at
Closing and WC shall have received certificates from a senior officer
of SST certifying the truth and correctness of each of its
representations and warranties contained herein.
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6.1.2 PERFORMANCE OF OBLIGATIONS: SST shall have performed or complied with
all of its obligations, covenants and agreements hereunder and WC shall
have received a certificate from a senior officer of SST certifying the
performance of or compliance with all of its obligations, covenants and
agreements hereunder.
6.1.3 RECEIPT OF CLOSING DOCUMENTATION: All documentation relating to the due
authorization and completion of the purchase and sale hereunder of the
Purchased Assets and all actions and proceedings taken on or prior to
the Time of Closing in connection with the performance by SST of its
obligations under this Agreement shall be satisfactory to WC and to
WC=s Solicitors acting reasonably and WC shall have received copies of
all such documentation or other evidence as it may reasonably request
in order to consummate the transactions contemplated hereby and the
taking of all corporate proceedings in connection therewith in
compliance with these conditions, in form (as to certification and
otherwise) and substance satisfactory to WC and to WC's Solicitors.
6.1.4 APPROVALS AND CONSENTS: All Approvals and Consents required or deemed
necessary or advisable by WC in connection with the completion of any
of the transactions contemplated by this Agreement, the execution of
this Agreement, or the performance of any of the terms and conditions
hereof shall have been obtained and delivered to WC.
6.1.5 PERMITS: WC shall have received all Permits necessary to enable it to
conduct the Business as conducted by SST immediately prior to the
Effective Date; WC shall use its best efforts to obtain same and SST
shall reasonably assist WC in that regard.
6.1.6 RETAIL SALES TAX COMPLIANCE: SST shall have delivered to WC a clearance
certificate pursuant to section 6 of the Retail Sales Tax Act (Ontario)
and the corresponding legislation in each other relevant province.
6.1.7 WSIB PURCHASE CERTIFICATE: SST shall have delivered to WC a Purchase
Certificate whereby the WSIB waives its rights under s. 146(2) of the
Workplace Safety and Insurance Act (Ontario).
6.1.8 OPINION OF SST'S SOLICITORS: WC shall have received an opinion dated
the Closing Date from SST's Solicitors substantially in the form of
Exhibit 7.1.8 hereto.
6.1.9 NON-COMPETITION AND CONFIDENTIALITY AGREEMENT: WC shall have received a
Non-Competition and Confidentiality Agreement from SST, SST's Guarantor
and Richard Brock and any Affiliated Corporation of SST, SST's
Guarantor or Richard Brock substantially in the form of Exhibit 7.1.9.
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6.1.10 SALE OF PURCHASED ASSETS: All necessary proceedings, to the
satisfaction of WC's Solicitors acting reasonably, shall have been
taken or caused to be taken by SST so as to cause the Purchased Assets
to be validly transferred to WC.
6.1.11 ACCEPTANCE OF OFFERS OF EMPLOYMENT: All of those Scheduled Employees
designated as "Key Employees" in Schedule 7.1.11 shall accept the
offer of employment by WC on terms acceptable to WC, subject to the
completion of the transactions contemplated by this Agreement.
6.1.12 NO EVENT: There shall have been no event or series of events which has
or will likely result in either alone or cumulatively a Material
Adverse Effect with respect to the operations or financial condition
of the Business since March 31, 1998, having regard to such operations
or financial condition as a whole.
6.1.13 NO STRIKE OR LOCK OUT: There shall be no current Labour Disturbance.
6.1.14 SATISFACTION WITH DUE DILIGENCE: WC shall have completed its due
diligence (including appraisals of the Product).
6.1.15 PHASE I REPORT: SST shall have delivered a Phase I Environmental Report
of the Premises (the "Report") to WC. Such Report shall be accompanied
by a letter from the author of such Report allowing WC to use and rely
upon such Report.
6.2 FAILURE TO MEET CONDITIONS: In case any of the material conditions set
forth in this Agreement are not satisfied in full in WC's sole opinion
(acting reasonably), at the Time of Closing, WC may terminate this
Agreement by notice in writing to SST and in such event WC shall be
released from all obligations hereunder, without in any way limiting
any other rights or remedies which may be available to WC at law or in
equity or otherwise; provided, however, that WC shall be entitled to
waive compliance with any such conditions in whole or in part if it
sees fit to do so. Any waiver by WC of a specific condition shall be
without prejudice to any of WC's rights of termination in the event of
non-performance of any other condition in whole or in part, any such
waiver to be binding upon WC only if the same is in writing.
Notwithstanding the foregoing, in the event that SST's failure to meet
a condition is due to the action or inaction of a third party and
provided that SST has used its reasonable best efforts to satisfy such
condition, WC shall be precluded from claiming any Loss arising
therefrom.
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ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SST
TO COMPLETE THE TRANSACTION
7.1 SST'S CONDITIONS: The obligations of SST to complete the sale of the
Purchased Assets hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Date, each of the following
conditions precedent, each of which is hereby acknowledged to be
inserted for the exclusive benefit of SST and which may be waived by
it in its sole discretion:
7.1.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF WC AT CLOSING DATE: All of the
representations and warranties of WC made in or pursuant to this
Agreement shall be true and correct in all respects at Closing and SST
shall have received a certificate from a senior officer of WC
certifying the truth and correctness of the representations and
warranties of WC hereunder;
7.1.2 PERFORMANCE OF AGREEMENT: WC shall have performed or complied with all
its obligations, covenants and agreements hereunder and SST shall have
received a certificate from a senior officer of WC certifying the
performance of and compliance with all of its obligations, covenants
and agreements;
7.1.3 OPINION OF COUNSEL FOR WC AND WOODHEAD: SST shall have received an
opinion dated the Closing Date from WC's Solicitors and Woodhead's
Solicitors, substantially in the form annexed hereto as Exhibit 8.1.3.
7.1.4 SERVICE AND CONSULTING AGREEMENTS: SST shall have received a Service
Agreement, Consulting Agreement and X-Link Software License Agreement
duly executed by WC substantially in the forms annexed hereto as
Exhibit 8.1.4.
7.1.5 APPROVALS AND CONSENTS: All Approvals and Consents required or deemed
necessary or advisable by SST in connection with the completion of any
of the transactions contemplated by this Agreement, the execution of
this Agreement, or the performance of any of the terms and conditions
hereof shall have been obtained and delivered to SST.
7.2 FAILURE TO MEET CONDITIONS: In case any of the material conditions set
forth in this Agreement are not satisfied in full on or before the
Time of Closing, SST may at any time terminate this Agreement by notice
in writing to WC and in such event SST shall be released from all
obligations hereunder, without in any way limiting any other rights or
remedies which may be available to SST, at law or in equity or
otherwise; provided, however, that SST shall be entitled to waive
compliance with any such conditions in whole or in part if it sees fit
to do so without prejudice to any of its rights of termination in the
event of non-performance of any other condition in whole or in part,
any such waiver to be binding upon SST only if the
<PAGE>
-50-
same is in writing. Notwithstanding the foregoing, in the event that
WC's failure to meet a condition is due to the action or inaction of a
third party and provided that WC has used its reasonable best efforts
to satisfy such condition, SST shall be precluded from claiming any
Loss arising therefrom.
ARTICLE 8
INDEMNITIES
8.1 DEFINITIONS
In this Article 9 the following terms shall have the following meanings
respectively:
8.1.1 "BREACH" means any non-performance of any covenant or agreement to be
observed or performed by a party under this Agreement or any document,
agreement or instrument delivered pursuant hereto or any incorrectness,
misstatement or breach of any representation or warranty of a party
contained in this Agreement or in any certificate furnished by a party
pursuant to or with respect to this Agreement;
8.1.2 "LOSS" means the aggregate of:
(1) the amount necessary to put a party into the position
(financial or otherwise) which would have existed if a Breach
had not occurred, including any diminution in the value of the
Purchased Assets and increase in insurance premiums but net of
any insurance proceeds;
(2) all damages, claims, demands, actions, causes of action,
costs, liabilities, taxes, fines, penalties or expenses
(including legal expenses incurred by a party) which may be
made or brought or levied against a party or which a party may
suffer or incur as a result of, in respect of, or arising out
of a Breach; and
(3) interest at a rate per annum equal to the Rate, calculated and
payable monthly, before and after judgment on any amount due
by one party to another party which is payable pursuant to
this Section 9, with interest on overdue interest at the same
rate, from the date the Breach occurred or the Claim arose,
whichever is the earlier, to the date of payment.
8.1.3 "CLAIM" means any event, action or proceeding that may result in a
Loss.
8.2 INDEMNIFICATION
<PAGE>
-51-
8.2.1 From and after the date hereof, SST covenants and agrees to indemnify
and save WC fully harmless from and against any Loss resulting from a
Breach. Without limiting the generality of the foregoing, SST agrees to
indemnify and save WC fully harmless from and against any Loss pursuant
to the Allen-Bradley Settlement Agreement dated March 6, 1992 and based
on a Claim arising on or prior to the Effective Date and any Loss
resulting in non-compliance with the provisions of the Bulk Sales Act
(Ontario) and similar legislation of the other Canadian provinces.
8.2.2 From and after the date hereof, WC covenants and agrees to indemnify
and save SST fully harmless from and against any Loss resulting from
a Breach.
8.2.3 LIMITATION OF LIABILITY: SST and WC (a "Claimant") shall only be
entitled to indemnification pursuant to this Agreement if and only if
the Claimant's Claims, in the aggregate, for indemnification total at
least $50,000. Thereafter, Claimant shall be entitled to
indemnification on a dollar-for-dollar basis for all Claims (including
the first $50,000), provided, however, that the total maximum liability
of WC and SST to the other shall not exceed the Purchase Price.
8.3 NOTIFICATION: Each of SST and WC shall notify the other promptly after
such party becomes aware of any matters for which each of them may be
liable under this Section 9 and subject to the provisions of Section
9.4 hereof, the other party shall have the right to participate in any
negotiations with respect thereto.
8.4 RIGHT OF SST TO DISPUTE THIRD PARTY CLAIM: SST shall at all times have
the right at its sole expense to resist, defend, compromise or settle
any third party Claim which may result in a Loss to WC, provided,
however, that:
8.4.1 it must give notice (a "Defence Notice") to WC of its intent to do so,
specifying the defence counsel SST will appoint to defend such claim
promptly after receipt of notification from WC pursuant to section 9.3;
8.4.2 it must do so diligently and reasonably throughout the period while
such Claim exists;
8.4.3 WC shall have the right to approve SST's choice of defence counsel,
and approval shall not be unreasonably withheld;
8.4.4 failing prompt receipt by WC of the Defence Notice, WC may resist,
defend, compromise or settle such third party Claim without the
participation or consent of SST and any such actions taken by WC
hereunder shall not in any way reduce or limit in any way SST's
obligations to indemnify WC in respect thereof all as hereinbefore
provided;
<PAGE>
-52-
8.4.5 if SST at any time fails to resist and defend diligently and reasonably
any Claim pursuant to this Section 8.4, its right to defend the Claim
shall terminate at the option of WC. WC may assume the defence of
such Claim and may resist, defend, compromise or settle such Claim
without the participation or consent of SST and any such actions
taken by WC hereunder shall not in any way reduce or limit in any way
SST's obligations to indemnify WC in respect thereof all as
hereinbefore provided.
8.4.6 in the event that SST does deliver a Defence Notice and thereby elects
to conduct the defence of the subject claim, WC will cooperate with
and make available to SST such assistance and materials as SST may
reasonably request, all at the expense of SST, and WC shall have the
right at its expense to participate in the defense assisted by
counsel of its own choosing, provided that SST shall have the right
to compromise and settle the claim only with the prior written
consent of WC, which consent shall not be unreasonably withheld or
delayed.
8.4.7 without the prior written consent of WC, SST will not enter into any
settlement of any third party Claim or cease to defend against such
Claim, if pursuant to or as a result of such settlement or cessation,
(i) injunctive or other equitable relief would be imposed against WC,
or (ii) such settlement or cessation would lead to liability or
create any financial or other obligation on the part of WC.
8.4.8 SST shall not be entitled to control, and WC shall be entitled to have
sole control over, the defense or settlement of any claim to the
extent that claim seeks an order, injunction or other equitable
relief against WC which, if successful, could materially interfere
with the business, operations, assets, condition (financial or
otherwise) or prospective of WC (and the cost of such defense shall
constitute an amount for which WC is entitled to indemnification
hereunder).
8.4.9 if an offer is made to settle a third party Claim, which offer SST is
permitted to settle under this Section 9.4, and SST desires to accept
and agree to such offer, SST will give written notice to WC to that
effect. If WC fails to consent to such offer within 15 calendar days
after its receipt of such notice, WC may continue to contest or
defend such third party Claim and, in such event, the maximum
liability of SST as to such third party Claim will not exceed the
amount of such settlement offer, plus costs and expenses paid or
incurred by WC through the end of such 15 day period.
8.4.10 any judgment entered or settlement agreed upon in the manner provided
herein shall be binding upon SST, and shall conclusively be deemed to
be an obligation with respect to which WC is entitled to prompt
indemnification hereunder.
<PAGE>
-53-
8.5 COOPERATION OF WC: During the period that SST is entitled to defend any
Claim pursuant to section 9.4, WC shall (but at the expense of SST)
cooperate with SST in connection with the defence of such Claim and
shall provide SST with access to and copies of all relevant books and
records relating to such Claim provided that if WC re-assumes the
defence of such Claim as provided in subsection 9.4.5, all such
information and material shall be forthwith returned to WC.
8.6 GUARANTEES: Woodhead hereby unconditionally guarantees WC's performance
of its obligations as primary obligor and not as a guarantor pursuant
to this Agreement and each ancillary agreement related thereto. SST's
Guarantor hereby unconditionally guarantees SST's performance of its
obligations as primary obligor and not as a guarantor pursuant to
this Agreement and each ancillary agreement related thereto.
ARTICLE 9
NOTICES
9.1 METHOD OF DELIVERY: Any notice, demand or other communication (a
"Notice") required or permitted to be given to any party hereunder
shall be in writing and shall be:
(1) hand delivered to such party (hand delivery to include
delivery by recognized commercial courier); or
(2) sent by telecopier, and confirmed by prepaid registered
mail.
9.2 ADDRESSES FOR DELIVERY: Any Notice given pursuant to Section 10.1
shall be sent to the party or parties, as the case may be, at their
respective addresses set out below:
(1) in the case of a Notice to WC at:
Woodhead Industries, Inc.
Three Parkway North, suite 550
Deerfield, Illinois 60015
Facsimile: 847-236-0504
Attention: Gregory E. Baker,
Vice President, Corporate Development
and Strategic Planning
- and -
Robert Tortorello, Vice President,
General Counsel and Secretary
<PAGE>
-54-
with a copy to:
Baker & McKenzie
Barristers & Solicitors
BCE Place
181 Bay Street, Suite 2100
P.O. Box 874
Toronto, Ontario M5J 2T3
Facsimile: 416-863-6275
Attention: Edward J. Kowal
(2) in the case of a notice to SST:
196 Riverbank Drive
R.R. #31
Cambridge, Ontario
N3H 4R6
Facsimile:
Attention: Richard Brock
with a copy to:
Harrison Elwood
450 Talbot Street
P.O. Box 3237
London, Ontario N6A 4K3
Facsimile: 519-667-3362
Attention: Peter R. Lockyer
or at such other address as the party to whom such Notice is
to be given shall have last notified the party giving the same
in the manner provided in this Section 10.
9.3 TIMING OF DELIVERY: Any Notice given by personal delivery or by
telecopier shall be deemed to be given and received on the date of
delivery or telecopier transmission, as the case may be, provided that
if such day is not a Business Day, then the Notice shall be deemed to
have been given and received on the Business Day next following
such day.
<PAGE>
-55-
ARTICLE 10
MISCELLANEOUS
10.1 FURTHER ASSURANCES: Each party hereto hereby agrees that it will do all
such acts and execute all such further documents, conveyances, deeds,
assignments, transfers and the like, and will cause the doing of all
such acts and will cause the execution of all such further documents as
are within its power as any other party hereto may in writing from time
to time reasonably request be done and/or executed, in order to
consummate the transactions contemplated hereby or as may be necessary
or desirable to effect the purpose of this Agreement or any document,
agreement or instrument delivered pursuant hereto and to carry out
their provisions or to better or more properly or fully evidence or
given effect to the transactions contemplated hereby, whether before
or after the Closing Date.
10.2 EXPENSES: Each party hereto shall pay all of their own expenses
incurred in connection with the authorization, preparation, execution
and performance of this Agreement and the transactions contemplated
hereunder, whether or not the Closing occurs, including without
limitation all fees and expenses of their respective legal counsel,
accountants or other representatives or consultants.
10.3 COUNTERPARTS: This Agreement may be executed in several counterparts,
each of which shall be an original, and such counterparts shall
together constitute but one and the same instrument.
10.4 BENEFIT AND BINDING NATURE OF AGREEMENT: This Agreement shall enure to
the benefit of and shall be binding upon the parties hereto and their
respective successors and permitted assigns. This Agreement may not be
assigned in whole or in part by any party hereto without the prior
written consent of the other party hereto.
10.5 CONFIDENTIALITY: If the transaction contemplated by this Agreement is
not completed, WC confirms that it is bound by the provisions of the
Confidentiality and Non-Disclosure Agreement executed by WC on
September 30, 1997. The foregoing shall not prevent WC from disclosing
or making available to its accountants, professional advisers and
bankers and other lenders, whether current or prospective, any such
information or data for the purposes of completing the transactions
contemplated herein.
<PAGE>
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10.6 PUBLICATION: No party shall, between the date of this Agreement and the
Closing Date, without the prior written consent of the other party
hereto, make any public statement or release to the press concerning
the transactions contemplated by this Agreement except as may be
necessary, in the opinion of SST's Solicitors and WC's Solicitors, to
comply with the requirements of any Law or the order or judgment of a
court or tribunal of competent jurisdiction. If any such public
announcement, statement or release is so required, the parties will
consult prior to making such announcement, statement or release, and
shall use their best efforts, acting reasonably and in good faith, to
agree upon the form and substance thereof.
<PAGE>
-57-
IN WITNESS WHEREOF the parties hereto have executed this Agreement
this 2nd day of July, 1998.
S-S TECHNOLOGIES INC.
Per:_____________________________
S-S TECHNOLOGIES HOLDINGS LTD.
Per:______________________________
WOODHEAD CANADA LIMITED
Per:______________________________
WOODHEAD INDUSTRIES, INC.
Per: ______________________________
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
ARTICLE I - DEFINITIONS AND INTERPRETATION....................................................................- 2 -
1.1 Definitions.................................................................................- 2 -
ARTICLE II - PURCHASE AND SALE OF THE PURCHASED ASSETS.......................................................- 13 -
2.1 Purchase...................................................................................- 13 -
2.2 Excluded Assets and Excluded Contracts.....................................................- 14 -
2.3 Purchase Price.............................................................................- 14 -
2.4 Payment of the Purchase Price..............................................................- 14 -
2.5 Time and Place of Closing..................................................................- 15 -
2.6 Non-Assignable Contracts...................................................................- 15 -
ARTICLE III - ASSUMPTION OF LIABILITIES......................................................................- 16 -
3.1 Assumed Liabilities........................................................................- 16 -
3.2 Excluded Liabilities.......................................................................- 16 -
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF SST AND SST'S GUARANTOR ..................................................................................- 16 -
4.1 Corporate Status and Authority.............................................................- 16 -
4.2 The Financial Condition of the Business....................................................- 17 -
4.3 Title to the Purchased Assets..............................................................- 17 -
4.4 Assets.....................................................................................- 18 -
4.5 Tax........................................................................................- 21 -
4.6 Legal Proceedings..........................................................................- 21 -
4.7 Licences, Registrations and Permits........................................................- 22 -
4.8 Employees..................................................................................- 22 -
4.9 Employee Benefits..........................................................................- 25 -
4.10 Environmental Matters......................................................................- 27 -
4.11 Contracts..................................................................................- 28 -
4.12 Absence of Changes.........................................................................- 30 -
4.13 Intellectual Property......................................................................- 31 -
4.14 No Violation or Breach, Validity, Notification.............................................- 34 -
4.15 U.S. Securities Investment Representations.................................................- 36 -
4.16 Deliveries and Copies......................................................................- 37 -
4.17 No Misstatements or Omissions Disclosure...................................................- 38 -
4.18 Rescission.................................................................................- 38 -
4.19 Survival of SST's and SST's Guarantor's Representations and Warranties.....................- 38 -
<PAGE>
<CAPTION>
<S> <C>
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF WC AND WOODHEAD...........................................................................................- 39 -
5.1 Representations and Warranties of WC.......................................................- 39 -
5.2 Representations and Warranties of Woodhead.................................................- 40 -
5.3 Survival of WC's and Woodhead's Representations and Warranties.............................- 41 -
ARTICLE VI - OTHER AGREEMENTS OF THE PARTIES.................................................................- 41 -
6.1 Real Property Leases.......................................................................- 41 -
6.2 Employees..................................................................................- 42 -
6.3 Sales and Goods and Services Tax...........................................................- 44 -
6.4 Risk and Insurance.........................................................................- 44 -
6.5 Change of Name.............................................................................- 44 -
6.6 Covenant Not to Compete....................................................................- 45 -
6.7 Bulk Sales Waiver..........................................................................- 45 -
6.8 Effective Date Asset List:.................................................................- 45 -
6.9 Post-Closing Cooperation...................................................................- 45 -
6.10 Cooperation and Exchange of Information....................................................- 46 -
6.11 Phase II Environmental Report..............................................................- 46 -
6.12 Resale of Woodhead Shares..................................................................- 46 -
ARTICLE VII - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF WC TO COMPLETE THE TRANSACTION ...........................................................................- 47 -
7.1 Conditions Precedent.......................................................................- 47 -
7.2 Failure to Meet Conditions.................................................................- 49 -
ARTICLE VIII - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SST TO COMPLETE THE TRANSACTION...........................................................................- 49 -
8.1 SST's Conditions...........................................................................- 49 -
8.2 Failure to Meet Conditions.................................................................- 50 -
ARTICLE IX - INDEMNITIES.....................................................................................- 50 -
9.1 Definitions................................................................................- 50 -
9.2 Indemnification............................................................................- 51 -
9.3 Notification...............................................................................- 51 -
9.4 Right of SST to Dispute Third Party Claim..................................................- 52 -
9.5 Cooperation of WC..........................................................................- 53 -
9.6 Guarantees.................................................................................- 53 -
ARTICLE X - NOTICES..........................................................................................- 53 -
10.1 Method of Delivery.........................................................................- 53 -
10.2 Addresses for Delivery.....................................................................- 54 -
10.3 Timing of Delivery.........................................................................- 55 -
<PAGE>
<CAPTION>
<S> <C>
ARTICLE XI - MISCELLANEOUS...................................................................................- 55 -
11.1 Further Assurances.........................................................................- 55 -
11.2 Expenses...................................................................................- 55 -
11.3 Counterparts...............................................................................- 55 -
11.4 Benefit and Binding Nature of Agreement....................................................- 56 -
11.5 Confidentiality............................................................................- 56 -
11.6 Publication................................................................................- 56 -
</TABLE>
<PAGE>
Exhibit 7.1.9
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made as of this 31st day of July, 1998.
B E T W E E N:
S-S TECHNOLOGIES INC., a corporation incorporated under the
laws of the province of Ontario
(hereinafter referred to as "SST")
OF THE FIRST PART,
-and -
S-S TECHNOLOGIES HOLDINGS LTD., a corporation incorporated
under the laws of the province of Ontario
(hereinafter referred to as "SST's Guarantor")
OF THE SECOND PART,
-and-
WOODHEAD CANADA LIMITED, a corporation continued under the
provincial laws of Nova Scotia
(hereinafter referred to as "WC")
OF THE THIRD PART,
-and-
WOODHEAD INDUSTRIES, INC., a corporation incorporated under
the laws of the state of Delaware
(hereinafter referred to as "Woodhead")
OF THE FOURTH PART,
-and-
RICHARD BROCK, of the City of Waterloo, Ontario
(hereinafter referred to as "Brock")
OF THE FIFTH PART
<PAGE>
WHEREAS by an Asset Purchase Agreement made the 2nd day of
July, 1998 (the "Purchase Agreement") between SST, SST's Guarantor, WC and
Woodhead, WC agreed to buy the Product and the assets of the Business related
thereto from SST;
AND WHEREAS Brock (through SST's Guarantor) owns greater than
ninety percent (90%) of the issued and outstanding shares of SST;
AND WHEREAS the obligations of WC under the Purchase Agreement
are expressly subject to certain conditions set out therein, including the
entering into of this Agreement;
AND WHEREAS WC desires to obtain certain assurances that SST,
SST's Guarantor and Brock (collectively, the "Covenantors") will not enter into
competition with the Business;
AND WHEREAS the Covenantors wish to give such assurances to WC
in order to induce WC to conclude the transactions contemplated by the Purchase
Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
of WC entering into the Purchase Agreement and other good and valuable
consideration the receipt of which is hereby acknowledged it is agreed by and
between the parties hereto as follows:
1. Defined Terms
-------------
1.1 All terms defined in the Purchase Agreement and used herein shall have the
meaning ascribed to them in the Purchase Agreement unless the contrary is so
provided in this Agreement:
(1) "Affiliates" shall bear the meaning attributed to the term
"affiliated bodies corporate" provided in Section 1(4) of the
Business Corporations Act (Ontario);
<PAGE>
(2) "Business" means the business carried on by SST in the SST
Software Division (formerly known as the Products Division of
SST) as the same exists at the Effective Date and includes the
development, manufacture and sale of the Product;
(3) "Product" means the SST Software and all other software
products developed or owned by SST and used in the Business
including all enhancements, versions, releases and updates of
such products and any other software products in development
for the Business;
(4) "Related Persons" shall bear the meaning provided in Section
251(2) of the Income Tax Act (Canada); and
(5) "Trade Secrets" means the interest of SST in all licences,
know-how, processes, algorithms, formulae, designs, methods,
trade secrets, inventions, proprietary or technical
information, pricing lists, customer lists and data covering
or embodied in any software or other assets used in the
Business.
1.2 Confidential or proprietary information or material ("Protected
Information") includes, without limitation, the following types of information
or material, both existing and contemplated, regarding the Business:
(1) business plans, strategies, tactics, policies, patent,
trade-mark and trade name applications, any litigation or
negotiations and contractual licensing arrangements;
(2) financial information, including but not limited to cost and
performance data;
(3) operational and scientific information, including but not
limited to, Trade Secrets, all documentation, specifications,
manuals, user guides, promotional material, internal notes and
memos, technical documentation, drawings, flow-charts,
diagrams, source
<PAGE>
language statements, demo disks, benchmark test results, and
other written materials related to, associated with or used
or produced in the development of the Product;
(4) marketing information, including but not limited to, current
and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer
requirements, price lists, market studies, sales, investment
and product plans and information concerning suppliers;
(5) personnel information, including but not limited to, the names
and backgrounds of key personnel, personnel lists, resumes,
personnel data, organization structure, performance
evaluations of personnel of the Business and personnel
training techniques and materials;
(6) any and all information concerning the business and affairs
of the Business which the Business treats or has treated as
proprietary and confidential and which is not in the public
domain;
(7) any and all notes, analyses, compilations, studies, summaries
and other material prepared by or for the Business containing
or based, in whole or in part, on any information included in
the foregoing; and
(8) any other information, however documented, of the Business,
that is a trade secret under any applicable legislation or at
common law.
1.3 When used herein, "it" shall mean and include she and he and "its" shall
mean and include hers and his.
2. Confidentiality
---------------
2.1 Each of the Covenantors agrees to hold all Protected Information in
confidence. Each of the Covenantors severally agrees with WC that it shall not,
and shall use reasonable best efforts to not
<PAGE>
permit any Related Persons to, use for its own benefit or to divulge, disclose
or communicate, or authorize anyone to use, divulge or communicate to any
individual or entity (subject to Section 2.2, as otherwise required by law),
in any form or manner whatsoever, any Protected Information. The obligations
of the Covenantors hereunder shall not apply to any information relating to
the Business which is, or becomes, information in the public domain through
no violation of this Agreement by the Covenantors.
2.2 Prior to any unauthorized use or disclosure of Protected Information which
is required by law, such Covenantor shall give WC reasonable prior notice of any
disclosure of Protected Information required by law, and, if requested by WC,
shall use reasonable efforts to obtain a protective order or similar protection
for WC and shall permit and cooperate with any effort by WC to obtain such an
order. WC shall pay all costs reasonably incurred by the Covenantors in seeking
or assisting WC in seeking such an order.
3. Restriction Against Competition
-------------------------------
3.1 From and after the Closing Date, within any of the territories (collectively
referred to as the "Territories" and individually, as a "Territory") as
hereinafter specified, and for a period of five (5) years from the date hereof
(referred to as the "Time Period"), each of the Covenantors severally agrees
that it shall not and shall use reasonable best efforts to not permit any
Related Persons to, directly or indirectly, either as a sole proprietorship, a
partner or a joint venturer or as employee, principal, consultant, agent,
shareholder, officer, director or salesperson for any person, firm, association,
organization, corporation or any other entity (an "Entity"), or in any other
manner:
(1) participate in, carry on, be engaged in, concerned with,
interested in, advise, lend money to or guarantee the debts or
obligations of, any business which is the same as or
competitive with the Business (save and except as a
shareholder of less than one percent (1%) of the voting equity
of an entity offering its securities to the public);
<PAGE>
(2) permit its name or any part of such name to be used or
employed by any Entity concerned with or engaged or interested
in any business which is the same as, or competitive with the
Business;
(3) make use of any list of persons who are or have been customers
or suppliers of the Business within the immediately preceding
two year period, for the purpose of competing with the
Business;
(4) solicit away from the Business, interfere with or endeavour to
entice away from the Business any customer or solicit away
from the Business any person, firm, corporation or entity who
has been a customer or who has dealt with the Business at any
time during the two year period immediately preceding the
Closing Date or attempt to persuade any person providing
employment, consulting, marketing or other services to the
Business within the two-year period immediately preceding the
Closing Date to not provide or to cease to provide such
services to the Business.
Notwithstanding the foregoing, nothing in this agreement
prohibits the Covenantors through the Related Person, SAF Drive Systems Ltd.
from any activity authorized by the letter agreement dated July 31, 1998 between
Woodhead Canada Limited and SAF Drive Systems Ltd. relating to the X-Link
Software License Agreement.
3.2 The Territories herein specified shall be North America, Germany, Japan,
Taiwan, South Korea, Australia, New Zealand, China, France, Italy, the Benelux
countries, Sweden, Norway, Israel, the United Kingdom and Brazil.
3.3 The Covenantors acknowledge that the restrictions and covenants contained in
this Section shall be construed independently of any other provision of this
Agreement, and the existence of any claim or cause of action by the Covenantors
against WC, whether predicated on this Agreement, the Purchase Agreement or any
other agreement between any of the Covenantors and WC shall not constitute a
defence to the enforcement by WC of the covenants or restrictions hereof
<PAGE>
provided, however, if any provision shall be held to be illegal, invalid or
unenforceable in any jurisdiction, the decision shall not affect any other
covenants or provisions of this Agreement or the application of any other
covenant or provision in respect of each year during which the aforesaid
covenants are to continue.
4. INJUNCTIVE RELIEF
The parties agree that, without prejudice to any and all
remedies which may be available to WC at law or in equity, injunctive relief is
the only effective relief for a breach of the covenants of the Covenantors
hereunder, and each Covenantor hereby agrees that WC shall be entitled to
injunctive relief, including an interim or interlocutory injunction, in any
court of competent jurisdiction, to enforce any of the covenants herein of such
Covenantor upon the breach or threatened breach thereof, together with
reimbursement for all reasonable attorney's fees and other expenses incurred in
connection therewith. Covenantor agrees that a breach of any provision of this
Agreement shall cause irreparable harm to WC, not compensable in damages.
5. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein. Each of the parties hereto agrees to attorn to the
jurisdiction of the courts of Ontario and to comply with any orders or judgments
issued thereby, subject to any applicable rights of appeal.
6. ASSIGNMENT
The rights of WC under this Agreement may be assigned, in
whole or in part, by WC to, and upon such assignment shall enure to the benefit
of, any affiliate of WC or to any business organization which shall succeed to
any of the assets of the Business.
<PAGE>
7. NO WAIVER
Except as waived in writing by a party hereto, no action taken
pursuant to this Agreement or failure to pursue the enforcement of any right
pursuant to this Agreement shall be deemed to constitute a waiver by such party
of compliance with any covenants or promises contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
8. NOTICES
Any communication (including any consent, approval or
instructions) provided for under this Agreement shall be in writing and shall be
effectively given if: (i) delivered personally, or (ii) sent by prepaid
registered mail addressed to:
(1) in the case of a Notice to WC at:
c/o Woodhead Industries, Inc.
Three Parkway North, suite 550
Deerfield, Illinois 60015
Facsimile: 847-236-0504
Attention: Gregory E. Baker,
Vice President, Corporate Development
and Strategic Planning
- and -
Robert Tortorello, Vice President,
General Counsel and Secretary
with a copy to:
Baker & McKenzie
Barristers & Solicitors
BCE Place
181 Bay Street, Suite 2100
P.O. Box 874
Toronto, Ontario M5J 2T3
Facsimile: 416-863-6275
Attention: Edward J. Kowal
<PAGE>
(2) in the case of a notice to the Covenantors:
196 Riverbank Drive
R.R. #31
Cambridge, Ontario
N3H 4R6
Attention: Richard Brock
with a copy to:
Harrison Elwood
450 Talbot Street
P.O. Box 3237
London, Ontario N6A 4K3
Facsimile: 519-667-3362
Attention: Peter R. Lockyer
Any notice so given shall be deemed conclusively to have been given and
received when so personally delivered or on the fifth business day following the
sending thereof by registered mail. Any party hereto or others mentioned above
may change any particulars of its address for notice by notice to the others in
the manner aforesaid.
9. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be an original, and such counterparts shall together constitute but one
and the same instrument.
10. HEADINGS
The headings in this Agreement are for convenience of reference only,
and under no circumstances should they be construed as being a substantive part
of this Agreement nor shall they limit or otherwise affect the meaning hereof.
11. ENTIRE AGREEMENT
This Agreement, the Purchase Agreement and the other documents referred
to in or contemplated by the Purchase Agreement contain the final and entire
understanding and agreement
<PAGE>
between the parties hereto with respect to the subject matter hereof, and they
shall not be bound by any terms, conditions, statements, covenants,
representations, or warranties, oral or written, not herein or therein
contained with respect to the subject matter hereof.
12. MODIFICATION OF AGREEMENT
No modification of any provision of this Agreement shall in any event
be effective unless the same shall be in writing and signed by all the parties.
IN WITNESS WHEREOF, this agreement had been executed by the parties
hereto as of the day, month and year first above written.
S-S TECHNOLOGIES INC.
Per:_____________________________
S-S TECHNOLOGIES HOLDINGS LTD.
Per:______________________________
WOODHEAD CANADA LIMITED
Per:______________________________
WOODHEAD INDUSTRIES, INC.
Per: ______________________________
SIGNED, SEALED AND DELIVERED in the presence of:
- ------------------------- ---------------------------------
Witness RICHARD BROCK
<PAGE>
Exhibit 8.1.4
S-S TECHNOLOGIES HOLDINGS LTD.
88 Ardelt Avenue
Kitchener, ON N6A 4T3
July 31, 1998
Woodhead Canada Limited
Three Parkway North, Suite 550
Deerfield, Illinois
USA 60015
Dear Sir:
SERVICE ARRANGEMENTS
As a result of your purchase of the SST Software Division from S-S Technologies
Inc. effective today's date, we have agreed to assist you in the transition
period with respect to certain accounting and payroll services. The following
are the terms that we have agreed:
1. We will continue to provide the current accounting and payroll services
as we have in the past with the same reporting packages;
2. provided is on the basis of CDN$15,000 per month;
3. You shall have the right at any time to advise us that you require
services on a reduced basis. We will meet with you to establish a fair
fee for such reduced services;
4. You can tell us, at any time, that you will no longer require such
services in whole or in part and the appropriate fees shall be
discontinued immediately;
5. We incorporate by reference the terms of the Non-Competition and
Confidentiality Agreement between us, and others, as applicable.
Yours truly,
S-S Technologies Holdings Ltd.
<PAGE>
S-S TECHNOLOGIES HOLDINGS LTD.
88 Ardelt Avenue
Kitchener, ON N6A 4T3
July 31, 1998
Woodhead Canada Limited
Three Parkway North, Suite 550
Deerfield, Illinois
USA 60015
Dear Sir:
CONSULTING ARRANGEMENTS
As a result of your purchase of the SST Software Division from S-S Technologies
Inc, you have asked if we would confirm certain engineering and consulting
services that will be available to your customers and the terms that we have
agreed. May I therefore confirm to you the following:
1. You will agree to consider us for any appropriate consulting and
engineering work and we will consider providing such services to you
as we did with your predecessor. These arrangements, however, are on a
non-exclusive basis to either of us;
2. In the normal course, should you refer customers to us, then we
recognize that there will be support services and an introduction
component to the efforts that you have undertaken. We recognize
therefore, that on any such referral work, in the normal course, we
will pay to Woodhead a 20% finders and support service fee;
3. We, of course, will enter into contracts directly with your customers
that you refer to us on our normal business terms. We will pay your fee
based on the payments we receive from the customers. We shall enter
into our standard contract with such customers as we have in the past.
4. We incorporate by reference the terms of the Non-Competition and
Confidentiality Agreement between us, and others, as applicable.
We look forward to a continued business relationship.
Yours truly,
S-S Technologies Holdings Ltd.
<PAGE>
July 31, 1998
SAF Drive Systems Ltd.
88 Ardelt Avenue
Kitchener, Ontario N6A 4T3
Dear Sirs:
Re: X-Link Software License Agreement
As a result of our purchase of the SST Software Division from S-S Technologies
Inc., you have asked if we would confirm certain arrangements to be enjoyed by
you in regard to the X-Link Software currently utilized by SAF in its SAFphire
product. We would confirm to you the following arrangement:
a) SAF is hereby granted a perpetual license to utilize the current
version of the X-Link Software for use as an embedded component of
SAF's SAFphire product;
b) SAF may sell the SAFphire product but is prohibited from reselling
the X-Link Software or using the X-Link Software to create a stand
alone gateway; and
c) The ability of SAF to utilize any upgraded versions of the X-Link
Software shall be subject to normal commercial terms applicable at
such time.
I would ask you to execute the duplicate copy of this letter in the space
provided acknowledging your agreement to the foregoing terms. We look forward to
a continued business relationship.
Yours very truly,
WOODHEAD CANADA LIMITED
Per:
The undersigned hereby confirms receipt of and agrees to the terms set
forth above as it relates to the utilization by the undersigned of the X-Link
Software.
Dated the 31st day of July, 1998.
SAF Drive Systems Ltd.
Per:
July 31, 1998
S-S Technologies Inc.
88 Ardelt Avenue
Kitchener, Ontario
N6A 4T3
Dear Sirs:
Re: A Certain Asset Purchase Agreement Made the 2nd July, 1998 (the
"Agreement") Among Several Parties Including S-S Technologies Inc.
("SST") and Woodhead Industries Inc ("Woodhead")
Pursuant to Section 6.12.4 of the Agreement, Woodhead agrees as follows:
a) Woodhead shall use commercially reasonable efforts to file the reports
required to be filed by it under the Securities Exchange Act of 1934 in a timely
manner so long as necessary to permit sales pursuant to Rule 144 under the
Securities Act of 1933 (the "Act") of the Woodhead Shares received by you as
part of the Purchase Price under the Agreement. Woodhead agrees that it will
take such further action as you may reasonably request, all to the extent
required from time to time to enable you to sell such Woodhead Shares commencing
August 1, 1999 without registration under the Act within the volume limitations
and other requirements of the exemption provided by Rule 144. The volume
limitations provide for the sale during any three month period of up to 1% of
the outstanding shares of the class outstanding as reported by the issuer. Based
on the total number of Woodhead Shares outstanding on the date hereof, the
volume limitations of Rule 144 would allow for the sale of no less than 100,000
shares in the aggregate held by SST subject to the requirements of Rule 144
during any three month period commencing after August 1, 1999.
b) Woodhead will prepare and file with the Securities and Exchange Commission
("SEC") as soon as reasonably possible after your written request, provided that
such a request must be received on or after August 1, 1999 but prior to May 1,
2000, a Registration Statement on Form S-3, or other available form of
Registration Statement with respect to the Woodhead Shares received by you as
part of the Purchase Price under the Agreement (hereinafter referred to as the
ARegistration Statement@) and use its reasonable best efforts to cause such
Registration Statement to become effective as soon as reasonably possible
thereafter, and, subject to the provisions below, use its reasonable best
efforts to keep such Registration Statement effective for a period concluding on
the earlier of (i) 90 days after it becomes effective or (ii) until you have
sold all of such Woodhead Shares. If at any time after a Registration Statement
becomes effective, Woodhead advises you in
<PAGE>
writing that due to the existence of material information that has not been
disclosed to the public and included in the Registration Statement it is
necessary to amend the Registration Statement, you shall suspend any
further sale of Woodhead Shares pursuant to the Registration Statement
until Woodhead advises you that the Registration Statement has been
amended. In such event, Woodhead shall not be required to amend the
Registration Statement during any time when the Woodhead=s officers and
directors are prohibited from buying or selling Woodhead Shares pursuant to
Woodhead=s insider trading policy. Notwithstanding the foregoing sentence,
Woodhead shall file any amendment necessary for you to recommence sales
under the Registration Statement concurrently with the commencement of any
period in which directors and officers of Woodhead are allowed to buy or
sell Woodhead Shares pursuant to Woodhead=s insider trading policy.
In addition, Woodhead may suspend use of the Registration Statement to the
extent Woodhead is advised by its legal counsel that such action is reasonably
necessary to comply with federal securities law. In the event the sales of your
Woodhead Shares pursuant to the Registration Statement are suspended as provided
above, the 90-day period during which a Registration Statement must be kept
effective shall be extended for the total number of days during which sales are
suspended. It shall be a condition precedent to the obligations of Woodhead to
take any action pursuant to this section b that you furnish to Woodhead such
information regarding you, the Woodhead Shares held by you, and the intended
method of disposition of such Woodhead Shares, as shall be required to effect
their registration.
c) Notwithstanding the foregoing section (b), Woodhead will not be required to
prepare and file a Registration Statement in the event that an alternative plan
of liquidity which is satisfactory to you, acting reasonably, can be provided to
you.
Yours truly,
WOODHEAD INDUSTRIES INC.
By:__________________________
Agreed and accepted as of July 31, 1998:
S-S TECHNOLOGIES INC.
By:_____________________
-2-
CREDIT AGREEMENT
dated as of July 30, 1998
between
WOODHEAD CANADA LIMITED
and
HARRIS TRUST AND SAVINGS BANK
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PREAMBLE....................................................................................... 1
SECTION 1
COMMITMENT OF THE BANK; TYPES OF LOANS; BORROWING, CONTINUATION AND CONVERSION PROCEDURES......1
1.1 Commitment....................................................................1
1.2 Various Types of Loans........................................................1
1.3 Borrowing Procedures..........................................................1
1.4 Conversion and Continuation Procedures........................................2
1.5 Warranty......................................................................3
1.6 Conditions........................................................................3
SECTION 2
NOTE EVIDENCING LOANS...........................................................................3
SECTION 3
INTEREST........................................................................................4
3.1 Interest Rates................................................................4
3.2 Interest Payment Dates........................................................4
3.3 Computation of Interest.......................................................4
SECTION 4
FEES............................................................................................4
4.1 Commitment Fee................................................................4
SECTION 5
REDUCTION OR TERMINATION OF THE COMMITMENT; VOLUNTARY
PREPAYMENTS...................................................................................5
5.1 Reduction or Termination of the Commitment...................................
5.2 Prepayments...................................................................5
SECTION 6
MAKING OF PAYMENTS; SETOFF......................................................................6
i
<PAGE>
6.1 Making of Payments............................................................6
6.2 Application of Certain Payments...............................................6
6.3 Due Date Extension............................................................6
6.4 Setoff........................................................................6
SECTION 7
INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS..........................................6
7.1 Increased Costs...............................................................6
7.2 Basis for Determining Interest Rate
Inadequate or Unfair........................................................8
7.3 Changes in Law Rendering Certain Loans
Unlawful....................................................................8
7.4 Funding Losses................................................................9
7.5 Right of Bank to Fund through Other Offices.......................................9
7.6 Discretion of Bank as to Manner of Funding........................................9
7.7 Conclusiveness of Statements; Survival of
Provisions..................................................................9
SECTION 8
WARRANTIES .................................................................................10
8.1 Organization, etc............................................................10
8.2 Authorization; No Conflict...................................................10
8.3 Validity and Binding Nature..................................................10
8.4 Representations and Warranties of the Parent.................................10
8.5 Litigation and Contingent Liabilities........................................10
8.6 Investment Company Act.......................................................11
8.7 Regulation U.................................................................11
8.8 Public Utility Holding Company Act...........................................11
8.9 Information..................................................................11
SECTION 9
COVENANTS...................................................................................11
9.1 Reports, Certificates and Other Information..................................11
9.1.1 Notice of Default and Litigation......................................11
9.1.2 Other Information.....................................................12
9.2 Use of Proceeds..............................................................12
9.3 Other Agreements.............................................................12
SECTION 10
ii
<PAGE>
CONDITIONS OF LENDING.......................................................................12
10.1 Initial Loan.................................................................12
10.1.1 Note.................................................................12
10.1.2 Parent Guaranty......................................................12
10.1.3 Sister Guaranty......................................................12
10.1.4 Resolutions..........................................................12
10.1.5 Consents, etc........................................................13
10.1.6 Incumbency and Signatures............................................13
10.1.7 Opinion of U.S. Counsel for the Company
and the Guarantors...............................................13
10.1.8 Opinion of Canadian Counsel for the Company..........................13
10.1.9 Other................................................................13
10.2 All Loans.......................................................................13
10.2.1 No Default...........................................................13
10.2.2 Confirmatory Certificate.............................................13
SECTION 11
EVENTS OF DEFAULT AND THEIR EFFECT..........................................................14
11.1 Events of Default............................................................14
11.1.1 Non-Payment of Note, etc.............................................14
11.1.2 Invalidity of Guaranty, etc..........................................14
11.1.3 Warranties...........................................................14
11.1.4 Bankruptcy, Insolvency, etc..........................................14
11.1.5 Non-Compliance with This Agreement...................................15
11.1.6 Default under Parent Credit Agreement................................15
11.2 Effect of Event of Default...................................................15
SECTION 12
CERTAIN DEFINITIONS.........................................................................15
SECTION 13
GENERAL.....................................................................................19
13.1 Waiver; Amendments..............................................................19
13.2 Notices.........................................................................19
13.3 Costs, Expenses and Taxes.......................................................19
13.4 Subsidiary References...........................................................20
13.5 Captions........................................................................20
13.6 Indemnification.................................................................20
13.7 Governing Law...................................................................21
iii
<PAGE>
13.8 Counterparts....................................................................21
13.9 Successors and Assigns..........................................................21
13.10 Waiver of Jury Trial...........................................................21
13.11 FORUM SELECTION AND CONSENT TO JURISDICTION.....................................22
</TABLE>
iv
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Form of Note (Section 2)
EXHIBIT B Form of Parent Guaranty (Section 10.1.2)
EXHIBIT C Form of Sister Guaranty (Section 10.1.3)
EXHIBIT D Form of Opinion of U.S. counsel to the
Company and the Guarantors (Section 10.1.7)
EXHIBIT E Form of Opinion of Canadian counsel to the Company
(Section 10.1.8)
v
<PAGE>
CREDIT AGREEMENT
Dated as of July 30, 1998
This CREDIT AGREEMENT dated as of July 30, 1998 (this "Agreement") is
between WOODHEAD CANADA LIMITED (the "Company") and HARRIS TRUST AND SAVINGS
BANK (the "Bank"). Certain terms are used in this Agreement as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Company has requested the Bank to extend certain loans to
the Company from time to time; and
WHEREAS, the Bank is willing to extend such loans on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1 COMMITMENT OF THE BANK; TYPES OF LOANS; BORROWING,
CONTINUATION AND CONVERSION PROCEDURES
SECTION 1.1 COMMITMENT. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans to the Company on a revolving
basis (collectively the "Loans" and each individually a "Loan") from time to
time before the Termination Date in such amounts as the Company may from time to
time request; PROVIDED that the aggregate principal amount of all Loans shall
not at any time exceed $35,000,000 (less any reduction to the amount of the
Commitment made pursuant to SECTION 5.1).
SECTION 1.2. Each Loan shall be a Domestic Rate Loan, a LIBOR Loan or
an Offered Rate Loan as the Company shall specify in the related notice of
borrowing, Continuation or Conversion pursuant to SECTION 1.3 or 1.4. The Bank
shall have no obligation, however, to quote Offered Rates or to make or
continue, or to Convert any Loan into, an Offered Rate Loan, even after the
Company has requested an Offered Rate Loan in a notice of borrowing,
Continuation or Conversion pursuant to SECTION 1.3 or 1.4. Domestic Rate Loans,
LIBOR Loans and Offered Rate Loans may be outstanding at the same time, it being
understood, however, that in the case of LIBOR Loans, not more than three
different Interest Periods shall be outstanding at any time for all LIBOR Loans.
SECTION 1.3 BORROWING PROCEDURES. The Company shall give written or
telephonic notice to the Bank of each proposed borrowing (i) prior to 11:00 A.M.
(Chicago time) three
<PAGE>
Business Days prior to the requested date of such borrowing, in the case of
LIBOR Loans and (ii) prior to 11:00 A.M. (Chicago time) on the requested date of
such borrowing, in the case of Offered Rate Loans and Domestic Rate Loans),
specifying:
(A) the amount of the such borrowing, which shall be a minimum
amount of $1,000,000 in the case of LIBOR Loans, a minimum amount of
$500,000 in the case of Offered Rate Loans, and a minimum amount of
$100,000 in the case of Domestic Rate Loans; PROVIDED that if such
requested borrowing is to be a Domestic Rate Loan and the unused amount
of the Commitment is less than $100,000, the amount of such borrowing
may be in an amount equal to the unused amount of the Commitment;
(B) the requested borrowing date, which shall be a Business
Day;
(C) the Type of Loans comprising such borrowing; and
(D) in the case of LIBOR Loans and Offered Rate Loans, the
duration of the initial Interest Period therefor.
SECTION 1.4 CONVERSION AND CONTINUATION PROCEDURES.(a) Subject to the
provisions of SECTION 1.2, the Company may:
(i) elect to Convert, on any Business Day, any
Domestic Rate Loan (or any part thereof in a minimum amount of
$1,000,000 in the case of the Conversion into a LIBOR Loan and
$500,000 in the case of the Conversion into an Offered Rate
Loan) into a LIBOR Loan or an Offered Rate Loan;
(ii) elect to Convert, on the last day of the
applicable Interest Period, any LIBOR Loan (or any part
thereof in a minimum amount of $100,000 in the case of the
Conversion into a Domestic Rate Loan and $500,000 in the case
of the Conversion into an Offered Rate Loan) into a Domestic
Rate Loan or an Offered Rate Loan (provided that no conversion
of a part of a LIBOR Loan to a Domestic Rate Loan or an
Offered Rate Loan shall be permitted if the remaining LIBOR
Loan would be less than $1,000,000); or
(iii) elect to Convert, on the last day of the
applicable Interest Period, any Offered Rate Loan (or any part
thereof in a minimum amount of $100,000 in the case of the
Conversion into a Domestic Rate Loan and $1,000,000 in the
case of the Conversion into a LIBOR Loan) into a Domestic Rate
Loan or a LIBOR Loan (provided that no conversion of a part of
an Offered Rate Loan to a Domestic Rate Loan or a LIBOR Loan
shall be permitted if the remaining Offered Rate Loan would be
less than $500,000);
2
<PAGE>
(iv) elect to Continue, as of the last day of the
applicable Interest Period, any LIBOR Loan having an Interest
Period expiring on such day (or any part thereof in a minimum
amount of $1,000,000); and
(v) elect to Continue, as of the last day of the
applicable Interest Period, any Offered Rate Loan having an
Interest Period expiring on such day (or any part thereof in a
minimum amount of $500,000).
(b) The Company shall give written or telephonic notice to the
Bank not later than (i) 11:00 A.M. (Chicago time) at least three Business Days
in advance of the proposed date of such Conversion or Continuation, if the Loans
are to be Converted into or Continued as LIBOR Loans and (ii) not later than
11:00 A.M. (Chicago time) on the proposed date of such Conversion or
Continuation, if the Loans are to be Converted into Domestic Rate Loans or
Converted into or Continued as Offered Rate Loans, specifying:
(A) the proposed date of such Conversion or Continuation;
(B) the aggregate principal amount of Loans to be Converted or
Continued;
(C) the Type of Loans resulting from the proposed Conversion
or Continuation; and
(D) in the case of Conversions into or Continuations of LIBOR
Loans or Offered Rate Loans, the duration of the requested Interest Period.
(c) If the Company fails to give timely notice pursuant to
CLAUSE (B) above of the continuation of a LIBOR Loan or an Offered Rate Loan or
the Bank declines to continue any Offered Rate Loan for a new Interest Period,
such LIBOR Loan or Offered Rate Loan shall automatically Convert to a Domestic
Rate Loan on the last day of the Interest Period therefor.
SECTION 1.5 WARRANTY. Each notice of borrowing,
Continuation and/or of Conversion pursuant to SECTION 1.3 or 1.4 shall
automatically constitute a warranty by the Company to the Bank to the effect
that on the date of such requested borrowing, Continuation or Conversion, as the
case may be, (a) the warranties of the Company contained in SECTION 8 of this
Agreement shall be true and correct as of such requested date as though made on
the date thereof and (b) no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing or will result therefrom.
SECTION 1.6 CONDITIONS. Notwithstanding any other provision of this
Agreement, the Bank shall not be obligated to make any Loan or to Convert into
or permit the Continuation at the end of the applicable Interest Period of any
LIBOR Loan if an Event of Default or Unmatured Event of Default exists or
would result therefrom.
3
<PAGE>
SECTION 2 NOTE EVIDENCEING LOANS. The Loans shall be evidenced by a
promissory note (the "Note") substantially in the form set forth in EXHIBIT
A, with appropriate insertions, dated the Effective Date (or such earlier
date as shall be satisfactory to the Bank), payable to the order of the
Bank in the principal amount of the Commitment (or, if less, in the
aggregate unpaid principal amount of the Loans). The Bank shall record in
its records, or at its option on the schedule attached to the Note, the
date and amount of each Loan, each repayment, Continuation or Conversion
thereof and, in the case of each LIBOR Loan and Offered Rate Loan, the
dates on which each Interest Period for such Loan shall begin and end. The
aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the Note.
The failure to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the obligations
of the Company hereunder or under the Note to repay the principal amount of
the Loans together with all interest accruing thereon.
SECTION 3 INTEREST.
. The Company promises to pay interest on the unpaid principal amount
of each Loan for the period commencing on the date of such Loan until such Loan
is paid in full, as follows:
(a) at all times while such Loan is a Domestic Rate Loan,
at a rate per annum equal to the Domestic Rate from time to time
in effect;
(b) at all times while such Loan is a LIBOR Loan, at a rate
per annum equal to the Adjusted LIBOR applicable to each Interest
Period for such Loan plus the applicable percentage set forth in
SCHEDULE 3.1; and
(c) at all times while such Loan is an Offered Rate Loan, at a
rate per annum equal to the Offered Rate applicable to each Interest
Period for such Loan;
PROVIDED that at any time an Event of Default exists under SECTION 11.1.1, the
interest rate applicable to each Loan shall be increased by 3%.
SECTION 3.2 INTEREST PAYMENT DATES. Accrued interest on each Domestic
Rate Loan shall be payable on the last day of each calendar quarter and at
maturity, commencing with the first of such dates to occur after the date
hereof. Accrued interest on each LIBOR Loan and each Offered Rate Loan
shall be payable on the last day of each Interest Period relating to such
Loan (and, in the case of each LIBOR Loan and Offered Rate Loan with an
Interest Period in excess of three months, on each three-month anniversary
of the first day of such Interest Period) and at maturity. After maturity,
accrued interest on all Loans shall be payable on demand.
4
<PAGE>
SECTION 3.3 COMPUTATION OF INTEREST. Interest shall be computed for
the actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Domestic Rate Loan shall change
simultaneously with each change in the Domestic Rate.
SECTION 4 FEES. The Company agrees to pay to the Bank a commitment
fee, for the period from and including the Effective Date to the Termination
Date, in an amount equal to the commitment fee rate (determined as set
forth on SCHEDULE 3.1) per annum on the daily average of the amount by
which the amount of the Commitment exceeds the outstanding principal amount
of the Loans. Such commitment fee shall be payable in arrears on the last
day of each calendar quarter and on the Termination Date for any period
then ending for which such commitment fee shall not have been theretofore
paid. The commitment fee shall be computed for the actual number of days
elapsed on the basis of a year of 360 days.
SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENT;
VOLUNTARY PREPAYMENTS.
SECTION 5.1 REDUCTION OR TERMINATION OF THE COMMITMENT. (a) The Company
may from time to time on at least three Business Days' prior written notice
received by the Bank permanently reduce the amount of the Commitment to an
amount not less than the aggregate unpaid principal amount of the Loans
then outstanding. Any such reduction shall be in an aggregate amount of at
least $25,000. The Company may at any time on like notice terminate the
Commitment upon payment in full of the Loans and all other obligations of
the Company hereunder.
(b) During the period from July 30, 1998 to October 30, 1998, the
Commitment shall be reduced concurrently with the receipt by the Parent or any
Subsidiary of the Parent of any net cash proceeds from any long-term debt
financing; PROVIDED that the Commitment shall not be reduced to less than
$10,000,000 pursuant to this SECTION 5.1(B).
(c) On October 30, 1998, the Commitment shall be reduced by an amount
equal to the excess (if any) of the Commitment over $10,000,000.
SECTION 5.2 PREPAYMENTS. (a) The Company shall have the privilege of
prepaying without premium or penalty and in whole or in part (but if in
part, then in an amount not less than $25,000) the Domestic Rate Loans at
any time upon notice to the Bank prior to 11:00 a.m. (Chicago time) on the
date of prepayment.
(b) The Company may prepay any LIBOR Loan or Offered Rate Loan without
premium or penalty in whole or in part (but if in part, then in an amount not
less than $1,000,000 in the case of LIBOR Loans and $500,000 in the case of
Offered Rate Loans), but only on the last day of the then applicable Interest
Period, upon notice to the Bank not later than 11:00 A.M. (Chicago time) three
Business Days prior to the date of such prepayment (which notice shall be
irrevocable once given and shall specify the principal amount to be repaid);
PROVIDED that the outstanding principal amount of any LIBOR Loan or Offered Rate
Loan prepaid in part shall not be less than $1,000,000 in the
5
<PAGE>
case of LIBOR Loans and $500,000 in the case of Offered Rate Loans after
giving effect to such prepayment. Any such prepayment shall be effected by
payment of the principal amount to be prepaid and accrued interest thereon to
the end of the applicable Interest Period.
(c) On each date on which the Commitment is reduced pursuant to SECTION
5.1(B) or (C), the Company shall make a prepayment of the Loans in the amount
(if any) by which the aggregate principal amount of the Loans exceeds the
Commitment as so reduced.
SECTION 6 MAKING OF PAYMENTS; SETOFF.
SECTION 6.1 MAKING OF PAYMENTS. All payments of principal, interest,
fees and all other amounts payable hereunder shall be made to the Bank at
its principal office in Chicago, Illinois no later than 11:00 a.m. (Chicago
time) on the date any such payment is due and payable. All such payments
shall be made in lawful money of the United States of America, in
immediately available funds at the place of payment, without setoff or
counterclaim and without reduction for, and free from, any and all present
or future taxes, levies, imposts, duties, fees, charges, deductions,
withholdings, restrictions or conditions of any nature imposed by any
government or any political subdivision or taxing authority thereof (but
excluding any taxes imposed on or measured by the net income of the Bank).
SECTION 6.2 APPLICATION OF CERTAIN PAYMENTS. Unless the Company
otherwise directs, principal payments shall be first applied to the Domestic
Rate Loans until payment in full thereof, then to Offered Rate Loans in the
order in which their Interest Periods expire, with any balance applied to
LIBOR Loans in the order in which their Interest Periods expire.
SECTION 6.3 DUE DATE EXTENSION. If any payment hereunder falls due on
a day which is not a Business Day, then such due date shall be extended to
the next following Business Day (unless, in the case of a LIBOR Loan or an
Offered Rate Loan, such immediately following Business Day is the first
Business Day of a calendar month, in which case such due date shall be the
immediately preceding Business Day) and, in the case of principal,
additional interest shall accrue and be payable for the period of such
extension.
SECTION 6.4 SETOFF. The Company agrees that the Bank has all rights of
set-off and bankers' lien provided by applicable law, and in addition
thereto, the Company agrees that at any time (i) any payment or other
amount owing by the Company under this Agreement is then due to the Bank or
(ii) any Event of Default, or any event which might mature into an Event of
Default described in SECTION 11.1.4, exists, the Bank may apply to the
payment of such payment or other amount (or, in the case of CLAUSE (II)
above, any obligation of the Company hereunder, whether or not then due)
any and all balances, credits, deposits, accounts or moneys of the Company
then or thereafter with the Bank.
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SECTION 7 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS
SECTION 7.1 INCREASED COSTS. (a) If (i) Regulation D or (ii) after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
the Bank (or any lending office of the Bank) with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency
(A) shall subject the Bank (or any lending office of the Bank)
to any tax, duty or other charge with respect to LIBOR Loans, the Note
or its obligation to make LIBOR Loans, or shall change the basis of
taxation of payments to the Bank of the principal of or interest on
LIBOR Loans or any other amounts due under this Agreement in respect of
LIBOR Loans or its obligation to make LIBOR Loans (except for changes
in the rate of tax on the overall net income of the Bank or its lending
office imposed by the jurisdiction in which the Bank's principal
executive office or lending office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the FRB, but
excluding any reserve included in the determination of interest rates
pursuant to SECTION 3), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
the Bank (or any lending office of the Bank); or
(C) shall impose on the Bank (or its lending office) any
other condition affecting LIBOR Loans, the Note or its obligation to
make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on) the Bank (or any lending office of
the Bank) of making or maintaining any LIBOR Loan, or to reduce the amount of
any sum received or receivable by the Bank (or its lending office) under this
Agreement or under the Note with respect thereto, then within 10 days after
demand by the Bank (which demand shall be accompanied by a statement setting
forth the basis of such demand), the Company shall pay directly to the Bank such
additional amount or amounts as will compensate the Bank for such increased cost
or such reduction.
(b) If the Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Bank (or
its lending office) or any Person controlling the Bank with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Bank's or such controlling Person's
capital as a consequence of the Bank's obligations hereunder (including,
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without limitation, the Commitment) to a level below that which the Bank or such
controlling Person could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by the Bank or
such controlling Person to be material, then from time to time, within 10 days
after demand by the Bank (which demand shall be accompanied by a statement
setting forth the basis of such demand), the Company shall pay to the Bank such
additional amount or amounts as will compensate the Bank or such controlling
Person for such reduction.
SECTION 7.2 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If with respect to any Interest Period deposits in Dollars (in the applicable
amount) are not being offered to the Bank in the interbank eurodollar
market for such Interest Period, or the Bank otherwise determines (which
determination shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank eurodollar market adequate and reasonable
means do not exist for ascertaining the applicable Adjusted LIBOR; THEN the Bank
shall promptly notify the Company thereof and, so long as such circumstances
shall continue, (i) the Bank shall be under no obligation to make, Continue or
Convert into LIBOR Loans and (ii) on the last day of the current Interest Period
for each LIBOR Loan, such Loan shall, unless then repaid in full, automatically
Convert to a Domestic Rate Loan.
SECTION 7.3 CHANGES IN LAW RENDERING CERTAIN LOANS UNLAWFUL. In the
event that any change in (including the adoption of any new) applicable laws
or regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of
the Bank raise a substantial question as to whether it is) unlawful for the
Bank to make, maintain or fund LIBOR Loans, then the Bank shall promptly
notify the Company and, so long as such circumstances shall continue, (a)
the Bank shall have no obligation to make, Continue or Convert into LIBOR
Loans and (b) on the last day of the current Interest Period for each LIBOR
Loan (or, in any event, if the Bank so requests, on such earlier date as
may be required by the relevant law, regulation or interpretation), such
LIBOR Loan shall, unless then repaid in full, automatically Convert to a
Domestic Rate Loan.
SECTION 7.4 FUNDING LOSSES. The Company hereby agrees that upon
demand by the Bank (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed)
the Company will indemnify the Bank against any net loss or expense which
the Bank may sustain or incur (including, without limitation, any net loss
or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Bank to fund or maintain any LIBOR
Loan), as reasonably determined by the Bank, as a result of (a) any
payment, prepayment, Continuation or Conversion of any LIBOR Loan on a date
other than the last day of an Interest Period for such Loan (including,
without limitation, any Conversion pursuant to SECTION 7.3) or (b) any
failure of the Company to borrow, Continue or Convert any Loan on a date
specified therefor in a notice of borrowing, Continuation or Conversion
pursuant to this Agreement. For this purpose, all notices to the Bank
pursuant to this Agreement shall be deemed to be irrevocable.
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SECTION 7.5 RIGHT OF BANK TO FUND THROUGH OTHER OFFICES. The Bank may,
if it so elects, fulfill its commitment as to any LIBOR Loan by causing a
foreign branch or affiliate of the Bank to make such Loan, PROVIDED that in
such event for the purposes of this Agreement such Loan shall be deemed to
have been made by the Bank and the obligation of the Company to repay such
Loan shall nevertheless be to the Bank and shall be deemed held by it, to
the extent of such Loan, for the account of such branch or affiliate.
SECTION 7.6 DISCRETION OF BANK AS TO MANER OF FUNDING. Notwithstanding
any provision of this Agreement to the contrary, the
Bank shall be entitled to fund and maintain its funding of all or any part of
its Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if the
Bank had actually funded and maintained each LIBOR Loan during each Interest
Period for such Loan through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
Adjusted LIBOR for such Interest Period.
SECTION 7.7 CONCLUSIVENESS OF STATEMENTS: SURVIVAL OF PROVISIONS.
Determinations and statements of the Bank pursuant to SECTION 7.1, 7.2,
7.3 or 7.4 shall be conclusive absent demonstrable error. The Bank may use
reasonable averaging and attribution methods in determining compensation under
SECTIONS 7.1 and 7.4, and the provisions of such Sections shall survive
termination of this Agreement.
SECTION 8 WARRANTIES.
To induce the Bank to enter into this Agreement and to make Loans
hereunder, the Company warrants to the Bank that:
SECTION 8.1 ORGANIZATION, ETC. The Company is a corporation duly
existing and in good standing under the laws of the province of Nova Scotia,
Canada; and the Company is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where, because of
the nature of its activities or properties, such qualification is required and
the failure to so qualify would materially and adversely affect the Company's
financial condition, operations, or business prospects.
SECTION 8.2 AUTHORIZATION; NO CONFLICT. The execution and delivery of
this Agreement and the Note, the borrowings hereunder, and the performance by
the Company of its obligations under this Agreement and the Note are within the
Company's corporate powers, have been duly authorized by all necessary corporate
action, have received all necessary governmental approval (if any shall be
required), and do not and will not contravene or conflict with any provision of
law or of the charter or by-laws of the Company or any Subsidiary or of any
agreement binding upon the Company.
SECTION 8.3 VALIDITY AND BINDING NATURE. This Agreement is, and the
Note when duly executed and delivered will be, legal, valid and binding
obligations of the Company, enforceable
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against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the right of creditors and the availability
of equitable remedies.
SECTION 8.4 REPRESENTATIONS AND WARRANTIES OF THE PARENT. The
representations and warranties of the Parent contained in Section 6 of the
Parent Credit Agreement are true and correct, except to the extent the same
expressly relate to an earlier date.
SECTION 8.5 LITIGATION AND CONTINGENT LIABILITIES. No litigation
(including, without limitation, derivative actions), arbitration proceedings or
governmental proceedings are pending or, to the best of the Company's knowledge,
threatened against the Company or any Subsidiary which would, if adversely
determined, materially and adversely affect (i) the financial condition or
continued operations of the Company and its Subsidiaries or (ii) the ability of
the Company to perform its obligations hereunder or under the Note, EXCEPT as
set forth (including estimates of the dollar amounts involved) in a schedule
heretofore furnished by the Company to the Bank. Other than any liability
incident to such litigation or proceedings, neither the Company nor any
Subsidiary has any material contingent liabilities.
SECTION 8.6 INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" with the meaning of the Investment Company Act of 1940,
as amended.
SECTION 8.7 REGULATION U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit, and will
not use the proceeds of any of the Loans, for the purpose of purchasing or
carrying Margin Stock.
SECTION 8.8 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor
any Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 8.9 INFORMATION. All information heretofore or
contemporaneously herewith furnished by the Company to the Bank for purposes of
or in connection with this Agreement and the transactions contemplated hereby
is, and all information hereafter furnished by or on behalf of the Company to
the Bank will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is
or will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
SECTION 9 COVENANTS.
Until the expiration or termination of the Commitment and thereafter
until all obligations of the Company hereunder and under the Note are paid in
full, the Company agrees that, unless at any time the Bank shall otherwise
expressly consent in writing, it will:
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SECTION 9.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. Furnish
to the Bank:
SECTION 9.1.1 NOTICE OF DEFAULT AND LITIGATION. Forthwith upon learning
of the occurrence of any of the following, written notice thereof, describing
the same and the steps being taken by the Company or the Subsidiary affected
with respect thereto: (i) the occurrence of an Event of Default or an Unmatured
Event of Default, or (ii) the institution of, or any adverse determination in,
any litigation, arbitration proceeding or governmental proceeding which is
material to the Company and its Subsidiaries on a consolidated basis.
SECTION 9.1.2 OTHER INFORMATION. From time to time such other
information concerning the Company and its Subsidiaries as the Bank may
reasonably request.
SECTION 9.2 USE OF PROCEEDS. Not use or permit any proceeds of the
Loans to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock.
SECTION 9.3 OTHER AGREEMENTS. Not enter into any agreement containing
any provision which would be violated or breached by the performance of its
obligations hereunder or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith.
SECTION 10 CONDITIONS OF LENDING.
The obligation of the Bank to make its Loans is subject to the
following conditions precedent:
SECTION 10.1 INITIAL LOAN. The obligation of the Bank to make its
initial Loan is, in addition to the conditions precedent specified in
SECTION 10.2, subject to the condition precedent that the Bank shall have
received all of the following, each duly executed and dated the Effective Date
(or such earlier date as shall be satisfactory to the Bank), in form and
substance satisfactory to the Bank (and the date on which all such conditions
precedent have been satisfied or waived in writing by the Bank is called the
"Effective Date").
SECTION 10.1.1 NOTE The Note
SECTION 10.1.2 PARENT GUARANTY. A Guaranty signed by the Parent,
substantially in the form of EXHIBIT B (as amended or otherwise modified from
time to time, the "Parent Guaranty").
SECTION 10.1.3 SISTER GUARANTY. A Guaranty signed by each U.S.
Subsidiary of the Parent, substantially in the form of EXHIBIT C (as amended or
otherwise modified from time to time, the "Sister Guaranty").
SECTION 10.1.4. RESOLUTIONS. Certified copies of resolutions of the
Board of Directors of the Company authorizing the execution, delivery and
performance of this Agreement, the Note, and
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the other documents to be executed by the Company pursuant to this Agreement;
and certified copies of resolutions of the Board of Directors of each
Guarantor authorizing or ratifying the execution, delivery and performance by
such Guarantor of the Parent Guaranty or the Sister Guaranty, as applicable, and
the other documents to be executed by such Guarantor pursuant to this Agreement.
SECTION 10.1.5 CONSENTS, ETC. Certified copies of all documents
evidencing any necessary corporate action, consents and governmental approvals
(if any) with respect to this Agreement, the Note, the Parent Guaranty, the
Sister Guaranty and the other documents to be executed by the Company or any
Guarantor pursuant to this Agreement.
SECTION 10.1.6 INCUMBENCY AND SIGNATURES. A certificate of the
Secretary or an Assistant Secretary of the Company and each Guarantor certifying
the names of the officer or officers of such entity authorized to sign this
Agreement, the Note, the Parent Guaranty, the Sister Guaranty and the other
documents provided for in this Agreement, as applicable, together with a sample
of the true signature of each such officer (it being understood that the Bank
may conclusively rely on such certificate until formally advised by a like
certificate of any changes therein).
SECTION 10.1.7 OPINION OF U.S. COUNSEL FOR THE COMPANY AND THE
GUARANTORS. The opinion of Robert J. Tortorello, counsel to the Company and the
Guarantors, substantially in form set forth in EXHIBIT D.
SECTION 10.1.8 OPINION OF CANADIAN COUNSEL FOR THE COMPANY. The opinion
of Stewart McKelvey Stirling Scales, Canadian counsel to the Company,
substantially in form set forth in EXHIBIT E.
SECTION 10.1.9 OTHER. Such other documents as the Bank may reasonably
request.
SECTION 10.2 ALL LOANS. The obligation of the Bank to make the initial
Loan and each subsequent Loan is subject to the conditions precedent that:
SECTION 10.2.1 NO DEFAULT. (a) No Event of Default, or Unmatured Event
of Default, has occurred and is continuing or will result from the making of
such Loan and (b) the warranties of the Company contained in SECTION 8 are true
and correct as of the date of such requested Loan, with the same effect as
though made on such date.
SECTION 10.2.2 CONFIRMATORY CERTIFICATE. The Bank shall have received a
certificate dated the date of such requested Loan and signed by a duly
authorized representative of the Company as to the matters set out in
SECTION 10.2.1 (it being understood with respect to each Loan that the request
by the Company for the making of such Loan shall be deemed to constitute a
certificate as to the matters set out in SECTION 10.2.1), together with such
other documents as the Bank may reasonably request in support thereof,
including, without limitation, in the case of each Loan other than the
initial Loan, duly executed and updated copies or other confirmations of the
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continuing effectiveness of any or all of the documents (except the Note)
provided for in SECTION 10.1.
SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 11.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default under this Agreement:
SECTION 11.1.1 NON-PAYMENT OF NOTE, ETC. Default, and continuance
thereof for 10 days, in the payment when due of any principal of or interest on
the Note or any fees payable by the Company hereunder.
SECTION 11.1.2 INVALIDITY OF GUARANTY, ETC. The Parent Guaranty or the
Sister Guaranty shall cease to be in full force and effect with respect to any
Guarantor, any Guarantor shall fail (subject to any applicable grace period) to
comply with or to perform any applicable provision of the Parent Guaranty or the
Sister Guaranty, or any Guarantor (or any Person by, through or on behalf of any
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of the Parent Guaranty or the Sister Guaranty with respect to
such Guarantor.
SECTION 11.1.3 WARRANTIES. Any warranty made by the Company herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice, or other writing furnished by
the Company or any Guarantor to the Bank is false or misleading in any material
respect on the date as of which the facts therein set forth are stated
or certified.
SECTION 11.1.4 BANKRUPTCY, INSOLVENCY, ETC. The Company or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or the Company or any
Subsidiary applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for the Company or such Subsidiary or any
property thereof, or makes a general assignment for the benefit of creditors;
or in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for the Company or any Subsidiary or
for a substantial part of the property of any thereof and is not discharged
within 30 days; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary), is commenced in respect of the
Company or any Subsidiary, and if such case or proceeding is not commenced by
the Company or such Subsidiary, it is consented to or acquiesced in by the
Company or such Subsidiary or remains for 30 days undismissed; or the Company
or any Subsidiary takes any corporate action to authorize, or in furtherance of,
any of the foregoing.
SECTION 11.1.5 NON-COMPLIANCE WITH THIS AGREEMENT. (a) Failure by the
Company to comply with the provisions of SECTION 9.2 of this Agreement or (b)
failure by the Company to comply with or to perform any other provision of this
Agreement (and not constituting an Event of
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Default under any other provision of this SECTION 11) and continuance of such
failure for 30 days after notice thereof to the Company from the Bank or other
holder of the Note.
SECTION 11.1.6 DEFAULT UNDER PARENT CREDIT AGREEMENT. A "Default", as
defined in the Parent Credit Agreement, shall occur and be continuing.
SECTION 11.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default
described in SECTION 11.1.4 shall occur, the Commitment (if it has not
theretofore terminated) shall immediately terminate and the Note and all other
obligations hereunder shall become immediately due and payable, all without
presentment, demand, protest or notice of any kind; and, in the case of any
other Event of Default, the Bank may declare the Commitment (if it has not
theretofore terminated) to be terminated and/or declare the Note and all other
obligations hereunder to be due and payable, whereupon the Commitment (if it
has not theretofore terminated) shall immediately terminate and/or the Note and
all other obligations hereunder shall become immediately due and payable, all
without presentment, demand, protest or notice of any kind. The Bank shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration.
SECTION 12 CERTAIN DEFINITIONS. When used herein the following terms
shall have the following meaning (such definitions to be applicable to both the
singular and plural forms of such terms):
ADJUSTED LIBOR means a rate per annum determined pursuant to the
following formula:
Adjusted LIBOR = LIBOR
----------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirements by the FRB,
and taking into account any transitional adjustments thereto becoming effective
during such Interest Period. For purposes of this definition, LIBOR Loans shall
be deemed to be Eurocurrency liabilities as defined in Regulation D without
benefit of or credit for prorations, exemptions or offsets under Regulation D.
"LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for such
Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rate of interest per annum
(rounded upward, if necessary, to the nearest (1/100th of 1%) at which deposits
in Dollars in immediately available funds are offered to the Bank at 11:00 a.m.
(London, England time) two Business Days before the beginning of such Interest
Period by major banks in the interbank eurodollar market for a period equal to
such Interest Period and in an amount equal or comparable to the applicable
LIBOR Loan scheduled to be outstanding from the Bank during such Interest
Period. "LIBOR Index Rate" means, for any Interest Period, the rate per
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annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) for
deposits in Dollars for a period equal to such Interest Period which appears on
the Telerate Page 3750 as of 11:00 (London, England time) on the date two
Business Days before the commencement of such Interest Period. "Telerate, Page
3750" means the display designated as "Page 3750" on the Telerate Service (or
such other page as may replace Page 3750 on that service or such other service
as may be nominated by the British Bankers' Association as the information
vendor for the purpose of displaying British Bankers' Association Interest
Settlement Rates for Dollar deposits). Each determination of LIBOR made by the
Bank shall be conclusive and binding absent manifest error.
AGREEMENT - see PREAMBLE.
BANK - see PREAMBLE.
BUSINESS DAY means a day (other than a Saturday or Sunday) on which the
Bank is open for business in Chicago, Illinois for the conduct of substantially
all of its commercial lending activities and, when used with respect to LIBOR
Loans, a day on which the Bank is also dealing in Dollar deposits in London,
England and Nassau, Bahamas.
COMMITMENT means the commitment of the Bank to make Loans pursuant to
SECTION 1.1.
COMPANY - see PREAMBLE.
CONTINUE, CONTINUATION AND CONTINUED refer to a continuation of Loans
pursuant to SECTION 1.4.
CONVERT, CONVERSION AND CONVERTED refer to a conversion of Loans
pursuant to SECTION 1.4, 7.2 or 7.3.
DOLLAR and the sign "$" means lawful money of the United States of
America.
DOMESTIC RATE means, for any day, the greater of (i) the rate of
interest announced by the Bank from time to time as its prime commercial rate,
as in effect on such day; and (ii) the sum of (x) the rate determined by the
Bank to be the average (rounded upwards, if necessary, to the next higher 1/100
of 1%) of the rates per annum quoted to the Bank at approximately 10:00 a.m.
(Chicago time) (or as soon thereafter as is practicable) on such day (or, if
such day is not a Business Day, on the immediately preceding Business Day) by
two or more Federal funds brokers selected by the Bank for the sale to the Bank
at face value of Federal funds in an amount equal or comparable to the principal
amount owed to the Bank for which such rate is being determined, plus (y) 3/8 of
1% (0.375%).
DOMESTIC RATE LOAN means any Loan which bears interest at or by
reference to the Domestic Rate.
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EFFECTIVE DATE - see SECTION 10.1.
EVENT OF DEFAULT means any event described in SECTION 11.1.
FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.
GUARANTORS means the Parent and each of its U.S. Subsidiaries.
HAZARDOUS MATERIAL means: (a) any "hazardous substance" as now defined
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. '9601(14) as amended by the Superfund Amendments and
Reauthorization Act, and including the judicial interpretation thereof; (b) any
"pollutant or contaminant" as defined in 42 U.S.C.A. '9601(33); (c) any material
now defined as "hazardous waste" pursuant to 40 C.F.R. Part 261; (d) any
petroleum, including crude oil and any fraction thereof; (e) natural gas,
natural gas liquids, liquified natural gas, or synthetic gas usable for fuel;
(f) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (g) any
asbestos, polychlorinated biphyenyl (PCB), or isomer or dioxin; and (h) any
other substance, regardless of physical form, that is regulated under any past,
present or future federal, state or local government statute, rule or
regulation.
INTEREST PERIOD means, with respect to (a) any LIBOR Loan, the period
commencing on the date such LIBOR Loan is made, or Converted into or Continued
as a LIBOR Rate Loan, and ending one, two, three, six, nine or twelve months
thereafter as selected by the Company in its notice as provided herein and (b)
any Offered Rate Loan, the period commencing on the date such Offered Rate Loan
is made, or Converted into or Continued as an Offered Rate Loan, and ending 7 to
180 days thereafter as selected by the Company in its notice as provided herein;
PROVIDED that:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day, unless, in the case of a LIBOR Loan, the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Business Day;
(ii) if an Interest Period for a LIBOR Loan begins on a day
for which there is no numerically corresponding day in the subsequent
month in which an Interest Period is to end, such Interest Period shall
end on the last Business Day of such subsequent month; and
(iii) no Interest Period may extend beyond the Termination
Date.
LIBOR LOAN means any Loan which bears interest at a rate determined by
reference to Adjusted LIBOR.
LOAN - see SECTION 1.1.
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MARGIN STOCK means any "margin stock" as defined in Regulation U of the
FRB.
NOTE - see SECTION 2.
OFFERED RATE means the rate per annum quoted to the Company by the Bank
for the applicable Interest Period.
OFFERED RATE LOAN means any Loan which bears interest at or by
reference to the Offered Rate.
PARENT means Woodhead Industries, Inc., a Delaware corporation.
PARENT CREDIT AGREEMENT means the Credit Agreement dated as of October
29, 1993 between the Parent and the Bank, as amended or otherwise modified from
time to time.
PARENT GUARANTY - see SECTION 10.1.2.
PERSON means any natural person, corporation, limited liability
company, partnership, trust, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
REGULATION D means Regulation D of the FRB.
SISTER GUARANTY - see SECTION 10.1.3.
SUBSIDIARY means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company.
TERMINATION DATE means the earlier to occur of February 28, 2001 or
such other date on which the Commitment shall terminate pursuant to SECTION 5.1
or SECTION 11.
TYPE OF LOAN means either a LIBOR Loan or a Domestic Rate Loan.
UNMATURED EVENT OF DEFAULT means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
SECTION 13 GENERAL.
SECTION 13.1 WAIVER, AMENDMENTS. No delay on the part of the Bank in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by the Bank of any right, power or
remedy preclude other or further exercise thereof, or the
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exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
Note shall in any event be effective unless the same shall be in writing and
signed and delivered by the Bank.
SECTION 13.2 NOTICES. Except as otherwise provided in SECTIONS 1.3 and
1.4, all notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and shall be sent to the applicable party at its
address shown below its signature hereto or at such other address as such party
may, by written notice received by the other party hereto, have designated as
its address for such purpose. Notices sent by facsimile transmission shall be
deemed to have been given when sent; notices sent by mail shall be deemed to
have been given three Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery shall be
deemed to have been given when received. For purposes of SECTIONS 1.3 and 1.4,
the Bank shall be entitled to rely on telephonic instructions from any person
that the Bank in good faith believes is an authorized representative of the
Company, and the Company shall hold the Bank harmless from any loss, cost or
expense resulting from such reliance.
SECTION 13.3 COSTS, EXPENSES AND TAXES. The Company agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Bank (including
the fees and charges of counsel for the Bank and of local counsel, if any, who
may be retained by said counsel), in connection with the negotiation, execution,
delivery and administration of this Agreement, the Note, the Parent Guaranty,
the Sister Guaranty and all other documents provided for herein or delivered or
to be delivered hereunder or in connection herewith, and all reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees and
charges) incurred by the Bank in connection with the enforcement of this
Agreement, the Note, the Parent Guaranty, the Sister Guaranty or any such other
document. In addition, the Company agrees to pay, and to save the Bank harmless
from all liability for, any stamp or other taxes which may be payable in
connection with the execution and delivery of this Agreement, the Parent
Guaranty, the Sister Guaranty, the borrowings hereunder, the issuance of the
Note or the execution and delivery of any other document provided for herein or
delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this SECTION 13.5 shall survive repayment of the
Loans, cancellation of the Note and any termination of this Agreement.
SECTION 13.4 SUBSIDIARY REFERENCES. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Company has
one or more Subsidiaries.
SECTION 13.5 CAPTIONS. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
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SECTION 13.6 INDEMNIFICATION.
(a) In consideration of the execution and delivery of this Agreement by
the Bank and the agreement to extend the Commitment, the Company hereby agrees
to indemnify, exonerate and hold the Bank and each of the officers, directors,
employees and agents of the Bank (collectively the "Bank Parties" and
individually each a "Bank Party") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities, damages and expenses,
including, without limitation, reasonable attorneys' fees and charges
(collectively the "Indemnified Liabilities"), incurred by the Bank Parties or
any of them as a result of, or arising out of, or relating to (i) any tender
offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan or (ii) the execution, delivery,
performance or enforcement of this Agreement or any other document executed in
connection herewith by any of the Bank Parties, except for any such Indemnified
Liabilities arising on account of any such Bank Party's bad faith, gross
negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Nothing set forth above
shall be construed to relieve any Bank Party from any obligation it may have
under this Agreement.
(b) Without limiting CLAUSE (A) above, the Company agrees to reimburse
each Bank Party against any and all losses, claims, damages, penalties,
judgments, liabilities and expenses (including reasonable attorneys' and charges
and consultant's fees) which any Bank Party may pay, incur or become subject to
arising out of or relating to the use, handling, emission, discharge,
transportation, storage, treatment or disposal of any Hazardous Material at any
real property owned, operated or leased by the Company, except to the extent
caused by the acts or omissions of any Bank Party.
(c) All obligations provided for in this SECTION 13.6 shall survive any
termination of this Agreement.
SECTION 13.7 GOVERNING LAW. This Agreement and the Note shall be a
contract made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such
State. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
All obligations of the Company and rights of the Bank expressed herein or
in the Note shall be in addition to and not in limitation of those provided
by applicable law.
SECTION 13.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart
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shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Agreement.
SECTION 13.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and the Bank and their respective successors and assigns, and
shall inure to the benefit of the Company and the Bank and the successors and
assigns of the Bank.
SECTION 13.10 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE BANK
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTE, AND ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 13.11 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH, SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
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Delivered at Chicago, Illinois, as of the day and year first above written.
WOODHEAD CANADA LIMITED
By:
------------------------
Title:
--------------------
Address:
-------------------
-------------------
Facsimile No.:
-------------
Number for confirmation
of facsimiles:
-------------
Attention:
-----------------
-----------------
HARRIS TRUST AND SAVINGS BANK
By:
------------------------
Title:
--------------------
Address: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-2591
Number for confirmation
of facsimiles: (312) 461-3134
Attention: Adam Balbach
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SCHEDULE 3.1
The percentage to be added to Adjusted LIBOR pursuant to Section 3.1
(the "LIBOR Spread") and the commitment fee rate shall be determined based upon
the applicable Debt to EBITDA Ratio (as defined in the Parent Credit Agreement)
set forth below:
Debt to EBITDA Ratio LIBOR Spread Commitment Fee Rate
- -------------------------------- ----------------------- ----------------------
Less than or equal to 1.5 to 1 .250% .100%
- -------------------------------- ----------------------- ----------------------
Greater than 1.5 to 1 .375% .150%
- -------------------------------- ----------------------- ----------------------
The LIBOR Spread and the commitment fee rate shall be adjusted, to the
extent applicable, 45 days (or, in the case of the last fiscal quarter of any
fiscal year, 90 days) after the end of each fiscal quarter based on the Debt to
EBITDA Ratio as of the last day of such fiscal quarter; if the Parent fails to
deliver the financial statements required by Section 8.5 of the Parent Credit
Agreement by the 45th day (or, if applicable, the 90th day) after any fiscal
quarter, the LIBOR Spread and the commitment fee rate shall be .375% and .150%,
respectively, until such financial statements are delivered.
<PAGE>
NOTE
$35,000,000 July 30, 1998
Chicago, Illinois
On or before the Termination Date (as defined in the Credit Agreement
referred to below), the undersigned, for value received, promises to pay to the
order of HARRIS TRUST AND SAVINGS BANK (the "Bank"), at its principal office in
Chicago, Illinois, THIRTY FIVE MILLION DOLLARS ($35,000,000) or, if less, the
aggregate unpaid amount of all Loans made by the payee to the undersigned
pursuant to the Credit Agreement referred to below (as shown in the records of
the payee or, at the payee's option, on the schedule attached hereto and any
continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement dated as of July 30, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") between
the undersigned and the Bank, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must be
paid prior to its due date or may have its due date accelerated. Terms used but
not otherwise defined herein are used herein as defined in the Credit Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
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This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.
WOODHEAD CANADA LIMITED
By:
-------------------------
Title:
-----------------------
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