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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 1999
------------------------
ORBITAL SCIENCES CORPORATION
DELAWARE 0-18287 06-1209561
(State of incorporation) (Commission File Number) (I.R.S. Employer I.D. No.)
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(Address and telephone number
of principal executive offices)
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EXPLANATORY NOTE
----------------
Orbital Sciences Corporation hereby amends Item 7(c) of
its Current Report on Form 8-K, filed with the Securities and Exchange
Commission on May 24, 1999 to add the exhibits referenced
below.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The required financial statements will be filed by amendment.
(b) Pro Forma Financial Information.
The required pro forma financial information will be filed by
amendment.
(c) Exhibits.
The following exhibits are filed herewith:
10.1 Asset Acquisition Agreement dated as of March 18, 1999 between
MacDonald, Dettwiler and Associates Ltd. ("MDA") and Spar
Aerospace Limited ("Spar").
10.2 Promissory Note dated May 7, 1999 from MacDonald, Dettwiler Space
and Advanced Robotics Ltd. in favor of Spar.
10.3 Guaranty dated May 7, 1999 from Orbital Sciences Corporation and
MDA in favor of Spar.
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SIGNATURES
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.
ORBITAL SCIENCES CORPORATION
Date: May 27, 1999 By: /s/ Jeffrey V. Pirone
------------------------------
Jeffrey V. Pirone
Executive Vice President and
Chief Financial Officer
2
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EXHIBIT 10.1
SPAR AEROSPACE LIMITED
- AND -
MacDONALD, DETTWILER AND ASSOCIATES LTD.
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ASSET PURCHASE AGREEMENT
================================================================================
Osler, Hoskin & Harcourt
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ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DEFINITIONS AND PRINCIPLES OF INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Rules of Interpretation - . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.3 Knowledge - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.4 Entire Agreement - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.5 Applicable Law - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.6 Accounting Principles - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.7 Schedules - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1 Action by Vendor and Purchaser - . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Place of Closing - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Tender - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 No Assumption of Liabilities - . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.5 Assignment of Contracts - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Purchase Price - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Satisfaction of Purchase Price - . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 Adjustments to Purchase Price Based on Net Assets - . . . . . . . . . . . . . . . . 25
3.4 Delivery of Closing Statement - . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 Payment of Adjustment Amount - . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.6 Objection to Closing Date Statement - . . . . . . . . . . . . . . . . . . . . . . . 26
3.7 Interest - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.8 Adjustment to Purchase Price Based on CSA or NASA Payments - . . . . . . . . . . . 28
3.9 Allocation of Purchase Price - . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
REPRESENTATIONS AND WARRANTIES OF THE VENDOR . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1 Incorporation and Registration - . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Title to the Assets - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Right to Sell Radarsat Shares - . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4 Due Authorization - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Enforceability of Obligations - . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Absence of Conflicting Agreements - . . . . . . . . . . . . . . . . . . . . . . . . 31
4.7 No Joint Venture Interests, etc. - . . . . . . . . . . . . . . . . . . . . . . . . 31
4.8 Regulatory Approvals - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.9 Financial Statements - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.10 Absence of Undisclosed Liabilities - . . . . . . . . . . . . . . . . . . . . . . . 32
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4.11 Absence of Changes - Since the date of the Balance Sheet there has not been: . . . 33
4.12 Absence of Unusual Transactions - . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.13 Major Suppliers and Customers - . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.14 Condition of Fixed Assets - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.15 Customer Owned Assets - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.16 Work-in-Process - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.17 Collectibility of Accounts Receivable - . . . . . . . . . . . . . . . . . . . . . . 36
4.18 Government Grants - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.19 Business in Compliance with Law - . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.20 Restrictive Covenants - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.21 Intellectual Property - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.22 Equipment Contracts - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.23 Real Property Leases - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.24 Environmental Matters - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.25 Employment Matters - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.26 Collective Agreements - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.27 Insurance - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.28 Material Contracts - Except for the: . . . . . . . . . . . . . . . . . . . . . . . 46
4.29 Copies of Agreements, etc. - . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.30 Litigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.31 Vendor Tax Matters - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.32 Spar Holdco and Spar Operations Tax Matters - . . . . . . . . . . . . . . . . . . . 48
4.33 Residence of the Vendor - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.34 No Previous Tax Elections - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.35 Books and Records- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.36 Management Recommendation Letters - . . . . . . . . . . . . . . . . . . . . . . . . 51
4.37 Location of the Assets - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.38 No Broker - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.39 Non-Arm's Length Transactions - . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.40 Sufficiency of Purchased Assets - . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.41 Year 2000 Compliance - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.42 Changes - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.43 Full Disclosure - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.44 Spar Holdco - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.45 Competition Acts Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . 54
5.1 Incorporation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.2 Due Authorization - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.3 Enforceability of Obligations - . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.4 Absence of Conflicting Agreements - . . . . . . . . . . . . . . . . . . . . . . . . 54
5.5 Investment Canada - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.6 Regulatory Approvals - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.7 Litigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.8 Availability of Funds - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.9 No Broker - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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5.10 Competition Act Requirements - . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
NON-WAIVER; SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.1 Non-Waiver - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2 Nature and Survival - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
PURCHASER'S CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.1 Truth and Accuracy of Representations of Vendor at the Closing Time - . . . . . . . 59
7.2 Performance of Obligations - . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.3 Receipt of Closing Documentation - . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Opinion of Counsel for Vendor - . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.5 Consents to Assignment - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.6 Consents, Authorizations and Registrations - . . . . . . . . . . . . . . . . . . . 60
7.7 No Litigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.8 Encumbrances - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.9 Non-Competition - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.10 Actual Possession - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.11 Employee Confidentiality and Intellectual Property - . . . . . . . . . . . . . . . 61
7.12 Substantial Damage - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.13 No Laws - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.14 Directors and Officers of Spar Operations and Radarsat International Inc. - . . . . 61
7.15 Pension/Benefit Plans Agreement - . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.16 BAAN Agreements - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
VENDOR'S CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.1 Truth and Accuracy of Representations of the Purchaser at Closing Time - . . . . . 62
8.2 Performance of Obligations - . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.3 Receipt of Closing Documentation - . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Opinion of Counsel for Purchaser - . . . . . . . . . . . . . . . . . . . . . . . . 63
8.5 Consents, Authorizations and Registrations - . . . . . . . . . . . . . . . . . . . 63
8.6 U.S. Regulatory Requirements - . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.7 No Litigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.8 Pension/Benefit Plans Agreement - . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.9 Consent of Lenders - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
OTHER COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.1 Conduct of Business Prior to Closing - . . . . . . . . . . . . . . . . . . . . . . 65
9.2 Access for Investigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.3 Confidentiality - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.4 Actions to Satisfy Closing Conditions - . . . . . . . . . . . . . . . . . . . . . . 66
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9.5 Offer of Employment, etc. - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.6 Governmental Filings - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.7 Sales and Transfer Taxes - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.8 Goods and Services Tax Election - . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.9 Subsection 20(24) Election - . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.10 Accounts Receivable Election - . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.11 Stub Period Returns - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.12 Assumed Liabilities - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.13 Preservation of Records - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.14 Purchaser's Option if Damage, Etc. - . . . . . . . . . . . . . . . . . . . . . . . 72
9.15 Spar Name - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.16 Post-Closing Receipts - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.17 Access to Personnel - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.18 Government Contract Audits - . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.19 Letters of Credit, Etc. - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.20 Baan System - Transitional Arrangements - . . . . . . . . . . . . . . . . . . . . . 75
9.21 Goods and Services Tax Registration - . . . . . . . . . . . . . . . . . . . . . . . 76
9.22 MIS Systems - Transitional Agreement - . . . . . . . . . . . . . . . . . . . . . . 76
9.23 Bank Consents - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.24 Radarsat Shares Closing - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.25 Sirius Program Arrangements - . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.1 Mutual Indemnifications for Breaches of Covenants and Warranty, etc. - . . . . . . 81
10.2 Limitations Indemnification - . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.3 Bulk Sales Act Indemnity - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.4 Environmental Indemnity - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.5 Sensor Adaptive Machines Patent - . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.6 Product Liability and Warranties - . . . . . . . . . . . . . . . . . . . . . . . . 84
10.7 Indemnity Re Assumed Liabilities - . . . . . . . . . . . . . . . . . . . . . . . . 85
10.8 Indemnity Re Litigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.9 Indemnification Procedures - . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.10 Mitigation - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.11 Exclusive Remedies - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.12 No Claims Against Senior Officers - . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.1 Public Notices - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.2 Expenses - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.3 Notices - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.4 Assignment - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.5 Further Assurances - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.6 Counterparts - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
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THIS ASSET PURCHASE AGREEMENT is made the 18th day of March, 1999
B E T W E E N:
SPAR AEROSPACE LIMITED, a corporation governed by the laws
of Canada
(the "Vendor")
- and -
MacDONALD, DETTWILER AND ASSOCIATES LTD., a corporation
governed by the laws of Canada
(the "Purchaser")
RECITALS:
A. The Vendor currently carries on the business of the
design, assembly, manufacture, marketing and support of robotic
systems for space and entertainment applications directly through
its Robotics Division and indirectly through its wholly-owned
subsidiary, Spar Aerospace Inc., a Delaware Corporation, and its
wholly-owned subsidiary, Spar Operations & Engineering
Corporation, a Delaware Corporation, and the Vendor beneficially
owns and controls 1,071,737 shares of Radarsat International Inc.,
a corporation governed by the laws of Canada.
B. The Vendor has agreed to sell to the Purchaser and the
Purchaser has agreed to purchase from the Vendor all of the
assets, property and undertaking of and pertaining to the Business
and all of the shares of Radarsat International Inc. owned by the
Vendor, on the terms and conditions of this Agreement.
NOW THEREFORE, the Parties agree as follows:
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ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS-
Whenever used in this Agreement, unless there is something inconsistent in the
subject matter or context, the following words and terms shall have the meanings
set out below:
"ACCOUNTS PAYABLE" means all amounts in connection with the Business due and
owing to traders, suppliers and other Persons incurred in the ordinary course of
business as of the Time of Closing other than amounts due and owing to Persons
who are not dealing at Arm's Length with the Vendor;
"ACCOUNTS RECEIVABLE" means any and all accounts receivable, bills receivable,
trade accounts, notes receivable, book debts, insurance claims, royalties and
other amounts due to the Vendor or Spar Operations in connection with the
Business and the Purchased Assets, including any holdbacks, unbilled revenue,
refunds and rebates receivable in connection with the Business or the Purchased
Assets and those loans and accounts receivable owing by Employees to the Vendor
in connection with the Business listed in Schedule 4.17, other than any such
amounts which are Excluded Assets, and the benefit of all security (including
cash deposits), guarantees and other collateral held by the Vendor and Spar
Operations in connection with the Business;
"ACCRUED LIABILITIES" means all accrued liabilities of the Business incurred in
the ordinary course of business to the extent reflected in the Closing Date
Statement, including for greater certainty those liabilities, if any, of the
Business reflected in the Closing Date Statement under the headings "Trade
Payables", "Accrued Liabilities", "Income Taxes" and "Warr/Liab Prov";
"AFFILIATE" has the meaning given in the Canada Business Corporations Act, as
amended from time to time;
<PAGE> 8
-3-
"AGREEMENT" means this Asset Purchase Agreement, including all schedules, and
all instruments supplementing or amending or confirming this Agreement and
references to "ARTICLE" or "SECTION" mean and refer to the specified Article or
Section of this Agreement;
"ARM'S LENGTH" has the meaning ascribed for the purposes of the ITA;
"ASSUMED CONTRACTS" means the Contracts of the Vendor other than the Excluded
Contracts;
"ASSUMED LIABILITIES" means (i) all Balance Sheet Liabilities plus (ii) the
liabilities and obligations of the Vendor relating to the Business accrued due
on, or accruing due subsequent to, the Closing Date under the Permitted
Encumbrances, with respect to the Transferred Employees and, subject to Section
2.5, under the Assumed Contracts and Governmental Authorizations
(notwithstanding that customer advances received by the Vendor prior to Closing
under such Contracts are an Excluded Asset) plus (iii) obligations of the Vendor
in respect of the grievances and complaints identified in Schedule 4.26 and
other grievances and complaints arising in the ordinary course of business after
the date hereof but prior to the Closing Date none of which have a material
adverse effect on the Business plus (iv) all other liabilities and obligations
for which the Purchaser is expressly responsible under this Agreement;
"AUDITOR" means Ernst & Young LLP, Chartered Accountants;
"BAAN" means Baan Canada, Inc.;
"BAAN AGREEMENTS" means the Professional Services Agreement executed February 13
and 25, 1998 between the Vendor and Baan as amended by Amendment Number One
dated February 13, 1998; the Software License and Support Agreement executed
February 10 and 16, 1998 between the Vendor and Baan, as amended by Amendment
Number One dated February 10, 1998 and Amendment Number Two dated March 8, 1999;
and the Software License and Support Agreement dated February 10, 1998 between
the Vendor and Interactive Software Systems Inc. as amended by Addenda Number
One dated , 1998 and assigned in part pursuant to an Assignment
Agreement dated March 8, 1999 among the Vendor, EMS and Interactive Software
Systems Inc.;
<PAGE> 9
-4-
"BALANCE SHEET" means the statement of Net Assets of the Business as at December
31, 1998, forming part of the Financial Statements;
"BALANCE SHEET LIABILITIES" means Accounts Payable and Accrued Liabilities;
"BOOKS AND RECORDS" means all books, records, books of account, personnel
records, sales and purchase records, lists of suppliers and customers, formulae,
inventory records, referral sources, research and development reports and
records, price lists, advertising material, production reports and records,
manufacturing data, equipment logs, operating guidelines and manuals, employee
manuals, business reports, plans and projections and all other documents, files,
records, correspondence, and other data and information, financial or otherwise,
relating to the Business or the Purchased Assets, including all data and
information stored on computer-related media;
"BUSINESS" shall mean the business of the design, development, assembly,
manufacture, marketing and support of robotic systems for space and
entertainment applications carried on by the Vendor directly through its
Robotics Division and indirectly through Spar Holdco and Spar Operations, but
shall not include the contracts and assets sold to DRS under or pursuant to the
Sirius Program Purchase Agreement dated March 8, 1999 between DRS and the
Vendor;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located in the Cities of Toronto, Ontario and
Vancouver, British Columbia are open for business during normal banking hours;
"BUSINESS PLAN" means the 1999/2000 Business Plan of the Vendor, a copy of which
is attached as Schedule 1.1(e);
"CGI" means CGI Information Systems and Management Consultants Inc.;
"CGI AGREEMENT" means the Outsourcing Services Agreement dated May 22, 1997
between the Vendor and CGI, as amended by Amendment Number 1 and Amendment
Number 2;
<PAGE> 10
-5-
"CLAIMS" means any claim, demand, action, cause of action, damage, loss, costs,
liability, deficiency or expense, including reasonable professional fees and all
costs incurred in investigating or pursuing any of the foregoing or any
proceeding relating to any of the foregoing;
"CLOSING" means the completion of the sale to and purchase by the Purchaser of
the Purchased Assets under this Agreement;
"CLOSING DATE" means the 30th day of April, 1999, provided that if the
applicable time periods under the HSR Act have not expired, the Closing Date
shall be the earliest of June 30, 1999 and the tenth Business Day following
expiry of applicable time periods under the HSR Act, or such other date as the
Parties may agree in writing as the date upon which the Closing shall take
place;
"CLOSING DATE STATEMENT" means the statement of assets and liabilities of the
Business as at the Closing Date, and the statement of the Net Assets as at the
Closing Date, all of which are prepared by the Vendor, together with:
an unqualified opinion of the Auditor to the effect that the Closing Date
Statement has been prepared in accordance with generally accepted accounting
principles consistently applied with those used in the Financial Statements
except for the adjustments described in Schedule 1.1(a) and presents fairly in
all material respects the Net Assets, including the Balance Sheet Liabilities,
as at the Closing Date; and
a Certificate of the Chief Financial Officer of the Vendor certifying without
personal liability the matters referred to in (a) above;
"CLOSING TIME" means 10:00 o'clock a.m. Toronto time, on the Closing Date or
such other time on such date as the Parties may agree in writing as the time at
which the Closing shall take place;
"COLLECTIVE AGREEMENTS" means the collective agreements relating to the Business
by which the Vendor or Spar Operations is bound, and all related documents
including all benefit agreements, letters of understanding, letters of intent
and other written communications with bargaining agents for the Employees which
impose any obligations upon the Vendor or Spar Operations or set out the
<PAGE> 11
-6-
understanding of the parties thereto with respect to the meaning of any
provisions of such collective agreements;
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated August 31,
1998 between the Vendor and Orbital Sciences Corporation as amended;
"CONTRACTS" means all contracts, licences, leases, agreements, commitments,
entitlements and engagements of the Vendor and Spar Operations, including all
quotations, orders or tenders for contracts which remain open for acceptance and
any manufacturers' or suppliers' warranty, guarantee or commitment (express or
implied), relating to the Business or the Purchased Assets and, for greater
certainty, including the Material Contracts;
"CONTROL" has the meaning given in the Canada Business Corporations Act;
"COPYRIGHTS" means all copyrights used in or relating to the Business, whether
registered or not, including those copyright registrations and applications
identified in Schedule 4.21;
"COVERED TAXES" has the meaning set out in Section 4.32;
"CUSTOMER - OWNED ASSETS" means those Fixed Assets and Inventory listed on
Schedule 4.14 and Schedule 4.15 which are not owned by the Vendor;
"DRS" means DRS Technologies Canada, Inc.;
"EMPLOYEES" means all persons employed or retained by the Vendor or Spar
Operations in connection with the Business, including, for greater certainty,
those employees of the Business on long term or short term disability leave or
other absence;
"EMS" means EMS Technologies Canada, Ltd.;
<PAGE> 12
-7-
"ENCUMBRANCES" means any pledge, lien, charge, hypothec, security agreement,
lease, title retention agreement, mortgage, encumbrance, option or adverse
claim, security interest of any nature, exception, reservation, easement, right
of title, option, right of pre-emption, privilege, matter capable of
registration against title, of any kind or character whatsoever;
"ENVIRONMENT" means the environment or natural environment as defined in any
Environmental Law and includes air, surface, water, ground water, land surface,
soil, subsurface strata, a sewer system and the environment in the workplace;
"ENVIRONMENTAL APPROVALS" means all permits, certificates, licences,
authorizations, consents, instructions, registrations, directions or approvals
issued or required by Governmental Authorities pursuant to Environmental Laws
with respect to the operation of the Business or pertaining to the Purchased
Assets and includes any sewer surcharge agreement;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to the
protection of the Environment and employee and public health and safety, and
includes those Environmental Laws relating to the storage, generation, use,
handling, manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, Release and disposal of Hazardous Substances;
"EQUIPMENT CONTRACTS" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other Contracts
binding upon the Vendor or Spar Operations relating to equipment and vehicles
used by the Vendor in connection with the Business;
"ETA" means the Excise Tax Act (Canada), as amended from time to time;
"EXCLUDED ASSETS" means:
(a) all cash, bank balances, moneys in possession of banks and other
depositaries, term or time deposits and similar cash items of,
owned or held by or for the account of the Vendor, including for
greater certainty customer advances received by the Vendor prior
to Closing under the Contracts;
<PAGE> 13
-8-
(b) all shares, notes, bonds, debentures or other securities of or
issued by corporations or other persons and all certificates or
other evidences of ownership thereof owned or held by or for the
account of the Vendor except to the extent such are held as
collateral for any Assumed Liabilities and except for the
Radarsat Shares and the Spar Holdco Shares;
(c) the corporate, financial, taxation and other records of the
Vendor not pertaining exclusively or primarily to the Business;
(d) all extra-provincial, sales, excise or other licences or
registrations issued to or held by the Vendor, whether in respect
of the Business or otherwise;
(e) all rights of action and claims (and benefits arising therefrom)
of the Vendor against third Persons in connection with the
conduct of the Business prior to the Closing Date or otherwise
arising by reason of any facts or circumstances that occurred or
existed prior to the Closing Date, in each case whether or not an
action or any other proceeding shall have been commenced before
such time, except to the extent such claims are reflected in the
Accounts Receivable;
(f) any refunds in respect of any re-assessments for Taxes of the
Vendor paid or accrued prior to the Closing Date;
(g) investment tax or similar credits and goods and services tax
input tax credits of the Vendor generated prior to the Closing
Date and refundable Taxes of the Vendor paid or accrued prior to
the Closing Date except to the extent reflected on the Closing
Date Statement;
(h) any amounts receivable pursuant to Section 9.17;
<PAGE> 14
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(i) except as set out in Schedule 4.17 and except for receivables
for travel advances or similar items from Employees, all amounts
owing from any director, officer, former director or officer,
shareholder, employee or Affiliate of the Vendor;
(j) all Excluded Contracts;
(k) except as provided in this Agreement, all rights of the Vendor
to use the name "Spar" or "Spar Aerospace" or any word or name
containing such phrases or words (including all logos, trade or
brand names, business names, trade marks, trade mark
registrations and applications, service mark registrations and
applications and copyrights containing or in respect of such
words or phrases);
(l) subject to Section 9.13, insurance policies of the Vendor
relating to the Business and the Purchased Assets and all rights
in connection therewith including any rights to payments
thereunder upon the occurrence of an insured event or refunds of
insurance payments;
(m) all rights of the Vendor to any refunds of workers' compensation
payments in respect of any period prior to the Closing Date;
(n) except as described in Schedule 7.15, all Pension/Benefit Plans;
(o) the Vendor's Class B I.P. address 142.65;
(p) the assets set out in Schedule 1.1(c);
(q) all Contracts and assets sold to DRS under or pursuant to the
Sirius Program Purchase Agreement dated March 8, 1999 between DRS
and the Vendor, and all rights of the Vendor
<PAGE> 15
-10-
thereunder other than the Technical Assistance Agreement dated
March 8, 1999 between DRS and the Vendor; and
(r) all rights of the Vendor under this Agreement and agreements,
instruments and certificates delivered pursuant to this Agreement;
"EXCLUDED CONTRACTS" means all Contracts relating to the Excluded Assets and all
Contracts listed in Schedule 1.1(b);
"FINANCIAL STATEMENTS" means the combined (with Spar Operations and Spar Holdco)
and unaudited financial statements of the Business for the fiscal year ended
December 31, 1998, consisting of the balance sheet, income statement, statement
of changes in financial positions and cash flow statement, and the combined and
unaudited income statement of the Business for the fiscal year ended December
31, 1997, copies of which are included in Schedule 4.9;
"FIXED ASSETS" means the fixed assets, machinery, equipment, fixtures,
furniture, furnishings, vehicles, material handling equipment, implements,
tools, jigs, discs, molds, patterns and tooling owned or used or held by the
Vendor or Spar Operations in connection with the Business, including any which
are in storage, and other tangible property and facilities used in the Business
whether located in or on the premises of the Vendor or Spar Operations or
elsewhere;
"GOODWILL" means the goodwill of the Business, and information and documents
relevant thereto, including lists of customer and suppliers, credit information,
research materials, research and development files and the exclusive right of
the Purchaser to represent itself as carrying on the Business in succession to
the Vendor;
"GOVERNMENT AUDIT PERIOD" means, with respect to any Assumed Contract which is
subject to a Government Contract Audit, the period in respect of which there is
a Government Contract Audit;
<PAGE> 16
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"GOVERNMENT CONTRACT AUDIT" means an audit by a Governmental Authority of any
Assumed Contract which under the terms thereof is subject to such an audit;
"GOVERNMENTAL AUTHORITY" means any government, regulatory authority,
governmental department, bureau, agency, commission, board, tribunal, crown
corporation, or court or other law, rule or regulation-making entity having
jurisdiction on behalf of any nation, or province or state or other subdivision
thereof or any municipality, district or other subdivision thereof;
"GOVERNMENTAL AUTHORIZATION" means all authorizations, approvals, including
Environmental Approvals, licences or permits issued to the Vendor or Spar
Operations in connection with the Business or any of the Purchased Assets by any
Governmental Authorities;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any nature,
hazardous substance, hazardous material, toxic substance, dangerous substance or
dangerous good as defined, judicially interpreted or identified in any
Environmental Law;
"HSR ACT" means the United States Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended from time to time;
"INCLUDING" means including without limitation;
"INDUSTRIAL DESIGNS" means all industrial designs or similar rights used in or
relating to the Business, whether registered or not, including those industrial
design registrations and applications identified in Schedule 4.21;
"INTELLECTUAL PROPERTY RIGHTS" means all right, title and interest in and to and
the benefit of all Patents, Trade-marks, Copyrights, Industrial Designs and
Topographies;
"INVENTORIES" means all inventories of every kind and nature and wheresoever
situate owned by the Vendor or Spar Operations and pertaining to the Business,
including all inventories of raw materials,
<PAGE> 17
-12-
finished goods, operating supplies, parts, spare parts and packaging materials,
and all rights of the Vendor or Spar Operations to any such inventories
furnished by any Governmental Authority or customer;
"ITA" means the Income Tax Act (Canada), as amended from time to time;
"LAWS" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, tax treaties, notices, directions and
judgements, in all such cases to the extent the same are legally enforceable, or
other legally enforceable requirements of any Governmental Authority;
"LEASED PREMISES" means the leased premises which are the subject of the Real
Property Leases and the Vendor's or Spar Operations' interest in all leasehold
improvements pertaining to such leased premises and Real Property Leases and in
fixtures located in, on or about such leased premises and all appurtenances
thereto;
"MARCH 31 BALANCE SHEET" means the projected balance sheet of the Business as at
March 31, 1999, a copy of which is attached as Schedule 1.1(a);
"MATERIAL CONTRACT" means the Permitted Encumbrances listed in Schedule 4.2, the
Equipment Contracts listed in Schedule 4.22, the Real Property Leases listed in
Schedule 4.23, the Employment Contracts listed in Schedule 4.25(b), the
Collective Agreements listed in Schedule 4.26, the Pension/Benefit Plans
referenced in Schedule 7.15 and any other Contract (other than an Excluded
Contract) involving aggregate payments to or by the Vendor or Spar Operations in
excess of $250,000, or any commitment to or by the Vendor or Spar Operations
that may reasonably extend beyond two years or which is outside the ordinary
course of business or which does not or cannot be terminated without penalty on
less than three months' notice;
"NET ASSETS" means:
(a) the value of all Accounts Receivable, less a proper and reasonable
allowance for doubtful accounts;
plus
<PAGE> 18
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(b) the value of all Inventories valued in accordance with Section
4.15;
plus
(c) the value of all Work-in-Process valued in accordance with
Section 4.16;
plus
(d) the Prepaid Expenses and Deposits;
plus
(e) the book value of Fixed Assets, less accumulated depreciation
relating thereto;
less
(f) the aggregate value of all Balance Sheet Liabilities,
the whole as determined in accordance with generally accepted
accounting principles applied on a basis consistent with those
used in the preparation of the March 31 Balance Sheet;
"NON-UNION EMPLOYEES" means Employees whose employment is not governed by the
terms of a Collective Agreement;
"NOTICE" shall have the meaning given in Section 11.3;
"PARTIES" means the Vendor and the Purchaser collectively, and "PARTY" means any
one of them;
"PATENTS" means all patents and inventions and applications thereof used in or
relating to the Business, and patents which may be issued out of such current
applications, (including divisions, reissues, renewals, re-examinations,
continuations, continuations in part and extensions) applied for or registered
in any jurisdiction, including those issued patents and patent applications
identified in Schedule 4.21;
"PENSION/BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies or practices, whether oral or written, formal or informal, funded or
unfunded, relating to the Employees to which the Vendor or Spar Operations is a
party to or bound by or under which the Vendor or Spar Operations has any
liability or contingent liability, relating to:
<PAGE> 19
-14-
(a) retirement savings or pensions, including any defined benefit
pension plan, defined contribution pension plan, group
registered retirement savings plan, or supplemental pension or
retirement plan; or
(b) any bonus, profit sharing, deferred compensation, incentive
compensation, hospitalization, health, dental, disability,
unemployment insurance, vacation pay, severance pay or other
benefit plan with respect to any of its Employees or former
employees, individuals working on contract with it or other
individuals providing services to it of a kind normally provided
by employees, and all statutory plans with which the Vendor or
Spar Operations is required to comply, including the Canada or
Quebec Pension Plans and plans administered pursuant to applicable
provincial health tax, workers' compensation and unemployment
insurance legislation;
"PERMITTED ENCUMBRANCES" means the Encumbrances identified as permitted
encumbrances in Schedule 4.2;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and a
natural person in such person's capacity as trustee, executor,
administrator or other legal representative;
"PRE-CLOSING TAX PERIOD" shall mean all taxable periods ending on or
before the Closing Date and the portion ending on the Closing Date of any
taxable period that includes (but does not end on) such day;
"PREPAID EXPENSES AND DEPOSITS" means all deposits with any public
utility or Governmental Authority and all amounts prepaid in connection
with the Business or the Purchased Assets, including Taxes, rents and
telephone, but excluding income or other taxes which are personal to the
Vendor, other than any such prepaid amounts or deposits which directly
relate to Excluded Assets;
"PRIME RATE" means the annual variable rate of interest quoted or
published from time to time by Bank of Nova Scotia at its main branch in
Toronto, Ontario as the "prime rate" of interest charged by it for
<PAGE> 20
-15-
Canadian dollar commercial loans made in Canada and for the purposes of this
Agreement the "Prime Rate" shall vary, upwards and downwards, as the case may
be, at the same time and in the same amount as the said "prime rate" so varies;
"PURCHASE PRICE" shall have the meaning given in Section 3.1;
"PURCHASED ASSETS" means all of the Vendor's right, title and interest in, to
and under the assets, property and undertaking, other than the Excluded Assets,
owned or used or held by Vendor for use in, or in respect of the operation of,
the Business, including the Vendor's right, title and interest in, to and under
the following properties, assets and rights:
(a) CONTRACTS - the Assumed Contracts, including:
(i) REAL PROPERTY LEASES, ETC. - the Real Property Leases and
the Leased Premises; and
(ii) EQUIPMENT CONTRACTS - the Equipment Contracts and the
full benefit of all service contracts relating to any
Equipment Contracts or any equipment or other assets
covered by the Equipment Contracts
and all options, including options to purchase, under the
Equipment Contracts;
(b) INVENTORIES, ETC. - the Inventories;
(c) FIXED ASSETS - the Fixed Assets;
(d) WORK-IN-PROCESS - the Work-in-Process;
(e) INVESTMENTS - the Radarsat Shares and the Spar Holdco Shares;
(f) GOODWILL OF BUSINESS - the Goodwill;
<PAGE> 21
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(g) PREPAID EXPENSES AND DEPOSITS - all Prepaid Expenses and Deposits;
(h) ACCOUNTS RECEIVABLE - all Accounts Receivable;
(i) TECHNOLOGY - the Technology;
(j) BOOKS AND RECORDS - the Books and Records;
(k) GOVERNMENT AUTHORIZATIONS - the Government Authorizations; and
(l) GENERAL - all other rights, properties and assets (other than any
Excluded Assets) of the Vendor used in the Business, of
whatsoever nature or kind and wherever situated;
"RADARSAT SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated June
21, 1994 among the Vendor, Comdev Limited, MacDonald Dettwiler & Associates
Limited, Martin Marietta Technologies Inc. and Radarsat International Inc.;
"RADARSAT SHARES" means all the common shares of Radarsat International Inc.
owned by the Vendor;
"REAL PROPERTY LEASES" means those leases and subleases of real property
relating to real property used or occupied by the Vendor or Spar Operations in
connection with the Business;
"RELEASE" has the meaning prescribed in any Environmental Law and includes any
release, spill, leak, pumping, pouring, emission, emptying, discharge,
injection, escape, leaching, disposal, dumping, deposit, spraying, burial,
abandonment, incineration, seepage, or placement;
"REMEDIAL ORDER" means any administrative direction, order or sanction issued,
filed or imposed by any Governmental Authority pursuant to any Environmental
Laws and includes any order requiring any
<PAGE> 22
-17-
remediation or clean-up of any Hazardous Substance, or requiring that any
Release or any other activity be reduced, modified or eliminated;
"SPAR HOLDCO" means Spar Aerospace Inc.;
"SPAR HOLDCO FINANCIAL STATEMENTS" means the unaudited financial statements of
Spar Holdco for the fiscal year ended December 31, 1998, consisting of a balance
sheet and income statement, copies of which are included in Schedule 4.9;
"SPAR HOLDCO SHARES" means all of the outstanding shares in the capital of Spar
Holdco;
"SPAR OPERATIONS" means Spar Operations & Engineering Corporation;
"SPAR OPERATIONS FINANCIAL STATEMENTS" means the unaudited financial statements
of Spar Operations for the fiscal year ended December 31, 1998, consisting of a
balance sheet and income statement, copies of which are included in Schedule
4.9;
"SPAR OPERATIONS SHARES" means all of the outstanding shares in the capital of
Spar Operations;
"TAXING AUTHORITY" shall mean any Governmental Authority exercising official
regulatory authority with respect to Taxes;
"TAX RETURNS" includes all returns, reports, declarations, elections, notices,
filings, information returns and statements, including any related or supporting
information with respect to any of the foregoing, filed or required to be filed
in respect of Taxes;
"TAXES" includes all taxes, duties, fees, premiums, assessments, imposts, levies
and other charges of any kind whatsoever imposed by any Governmental Authority,
together with all interest, penalties, fines, additions to tax or other
additional amounts imposed in respect thereof, including those levied on, or
measured by, or referred to as income, gross receipts, profits, capital,
transfer, land transfer, sales, goods
<PAGE> 23
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and services, harmonized sales use, value-added, excise, stamp, withholding,
business, franchising, property, payroll, employment, health, employer health,
social services, education and social security taxes, all surtaxes, all customs
duties and import and export taxes, all license, franchise and registration
fees and all employment insurance, health insurance and Canada, Quebec and
other government pension plan premiums and contributions;
"TECHNICAL INFORMATION" means all right, title and interest in and to all
know-how used in or relating to the Business, including all information of a
scientific, technical or business nature whether in oral, written, graphic,
machine readable, electronic or physical form, all documented research, trade
secrets and other proprietary know-how, processes, computer software and
associated manuals, methods of production, drawings, blueprints, patterns,
plans, flow charts, equipment and parts lists, descriptions and related
instructions, formulas, designs, manuals, records and procedures used in or
relating to the Business;
"TECHNOLOGY" means all technology used in or relating to the Business, including
all Intellectual Property Rights and Technical Information;
"TOPOGRAPHIES" means the design of the disposition of the elements or
interconnections of an integrated circuit product used in or relating to the
Business or customization layers for such a product whether registered or not,
including the topography, registrations and applications identified in Schedule
4.21;
"TRADE-MARKS" means all trade-marks, trade names, designs, graphics, logos,
service marks and other commercial symbols used in connection with the Business
except any which are Excluded Assets, whether registered or not, including the
trade-marks trade names, designs, graphics, logos and other commercial symbols
identified in Schedule 4.21;
"TRANSFERRED EMPLOYEES" shall have the meaning given in Section 9.5;
"WORK-IN-PROCESS" means the work-in-process pertaining to the Business; and
<PAGE> 24
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"YEAR 2000 COMPLIANT" means:
(a) all dates receivable by software and hardware used in the
Business or Purchased Assets (input data) have a century
indicator, all dates produced by software and hardware used in
the Business or Purchased Assets (output or results) have a
century indicator;
(b) date calculations involving either a single century or multiple
centuries neither cause an abnormal ending nor generate incorrect
results;
(c) when sorting by date, all records are sorted by accurate sequence;
and when the date is used as a key, records are read and written
in accurate sequence; and
(d) leap years are determined by the following standard:
(e) if the year is evenly divisible by 4, it is a leap year, except
for years ending in 00; and
a year ending in 00 is a leap year if it is evenly divisible by
400.
1.2 CERTAIN RULES OF INTERPRETATION -
In this Agreement and the Schedules:
(a) TIME - time is of the essence in the performance of the Parties'
respective obligations;
(b) CURRENCY - unless otherwise specified, all references to money
amounts are to Canadian currency;
(c) HEADINGS - the descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended
as complete or accurate descriptions of the content of such
Articles or Sections;
<PAGE> 25
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(d) SINGULAR, ETC. - the use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
(e) CONSENT - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification
of such approval or consent is not delivered within the applicable
time limited, then, unless otherwise specified, the Party whose
consent or approval is required shall be conclusively deemed to
have withheld its approval or consent;
(f) CALCULATION OF TIME - unless otherwise specified, time periods
within or following which any payment is to be made or act is to
be done shall be calculated by excluding the day on which the
period commences and including the day on which the period ends
and by extending the period to the next Business Day following if
the last day of the period is not a Business Day; and
(g) BUSINESS DAY - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a
day other than a Business Day, such payment shall be made or
action taken on the next Business Day following such day.
1.3 KNOWLEDGE -
Any reference to the knowledge of the Vendor or words to similar effect shall be
deemed to refer solely to knowledge, information and belief of the following
individuals, after reviewing all internal relevant records and making reasonable
inquiries regarding the relevant matter of their direct subordinates, including
for greater certainty the program managers where applicable:
Colin Watson Mag Iskander
Mark Steinman Hitem Makim
Sheldon Polansky Alan Luborsky
Stephen McPherson Cameron Craig
Susan Kritzinger Roman Gula
1.4 ENTIRE AGREEMENT -
<PAGE> 26
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This Agreement together with the Confidentiality Agreement and the agreements
and other documents to be delivered pursuant to this Agreement, constitute the
entire agreement between the Parties and their Affiliates pertaining to the
subject matter of this Agreement and supersede the letter of intent dated
January 22, 1999 between the Vendor and MacDonald, Dettwiler and Associates
Ltd., all other prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties and their Affiliates, and there are no
warranties, representations or other agreements between the Parties and their
Affiliates in connection with the subject matter of this Agreement except as
specifically set forth in this Agreement, the Confidentiality Agreement and any
document delivered pursuant to this Agreement. No supplement, modification or
waiver or termination of this Agreement shall be binding unless executed in
writing by the Party to be bound thereby.
1.5 APPLICABLE LAW -
This Agreement shall be construed in accordance with the Laws of the Province of
Ontario and the Laws of Canada applicable therein and shall be treated, in all
respects, as an Ontario contract. Each of the Parties irrevocably attorns and
submits to the non-exclusive jurisdiction of any Ontario court sitting in
Toronto in any action or proceeding arising out of or related to this Agreement
and irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Ontario court. Nothing in this
Section shall affect the right of a Party to bring any action or proceeding
against the other Party or its property in the courts in any other jurisdiction.
1.6 ACCOUNTING PRINCIPLES -
All references to generally accepted accounting principles means to principles
recommended, from time to time, in the Handbook of the Canadian Institute of
Chartered Accountants and, unless expressly stated otherwise, applied on a basis
consistent with prior periods and all accounting terms not otherwise defined in
this Agreement have the meanings assigned to them in accordance with Canadian
generally accepted accounting principles.
1.7 SCHEDULES -
The schedules to this Agreement, as listed below, are an integral part of this
Agreement:
Schedule Description
-------- -----------
<PAGE> 27
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Schedule 1.1(a) March 31 Balance Sheet
Schedule 1.1(b) Excluded Contracts
Schedule 1.1(c) Excluded Assets
Schedule 1.1(e) 1999/2000 Business Plan
Schedule 3.2 Promissory Note
Schedule 3.8 Copy of Invoice
Schedule 3.9 Allocation of Purchase Price
Schedule 4.2 Permitted Encumbrances
Schedule 4.9 Financial Statements
Schedule 4.10 Undisclosed Liabilities
Schedule 4.12 Capital Expenditure Budget
Schedule 4.13 Suppliers and Customers
Schedule 4.14 Fixed Assets
Schedule 4.15 Customer-Owned Assets
Schedule 4.17 Employee Accounts Receivable
Schedule 4.18 Government Grants
Schedule 4.19 Licences, Permits etc.
Schedule 4.20 Restrictive Covenants
Schedule 4.21 Intellectual Property
Schedule 4.22 Equipment Contracts
Schedule 4.23 Real Property Leases
Schedule 4.24 Environmental Matters
Schedule 4.25(a) Employment Matters
Schedule 4 25(b) Employment Contracts
Schedule 4.25(c) Employment Policies
Schedule 4.26 Collective Agreements
Schedule 4.27 Insurance
Schedule 4.28 Material Contracts
Schedule 4.30 Litigation
Schedule 4.32 Spar Operations Tax Matters
Schedule 4.39 Non-Arm's Length Contracts
Schedule 4.41 Year 2000 Plan
Schedule 7.5 Contracts Requiring Consent
Schedule 7.9 Non-Competition Agreement
Schedule 7.15 Pension/Benefit Plans Agreement
Schedule 7.16 Baan Agreement Principles
Disclosure of information on any Schedule shall be deemed to be disclosure of
such information on all other relevant Schedules. Inclusion of specific
information on any Schedule shall not constitute or be deemed to constitute any
admission that such information is material or is required to be so disclosed.
<PAGE> 28
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ARTICLE 2
PURCHASE AND SALE
2.1 ACTION BY VENDOR AND PURCHASER -
At the Closing Time:
(a) PURCHASE AND SALE OF PURCHASED ASSETS - the Vendor shall sell and
the Purchaser shall purchase the Purchased Assets for the Purchase
Price payable as provided in this Agreement;
(b) ASSUMPTION OF ASSUMED LIABILITIES - the Purchaser shall assume the
Assumed Liabilities;
(c) PAYMENTS BY PURCHASER - the Purchaser shall deliver to the Vendor
the amount set out in subsection 3.2(c) and the promissory note
contemplated in subsection 3.2(b);
(d) DELIVERY OF SHARE CERTIFICATES - the Vendor shall deliver to the
Purchaser share certificates representing the Radarsat Shares and
the Spar Holdco Shares duly endorsed for transfer subject to
compliance with the terms of the Radarsat Shareholders Agreement;
(e) DELIVERY OF CLOSING DOCUMENTATION - Each of the Parties shall
deliver to the other a certificate of status or equivalent and two
certified copies of its constating documents and by-laws and the
resolution authorizing the execution, delivery and performance by
it of the Agreement pursuant to the provisions hereof. Each of the
parties shall also execute and deliver or cause to be executed and
delivered to the other Party two copies of such other documents
relevant to the closing of the transactions contemplated in this
Agreement as such other Party, acting reasonably, may request; and
(f) TRANSFER AND DELIVERY OF PURCHASED ASSETS - the Vendor shall
execute and deliver to the Purchaser all such bills of sale,
assignments, instruments of transfer, deeds, assurances, consents
<PAGE> 29
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and other documents as shall be necessary to effectively transfer
to the Purchaser all the Vendor's right, title and interest in, to
and under, or in respect of, the Purchased Assets, and shall
deliver up to the Purchaser possession of the Purchased Assets,
free and clear of all Encumbrances (other than Permitted
Encumbrances and, in the case of the Radarsat Shares, the Radarsat
Shareholders Agreement) and shall effect such registrations,
recordings and filings with public authorities as may be required
in connection with the transfer of ownership to the Purchaser of
the Purchased Assets.
2.2 PLACE OF CLOSING -
The Closing shall take place at the Closing Time at the offices of Osler, Hoskin
& Harcourt located at 100 King Street West, 1 First Canadian Place, Toronto,
Ontario, or at such other place as may be agreed upon by the Vendor and the
Purchaser.
2.3 TENDER -
Any tender of documents or money under this Agreement may be made upon the
Parties or their respective counsel and money may be tendered by official bank
draft drawn upon a Canadian chartered bank or by negotiable cheque payable in
Canadian funds and certified by a Canadian chartered bank or trust company or,
at the option of the Party entitled to payment, by wire transfer of immediately
available funds to the account specified by that Party.
2.4 NO ASSUMPTION OF LIABILITIES -
For greater certainty, the Purchaser is not assuming and shall not be
responsible for any of the liabilities, debts or obligations of the Vendor,
whether present or future, absolute or contingent and whether or not relating to
the Business, other than the Assumed Liabilities.
2.5 ASSIGNMENT OF CONTRACTS -
Nothing in this Agreement shall be construed as an assignment of, or an attempt
to assign to the Purchaser, any Assumed Contract or Governmental Authorization
which, as a matter of law or by its terms, is (i) not assignable,
<PAGE> 30
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or (ii) not assignable without the approval or consent of the issuer thereof or
the other party or parties thereto, without first obtaining such approval or
consent (collectively "Non-Assignable Rights"). In connection with such
Non-Assignable Rights, the Vendor shall, at the request of the Purchaser:
(a) apply for and use all reasonable efforts to obtain all consents or
approvals contemplated by the Assumed Contracts and Governmental
Authorizations, in a form satisfactory to the Purchaser acting
reasonably, provided that nothing herein shall require the Vendor
to make any payment to any other party to any of the Assumed
Contracts;
(b) co-operate with the Purchaser in any reasonable and lawful
arrangements designed to provide the benefits of such
Non-Assignable Rights to the Purchaser, including holding any such
Non-Assignable Rights in trust for the Purchaser or acting as
agent for the Purchaser;
(c) enforce any rights of the Vendor arising from such Non-Assignable
Rights against the issuer thereof or the other party or parties
thereto;
(d) take all such actions and do, or cause to be done, all such things
at the request of the Purchaser as shall reasonably be necessary
and proper in order that the value of any Non-Assignable Rights
shall be preserved and shall enure to the benefit of the
Purchaser; and
(e) pay over to the Purchaser, all monies collected by or paid to the
Vendor in respect of such Non-Assignable Rights.
The Parties shall co-operate in any reasonable and lawful arrangements designed
to enable the Purchaser to perform and satisfy the obligations of the Vendor
under such Non-Assignable Rights and the Purchaser shall perform and satisfy
such obligations consistent with such arrangements with the Vendor. The
Purchaser shall indemnify and save the Vendor harmless from any Claims in
respect of any Non-Assignable Rights in connection with or arising as a result
of any action of the Vendor taken pursuant to the foregoing. If the Vendor is
unable
<PAGE> 31
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to lawfully provide the benefit of any Governmental Authorization to the
Purchaser, it shall not, at any time, use such Governmental Authorization for
its own purposes or assign or provide the benefit of such Governmental
Authorization to any other Person.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE -
The amount payable by the Purchaser for the Purchased Assets shall, subject to
any adjustments required by Section 3.3, and exclusive of all applicable sales
and transfer taxes, be the amount of $62,981,481,48 plus the amount of the
Balance Sheet Liabilities and plus the amount contemplated by Section 3.8 (the
"Purchase Price").
3.2 SATISFACTION OF PURCHASE PRICE -
At the Closing Time, the Purchaser shall satisfy the Purchase Price as follows:
(a) as to the amount of the Balance Sheet Liabilities, by the
assumption by the Purchaser of the Balance Sheet Liabilities;
(b) as to $31,481,481.40, by the delivery to the Vendor of a
promissory note guaranteed by Orbital Sciences Corporation, each
in the form set out in Schedule 3.2; and
(c) as to the balance, by the payment to the Vendor of the amount of
$31,500,000.
3.3 ADJUSTMENTS TO PURCHASE PRICE BASED ON NET ASSETS -
The Purchase Price payable pursuant to Section 3.1 is based upon the estimate
that the Net Assets to be reflected on the Closing Date Statement will be within
$500,000 of $12,680,000. The Purchase Price shall be decreased on a dollar for
dollar basis by the amount, if any, by which Net Assets reflected on the Closing
Date Statement
<PAGE> 32
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is less than $12,180,000 and increased on a dollar for dollar basis by the
amount, if any, by which Net Assets reflected on the Closing Date Statement is
greater than $13,180,000. The Vendor shall provide the Purchaser with a Letter
of Credit in the amount of $1 million to secure only the obligations of the
Vendor to pay an amount to the Purchaser pursuant to this Section.
3.4 DELIVERY OF CLOSING STATEMENT -
As soon as reasonably practical after the Closing Date and in any event not
later than 60 days thereafter, the Vendor shall prepare and deliver to the
Purchaser the Closing Date Statement. The Purchaser shall cooperate fully with
the Vendor in the preparation of the Closing Date Statement and shall grant the
Vendor and its representatives reasonable access during normal business hours to
the relevant records, facilities and personnel of the Business for such
purposes. The Vendor shall at the same time prepare and deliver to the Purchaser
unaudited unconsolidated statements of assets, liabilities and equity for each
of Spar Holdco and Spar Operations.
3.5 PAYMENT OF ADJUSTMENT AMOUNT -
Subject to Section 3.6, within 30 days after delivery by the Vendor to the
Purchaser of the Closing Date Statement, the Vendor or the Purchaser, as
applicable, shall pay to the other the amount, if any, by which, based on the
Closing Date Statement, the Purchase Price is to be adjusted pursuant to Section
3.3.
3.6 OBJECTION TO CLOSING DATE STATEMENT -
(a) DELIVERY OF OBJECTION NOTICE - In the event that the Purchaser
objects in good faith to any aspect of the Closing Date Statement,
the Purchaser shall so advise the Vendor by delivery to the Vendor
of a written notice (the "Objection Notice") within 30 days after
the delivery by the Vendor to the Purchaser of the Closing Date
Statement. The Objection Notice shall set out the reasons for the
Purchaser's objection as well as the amount under dispute and
reasonable details of the calculation of such amount.
<PAGE> 33
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(b) AGREEMENT OF PARTIES - In the event that the Parties agree on a
resolution of the dispute set out in the Objection Notice, the
Parties shall confirm this resolution in writing and shall
thereafter be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to settle
any dispute with respect to the Closing Date Statement within 30
days after the delivery by the Purchaser to the Vendor of the
Objection Notice, the dispute shall forthwith, and in any event
within 60 days after the delivery by the Purchaser to the Vendor
of the Objection Notice, be referred for arbitration to Deloitte &
Touche or, if such person is unwilling or unable to act as
arbitrator, to a partner of a national accounting firm which does
not audit either of the Parties or their Affiliates. The
arbitration and the appointment of the arbitrator shall, except to
the extent provided for in this Section, be conducted in Toronto
in accordance with the Arbitrations Act (Ontario). The Purchaser
and the Vendor shall cooperate in completing any arbitration as
expeditiously as possible and the arbitrators may hire such
experts as may appear to be appropriate. If a single arbitrator is
used, all of the costs and expenses of the arbitration shall be
borne equally by the Parties or in such other manner as the
arbitrator may determine to be appropriate.
(d) DETERMINATION OF ARBITRATOR - The Parties shall instruct the
arbitrator to make a determination within 30 days after the date
on which the dispute was referred to the arbitrator and the
determination of the arbitrator shall be final and binding on all
Parties. The Closing Date Statement and the Purchase Price shall
be adjusted in accordance with the determination of the
arbitrator.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within five days after
resolution by agreement of the Parties of the dispute which was
the subject of the Objection Notice or, failing such resolution,
within five days after the final determination of the arbitration,
the Vendor or the Purchaser shall pay to the other the amount, if
any, by which the Purchase Price is to be adjusted as a result of
such resolution or final determination.
<PAGE> 34
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3.7 INTEREST -
All amounts paid as adjustments to the Purchase Price under Sections 3.5 and 3.6
shall be paid together with interest thereon calculated monthly from the Closing
Date to the date of payment, at the Prime Rate.
3.8 ADJUSTMENT TO PURCHASE PRICE BASED ON CSA OR NASA PAYMENTS -
If, on or prior to the first anniversary of the Closing Date, the Purchaser or
Radarsat International Inc. receives any payment from the National Aeronautics
and Space Agency or Canadian Space Agency ("CSA") with respect to the invoice, a
copy of which is attached as Schedule 3.8, or if Radarsat International Inc.
offsets said amount or any part thereof against payables to CSA, the Purchaser
shall, or shall cause Radarsat International Inc. to, pay 29.8% of 50% of the
amount so received or set off to the Vendor and the Purchase Price shall be
deemed to have been increased by the amount so paid.
3.9 ALLOCATION OF PURCHASE PRICE -
The Purchase Price shall be allocated in accordance with the provisions of
Schedule 3.9. If the Purchase Price shall be adjusted pursuant to Section 3.3,
the amount of adjustment required shall, if such amount cannot be reasonably
allocated to a particular asset, be allocated on a pro rata basis based on the
amounts allocated among the various categories of assets listed in Schedule 3.9.
If the Purchase Price shall be adjusted pursuant to Section 3.8, the amount of
adjustment shall be allocated to the Radarsat Shares. The Vendor and the
Purchaser agree to report the purchase and sale of the Purchased Assets in any
returns required to be filed under the ITA and other taxation statutes in
accordance with the provisions of Schedule 3.9.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor hereby represents and warrants to the Purchaser, the matters set out
below.
4.1 INCORPORATION AND REGISTRATION -
<PAGE> 35
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(a) The Vendor is a corporation duly incorporated and validly
existing under the Laws of Canada and has all necessary
corporate power, authority and capacity to own its property and
assets and to carry on the Business as presently conducted.
Neither the nature of the Business nor the location or character
of the property owned or leased by the Vendor in connection with
the Business requires it to be registered, licensed or otherwise
qualified as an extra-provincial or foreign corporation in any
jurisdiction other than in the Province of Ontario where it is
duly registered, licensed or otherwise qualified for such
purpose.
(b) Spar Operations is a corporation duly incorporated and validly
existing under the laws of Delaware and has all necessary
corporate power, authority and capacity to own its property and
assets and to carry on its business as presently conducted.
Neither the nature of its business nor the location or character
of the property owned or leased by it requires Spar Operations to
be registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation in any jurisdiction other
than the States of Texas and Florida where it is duly registered,
licensed or otherwise qualified for such purpose.
(c) Spar Holdco is a corporation duly incorporated and validly
existing under the laws of Delaware and has all necessary
corporate power, authority and capacity to own its property and
assets and to carry on its business as presently conducted.
Neither the nature of its business nor the location or character
of the property owned or leased by it requires Spar Holdco to be
registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation in any jurisdiction.
4.2 TITLE TO THE ASSETS -
(a) Subject to subsection 4.21(b) and other than the Customer - Owned
Assets, the Vendor is the sole registered owner of the Spar Holdco
Shares and the Radarsat Shares and the absolute beneficial owner
of the Purchased Assets, with good and valid title, free and clear
of all Encumbrances other than Permitted Encumbrances and is
exclusively entitled to possess and
<PAGE> 36
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dispose of the Purchased Assets (subject only, in the case of
Assumed Contracts, Governmental Authorizations and the Radarsat
Shares, to the necessity for obtaining consents to their
assignment). In particular, without limiting the generality of the
foregoing, there has been no assignment, subletting or granting of
any licence (of occupation or otherwise) of or in respect of any
of the Purchased Assets or any granting of any agreement or right
capable of becoming an agreement or option for the purchase of any
of the Purchased Assets other than pursuant to the provisions of,
or as disclosed in, this Agreement or pursuant to purchase orders
accepted by the Vendor in the ordinary course.
(b) Each of Spar Holdco and Spar Operations is the absolute beneficial
owner of its assets, with good and valid title, free and clear of
all Encumbrances other than Permitted Encumbrances and is
exclusively entitled to possess and dispose of its assets. In
particular, without limiting the generality of the foregoing,
there has been no assignment, subletting or granting of any
licence (of occupation or otherwise) of or in respect of any of
the assets of, or any granting of any agreement or right capable
of becoming an agreement or option for the purchase of any of the
assets of, Spar Holdco or Spar Operations other than pursuant to
the provisions of, or as disclosed in, this Agreement or pursuant
to purchase orders accepted by Spar Operations in the ordinary
course.
(c) The Permitted Encumbrances are set out in Schedule 4.2.
4.3 RIGHT TO SELL RADARSAT SHARES -
The disposition of the Radarsat Shares as provided in this Agreement will not
violate, contravene, breach or offend against or result in any default under any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, statute regulation, order, judgment, decree, licence, permit or Law
to which the Vendor is a party or subject or by which the Vendor is bound or
affected, provided the Parties comply with the Radarsat Shareholders Agreement
and the consent of the directors of Radarsat International Inc. to such transfer
is obtained in accordance with the Articles of Radarsat International Inc.
<PAGE> 37
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4.4 DUE AUTHORIZATION -
The Vendor has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement and the performance of the Vendor's obligations
hereunder have been duly authorized by all necessary corporate action on the
part of the Vendor.
4.5 ENFORCEABILITY OF OBLIGATIONS -
This Agreement constitutes a valid and binding obligation of the Vendor
enforceable against it in accordance with the terms of this Agreement.
4.6 ABSENCE OF CONFLICTING AGREEMENTS -
Except for those Assumed Contracts and Governmental Authorizations which require
consent to their transfer or assignment, none of the Vendor, Spar Holdco or Spar
Operations is a party to, bound or affected by or subject to any Contract,
Governmental Authorization, indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation, order, judgment,
decree, licence, permit or Law (other than bulk sales legislation and the
Vendor's existing bank credit facilities) (a) which would be violated,
contravened, breached, (b) under which default would occur, (c) under which an
Encumbrance would be created, (d) which would be amended or (e) with respect to
which a provision which would be materially adverse to the Purchaser or the
Business would be triggered, in each case as a result of the execution and
delivery of this Agreement or any other agreement to be entered into under the
terms of this Agreement, or the performance by the Vendor of any of its
obligations provided for under this Agreement or any other agreement
contemplated herein.
4.7 NO JOINT VENTURE INTERESTS, ETC. -
Other than the Radarsat Shareholders Agreement, none of the Vendor, Spar Holdco
or Spar Operations (i) is a partner, beneficiary, trustee, co-tenant, joint
venturer or otherwise a participant in any partnership, trust, joint venture,
co-tenancy or other similar jointly owned business undertaking relating to the
Business or the Purchased Assets, (ii) has any other significant investment
interests or profit-sharing or similar agreements in any business
<PAGE> 38
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owned or controlled by any third party and (iii) has authorized, agreed or
otherwise become committed to do any of the foregoing.
4.8 REGULATORY APPROVALS -
No Governmental Authorization, order, consent or filing is required (other than
under the HSR Act) on the part of the Vendor, Spar Holdco or Spar Operations, in
connection with the execution, delivery and performance of this Agreement or any
other documents and agreements to be delivered under this Agreement or the
performance of the Vendor's obligations under this Agreement or any other
documents and agreements to be delivered under this Agreement.
4.9 FINANCIAL STATEMENTS -
Except as described in Schedule 1.1(a) and Schedule 4.9, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of the preceding period and
present fairly:
(a) all of the assets, liabilities and financial position of the
Business as at December 31, 1998; and
(b) the sales, earnings and results of operation of the Business for
the 12-month periods ended December 31, 1997 and December 31,
1998, respectively, and the cash flow of the Business for the 12
month period ending December 31, 1998.
Except as described in Schedule 1.1(a) and Schedule 4.9, the March 31 Balance
Sheet has been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of the Financial Statements
and presents fairly Vendor's reasonable expectation as at February 1, 1999 of
all of the assets, liabilities and financial position of the Business as at
March 31, 1999.
Except as described in Schedule 1.1(a) and Schedule 4.9, the Spar Operations
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of the preceding
period and present fairly all of the assets, liabilities and financial position
of Spar Operations as at
<PAGE> 39
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December 31, 1998 and the sales, earnings and operations of Spar Operations for
the 12-month period ending December 31, 1998.
Except as described in Schedule 1.1(a) and Schedule 4.9, the Spar Holdco
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of the preceding
period and present fairly all of the assets, liabilities and financial position
of Spar Holdco as at December 31, 1998 and the earnings of Spar Holdco for the
12-month period ending December 31, 1998.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES -
Since the date of the Balance Sheet, none of the Vendor, Spar Holdco or Spar
Operations has incurred any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) in respect of the Business, which continue to
be outstanding, except as disclosed on Schedule 4.10 or incurred in the ordinary
course of business.
4.11 ABSENCE OF CHANGES - SINCE THE DATE OF THE BALANCE SHEET THERE HAS NOT
BEEN:
(a) any material adverse change in the financial condition or
operations of the Business or the Purchased Assets taken as a
whole, or the occurrence of any event or circumstance which could
reasonably be expected to materially adversely affect the
Purchased Assets taken as a whole or, to the knowledge of the
Vendor, the anticipated realization of the revenues contemplated
in Business Plan during, or within a reasonable (in the context of
the industry of the Business) period after, the period covered by
the Business Plan, other than changes in the ordinary and usual
course of business none of which has been materially adverse;
(b) any damage, destruction, loss, labour trouble or other event,
development or condition of any character (whether or not covered
by insurance) materially and adversely affecting the business,
assets or properties of the Business or which could reasonably be
expected to materially adversely affect the Purchased Assets taken
as a whole or, to the knowledge of the Vendor, the anticipated
realization of the revenues contemplated in Business Plan during,
or within a reasonable (in the context of the industry of the
Business) period after, the period covered by the Business Plan;
or
<PAGE> 40
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(c) any material change in the level of Inventories, any material
write-down of the value of any Inventory, any material adverse
change in the estimated aggregate cost at completion of the
current programs of the Business or, except in the ordinary course
of business, any write-off as uncollectible of any Accounts
Receivable.
4.12 ABSENCE OF UNUSUAL TRANSACTIONS -
Since the date of the Balance Sheet, in respect of the Business, none of the
Vendor, Spar Holdco or Spar Operations has:
(a) transferred, assigned, sold or otherwise disposed of any of the
assets shown or reflected in the Balance Sheet or cancelled any
debts or entitlements except, in each case, in the ordinary and
usual course of business;
(b) incurred or assumed any obligation or liability (fixed or
contingent), except Permitted Encumbrances, those obligations and
liabilities listed in Schedule 4.10 and unsecured current
obligations and liabilities incurred in the ordinary and usual
course of business;
(c) paid any obligation or liability (fixed or contingent) other than
liabilities included in the Balance Sheet and liabilities incurred
since the date of the Balance Sheet in the ordinary and usual
course of business;
(d) suffered an operating loss or any extraordinary loss, waived or
omitted to take any action in respect of any rights of substantial
value, or entered into any commitment or transaction not in the
ordinary and usual course of business where such loss, rights,
commitment or transaction is or would be material in relation to
the Purchased Assets or the Business;
<PAGE> 41
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(e) granted any bonuses, whether monetary or otherwise, or made any
general wage or salary increases in respect of personnel employed
in the Business, other than as provided for in the Collective
Agreements or in the ordinary course of business and consistent
with past practice, or changed the terms of employment for any
Employee, except in the ordinary course of business and consistent
with past practice; or agreed to a change in interpretation or
application of any provision of any Collective Agreement;
(f) hired or dismissed any Employees except in the ordinary course of
business;
(g) except as disclosed in Schedule 4.2, mortgaged, pledged, subjected
to lien, granted a security interest in or otherwise permitted any
of its assets or property, whether tangible or intangible, to
become subject to an Encumbrance;
(h) incurred capital expenditures or commitments relating to the
Business or the Purchased Assets in excess of $50,000 in respect
of all categories not included in the Vendor's current capital
expenditure budget, a true copy of which is included in Schedule
4.12, or which are in respect of a category included in such
capital expenditure budget but which are materially higher than
the amounts set out in such category in such capital expenditure
budget;
(i) entered into any material forward purchase commitment in excess of
the requirements of the Business for normal operating inventories
or at prices materially higher than the then current market
prices;
(j) entered into any material forward sales commitments other than in
the ordinary course of business, failed to satisfy in any material
respect any accepted order for goods or services or implemented
any change in the credit terms offered to customers of the
Business;
<PAGE> 42
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(k) adopted any change in its accounting practices or in its
depreciation or amortization policies or rates or in its policies
with respect to the terms of payment of accounts payable or
supplier credit terms; or
(l) authorized, agreed or otherwise become committed to do any of the
foregoing.
4.13 MAJOR SUPPLIERS AND CUSTOMERS -
Schedule 4.13 contains a complete listing of each significant current supplier
of goods and services to, and each significant current customer of, the
Business. To the knowledge of the Vendor, no such supplier to, or customer of,
the Business has any intention to materially and adversely change its
relationship or the terms upon which it conducts business with the Business,
including the terms upon which any customer makes payments to the Business.
4.14 CONDITION OF FIXED ASSETS -
To the knowledge of the Vendor, the Fixed Assets do not have any latent defects.
Having regard to their use and age, the Fixed Assets are in good condition,
repair and (where applicable) proper working order except for, in each case,
latent defects not known to the Vendor and have been properly and regularly
maintained. Schedule 4.14 contains a list of substantially all of the Fixed
Assets.
4.15 CUSTOMER OWNED ASSETS -
All Inventories are valued on the books of the Vendor and Spar Operations at the
lower of cost and net realizable value in accordance with generally accepted
accounting principles. Finished goods in the Inventories are saleable in the
ordinary course of business and consistent with past practice and the rest of
the Inventories are merchantable or usable, subject to any reserves reflected on
the Closing Date Statement. All Inventories are in quantities usable and
saleable in the ordinary course of business. Schedule 4.15 contains a list of
substantially all of the Customer - Owned Assets and the location of such as of
the dates indicated in Schedule 4.15.
4.16 WORK-IN-PROCESS -
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All Work-in-Process is valued on the books of the Vendor and Spar Operations at
the lower of cost and net realizable value in accordance with generally accepted
accounting principles.
4.17 COLLECTIBILITY OF ACCOUNTS RECEIVABLE -
The Accounts Receivable are bona fide, have been reflected in the Books and
Records in accordance with generally accepted accounting principles and, subject
to the insolvency or bankruptcy of the Person who is to make payment thereof to
the Vendor or Spar Operations, are good and collectible in the ordinary course
of business and not subject to any defence, counterclaim or set off, except to
the extent of any reserves provided for such accounts in the Balance Sheet as
adjusted in the ordinary and usual course of business. Schedule 4.17 contains a
complete list of all loans and accounts receivable owing by Employees to the
Vendor or Spar Operations in connection with the Business (other than
receivables for travel advances or similar items) showing the name of the
Employee, the amount outstanding, a description of any security held therefor
and the terms of payment.
4.18 GOVERNMENT GRANTS -
Schedule 4.18 contains a complete list of all Contracts relating to grants or
other forms of assistance, including loans with interest at below market rates
received by the Vendor or Spar Operations in connection with the Business from
any Governmental Authority, and the terms of repayment for any which are subject
to repayment.
4.19 BUSINESS IN COMPLIANCE WITH LAW -
In all material respects, the operations of the Business have been and are now
conducted in compliance with all applicable Laws of each jurisdiction in which
the Business has been and is carried on and none of the Vendor, Spar Holdco or
Spar Operations has received any notice of any alleged breach of any such Laws.
The Governmental Authorizations are all such authorizations required by the
Vendor, Spar Holdco and Spar Operations to enable them to carry on the Business
in compliance with applicable Laws. Such Governmental Authorizations are in full
force and effect in accordance with their terms, and there have been no material
violations thereof and no proceedings are pending or, to the knowledge of the
Vendor, threatened, which could result in their revocation or limitation. All of
such Government Authorizations, other than Environmental Approvals, are listed
in Schedule 4.19.
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4.20 RESTRICTIVE COVENANTS -
Except as disclosed in Schedule 4.20, neither the Vendor, Spar Holdco or Spar
Operations is a party to or bound or affected by any commitment, agreement or
document containing any covenant expressly limiting its freedom to compete in
any line of business, transfer or move any of its assets or operations or which
materially or adversely affects the business practices, operations or conditions
of the Business or the continued operation of the Business after the Closing.
4.21 INTELLECTUAL PROPERTY -
(a) RIGHTS - Schedule 4.21 to this Agreement contains a true and
complete list and a brief description of all Intellectual Property
Rights which have been registered, or for which applications for
registration have been filed in any jurisdiction, that relate to
or are used in connection with the Business.
(b) OWNERSHIP -
(i) Except as set forth in Schedule 4.21, the Vendor is the
owner, and to the knowledge of the Vendor, the sole and
exclusive owner, of all right, title and interest in and to
the Technology free and clear of any Encumbrances;
(ii) Schedule 4.21 identifies all Technology which is not owned
by the Vendor and, to the knowledge of the Vendor, the
owner thereof; and all such Technology is being used with
the consent of or license from the rightful owner thereof
and all such licenses and consents are in full force and
effect and no default exists thereunder on the part of the
Vendor or any other party thereto;
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(iii) the Vendor or Spar Operations has all right, title and
interest in and to the Technology to the extent necessary
to carry on the Business and to fulfil all of the Vendor's
obligations under this Agreement; and
(iv) the Vendor has the right to grant the rights, licences and
privileges provided for in this Agreement and has not
assigned, licensed or otherwise conveyed such rights,
licences or privileges to any other person.
(c) VALIDITY - To the knowledge of the Vendor, the Intellectual
Property Rights are in full force and effect and have not been
used or enforced or failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability
of any of the Intellectual Property Rights. To the knowledge of
the Vendor, all applications for registration of Intellectual
Property are in good standing and the Vendor or Spar Operations is
diligently prosecuting all such applications.
(d) COMPLETE - Except as set forth in Schedule 4.21, the Technology is
complete to the extent and under the conditions stated in this
Agreement to enable the Purchaser to carry on the Business.
(e) INFRINGEMENTS BY THE VENDOR - Except as set forth in Schedule
4.21:
(i) to the knowledge of the Vendor, there is no claim of
adverse ownership or invalidity of or other opposition to
or conflict with any of the Technology or any pending or
threatened suit, proceeding, claim, demand, action or
investigation of any nature or kind against the Vendor or
Spar Operations relating to the Technology; and
(ii) to the knowledge of the Vendor, the Business and any
product or service which the Vendor or Spar Operations
manufactures, uses or sells in the conduct of the Business,
and
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any process, method, packaging, advertising, or material
that the Vendor or Spar Operations employs in the
manufacture, marketing for sale of any such product, and
the use of any of the Technology do not breach, violate,
infringe or interfere with any rights of any third party or
require payment for the use of any technology of another.
(f) LICENSES AND COVENANTS NOT TO SUE -
Schedule 4.21 sets forth a complete and correct list and brief description of
all judgments, covenants not to sue, permits, grants, franchises, licenses and
other agreements and arrangements relating to any of the Technology (other than
licenses or similar agreements relating to "off-the-shelf" Technology which is
widely commercially available) which bind, obligate or otherwise restrict the
Vendor or Spar Operations. To the knowledge of the Vendor, no Person licensed by
the Vendor or Spar Operations to use any of the Technology and no Governmental
Authority which owns Technology used by the Vendor or Spar Operations in the
Business has granted or intends to grant to a competitor of the Business a
license to use the Technology.
(g) THIRD PARTY INFRINGEMENTS - Schedule 4.21 sets forth a complete and
correct list and brief description of all infringements, violations or
appropriations of the Technology of which the Vendor is aware.
(h) MAINTENANCE - Subject to Section 2.5, the Vendor will until Closing
maintain or cause to be maintained in full force and effect all rights to
the Technology in accordance with its current practices, including paying
all renewal and maintenance fees required to maintain the Intellectual
Property.
4.22 EQUIPMENT CONTRACTS -
Schedule 4.22 sets forth a true and complete list of all Equipment Contracts
involving aggregate payments to or by the Vendor or Spar Operations in excess of
$25,000/year together with a description of the equipment and
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vehicles to which the Equipment Contracts relate. All of the Equipment Contracts
are in full force and effect and no material default exists on the part of the
Vendor or Spar Operations, or, to the knowledge of the Vendor, on the part of
any of the other parties thereto. The entire interest of the Vendor or of Spar
Operations under each of the Equipment Contracts is held by it free and clear of
any Encumbrances, other than Permitted Encumbrances, and all payments due under
the Equipment Contracts have been duly and punctually paid.
4.23 REAL PROPERTY LEASES -
(a) Schedule 4.23 sets forth a true and complete list of the Real
Property Leases and the municipal address and legal description of
the real property to which such Real Property Leases relate.
(b) Except as disclosed in Schedule 4.23, all interests held by the
Vendor or Spar Operations as lessee under the Real Property Leases
are free and clear of all Encumbrances.
(c) All payments required to be made by the Vendor or Spar Operations
pursuant to the Real Property Leases have been duly paid and the
Vendor or Spar Operations, as applicable, is not otherwise in
default in any material respect in meeting its obligations under
any of the Real Property Leases.
(d) None of the landlords under each of the Real Property Leases is in
default in meeting any of its material obligations under its
respective Real Property Leases.
(e) Except as disclosed in Schedule 4.23, neither the Vendor nor Spar
Operations has any option, right of first refusal or other
contractual right relating to the Leased Premises.
(f) No event exists which, but for the passing of time or the giving
of notice, or both, would constitute a material default by either
party to any of the Real Property Leases and no party to
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any Real Property Lease is claiming any such default or taking any
action purportedly based upon any such default.
(g) Neither the Vendor nor Spar Operations has waived, or omitted to
take any action in respect of any substantial rights under any of
the Real Property Leases.
(h) Except as disclosed in Schedule 4.23, neither the Vendor nor Spar
Operations is a party to any Real Property Leases as lessor.
4.24 ENVIRONMENTAL MATTERS -
(a) All Environmental Approvals are listed in Schedule 4.24.
(b) Except as disclosed in Schedule 4.24, all operations of the Vendor
or Spar Operations pertaining to the Business or the Purchased
Assets or conducted on the Leased Premises and the Leased Premises
and any real property used in the Business while occupied by the
Vendor or Spar Operations, and, to the knowledge of the Vendor,
while occupied by the Vendor's or Spar Operations' predecessors in
title, have been and are now in compliance in all material
respects with all Environmental Laws. Any Release by the Vendor or
Spar Operations of any Hazardous Substance from the Business or
the Purchased Assets into the Environment complied and complies in
all material respects with all Environmental Laws.
(c) All Environmental Approvals required to be held by the Vendor or
Spar Operations have been obtained, are valid and in full force
and effect, have been and are being complied with in all material
respects, and there have been and are no proceedings commenced or,
to the knowledge of the Vendor, threatened to revoke or amend any
Environmental Approvals.
(d) Neither the Business nor any of the Purchased Assets has been or
is now the subject of any Remedial Order, nor does the Vendor have
any knowledge of any investigation or evaluation
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commenced as to whether any such Remedial Order is necessary nor
has any threat of any such Remedial Order been made nor, to the
knowledge of the Vendor, are there any circumstances which could
reasonably result in the issuance of any such Remedial Order.
(e) With respect to the Business and the Purchased Assets, neither the
Vendor nor Spar Operations has ever been prosecuted for or
convicted of any offence under Environmental Laws, nor has the
Vendor or Spar Operations been found liable in any proceeding to
pay any fine or judgment to any Person as a result of any Release
or threatened Release of any Hazardous Substance into the
Environment or the breach of any Environmental Law and to the
knowledge of the Vendor, there is no reasonable basis for any such
proceeding.
(f) Except as disclosed in Schedule 4.24 and except for waste disposed
of by carriers duly licensed to do so, to the knowledge of the
Vendor no part of the Leased Premises, any other Purchased Assets
or any real property used in connection with the Business has ever
been used as a landfill or for the disposal of waste.
(g) Neither the Vendor nor Spar Operations uses or stores in or on the
Leased Premises any equipment, waste or other material containing
polychlorinated biphenyls (PCBs) except in compliance with
applicable Environmental Laws.
(h) All material environmental data and studies (including the results
of any environmental audit) in the possession of, or under the
control of, the Vendor with respect to the Business or the
Purchased Assets have been delivered or made available to the
Purchaser.
(i) The Vendor has no knowledge of the presence of any Hazardous
Substance in, on or under the Leased Premises or any other
Purchased Assets other than in accordance with applicable
Environmental Laws.
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(j) The Vendor has no knowledge of any Hazardous Substance originating
from any neighbouring or adjoining properties which has migrated
onto, or is migrating towards any of the Leased Premises or any
other Purchased Assets.
4.25 EMPLOYMENT MATTERS -
(a) Schedule 4.25(a) sets forth a list of all Employees, together with
the titles, job classifications, status (whether active or
inactive and, if inactive, the reason for their absence) and
material terms of employment, including, current wages, salaries
or hourly rate of pay of, and any bonus (whether monetary or
otherwise) paid for the 1997 and 1998 fiscal years (including the
date of payment) or payable to each such Employee, and the date
upon which each such Employee was first hired by the Vendor or
Spar Operations and the employer of such Employee if it is not the
Vendor. Bonuses paid in respect of the 1995 and 1996 fiscal years
averaged 6.7% and 2.8%, respectively, of the salary of each
Employee who received such a bonus and no bonuses were paid in
respect of the 1994 fiscal year. Except as disclosed, no Employee
is on short-term disability, long-term disability leave, extended
absence or receiving benefits pursuant to the Workplace Safety and
Insurance Act (Ontario) or equivalent legislation in other
jurisdictions.
(b) Except for those written employment contracts with salaried
Employees identified in Schedule 4.25(b), there are no written
contracts of employment entered into with any Employees or any
oral contracts of employment which are not terminable on the
giving of reasonable notice in accordance with applicable Law.
(c) Except as set out in Schedule 4.25(c), there are no employment
policies or plans, including policies or plans regarding incentive
compensation, stock options, severance pay or other terms or
conditions of employment or terms or conditions upon which
Employees may be terminated,
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which are binding upon the Vendor or Spar Operations in respect of
the Employees or the Business.
(d) The Business has been and is being operated in compliance in all
material respects with all applicable Laws relating to employees,
including employment standards, occupational health and safety,
workers' compensation, labour relations and pay equity and
employment equity to the extent applicable. Each of the Vendor and
Spar Operations has complied with and posted plans as required
under the Pay Equity Act (Ontario) or equivalent legislation in
other jurisdictions. To the knowledge of the Vendor, there have
been no complaints under such Laws against the Vendor or Spar
Operations in respect of the Business.
(e) To the knowledge of the Vendor there are no complaints, nor are
there any threatened complaints, against the Vendor or Spar
Operations in respect of the Employees or the Business, before any
employment standards branch, labour board (including the U.S.
National Labour Relations Board), human rights tribunal or any
other Governmental Authority. To the knowledge of the Vendor,
nothing has occurred which might reasonably lead to a complaint
against the Vendor or Spar Operations in respect of the Employees
or the Business under any human rights legislation or employment
standards legislation. There are no outstanding decisions or
settlements or pending settlements under the employment standards
legislation which place any obligation upon the Vendor or Spar
Operations, relating the Employees or the Business, to do or
refrain from doing any act.
(f) All current payroll premiums, non-compliance charges, experience
rating surcharges, and current assessments under the Workplace
Safety and Insurance Act (Ontario) or equivalent legislation in
other jurisdictions in relation to the Employees or the Business
have been paid or accrued by the Vendor or Spar Operations, as
applicable, and the Business has not been subject to any special
or penalty or interest assessment under such legislation which has
not been paid.
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4.26 COLLECTIVE AGREEMENTS -
(a) Schedule 4.26 sets forth a true and complete list of all the
Collective Agreements, with any trade union or association which
may qualify as a trade union.
(b) To the knowledge of the Vendor, there are no outstanding labour
board proceedings of any kind, including any proceedings which
could result in certification of a trade union as bargaining agent
for employees or dependent contractors of the Vendor or Spar
Operations in respect of the Business, not already covered by the
Collective Agreements, and there have not been any such
proceedings within the last two (2) years.
(c) To the knowledge of the Vendor, there are no threatened or
apparent union organizing activities involving Employees or
dependent contractors of the Vendor in respect of the Business,
not already covered by the Collective Agreements. No such
organizing activities have occurred within the three (3) year
period prior to the date of this Agreement.
(d) To the knowledge of the Vendor, neither the Vendor nor Spar
Operations is in default or in breach of any of its obligations
under any Collective Agreement.
(e) There is no strike or lock out occurring or, to the knowledge of
the Vendor, threatened affecting the Business.
(f) Except as described in Schedule 4.26, neither the Vendor nor Spar
Operations has any unresolved grievances or pending arbitration
cases outstanding relating to the Employees or the Business.
(g) To the knowledge of the Vendor, neither the Vendor nor Spar
Operations has any serious labour problems that might materially
adversely affect the value of the Business or lead to an
interruption
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of the operations at any location which may have material adverse
effect on the value of the Business.
4.27 INSURANCE -
Schedule 4.27 sets forth a list of all policies of insurance which the Vendor
maintains for the Business and the name of the insurer, the risk insured
against, the amount of coverage and the amount of any deductible. All such
policies of insurance are in full force and effect and the Vendor is not in
default, as to the payment of premium or otherwise, under the terms of any such
policy.
4.28 MATERIAL CONTRACTS - EXCEPT FOR THE:
- - Permitted Encumbrances listed in Schedule 4.2,
- - Equipment Contracts listed in Schedule 4.22,
- - Real Property Leases listed in Schedule 4.23,
- - Employment Contracts listed in Schedule 4.25(b),
- - Collective Agreements listed in Schedule 4.26,
- - Vendor's Pension/Benefit Plans, and
- - Material Contracts listed in Schedule 4.28,
neither the Vendor nor Spar Operations is a party to or bound by any Material
Contract which relates to the Business or the Purchased Assets. The Material
Contracts are all in full force and effect unamended and no material default
exists under such Material Contracts on the part of any of the parties to such
Contracts. The Vendor and Spar Operations have the necessary personnel to
perform all their obligations under the Material Contracts and the Vendor does
not know of any reason why the Vendor or Spar Operations would not have the
capacity to perform all their obligations under the Material Contracts in the
ordinary course of business. To the knowledge of the Vendor, each of the parties
to the Material Contracts other than the Vendor or Spar Operations has the
capacity, including the necessary personnel, equipment, supplies and know-how,
to perform all its obligations under the Material Contracts.
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4.29 COPIES OF AGREEMENTS, ETC. -
Current and complete copies (except for amendments thereto which are not
material, either individually or in the aggregate) of all Material Contracts,
other than inactive Material Contracts in respect of which warranty periods have
expired but with respect to which the Vendor or Spar Operations has ongoing
obligations respecting confidentiality, maintenance for Customer - Owned Assets
or similar obligations, have been delivered or made available to the Purchaser.
Except as set forth in Schedule 4.28, there are no current or pending
negotiations with respect to the renewal or repudiation of, or material
amendment to, any Material Contracts.
4.30 LITIGATION -
Except as set forth in Schedule 4.30, there is no suit, action, litigation,
investigation, claim, complaint, grievance or proceeding, including appeals and
applications for review, in progress, or, to the knowledge of the Vendor,
pending or threatened, against or relating to the Vendor, Spar Holdco or Spar
Operations before any Governmental Authority or arbitration panel which, if
determined adversely to the Vendor, Spar Holdco or Spar Operations, would:
(a) materially and adversely affect the properties, business, future
prospects or financial condition of the Business or the Purchased
Assets;
(b) enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Assets as contemplated by this Agreement; or
(c) prevent the Vendor from fulfilling all of its obligations set out
in this Agreement or arising from this Agreement,
and the Vendor has no knowledge of any existing ground on which any such action,
suit, litigation or proceeding might be commenced with any reasonable likelihood
of success. There is not presently outstanding against the Vendor, Spar Holdco
or Spar Operations any judgment, decree, injunction, rule or order of any
Governmental Authority or arbitrator relating to the Business or the Purchased
Assets.
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4.31 VENDOR TAX MATTERS -
There are no outstanding liabilities for Taxes payable, collectible or
remittable by the Vendor, including all installments on account of Taxes for the
current year that are due and payable, whether assessed or not, which may result
in an Encumbrance upon or other claim against or seizure of all or any part of
the Purchased Assets or which would otherwise adversely affect the Business or
would result in the Purchaser becoming liable or responsible therefor. There are
no actions, suits, proceedings, investigations or claims pending, or to the
knowledge of the Vendor threatened, against the Vendor in respect of Taxes which
may result in an Encumbrance on or other claim against or seizure of any of the
Purchased Assets or liability or responsibility on the part of the Purchaser for
Taxes payable, collectible or remittable by the Vendor nor are any material
matters under discussion with any Governmental Authority relating to Taxes. The
Vendor has timely withheld from any amount paid or credited by it to or for the
account or benefit of any Person, including any of its employees, officers or
directors and any non-resident Person, the amount of all Taxes and other
deductions required by any applicable Law to be withheld from any amount and has
duly and timely remitted or will duly and timely remit the same to the
appropriate Governmental Authority;
4.32 SPAR HOLDCO AND SPAR OPERATIONS TAX MATTERS -
(a) The Vendor has provided the Purchaser with true, complete and
correct copies of all Tax Returns of Spar Holdco and Spar
Operations for their respective last three (3) fiscal years.
(b) Except as provided in Schedule 4.32, neither Spar Holdco nor Spar
Operations has ever been a member of any combined, consolidated,
aggregate, unitary or affiliated group for purposes of filing Tax
Returns or paying Taxes. Except as provided in Schedule 4.32, (i)
each of Spar Holdco and Spar Operations has filed with the
appropriate Taxing Authority all Tax Returns required to be filed
on or prior to the date hereof or the Closing Date, as the case
may be, and each such Tax Return was complete and correct in all
material respects at the time of filing; and (ii) all Taxes
accruing through December 31, 1998, and all Taxes accruing through
Closing, respectively, including Taxes for which no Tax Returns
are required to be filed, (A) of Spar Operations, (B)
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for which Spar Holdco or Spar Operations is or could otherwise be
held liable, or (C) which are or could otherwise become chargeable
as an Encumbrance upon any property or assets of Spar Holdco or
Spar Operations (the Taxes referred to in this subsection 4.32(b)
being "Covered Taxes"), have been or will be duly paid or
adequately provided for in the Closing Date Statement.
(c) Except as set forth in Schedule 4.32, no liens for Taxes exist
with respect to any of the assets or properties of Spar
Operations. The statute of limitations with respect to the
relevant income tax liability has expired for all taxable periods
through and including the taxable year ended December 31, 1994.
Except as set forth in Schedule 4.32, no Tax Returns of Spar
Holdco or Spar Operations with respect to income, profits or
corporate franchise Taxes have been audited, or been the subject
of a notification of pending audit by the appropriate Taxing
Authority. Except, as set forth in Schedule 4.32, each deficiency
of which Spar Holdco or Spar Operations has been notified
resulting from any audit or examination relating to Covered Taxes
by any Taxing Authority has been paid and no prospective change in
treatment of any material item for Tax purposes resulted from such
audit or examination that is not reflected in the Spar Holdco
Financial Statements or the Spar Operations Financial Statements.
Except as set forth in Schedule 4.32, (i) to the knowledge of the
Vendor, no audit or examination relating to Covered Taxes is
currently being conducted by any Taxing Authority; and (ii) no
Taxing Authority has given notice (either orally or in writing) to
the Vendor, Spar Holdco or Spar Operations that it will commence
any such audit or examination.
(d) Except as set forth in Schedule 4.32, there is no agreement or
other document extending, or having the effect of extending, the
period of assessment or collection of any Covered Taxes and no
power of attorney with respect to any Covered Taxes has been
executed or filed with any Taxing Authority.
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(e) Neither Spar Holdco nor Spar Operations is a party to or is bound
by an agreement, arrangement or practice with respect to Taxes
(including any Tax sharing agreements with the Vendor or with any
Taxing Authority).
(f) Neither Spar Holdco nor Spar Operations will be required to
include in a taxable period ending after the Closing Date taxable
income (i) attributable to income that economically accrued in a
taxable period ending on or before the Closing Date, including,
without limitation, as a result of the installment method of
accounting, the completed contract method of accounting, the
long-term contract method of accounting or the cash method of
accounting; or (ii) by reason of Section 481 of the Internal
Revenue Code or comparable provisions of state, provincial, local
or foreign law, any Taxes which have not been provided for in the
Spar Holdco Financial Statement or the Spar Operations Financial
Statements, as applicable.
4.33 RESIDENCE OF THE VENDOR -
The Vendor is not a non-resident of Canada for the purposes of the ITA.
4.34 NO PREVIOUS TAX ELECTIONS -
The Vendor has not prior to the date of this Agreement made any election or
designation for the purposes of the ITA or any relevant provincial taxation
statute that would affect any of the Purchased Assets.
4.35 BOOKS AND RECORDS-
The Vendor has made available to the Purchaser all Books and Records. Such Books
and Records are complete and fairly and correctly set out and disclose in all
material respects the financial position of the Business. All material financial
transactions relating to the Business have been accurately recorded in such
Books and Records.
4.36 MANAGEMENT RECOMMENDATION LETTERS -
The Purchaser has been provided with copies of all management recommendation
letters, if any, received from the Auditor, or any previous auditor of the
Business, during the last two (2) years, relating to the Business.
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4.37 LOCATION OF THE ASSETS -
Substantially all of the Purchased Assets are traceable by the Vendor, and will
be traceable by the Purchaser using the systems included in the Purchased
Assets.
4.38 NO BROKER -
The Vendor has carried on all negotiations relating to this Agreement and the
transactions contemplated in this Agreement directly and without intervention on
its behalf by any other Person in such manner so as not to give rise to any
valid claim against the Purchaser, the Business or the Purchased Assets for a
brokerage commission, finder's fee or other like payment.
4.39 NON-ARM'S LENGTH TRANSACTIONS -
Except for written employment contracts set out in Schedule 4.25(b) or as
disclosed in Schedule 4.39, the Vendor is not a party to any Assumed Contract
with (i) any Employee, any officer or director of the Vendor or, to the
knowledge of the Vendor, any other Person not dealing at Arm's Length with any
such Employee, officer or director and (ii) any other Person not dealing at
Arm's Length with the Vendor.
4.40 SUFFICIENCY OF PURCHASED ASSETS -
The Purchased Assets are all of the assets used by the Vendor in the Business
(other than the Excluded Assets) and are sufficient to carry on the Business as
presently being conducted.
4.41 YEAR 2000 COMPLIANCE -
The Vendor has completed an assessment of the extent to which the Business and
the Purchased Assets are Year 2000 Compliant and has adopted an internal plan
(the "Plan"), a copy of which is attached as Schedule 4.41, which has as its
objective to ensure that the Business and the Purchased Assets will be Year 2000
Compliant by October 31, 1999. A copy of the Plan has been delivered to the
Purchaser. The Vendor has implemented the Plan and is presently in substantial
compliance with the deadlines established in the Plan. To the knowledge of the
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Vendor, the Vendor has all necessary resources and qualified personnel and has
entered into all necessary agreements with third parties to meet the remaining
deadlines set out in the Plan.
4.42 CHANGES -
For the purposes of the representations and warranties contained in this Article
4 the occurrence on or after the date hereof of any of the events, changes or
developments described below (except to the extent such events, changes or
developments occur as a result of any failure of the Vendor to comply with its
covenants herein) shall be deemed not to constitute a material adverse change in
the financial condition, operations, business, assets, properties or prospects
of the Business or the Purchased Assets:
(a) new Contracts (or amendments to Contracts) entered into by the
Vendor with respect to which the Purchaser has given, or is not
required hereunder to give, its consent;
(b) delay, failure and inability by the Vendor to acquire new
customers or prospective orders, including the failure or
inability to execute contracts and agreements currently under
discussion or negotiation;
(c) subject to Section 4.11, changes in general market conditions the
entry of new competitors into the markets related to the Business
or the expansion of existing competitors within such markets;
(d) delays in product shipments in the ordinary course of business;
(e) delays in the delivery of materials from suppliers in the ordinary
course of business;
(f) loss of customers due to a pre-existing competitive relationship
between the customer and the Purchaser; and
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(g) delays in the design or implementation process of products in the
ordinary course of business.
4.43 FULL DISCLOSURE -
The representations and warranties of the Vendor contained in this Agreement, or
in any agreement or instrument delivered by the Vendor pursuant hereto, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such representations or warranties not false or
misleading. There is no fact relating to the Business (other than facts
affecting the industry of the Business generally) known to the Senior Officers
which has not been disclosed to the Purchaser which could reasonably be expected
to have a material adverse effect upon the financial condition, assets or
liabilities of the Business or the Purchased Assets taken as a whole. For the
purposes hereof "known to the Senior Officers" means the knowledge of Colin
Watson, Mark Steinman, Steve McPherson, Hitem Makim and Mag Iskander after
having reviewed their files.
4.44 SPAR HOLDCO -
Spar Holdco has not and does not carry on business. The sole asset of Spar
Holdco is the Spar Operations Shares and Spar Holdco is the sole registered
owner of the Spar Operations Shares. The aggregate of all liabilities, including
contingent liabilities, of Spar Holdco, does not exceed $100.
4.45 COMPETITION ACT REQUIREMENTS -
The Vendor, together with its affiliates (as defined in the Competition Act
(Canada), have assets in Canada that are less than $280 million in aggregate
value, determined as of such time and in such manner as is prescribed under the
Competition Act (Canada) and its regulations and have gross revenues from sales
in, from or into Canada, determined for such annual period and in such manner as
is prescribed under such Act and its regulations (excluding for greater
certainty revenues from businesses sold by the Vendor or its affiliates), that
are less than $250 million in aggregate value.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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The Purchaser hereby represents and warrants to the Vendor the matters
set out below.
5.1 INCORPORATION -
The Purchaser is a corporation duly incorporated and validly existing under the
Laws of Canada and has all necessary corporate power, authority and capacity to
own its property and to carry on the Business.
5.2 DUE AUTHORIZATION -
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated under this Agreement and the performance of the Purchaser's
obligations hereunder have been duly authorized by all necessary corporate
action on the part of the Purchaser.
5.3 ENFORCEABILITY OF OBLIGATIONS -
This Agreement constitutes, and on Closing the promissory note delivered
pursuant to subsection 3.2(b) will constitute, a valid and binding obligation of
the Purchaser enforceable against it in accordance with the terms of this
Agreement or such promissory note, as the case may be.
5.4 ABSENCE OF CONFLICTING AGREEMENTS -
Except as set out in Section 9.22, the Purchaser is not a party to, bound or
affected by or subject to any contract, indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision, statute, regulation, order,
judgment, decree, licence, permit or Law which would be violated, contravened or
breached by, or under which any default would occur or a claim, restriction or
Encumbrance would be created as a result of the execution and delivery by it of
this Agreement or any other agreement to be entered into under the terms of this
Agreement or the performance by it of any of its obligations provided for under
of this Agreement.
5.5 INVESTMENT CANADA -
The Purchaser is a WTO Investor within the meaning of the Investment Canada Act
(Canada).
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5.6 REGULATORY APPROVALS -
No Governmental Authorization, order, consent or filing is required other than
Competition Act Approval on the part of the Purchaser, in connection with the
execution, delivery and performance of this Agreement or any other documents and
agreements to be delivered under this Agreement or the performance of the
Purchaser's obligations under this Agreement or any other documents and
agreements to be delivered under this Agreement.
5.7 LITIGATION -
There is no suit, action, litigation, investigation, claim, complaint or
proceeding, including appeals and applications for review, in progress or, to
the knowledge of the Purchaser, pending or threatened, against or relating to
the Purchaser before any Governmental Authority or arbitration panel which, if
determined adversely to the Purchaser, would
(a) prevent the Purchaser from paying to the Vendor, the Purchase
Price;
(b) enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Assets as contemplated by this Agreement; or
(c) prevent the Purchaser from fulfilling all of its obligations set
out in this Agreement or arising from this Agreement (including
the promissory note contemplated by subsection 3.2(b)),
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
5.8 AVAILABILITY OF FUNDS -
The Purchaser has or will have the funds required to pay the Purchase Price and
the promissory note contemplated in subsection 3.2(b) in accordance with its
terms but nothing in this Section shall imply that the "Consents" referred to in
subsection 9.23 are not required under the relevant banking agreement.
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5.9 NO BROKER -
The Purchaser has carried on all negotiations relating to this Agreement and the
transactions contemplated in this Agreement directly and without the
intervention on its behalf of any other Person in such manner as to give rise to
any valid claim against the Vendor or the Purchase Price for a brokerage
commission, finder's fee or other like payment.
5.10 COMPETITION ACT REQUIREMENTS -
The Purchaser, together with its affiliates (as defined in the Competition Act
(Canada), have assets in Canada that are less than $120 million in aggregate
value, determined as of such time and in such manner as is prescribed under the
Competition Act (Canada) and its regulations and have gross revenues from sales
in, from or into Canada, determined for such annual period and in such manner as
is prescribed under such Act and its regulations (excluding for greater
certainty revenues from businesses sold by the Vendor or its affiliates), that
are less than $150 million in aggregate value.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 NON-WAIVER -
(a) Subject to subsection (b), no investigations made by or on
behalf of the Purchaser at any time shall have the effect of
waiving, diminishing the scope or otherwise affecting any
representation or warranty made by the Vendor in or pursuant to
this Agreement. No waiver of any condition or other provisions,
in whole or in part, shall constitute as a waiver of any other
condition or provision (whether or not similar) nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
(b) To the knowledge of the Purchaser, there are no facts or
circumstances that would render any of the representations and
warranties of the Vendor contained in this Agreement untrue in
any
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material respect. For the purposes of this subsection (b),
"knowledge of the Purchaser" means the actual knowledge of Anil
Wirasekara, David Catty and Gord Thiessen, but shall not include
actual knowledge that a representation or warranty of the Vendor
is untrue to the extent that the Purchaser has relied on a
representation and warranty by the Vendor that information which
the Vendor has not provided or made available to the Purchaser
has not been so provided or made available on the basis that it
is not material. If any fact or circumstance which has given rise
to a Claim in respect of which the Purchaser is otherwise
entitled to indemnification pursuant to Section 10.1 was within
the Purchaser's knowledge as of the date hereof, the Purchaser's
right to indemnification pursuant to Section 10.1 shall be
limited to the extent (but only to the extent) such Claim arose
as a result of the fact or circumstance within the Purchaser's
knowledge. For greater certainty, this subsection 6.1(b) shall
not preclude any claim for indemnification being made by the
Purchaser pursuant to Section 10.1 but shall only limit the
recovery from the Vendor of the Claim suffered by the Purchaser
as provided in the foregoing sentence.
6.2 NATURE AND SURVIVAL -
(a) Subject to subsection (b), all representations, warranties,
covenants and agreements contained in this Agreement or in any
other document or instrument delivered pursuant to this Agreement
on the part of each of the Parties shall survive the Closing, the
execution and delivery under this Agreement of any bills of sale,
instruments of conveyance, assignments or other instruments of
transfer of title to any of the Purchased Assets and the payment
of the consideration for the Purchased Assets.
(b) Representations and warranties, concerning environmental matters
set out in Section 4.24 shall survive for a period of seven
years. Representations and warranties concerning tax matters set
out in Section 4.31 shall survive for a period of ninety days
after the date on which, having regard to any waiver given by the
Vendor in respect of the relevant taxation year, the relevant
authorities would no longer be entitled to assess liability for
tax against the Vendor or the Purchaser for any particular
taxation year ended on or prior to the Closing Date.
Representations and warranties
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concerning tax matters set out in Section 4.32 shall survive for
a period of ninety days after the date on which the relevant
authorities would no longer be entitled to assess liability for
tax against Spar Operations or Spar Holdco for the relevant
taxation year ended on or prior to the Closing Date, having
regard to any waivers given by Spar Operations or Spar Holdco.
All other representations and warranties whether set forth herein
or in any other document or instrument delivered pursuant to this
Agreement shall survive for a period of two years from the
Closing Date. If no claim shall have been made under this
Agreement against a Party for any incorrectness in or breach of
any representation or warranty made in this Agreement or in any
other document or instrument delivered pursuant to this Agreement
prior to the expiry of these survival periods, such Party shall
have no further liability under this Agreement or under any other
document or instrument delivered pursuant to this Agreement with
respect to such representation or warranty.
(c) Notwithstanding the limitations set out in subsection (b), any
Claim which is based on title to the Purchased Assets or fraud
shall survive indefinitely and may be brought at any time.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased
Assets under this Agreement shall be subject to the satisfaction of, or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is acknowledged to be inserted for the exclusive
benefit of the Purchaser and may be waived by it in whole or in part):
7.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING TIME -
The representations and warranties of the Vendor contained in subsections 4.2(a)
and (b) and Section 4.44 of this Agreement (but only to the extent they apply to
the Spar Holdco Shares, the Spar Operations Shares and the Radarsat Shares) and
any representations and warranties containing a materiality qualification
contained in
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the Agreement, any other agreement be entered into under the terms of this
Agreement or any document delivered pursuant hereto or thereto shall be true and
correct, and any representations and warranties without a materiality
qualification (other than the representations and warranties contained in
subsections 4.2(a) and (b) and Section 4.44 of this Agreement (but only to the
extent they apply to the Spar Holdco Shares, the Spar Operations Shares and the
Radarsat Shares) contained in this Agreement, any agreement to be entered into
under the terms of this Agreement or any document delivered pursuant hereto or
thereto shall be true and correct in all material respects, in each case as at
the Closing Time and with the same effect as if made at and as of the Closing
Time (except as such representations and warranties may be affected by the
occurrence of events or transactions expressly contemplated and permitted by
this Agreement) and the Purchaser shall have received a certificate from the
President and Chief Executive Officer of the Vendor, confirming, to the best of
his knowledge (but without personal liability) the truth and correctness of the
representations and warranties of the Vendor.
7.2 PERFORMANCE OF OBLIGATIONS -
The Vendor shall have performed or complied with, in all material respects, all
its obligations, covenants and agreements under this Agreement.
7.3 RECEIPT OF CLOSING DOCUMENTATION -
All instruments of conveyance and other documentation relating to the sale and
purchase of the Purchased Assets, including assignments of Assumed Contracts,
deeds, surveys, bills of sale and trade-mark assignments, documentation relating
to the due authorization and completion of such sale and purchase and all
actions and proceedings taken on or prior to the Closing in connection with the
performance by the Vendor of its obligations under this Agreement shall be
satisfactory to the Purchaser, acting reasonably, and the Purchaser shall have
received copies of all such documentation or other evidence as it may reasonably
request in order to establish the consummation of the transactions contemplated
by this Agreement and the taking of all corporate proceedings in connection with
such transactions in compliance with these conditions, in form (as to
certification and otherwise) and substance satisfactory to the Purchaser.
7.4 OPINION OF COUNSEL FOR VENDOR -
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The Purchaser shall have received an opinion dated the Closing Date from counsel
for the Vendor, Borden & Elliot, in a form satisfactory to the Purchaser, acting
reasonably.
7.5 CONSENTS TO ASSIGNMENT -
All consents or approvals from or notifications to the landlords, lessors,
Governmental Authorities and other Persons listed in Schedule 7.5 shall have
been duly obtained or given, as the case may be, on or before the Closing Time.
7.6 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS -
Expiry of applicable time periods under HSR Act.
7.7 NO LITIGATION -
There shall be no injunction or restraining order issued, and no claim, action,
litigation, proceeding, judicial or administrative, or investigation pending or
threatened, against any Party by any Person, Governmental Authority or
arbitration panel for the purpose of enjoining or preventing the consummation of
the transactions contemplated in this Agreement or otherwise claiming that this
Agreement or the consummation of this Agreement is improper or would give rise
to proceedings under any statute or rule of law.
7.8 ENCUMBRANCES -
The Purchaser shall have received evidence satisfactory to it that all
Encumbrances other than Permitted Encumbrances have been discharged and that the
Purchased Assets are free and clear of all Encumbrances other than Permitted
Encumbrances.
7.9 NON-COMPETITION -
The Vendor shall have executed and delivered a non-competition agreement
substantially in the form attached as Schedule 7.9.
7.10 ACTUAL POSSESSION -
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The Vendor shall have delivered actual possession of the Purchased Assets to the
Purchaser subject to compliance with the terms of the Radarsat Shareholders
Agreement.
7.11 EMPLOYEE CONFIDENTIALITY AND INTELLECTUAL PROPERTY -
The Vendor shall have assigned to the Purchaser the benefit of all
confidentiality and intellectual property agreements which the Vendor has with
any Employees.
7.12 SUBSTANTIAL DAMAGE -
The Purchaser shall not have terminated this Agreement pursuant to subsection
9.13(c).
7.13 NO LAWS -
No Laws shall have been enacted, introduced or announced which materially and
adversely affect the Business as a whole.
7.14 DIRECTORS AND OFFICERS OF SPAR OPERATIONS AND RADARSAT
INTERNATIONAL INC. -
There shall have been delivered to the Purchaser on or before the Closing Time
(or in the case of Radarsat International Inc., the Radarsat Closing Date as
defined in Section 9.23, if applicable) the resignations of all individuals
nominated by the Vendor who are presently directors or officers of Spar
Operations, Spar Holdco or Radarsat International Inc. (except to the extent
that the Vendor shall have been notified to the contrary by the Purchaser) and
duly executed comprehensive releases from each such individual who is not a
Transferred Employee or an employee of Spar Operations and from the Vendor of
all their claims respectively, against Spar Operations, Spar Holdco or Radarsat
International Inc., as applicable, except for any claims for current unpaid
remuneration.
7.15 PENSION/BENEFIT PLANS AGREEMENT -
The Vendor and the Purchaser shall have entered into an agreement respecting
Pension/Benefit Plans which reflects the principal terms set out in Schedule
7.15 within 21 days of the date of this Agreement, or such later date prior to
Closing as the Parties may agree.
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7.16 BAAN AGREEMENTS -
The Purchaser and EMS shall have entered into an agreement satisfactory to the
Purchaser, acting reasonably, with respect to the completion of the
implementation of the information technology systems contemplated by the Baan
Agreements substantially as contemplated in the terms set forth in Schedule
7.16.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Vendor, in which event the Purchaser is released from all obligations under this
Agreement, and unless the Purchaser can show that the condition relied upon
could reasonably have been performed by the Vendor, the Vendor is also released
from all obligations under this Agreement. However, the Purchaser may waive
compliance with any condition in whole or in part if it sees fit to do so,
without prejudice to its rights of termination in the event of non-fulfilment of
any other condition, in whole or in part, or to its rights to recover damages
for the breach of any representation, warranty, covenant or condition contained
in this Agreement.
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT
The obligations of the Vendor to complete the sale of the Purchased Assets under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of the Vendor and
may be waived by it in whole or in part):
8.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT CLOSING TIME -
All of the representations and warranties of the Purchaser or Orbital Sciences
Corporation contained in this Agreement, any other agreement to be entered into
under the terms of the Agreement or any document delivered pursuant hereto or
thereto shall be true and correct in all material respects as at the Closing
Time and with the same effect as if made at and as of the Closing Time and the
Vendor shall have received a certificate from the
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President and Chief Executive Officer of the Purchaser confirming to the best
of his knowledge (but without personal liability) the truth and correctness of
such representations and warranties.
8.2 PERFORMANCE OF OBLIGATIONS -
The Purchaser shall have satisfied the Purchase Price as contemplated in Section
3.2 and shall have performed or complied with, in all material respects, all its
other obligations, covenants and agreements under this Agreement.
8.3 RECEIPT OF CLOSING DOCUMENTATION -
All documentation relating to the sale and purchase of the Purchased Assets,
including assignments of and assumptions of liability for Assumed Contracts,
deeds, surveys, bills of sale and trade-mark assignments, documentation relating
to the due authorization and completion of such sale and purchase and all
actions and proceedings taken on or prior to the Closing in connection with the
performance by the Purchaser and Orbital Sciences Corporation, as applicable, of
its obligations under this Agreement and any other agreement to be entered into
under the terms of this Agreement and the delivery of the guarantee contemplated
by Schedule 3.2 shall be satisfactory to the Vendor, acting reasonably, and the
Vendor shall have received copies of all such documentation or other evidence as
it may reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and any other Agreement to be
entered into under the terms of this Agreement and the taking of all corporate
proceedings in connection with such transactions in compliance with these
conditions, in form (as to certification and otherwise) and substance
satisfactory to the Vendor.
8.4 OPINION OF COUNSEL FOR PURCHASER -
The Vendor shall have received opinions dated the Closing Date, from counsel for
the Purchaser, Osler, Hoskin & Harcourt and from counsel for Orbital Sciences
Corporation, Susan Herlick, in forms satisfactory to the Vendor, acting
reasonably.
8.5 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS -
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The consents, approvals, orders and authorizations of any Governmental Authority
or other Person (or registration, declarations, filings or recordings with any
such Person) identified in Schedule 7.5 shall have been obtained at or before
the Closing Time.
8.6 U.S. REGULATORY REQUIREMENTS -
Expiry of applicable periods under HSR Act.
8.7 NO LITIGATION -
There shall be no injunction or restraining order issued, and no claim, action,
litigation, proceeding, judicial or administrative, or investigation pending or
threatened, against any Party by any Person, Governmental Authority or
arbitration panel for the purpose of enjoining or preventing the consummation of
the transactions contemplated in this Agreement or otherwise claiming that this
Agreement or the consummation of this Agreement is improper or would give rise
to proceedings under any statute or rule of law.
8.8 PENSION/BENEFIT PLANS AGREEMENT -
The Vendor and the Purchaser shall have entered into an agreement respecting
Pension/Benefit Plans which reflects the principal terms set out in Schedule
7.15 within 21 days of the date of this Agreement, or such later date prior to
Closing as the Parties may agree.
8.9 CONSENT OF LENDERS -
The Vendor shall have obtained the consent of the lenders under its existing
bank credit facilities to the transactions contemplated in this Agreement.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Vendor may terminate this Agreement by notice in writing to the
Purchaser, in which event the Vendor is released from all obligations under this
Agreement, and unless the Vendor can show that the condition relied upon could
reasonably have been performed by the Purchaser, the Purchaser is also released
from all obligations under this Agreement. However, the Vendor may waive
compliance with any condition in whole or in part if it sees fit to do so,
without prejudice
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to its rights of termination in the event of non-fulfilment of any other
condition in whole or in part or to its rights to recover damages for the
breach of any representation, warranty, covenant or condition contained in this
Agreement.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING -
During the period from the date of this Agreement to the Closing Time, the
Vendor will, and will cause Spar Operations to, do the following:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE - Except as otherwise
contemplated or permitted by this Agreement, conduct the Business
in the ordinary and normal course, consistent with past practice
and regular customer service and business policies, and not,
without the prior written consent of the Purchaser, enter into any
transaction or refrain from doing any action which, if effected
before the date of this Agreement, would constitute a breach of
the representations, warranties, covenants or agreements of the
Vendor contained in this Agreement, except that the Vendor and
Spar Operations may enter into Contracts with suppliers to or
customers of the Business in the ordinary course of business
without the prior consent of the Purchaser provided that each such
Contract does not involve aggregate payments to or by the Vendor
or Spar Operations in excess of $150,000 and provided further that
the Vendor provides a copy of such Contract to the Purchaser.
(b) CONTINUE INSURANCE - Continue in force all policies of insurance
maintained in respect of the Business and give all notices and
present claims under all insurance policies in a timely fashion.
(c) PERFORM OBLIGATIONS - Comply in all material respects with all
Laws affecting the operation of the Business.
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(d) PREVENT CERTAIN CHANGES - Not, without the prior written consent
of the Purchaser, take any of the actions, do any of the things or
perform any of the acts described in Section 4.12.
9.2 ACCESS FOR INVESTIGATION -
The Vendor shall permit the Purchaser and its representatives, between the date
of this Agreement and the Closing Time, without interference to the ordinary
conduct of the Business, to have reasonable access during normal business hours
to the premises and to all the Books and Records and to the properties and
assets used in the Business as the Purchaser shall from time to time reasonably
request to enable confirmation of the matters warranted in Article 4.
9.3 CONFIDENTIALITY -
After the Closing, the Vendor shall keep confidential all information relating
to the Business, including the Technical Information, except information which:
(a) is or becomes generally available to the public;
(b) the Vendor received after Closing from an independent third party,
who had obtained the information lawfully and was under no
obligation of secrecy; or
(c) the Vendor is required by law to disclose provided that the Vendor
shall give prompt notice to the Purchaser of such requirement and,
unless the Purchaser waives any objection to compliance with the
requirement, the Vendor will cooperate with the Purchaser on a
reasonable basis in the Purchaser's efforts to obtain a protective
order or other remedy to avoid disclosure or obtain assurance that
the information will be accorded confidential treatment.
9.4 ACTIONS TO SATISFY CLOSING CONDITIONS -
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Each of the Parties will take all such actions as are within its power to
control, and to use its best efforts (it being understood that "best efforts"
shall not require a Party to expend cash) to cause other actions to be taken
which are not within its power to control, so as to ensure compliance with each
of the conditions, covenants and agreements set forth in Articles 7, 8 or 9
which are for the benefit of any other Party and the Vendor will take all such
actions as are within its power to control, and to use its best efforts to cause
other actions to be taken which are not within its power to control, so as to
ensure compliance with the conditions set forth in Sections 8.8 and 8.9.
9.5 OFFER OF EMPLOYMENT, ETC. -
(a) The Purchaser shall offer employment effective from the Closing
Date to those Non-Union Employees of the Vendor on Schedule
4.25(a) who are actively engaged in the Business on the Closing
Date. The Purchaser shall also offer employment to those Non-Union
Employees who are on short term disability, parental leave,
vacation or other approved leaves, but not Non-Union Employees on
long term disability or receiving Workers Compensation benefits,
each offer to be effective upon the date such Non-Union Employee
ceases to be disabled or injured, if applicable, and is ready,
willing and able to return to work. Such offers shall be on terms
and conditions of employment no less favourable in the aggregate
(including position, salary and benefits) as are then currently
applicable to each such Employee. The Purchaser shall recognize
service with the Vendor for those Employees who accept the
Purchaser's offer of employment for all purposes, including under
Laws and for severance, common law obligations to provide
reasonable notice on termination and other purposes. From and
after the Closing, the Purchaser shall become the successor
employer for all Employees of the Vendor on Schedule 4.25(a) whose
employment is governed by the terms of the Collective Agreements
in accordance with the Labour Relations Act. Employees who become
employed by the Purchaser on or after Closing pursuant to this
Section are referred to herein as the "Transferred Employees".
(b) No Employee shall be entitled to any rights under this Section 9.5
or any other provision of this Agreement.
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(c) The Vendor shall indemnify and hold harmless the Purchaser from
and against all Claims suffered or incurred by the Purchaser as a
result of or arising directly or indirectly out of, in connection
with or pursuant to (i) any Claims by any employee of the Vendor,
other than claims by Transferred Employees, with respect to his or
her employment in the Business, or (ii) any Claims by Transferred
Employees as a result of or by reason of any acts, omissions,
events or circumstances occurring or existing on or prior to the
date any such Employee became a Transferred Employee other than
Assumed Liabilities. The Purchaser shall indemnify and hold
harmless the Vendor from and against all Claims suffered or
incurred by the Vendor as a result of, or arising directly or
indirectly out of, in connection with or pursuant to any
termination of employment by the Purchaser after the Closing Date
of any Transferred Employees or any change in employment position,
salary, benefits or other change in compensation or employment
status of a Transferred Employee that occurs upon or subsequent to
Closing. No employee of the Business shall be entitled to any
rights under this Section 9.5 or under any other provisions of
this Agreement.
9.6 GOVERNMENTAL FILINGS -
Each of the Purchaser and the Vendor as promptly as practicable will file with
the United States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form, if any,
required for the transactions contemplated hereby and any supplemental
information requested in connection therewith pursuant to the HSR Act. Each of
the Purchaser and the Vendor shall furnish to the other such necessary
information and reasonable assistance as the other may reasonably request in
connection with the preparation of any filings or submissions under the HSR Act.
The Purchaser and the Vendor shall keep each other apprised of the status of any
communications with, and inquiries or requests for additional information from,
the FTC and the DOJ the Director and shall respond promptly to any such inquiry
or request. The Purchaser shall pay all filing fees in connection with such
filings or notifications.
9.7 SALES AND TRANSFER TAXES -
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The Purchaser shall be liable for and shall pay all federal and provincial
sales, use, transfer, consumption, excise and similar taxes and other like
charges payable by it in respect of the purchase and sale of the Purchased
Assets under this Agreement. If requested by the Vendor, the Purchaser shall pay
to the Vendor at the time provided for remittance by the Vendor in the
applicable law all such taxes and charges which the Vendor is required by
applicable law to collect (except to the extent that the Purchaser delivers to
the Vendor on Closing proper purchase exemption certificates or elections for
tax-free treatment in respect of any of the Purchased Assets in accordance with
the applicable law).
9.8 GOODS AND SERVICES TAX ELECTION -
The Vendor and the Purchaser shall jointly elect under subsection 167(1) of Part
IX of the ETA and any provincial legislation imposing a similar value added or
multi-staged tax that no such tax be payable with respect to the sale and
purchase of the Purchased Assets pursuant to this Agreement. The Vendor and the
Purchaser shall make such election in the prescribed form containing prescribed
information pursuant to the ETA and any provincial legislation imposing a
similar value added or multi-staged tax and the Purchaser shall file the joint
election in compliance with the requirements of the ETA and any provincial
legislation imposing a similar value added or multi-staged tax. The Purchaser
shall indemnify and save harmless the Vendor from and against any such tax
imposed on the Vendor as a result of any failure by any Taxing Authority to
accept any such election.
9.9 SUBSECTION 20(24) ELECTION -
The Vendor and Purchaser agree to jointly elect under subsection 20(24) of the
ITA, and any equivalent provision under applicable provincial tax legislation,
to have the rules in subsection 20(24) apply in respect of obligations of the
Vendor in respect of undertakings which arise from the operation of the Business
and to which paragraph 12(1)(a) of the ITA applies. The Vendor and the Purchaser
acknowledge that the Vendor is transferring assets to the Purchaser which have a
value equal to the elected amount as consideration for the assumption by the
Purchaser of such obligations of the Vendor.
9.10 ACCOUNTS RECEIVABLE ELECTION -
The Purchaser and the Vendor shall with respect to the Accounts Receivable of
the Vendor jointly execute and file an election under section 22 of the ITA, and
any equivalent provision under applicable provincial tax
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legislation, and shall designate therein the portion of the Purchase Price
allocated thereto under Section 3.8 of this Agreement as the consideration paid
by the Purchaser to the Vendor.
9.11 STUB PERIOD RETURNS -
(a) The Vendor shall prepare on behalf of Spar Operations and Spar
Holdco on a timely basis all Tax Returns for Spar Operations and
Spar Holdco that are required to be filed by Spar Operations and
Spar Holdco for taxation periods that end on or before the Closing
Date and for which Tax Returns have not been filed as of such
date. The Vendor shall provide a draft of any such Tax Returns to
the Purchaser within twenty (20) days prior to the deadline for
filing such Tax Returns in order that the Purchaser may review and
approve such Tax Returns (which approval shall not be unreasonably
withheld). The Purchaser will subsequently sign such Tax Returns
and cause Spar Operations or Spar Holdco, as appropriate, to file
such Tax Returns on a timely basis.
(b) The Purchaser shall cause to be prepared on a timely basis, all
Tax Returns for Spar Operations and Spar Holdco for periods
beginning before and ending after the Closing Date. The Purchaser
shall provide such Tax Returns to the Vendor twenty (20) days
prior to the deadline for filing any such Tax Returns in order
that the Vendor may review and comment upon such Tax Returns. The
Vendor shall, subject to applicable law, have the right to require
the Purchaser to make changes to such Tax Returns to the extent
that such charges may reasonably be required to ensure that its
representations and warranties contained herein are, and remain,
true and correct by communicating such changes to the Purchaser at
least ten (10) days prior to the deadline for filing any such Tax
Returns.
(c) The Vendor and the Purchaser shall co-operate fully with each
other and make available to each other in a timely fashion such
data and other information as may reasonably be required for the
preparation of any Tax Return of Spar Operations or Spar Holdco
for a period ending on, prior to or including the Closing Date and
shall preserve such data and other information until the
expiration of any applicable limitation period under any
applicable Law with respect to Taxes. The Vendor shall co-operate
fully with the Purchaser, Spar Operations and Spar Holdco and the
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Purchaser shall, and shall cause Spar Operations and Spar Holdco
to, co-operate fully with the Vendor. Each Party, Spar Operations
and Spar Holdco shall furnish the other Party, Spar Operations and
Spar Holdco with such information files, books, records,
documents, assessments, authorizations and signatures as the
Purchaser or the Vendor reasonably requests in conjunction with
such dealings.
(d) Effective as of the Closing Date, the Purchaser and its duly
authorized agents shall deal with all discussions, negotiations,
correspondence and agreements with all Taxing Authorities for all
taxation periods of Spar Operations and Spar Holdco, provided that
the Vendor shall direct, control and participate in all such
dealings that relate to a Pre-Closing Tax Period (including the
selection, appointment and instruction, at the Vendor's expense,
of professional advisors to represent Spar Operations and Spar
Holdco), and in such dealings the Purchaser shall act, and cause
its duly authorized agents to act, in accordance with all
instructions received from the Vendor. The Purchaser shall take
all reasonable steps to keep the Vendor informed of the progress
of all matters relating to any Pre-Closing Tax Period and promptly
provide to the Vendor copies of all correspondence, notices and
other documents received by it from Taxing Authorities in
connection with the matters referred to herein. The Purchaser
shall be entitled to participate with the Vendor in any
discussions, negotiations, correspondence and agreements with
Taxing Authorities in respect of any matters relating to any
Pre-Closing Tax Period.
(e) The Purchaser shall indemnify the Vendor against any Taxes payable
by the Vendor, Spar Operations or Spar Holdco in the event that
after the Closing Date, the Purchaser, Spar Operations or Spar
Holdco shall amend, without the written consent of the Vendor
(which consent will not be unreasonably withheld) any Tax Returns
that have been filed with a Taxing Authority relating to any
Pre-Closing Tax Periods. The Purchaser shall not without the
written consent of the Vendor (which consent will not be
unreasonably withheld) cause Spar Operations or Spar Holdco to
enter into any agreements, waivers or other arrangements providing
for an extension of time with respect to the assessment or
reassessment of any Taxes of Spar Operations or Spar Holdco for
any Pre-Closing Tax Periods.
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9.12 ASSUMED LIABILITIES -
Subject to the completion of the Closing as contemplated by this Agreement, but
with effect from and after the Closing Date, the Purchaser shall assume, perform
and discharge all the Assumed Liabilities.
9.13 PRESERVATION OF RECORDS -
The Purchaser shall take all reasonable steps to preserve and keep the records
of the Vendor, Spar Holdco and Spar Operations and the Business delivered to it
in connection with the completion of the transactions contemplated by this
Agreement for a period of six (6) years from the Closing Date, or for any longer
period as may be required by any Law or Governmental Authority, and shall make
such records available to the Vendor its authorized representatives and any
Governmental Authority as may be reasonably required by the Vendor and shall
permit the Vendor to make copies of such records; provided that the Purchaser
shall not be liable to the Vendor in the event of any destruction of such
records, unless the Purchaser fails to maintain such records with the same
degree of care with which it maintains its other records.
9.14 PURCHASER'S OPTION IF DAMAGE, ETC. -
If the Purchased Assets, or a portion of them are damaged or destroyed or
appropriated, expropriated or seized by any Person, on or prior to the Closing
Date, the Vendor shall give the Purchaser notice thereof forthwith after such
action comes to its attention and the Purchaser shall have the option:
(a) to reduce the Purchase Price by an amount equal to the cost of
repair or, if appropriated, expropriated, seized, destroyed or
damaged beyond repair, by an amount equal to the replacement cost
of such assets and to complete the purchase, in which event, the
Vendor shall be entitled to all proceeds of insurance and all
proceeds and claims relating to the applicable event;
(b) to reduce the Purchase Price by an amount equal to the deductible
amounts of the relevant insurance policies and to complete the
purchase, in which event, all proceeds of insurance paid
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to the Vendor and all right and claims of the Vendor to any such
amounts not paid by the Closing Date shall be assigned to the
Purchaser; or
(c) to terminate this Agreement by notice in writing to the Vendor but
only if such damage, destruction, appropriation, expropriation or
seizure exceeds $5,000,000.
9.15 SPAR NAME -
The Purchaser agrees that it shall not have any right or entitlement to the
words "Spar" or "Spar Aerospace" or any word or expression similar thereto. As
soon as practical and in any event within sixty (60) days from Closing, the
Purchaser and its Affiliates shall cease all further public use, and shall as
soon as practical and in any event within ninety (90) days from Closing, cease
all further internal use, of any logos, trademarks, trade names or other
references containing the words "Spar", "Spar Aerospace" or any word or
expression similar thereto. Any public use or references to such words in
connection with any statements, representations, negotiations or other acts
which could reasonably be expected to create legal obligations shall clearly
state that the Business is being carried on by the Purchaser and not by the
Vendor. Within 30 days from Closing, the Purchaser shall cause the names of Spar
Operation and Spar Holdco to be changed to names that do not include the word
"Spar", "Spar Aerospace" or any words or expressions similar thereto.
9.16 POST-CLOSING RECEIPTS -
If at any time following the Time of Closing, the Vendor or the Purchaser
receives, or comes into possession of, any of the Purchased Assets or Excluded
Assets or any receipts, proceeds, cheques, securities or other property of any
kind comprising, arising out of or derived from the Purchased Assets or the
Business or Excluded Assets (including any cheques, notes or cash in payment of
any account receivable or other intangible constituting part of the Purchased
Assets or Excluded Assets), the Vendor or the Purchaser, as applicable, shall
immediately deliver the same to the appropriate Party, with such endorsements,
transfers or assignments as may be necessary or desirable to ensure that such
Party receives the immediate and full benefit thereof.
9.17 ACCESS TO PERSONNEL -
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Following Closing, the Purchaser shall permit the Vendor reasonable access to
Employees for the purposes of satisfying its obligations, and/or enforcing or
defending its rights, under, pursuant to, or in respect of, the Excluded Assets
or any liabilities, assets or obligations of the Vendor relating to the Business
which were not Assumed Liabilities. If reasonably required by the Vendor, the
Purchaser shall use reasonable efforts to make available to the Vendor the
Employees employed by the Purchaser for reasonable periods of time for purposes
of giving evidence in any legal proceeding, provided that the Purchaser shall be
fully compensated for all costs arising therefrom, including the cost of
compensation payable to such Employees for the periods required by the Vendor.
9.18 GOVERNMENT CONTRACT AUDITS -
For any Government Audit Period in respect of any Assumed Contract covering in
whole or in part any period prior to the Closing Date, the Vendor shall be
entitled to receive any amount receivable as a result of a favourable rate
adjustment following a Government Contract Audit of such Assumed Contract
(provided that if the applicable Government Audit Period includes a period on or
following the Closing Date the Vendor shall be entitled to receive only a pro
rated portion of such receivable based on the number of days in the Government
Audit Period occurring prior to the Closing Date compared to the total number of
days in the applicable Government Audit Period and the Purchaser shall be
entitled to the remainder). The Vendor shall be responsible for and shall
reimburse the Purchaser for any amount paid by the Purchaser as a result of an
unfavourable rate adjustment in respect of a Government Contract Audit of any
Assumed Contract covering in whole or in part any period prior to the Closing
Date following a Government Contract Audit of such Assumed Contract (or the pro
rated portion thereof, if the applicable Government Audit Period includes a
period on or following the Closing Date). The Purchaser shall be responsible for
and shall reimburse the Vendor for any amount paid by the Vendor as a result of
an unfavourable rate adjustment in respect of a Government Contract Audit of any
Assumed Contract covering in whole or in part any period on or following the
Closing Date following a Government Contract Audit of such Assumed Contract (or
the pro rated portion thereof, if the applicable Government Audit Period
includes a period prior to the Closing Date).
9.19 LETTERS OF CREDIT, ETC. -
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The Purchaser acknowledges that the Vendor has recently sold its Space Products
and Systems Division to EMS and that the Purchaser and the Vendor (through such
Division) have entered into a Payload Subcontract dated September 1, 1998 (the
"Subcontract") in respect of the Radarsat II satellite. The Purchaser shall
return to the Vendor for cancellation the performance bond (or bank guarantee)
(the "Radarsat L/C") delivered to the Purchaser on behalf of the Vendor pursuant
to the terms of the Subcontract immediately upon receipt by the Purchaser from
EMS of a performance bond (or bank guarantee) from a Canadian chartered bank on
substantially the same terms as the Radarsat L/C and, upon receipt of such
performance bond (or bank guarantee) from EMS, shall execute and deliver to the
Vendor a release, in form satisfactory to the Vendor, acting reasonably,
releasing the Vendor from all further liabilities and obligations under the
Subcontract.
9.20 BAAN SYSTEM - TRANSITIONAL ARRANGEMENTS -
The Vendor shall use its best efforts to obtain the consent of Baan, Interactive
Software Systems Inc. and CGI prior to Closing and/or to enter into such
agreements or other instruments so as to permit the Purchaser to obtain the
benefits and rights, and to assume the corresponding liabilities and
obligations, under the Baan Agreements and the CGI Agreement as may be
reasonably required or appropriate to permit the Business to implement and
operate the information technology systems contemplated by the Baan Agreements
in the manner currently contemplated by the Vendor (or, in the case of the CGI
Agreement, to permit the continuation of the respective benefits and obligations
accruing to the Business thereunder). The Vendor shall pay any costs or fees
charged by Baan to consent to the assignment of the relevant portion of the Baan
Agreements to the Purchaser. The Purchaser will use its best efforts to provide
reasonable assistance and cooperation to the Vendor in connection with obtaining
such consent. The Vendor's use of its best efforts to obtain such consent shall
not relieve the Vendor of its obligations under Section 2.5 of this Agreement if
such consent is not obtained.
9.21 GOODS AND SERVICES TAX REGISTRATION -
At least three (3) Business Days prior to Closing, the Purchaser will be
registered under Subdivision (d) of Division V of Part IX of the ETA for the
collection and remittance of the goods and services tax and it will provide its
registration number to the Vendor at least three Business Days prior to Closing.
9.22 MIS SYSTEMS - TRANSITIONAL AGREEMENT -
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(a) The Parties acknowledge that currently the Vendor uses or has
access to, among other things, the following property or services
of the Business: accounts payable and associated corporate
accounting; payroll processing; and the telecommunication and
information technology network and personnel (the "Shared
Services"). The Purchaser shall cause the Business to provide the
Vendor following Closing and up to 120 days thereafter (the
"Transition Period") with access to and use of the Shared
Services in substantially the same manner as the same are
currently used by the Vendor. The Vendor shall have access to the
Leased Premises for the purpose of ensuring its continued use of
the Shared Services during the Transition Period provided such
access does not unreasonably interfere with the business and
operation of the Business.
(b) The Purchaser shall maintain the Shared Services during the
Transition Period in substantially the same manner as they are
currently maintained. The Vendor and the Purchaser shall share
the costs of the Shared Services in the same manner in which they
are currently shared.
(c) If security measures (e.g. firewalls) are required in order to
prevent either party from having access the other party's
information, such measures shall be implemented at the cost of
the Vendor.
(d) The Purchaser shall make available to the Vendor such of its
employees as may be necessary to assist the Vendor to remove the
Excluded Assets from the Leased Premises. If the Vendor is
removing Excluded Assets from the premises of the Purchased
Assets, this shall be done at the cost of the Vendor, shall be
done during the Transition Period and shall be coordinated with
the Purchaser such that it does not cause a disruption to the
Business.
9.23 BANK CONSENTS -
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(a) The Purchaser has advised the Vendor that (i) the Purchaser
requires the consent of its existing bankers to acquire the
Business and (ii) Orbital Sciences Corporation requires the
consent of its existing bankers to provide the guarantee (the
"Guarantee") contemplated by subsection 3.2(b) of this Agreement
(such consents being called the "Consents"). The Purchaser has
further advised the Vendor that it expects both Consents will be
obtained on or prior to March 26, 1999.
(b) The Parties agree that the obtaining of the Consents shall not
be a condition precedent to the completion of the transactions
contemplated hereby and shall not be deemed to result in any
condition precedent contained in Articles 7 or 8 failing to be
satisfied or complied with. Subject to the foregoing and
notwithstanding anything contained herein to the contrary,
provided all other applicable conditions precedent are satisfied
or waived the Vendor and the Purchaser shall complete the
transactions contemplated hereby and the Purchaser shall cause
Orbital Sciences Corporation to execute and deliver the
Guarantee, whether or not the Consents have been obtained by the
Closing and whether or not any claim, action, arbitration,
litigation, proceeding, judicial or administrative, or
investigation (a "Action") is pending or threatened against any
Party or Orbital Sciences Corporation as a result thereof,
including any Claim described in Sections 7.7 or 8.8.
(c) The Purchaser shall indemnify and save harmless the Vendor from
and against any and all Claims suffered or incurred by the Vendor
as a result of, or arising out of, the failure or inability of
either the Purchaser or Orbital Sciences Corporation to obtain
the Consents or as a result of the Closing occurring without
either such Consent being in place, including any Action
described in the preceding paragraph.
9.24 RADARSAT SHARES CLOSING -
(a) The Parties acknowledge that completion of the Closing with
respect to the sale of the Radarsat Shares is subject to
compliance with Article 3.05 of the Radarsat Shareholders
Agreement.
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Pursuant to Article 3.05 of the Radarsat Shareholders Agreement,
the Vendor is required to give notice to the other shareholders
of Radarsat International offering to sell such shares to such
shareholders on the same terms and conditions and each of the
other shareholders then has thirty (30) days following the giving
of such notice (the "Notice Period") to agree to purchase such
shareholder's proportionate interest in such shares.
(b) Forthwith after the date of this Agreement, the Purchaser and
the Vendor shall notify Lockheed Martin Corporation ("Lockheed")
that the Purchaser has made an offer (the "Offer") to purchase
the Radarsat Shares and has agreed to pay a price of $2.799 per
share (for an aggregate sum of $3,000,000.00), payable as to 50%
on Closing and as to 50% by the delivery of a promissory note
guaranteed by its parent in the form set out in Schedule 3.2 and
if, on or prior to the first anniversary of the date this
Agreement the Purchaser or Radarsat International Inc. receives
any payment from the National Aeronautics and Space Agency or
Canadian Space Agency ("CSA") with respect to the invoice, a copy
of which is attached as Schedule 3.8, or if Radarsat
International Inc. offsets said amount or any part thereof
against payables to CSA, then the Purchaser shall, or shall cause
Radarsat International Inc. to, pay 29.8% of 50% of the amount so
received or set off to the Vendor and the purchase price for the
Radarsat Shares shall be deemed to have been increased by the
amount so paid.
(c) In the event that Lockheed gives notice prior to the expiry of
the Notice Period of its intention to exercise its rights
pursuant to Article 3.05 of the Radarsat Shareholders Agreement,
the Purchaser shall also provide the appropriate notice, as
required under the Radarsat Shareholders Agreement to purchase
the maximum number of Radarsat Shares to which it is entitled and
the Purchase Price shall be reduced by an amount (the "Amount")
equal to the product of (i) the number of Radarsat Shares so
acquired by Lockheed times (ii) $2.799, on the basis that the
cash amount payable by the Vendor on Closing shall be reduced by
one-half of the Amount and the principal amount of the promissory
note shall each be reduced by an amount equal to one-half of the
Amount and the Vendor will deliver to the Purchaser on Closing
share certificate(s) representing the Radarsat Shares not sold to
Lockheed.
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(d) In the event that on or before the Closing Date Lockheed Martin
Corporation has not waived its rights to purchase its pro rata
share of the Radarsat Shares pursuant to the terms of Article
3.05 of the Radarsat Shareholders Agreement and the Notice Period
for Lockheed to exercise such rights has not yet expired, the
Closing of the purchase and sale of the other Purchased Assets
shall not be deferred but shall take place as otherwise
contemplated under this Agreement and:
(i) the completion of the sale of the Radarsat Shares to the
Purchaser shall take place on the second Business Day
following the expiry of the Notice Period or the receipt
of such waiver, whichever is earlier (the "Radarsat
Closing Date");
(ii) the amount payable pursuant to subsection 3.2(c) on
Closing shall be reduced by $1,500,000 and the principal
amount of the promissory note to be delivered on Closing
shall be reduced by 1.5 million;
(iii) on the Radarsat Closing Date the Purchaser shall, if
Lockheed has not given notice prior to the expiry of the
Notice Period of its intention to exercise its rights
pursuant to Article 3.05 of the Radarsat Shareholders
Agreement, pay to the Vendor $1,500,000 and shall deliver
a promissory note in the principal amount of 1.5 million
in the form set out in Schedule 3.2 and the Vendor will
deliver to the Purchaser share certificate(s) representing
the Radarsat Shares duly endorsed for transfer to the
Purchaser on the Radarsat Closing Date and a certificate
of the Purchaser confirming that the Vendor is the sole
registered owner of the Radarsat Shares and that the
disposition of the Radarsat Shares will not violate,
contravene, breach or offend against or result in any
default under any indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision,
statute, regulation, order, judgment, decree, licence,
permit or Law to which the Vendor is a party or subject or
by which the Vendor is bound or affected, provided the
consent of the directors of Radarsat International Inc. to
such transfer is obtained in accordance with the Articles
of Radarsat International Inc; and
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(iv) if Lockheed has given, notice prior to the expiry of the
Notice Period of its intention to exercise its rights
pursuant to Article 3.05 of the Radarsat Shareholders
Agreement, then the Vendor shall transfer to the Purchaser
on the Radarsat Closing Date the Radarsat Shares not
transferred to Lockheed and the Purchaser shall pay to the
Vendor the purchase price described in clause (iii) above
reduced by the amounts contemplated in subsection (c)
above.
9.25 SIRIUS PROGRAM ARRANGEMENTS -
The Vendor hereby grants to the Purchaser effective upon Closing a perpetual,
transferable, non-exclusive, world wide, royalty free sub-licence to use the
Intellectual Property (as defined in the Sirius Program Purchase Agreement dated
March 8, 1999 between the Vendor and DRS Technologies Canada Company (the
"Sirius Agreement")) provided that the Purchaser shall not use or permit the use
of any of the Intellectual Property licenced under this Section in any manner
that would result in the Vendor being in breach of its covenants under Section
8.8 of the Sirius Agreement. In the event that any of Robert Reeves, Garry
Brown, Hiro Takagi or George Zamfir accepts an offer of employment from DRS
Technologies Canada Company before September 8, 1999 pursuant to Section 8.6 of
the Sirius Agreement, the Purchaser shall comply with the Vendor's obligations
under subsection 8.6(b) of the Sirius Agreement and the Vendor shall indemnify
and hold harmless the Purchaser from and against any Claims made by any such
Person against the Purchaser for severance pay or damages for wrongful dismissal
upon or following the termination of the employment of such Person with the
Purchaser, provided, however, that such indemnity shall not extend to any Claim
for an amount owing for or in respect of wages, bonuses and other employee
benefits which have accrued up to or are due and payable when the Person's
employment with the Purchaser terminates.
ARTICLE 10
INDEMNIFICATION
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10.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. -
The Vendor covenants and agrees with the Purchaser, and the Purchaser covenants
and agrees with the Vendor (the Party or Parties so covenanting and agreeing to
indemnify another Party being referred to in this Section as the "Indemnifying
Party" and the Party so to be indemnified being called the "Indemnified Party")
to indemnify and save harmless the Indemnified Party, effective as of and from
the Closing Time, on an after Tax basis from and against all Claims which may be
made or brought against the Indemnified Party or which it may suffer or incur,
directly or indirectly as a result of or in connection with any non-fulfilment
of any covenant or agreement on the part of the Indemnifying Party under this
Agreement or any other agreement to be entered into under the terms of this
Agreement or any incorrectness in or breach of any representation or warranty of
the Indemnifying Party contained in this Agreement, in any other agreement to be
entered into under the terms of this Agreement or in any certificate or other
document furnished by the Indemnifying Party pursuant to this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, the
foregoing obligation of indemnification in respect of such Claims shall be
subject to:
(a) the limitation mentioned in Section 6.2 respecting the survival of
the representations and warranties of the Parties; and
(b) the limitations set out in Section 10.2.
10.2 LIMITATIONS INDEMNIFICATION -
For claims for indemnification made pursuant to Section 10.1 in respect of any
incorrectness in or breach of any representation or warranty and pursuant to
Sections 10.4 and 10.5 the obligation of the Indemnifying Party therein shall be
subject to:
(a) the requirement that the Indemnifying Party shall, in respect of
any Claim made by any third party, be afforded an opportunity at
its sole expense to resist, defend and compromise such Claim;
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(b) the limitation that the Indemnifying Party shall not be required
to pay any amount until the aggregate of such claims by the
Indemnified Party exceeds $250,000 and, upon the aggregate of such
claims exceeding $250,000, the Indemnifying Party shall be
required to pay the amount owing in respect of all of such claims
including the $250,000. Solely for purposes of calculating the
foregoing amounts (but, for greater certainty, not for purposes of
determining whether any representation or warranty is incorrect or
has been breached), any representation or warranty which contains
the words "material" or "materially" shall be read and construed
as though such words were not contained therein; and
(c) the limitation that the aggregate amount of all such claims shall
not exceed $30,000,000.
10.3 BULK SALES ACT INDEMNITY -
It is agreed that the Purchaser shall not require the Vendor to comply, or to
assist the Purchaser to comply, with the requirements of the Bulk Sales Act
(Ontario), section 6 of the Retail Sales Tax Act (Ontario) and any other
comparable bulk sales or retail sales tax legislation as may be applicable in
respect of the purchase and sale of the Purchased Assets pursuant to this
Agreement. Notwithstanding the foregoing, the Vendor agrees to indemnify and
save harmless the Purchaser on an after Tax basis from and against any Claims
which may be made or brought against the Purchaser or which the Purchaser may
suffer or incur as a result of, in respect of, or arising out of such
non-compliance.
10.4 ENVIRONMENTAL INDEMNITY -
The Vendor (referred to in this Section as the "Indemnifying Party") covenants
and agrees to indemnify and save harmless the Purchaser and, in respect of any
Claim against an officer, director, employee or agent of the Purchaser with
respect to whom a due diligence defense is not available, such Persons
(collectively referred to in this Section as the "Indemnified Party") on an
after Tax basis from and against all Claims which may be made or brought against
the Indemnified Parties or which they may suffer or incur, directly or
indirectly as a result of or in connection with:
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(a) the presence prior to the Closing Date of any Hazardous
Substances which are not in compliance with applicable
Environmental Laws in effect as of the Closing Date upon or
within the Leased Premises (including underlying soils and
substrata, surface water, groundwater and vegetation);
(b) the presence prior to the Closing Date of any Hazardous
Substances which are not in compliance with applicable
Environmental Laws in effect as of the Closing Date on, upon or
within properties adjoining or approximate to any of the Leased
Premises resulting from any act or omission of the Vendor, or the
carrying on of the Business by the Vendor;
(c) any Remedial Order imposed in connection with the Business or
the Leased Premises (including underlying soils and substrata,
surface water, groundwater and vegetation) resulting from any
condition, event or circumstance existing or occurring prior to
the Closing;
(d) any Remedial Order imposed in connection with the Business in
connection with properties adjoining or approximate to the Leased
Premises (including underlying soils and substrata, surface
water, groundwater and vegetation), in each case resulting from
any act or omission of the Vendor prior to the Closing Date or
the carrying on of the Business by the Vendor; and
(e) any other Claims brought or imposed at any time by third parties
in connection with environmental matters relating to any period
prior to the Closing Date as a result of any act or omission by
the Vendor or the carrying on of the business by the Vendor,
provided that the Indemnifying Party shall not be liable under this Section 10.4
to the extent that the Indemnifying Party shows that the facts or circumstances
giving rise to such Claim is the result of an act or omission by a third party
(including the Purchaser) and provided that the obligations of indemnification
pursuant to this Section 10.4 shall be subject to the limitations set out in
Section 10.2 and to the limitation that no Claim for indemnification pursuant to
this Section 10.4 shall be brought under this Agreement after the seventh (7th)
anniversary of the date of this Agreement.
<PAGE> 91
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The benefit of this indemnity may be assigned by the Purchaser to any one or
more Affiliates of the Purchaser which carry on any part of the Business at or
from the Leased Premises or to a financial institution in connection with a
credit facility provided by such financial institution to the Purchaser or to
any such Affiliate and the Vendor consents to any such assignment.
10.5 SENSOR ADAPTIVE MACHINES PATENT -
The Vendor shall indemnify and save harmless the Purchaser from and against any
Claims arising out of, or resulting from, any alleged infringement or potential
infringement of U.S. Patent No. 5,608,847 in connection with the SPDM Project,
including for greater certainty, any license fees or royalty fees payable as a
result of any settlement of any such Claims, provided that any claim for
indemnification pursuant to this Section 10.5 shall be subject to the
limitations set out in Section 10.2 and to the limitation that no Claim for
indemnification pursuant to this Section 10.5 shall be brought under this
Agreement after the fifth (5th) anniversary of the date of this Agreement and
provided further that the Vendor shall not indemnify or reimburse the Purchaser
for any of its internal costs in connection therewith.
10.6 PRODUCT LIABILITY AND WARRANTIES -
(a) All liability to third parties and warranty obligations respecting
products delivered by the Business and/or services provided by the
Vendor prior to the Closing Date, whether arising before or after
the Closing Time and whether known or unknown at the Closing Time
to the extent such liability or warranty obligations exceed the
applicable reserve contained in the Closing Date Statement, shall
remain the sole responsibility of the Vendor and the Vendor
covenants and agrees to indemnify and save harmless the Purchaser
on an after Tax basis in respect of such liability and warranty
obligations.
(b) All liability to third parties and warranty obligations respecting
products delivered by the Business or services provided by the
Vendor prior to the Closing Date to the extent of the applicable
reserve contained in the Closing Date Statement and all such
liability to third parties and warranty obligations respecting
products delivered by the Business and/or services provided by the
<PAGE> 92
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Purchaser from and after the Closing Date shall be the sole
responsibility of the Purchaser and the Purchaser covenants and
agrees to indemnify and save harmless the Vendor on an after Tax
basis in respect of such liability and warranty obligations.
(c) The Purchaser may, if the Purchaser acting reasonably determines
in good faith to do so for valid business reasons, and shall, if
requested to do so in writing by the Vendor, satisfy or perform
any applicable product or service warranty obligation of the
Vendor not assumed by the Purchaser, provided however that, in
either case, the Purchaser shall first provide the Vendor with an
opportunity to assess such warranty obligation and comment on its
validity, the proposed response by the Purchaser and the
Purchaser's cost estimate for satisfying or performing such
warranty obligation. The Vendor shall reimburse the Purchaser
forthwith following demand by the Purchaser for all costs
incurred by the Purchaser in repairing or replacing products to
the extent not covered by the applicable reserve contained in the
Closing Date Statement. For greater certainty, the Vendor shall
only be required to reimburse the Purchaser pursuant to this
subsection 10.6(c) for the Vendor's product or service warranty
obligations which are not assumed by the Purchaser.
10.7 INDEMNITY RE ASSUMED LIABILITIES -
The Vendor shall indemnify and save harmless the Purchaser from and against any
Claims respecting any liabilities of the Vendor which are not Assumed
Liabilities. The Purchaser shall indemnify and save harmless the Vendor from and
against any Claims respecting any Assumed Liabilities.
10.8 INDEMNITY RE LITIGATION -
The Vendor shall indemnify and save harmless the Purchaser from and against any
Claims respecting the matters set out in Schedule 4.30 and any Claims in
connection with the lawsuit filed in Superior Court, Los Angeles County,
California by AGF Reassurances et al (LASC Case No. BL 174857), the lawsuit
commenced in the Quebec Superior Court, District of Montreal by the Vendor
against Hughes Communications Inc. et al (case No. 50005041411981) and any and
all present or future lawsuits, arbitrations, mediations and other proceedings
<PAGE> 93
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relating to the supply by the Vendor to American Mobile Satellite Corporation of
a mobile communications satellite.
10.9 INDEMNIFICATION PROCEDURES -
(a) In the case of Claims made by a third party with respect to which
indemnification is sought, the Party seeking indemnification (the
"Indemnified Party") shall give prompt written notice, and in any
event within 20 days, to the other Party (the "Indemnifying
Party") of any such Claims made upon it, provided that in the
event of a failure to give such notice, such failure shall not
preclude the Indemnified Party to obtain such indemnification,
but its right to indemnification may be reduced to the extent
that such delay prejudiced the defense of the Claim or increased
the amount of liability or cost of defense, and provided that,
notwithstanding anything else herein contained, no claim for
indemnity in respect of the breach of any representation or
warranty contained herein may be made unless notice of such claim
has been given prior to the expiry of the survival period
applicable to such representation and warranty pursuant to
Section 6.2.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt of
the notice described in subsection (a) to assume the control of
the defense, compromise or settlement of the Claim, provided that
such assumption shall, by its terms, be without cost to the
Indemnified Party and provided the Indemnifying Party
acknowledges in writing its obligation to indemnify the
Indemnified Party in accordance with the terms contained in this
Section in respect of the full amount of that Claim.
(c) Upon the assumption of control of any Claim by the Indemnifying
Party as set out in subsection (b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of
the Claim at its sole expense, including, if necessary,
employment of counsel reasonably satisfactory to the Indemnified
Party and, in connection therewith, the Indemnified Party shall
cooperate fully, but at the expense of the Indemnifying Party
with respect to any out-of-pocket expenses incurred, to make
available to the Indemnifying Party all pertinent information and
witnesses under the Indemnified Party's control, make such
assignments and take such other steps
<PAGE> 94
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as in the opinion of counsel for the Indemnifying Party are
reasonably necessary to enable the Indemnifying Party to conduct
such defence. The Indemnified Party shall also have the right to
participate in the negotiation, settlement or defence of any
Claim at its own expense.
(d) If the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Claim, the Indemnifying Party shall
not settle any such Claim without the prior written consent of
the Indemnified Party, which consent shall not be unreasonably
withheld or delayed. If the Indemnifying Party has given notice
of the proposed settlement to the Indemnified Party and a
reasonable time to consider and respond to the proposed
settlement, the liability of the Indemnifying Party shall be
limited to the proposed settlement amount if the consent of the
Indemnified Party is not obtained and the Indemnified Party shall
indemnify and save harmless the Indemnifying Party from and
against any costs, liabilities or expenses, including reasonable
legal fees, in excess of the amount of the proposed settlement
resulting from or arising out of the failure of the Indemnified
Party to consent to such proposed settlement of such Claim.
(e) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the Parties as to the validity or invalidity, as
the case may be, of such Claim against the Indemnifying Party.
(f) Should the Indemnifying Party fail to give notice to the
Indemnified Party as provided in subsection (b), the Indemnified
Party shall be entitled to make such settlement of the Claim as
in its sole discretion may appear advisable, and such settlement
or any other final determination of the Claim shall be binding
upon the Indemnifying Party.
10.10 MITIGATION -
Nothing contained in this Agreement shall affect the obligation of a Party
seeking indemnification to take commercially reasonable steps to mitigate its
losses.
<PAGE> 95
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10.11 EXCLUSIVE REMEDIES -
Except as otherwise provided in this Agreement or in any other agreement,
certificate or other document delivered pursuant to this Agreement, the
provisions of this Article 10 shall apply to any Claim for breach of covenant,
representation, warranty or other provision of this Agreement or any agreement,
certificate or other document delivered pursuant to this Agreement (other than a
claim for specific performance or injunctive relief) with the intent that all
such Claims and recourses shall be subject to the limitations and other
provisions applicable thereto under this Article 10.
10.12 NO CLAIMS AGAINST SENIOR OFFICERS -
Notwithstanding any other provisions in this Agreement, (i) the Vendor agrees
not to assert any claims it may have against any Employee or director or officer
of the Vendor which, after the completion of the transactions provided for in
this Agreement, become employed by the Purchaser (collectively, the "Related
Persons"), whether in law or at equity or otherwise, arising out of or in any
way relating to any of the representations or warranties made by, or any
covenant, agreement or obligation of, the Vendor in this Agreement and for which
the Purchaser may be vicariously liable or otherwise liable at law and (ii) the
Vendor agrees that it will not take or seek to take, directly or indirectly, any
action against any Related Person as a result of or in connection with any such
representation, warranty, covenant, agreement or obligation, including any
action seeking compensation as a result of the failure of any such
representation or warranty to be true and correct or as a result of any payment
required to be made by the Vendor as a result of this Article and for which the
Purchaser may be vicariously liable or otherwise liable at law.
ARTICLE 11
GENERAL
<PAGE> 96
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11.1 PUBLIC NOTICES -
All public notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by the Parties and no Party shall act unilaterally in this regard
without the prior approval of the other Party, such approval not to be
unreasonably withheld, except where required to do so by Law or by the
applicable regulations or policies of any Governmental Authority or any stock
exchange in circumstances where prior consultation with the other Party is not
practicable.
11.2 EXPENSES -
Each of the Parties shall pay their respective legal, accounting, and other
professional advisory fees, costs and expenses incurred in connection with the
purchase and sale of the Business and the Purchased Assets and the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant to this Agreement and any other costs and expenses incurred.
In particular, the Vendor shall be responsible for any fees and expenses of any
broker or investment advisor retained by it in connection with the sale of the
Purchased Assets and such fees and expenses shall not constitute an obligation
of the Business or the Purchaser.
11.3 NOTICES -
Any notice or other writing required or permitted to be given under this
Agreement or for the purposes of this Agreement (in this Section referred to as
a "Notice") shall be in writing and shall be sufficiently given if delivered or
if transmitted by facsimile or other form of recorded communication tested prior
to transmission to such Party:
(a) in the case of a Notice to the Vendor at:
<PAGE> 97
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Spar Aerospace Limited
Suite 2100
121 King Street West
Toronto, Ontario
M5H 4C2
Attention: Vice President, General Counsel and Secretary
Fax: (416) 682-7631
(b) in the case of a Notice to the Purchaser at:
MacDonald, Dettwiler and Associates Ltd.
13800 Commerce Parkway
Richmond, B.C.
V6V 2J3
Attention: Anil Wirasekara,
Vice President and Chief Financial Officer
Fax: (604) 278-1837
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. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
11.4 ASSIGNMENT -
The Purchaser shall be entitled, upon giving written notice to the Vendor at any
time not less than two days prior to the Closing Time, to assign some or all of
its rights and obligations under this Agreement to any Affiliate of the
Purchaser. To the extent of such assignment, such assignee shall have and may
exercise all the rights, and shall assume all of the obligations, of the
Purchaser under this Agreement, and any reference to the Purchaser in this
Agreement shall be deemed to refer to such assignee. In the event of such an
assignment, the Vendor and such assignee shall execute an agreement confirming
such assignment and such assumption of obligations and
<PAGE> 98
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shall be on the basis that no such assignment shall release the Purchaser from
liability for its obligations as purchaser of the Purchased Assets under this
Agreement and the Purchaser shall either execute and deliver the promissory note
contemplated by subsection 3.2(b) or shall together with Orbital Sciences
Corporation guarantee such assignee's promissory note on the terms set forth in
Schedule 3.2. Except as hereinbefore provided, neither this Agreement nor any
benefits or burdens under this Agreement shall be assignable by any Party
without the prior written consent of the other Party. Subject to the foregoing,
this Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors (including any successor by reason of amalgamation
of any Party) and permitted assigns.
11.5 FURTHER ASSURANCES -
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
11.6 COUNTERPARTS -
This Agreement may be executed by the Parties in separate counterparts each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
SPAR AEROSPACE LIMITED
By:
Name:
Title:
<PAGE> 99
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MacDONALD, DETTWILER AND
ASSOCIATES LTD.
By:
Name:
Title:
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
$31,481,481.40 (Canadian) TORONTO, ONTARIO
DATE: May 7,1999
1. FOR VALUE RECEIVED the undersigned unconditionally promises to pay
on May 7, 2000 (the "Maturity Date") to Spar Aerospace Limited
("Spar") or to its order, at its offices at 121 King Street West,
Toronto, Ontario, in lawful money of Canada the amount of Thirty-One
Million Four Hundred and Eighty-One Thousand and Four Hundred and
Eighty-One Dollars and Forty Cents ($31,481,481.40) (the "Principal
Amount") together with interest on the Principal Amount outstanding
from time to time.
2. The Principal Amount outstanding at any time, and from time to time,
and any overdue interest, shall bear interest at the rate equal to
8% per annum, both before and after the Maturity Date, demand,
default and judgment and such interest shall be payable on the
Maturity Date and, after default, payable on demand.
3. Any payments in respect of amounts due hereunder shall be applied
first in satisfaction of any accrued and unpaid interest and
thereafter to the Principal Amount outstanding.
4. The undersigned shall be entitled to prepay any or all of the
Principal Amount outstanding without notice, bonus or penalty. Any
prepayments shall be recorded by endorsement on this Note.
5. MacDonald Dettwiler Space and Advanced Robotics Ltd. ("MDSAR") is
not entitled to any rights of set-off in respect of any amounts
payable hereunder.
6. Upon the occurrence of the bankruptcy, insolvency, or other like
event of MDSAR, Spar may, by giving notice to MDSAR in accordance
with the asset purchase agreement dated March 18, 1999 between Spar
and MacDonald, Dettwiler and Associates Ltd. ("MDA"), as amended,
and the Consent to Assignment and Assumption Agreement dated May 7,
1999 between Spar, MDA, MDSAR and MacDonald Dettwiler Technologies
Inc. declare the entire principal amount of this Note, all interest
accrued thereon and all fees and other amounts required to be paid
by MDSAR hereunder, to be immediately due and payable without the
necessity of presentment for payment, protest, notice of non-payment
or notice of protest (all of which are hereby expressly waived).
<PAGE> 2
7. This Note shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable
therein and shall enure to the benefit of Spar, its successors and
assigns and shall be binding on the undersigned and its successors.
DATED this 7th day of May, 1999.
MACDONALD DETTWILER SPACE AND ADVANCED ROBOTICS LTD.
By: [signed Anil Wirasekara]
-------------------------
Name: Anil Wirasekara
Title: Treasurer
<PAGE> 1
EXHIBIT 10.3
GUARANTEE
TO: Spar Aerospace Limited
("Spar")
WHEREAS MacDonald Dettwiler and Associates Ltd. (the "Purchaser") has entered
into an asset purchase agreement with Spar dated March 18, 1999, as amended,
(the "Agreement") respecting the purchase by the Purchaser of all of the assets,
property and undertaking of the Business for the Purchase Price payable as
provided in the Agreement;
AND WHEREAS the Vendor, the Purchaser, MacDonald Dettwiler Space and Advanced
Robotics Ltd. ("MDSAR"), and MacDonald Dettwiler Technologies Inc. have entered
into a Consent to Assignment and Assumption Agreement dated May 7 , 1999.
AND WHEREAS the Purchase Price is to be satisfied in part by the delivery of the
promissory note attached as Schedule A hereto (the "Note") guaranteed by Orbital
Sciences Corporation and MacDonald, Dettwiler and Associates Ltd. (the
"Guarantors");
AND WHEREAS MDSAR is a wholly owned subsidiary of the Guarantors;
AND WHEREAS unless otherwise defined herein capitalized terms shall have the
meaning set out on the Agreement;
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the Guarantors, the Guarantors hereby agree
and covenant as follows:
1. Each of the Guarantors hereby unconditionally and irrevocably
guarantees to Spar the payment by MDSAR of its obligations,
indebtedness and liabilities under the Note in accordance with its
terms (collectively the "Indebtedness").
2. The obligations of the Guarantors under this guarantee are joint and
several.
3. The Guarantors represent and warrant to Spar that:
(a) Incorporation - Orbital Sciences Corporation is a
corporation duly incorporated and validly existing under
the Laws of Delaware and has all necessary corporate
power, authority and capacity to own its property and to
carry on the Business. The Purchaser is a corporation
duly incorporated and validly existing under the Laws of
Canada and has all necessary corporate power, authority
and capacity to own its property and to carry on the
Business.
(b) Due Authorization - Each of the Guarantors has all
necessary corporate power, authority and capacity to
enter into this Guarantee and to carry out its
obligations under this Guarantee. The execution and
delivery of this Guarantee, the
<PAGE> 2
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consummation of the transactions contemplated under this
Guarantee and the performance of the Guarantors'
obligations hereunder have been duly authorized by all
necessary corporate action on the part of the
Guarantors.
(c) Enforceability of Obligations - This Guarantee
constitutes a valid and binding obligation of the
Guarantors enforceable against them in accordance with
its terms.
(d) Absence of Conflicting Agreements - The Guarantors are
not a party to, bound or affected by or subject to any
contract, indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision,
statute, regulation, order, judgment, decree, licence,
permit or Law which would be violated, contravened or
breached by, or under which any default would occur or a
claim, restriction or Encumbrance would be created as a
result of the execution and delivery by them of this
Guarantee or the performance by them of any of their
obligations provided for under of this Guarantee.
(e) Availability of Funds - Each of the Guarantors has or
will have the funds required to perform its obligations
under this Guarantee.
4. This guarantee shall be a continuing guarantee and shall secure the
Indebtedness. This guarantee shall not be discharged, determined or
affected or Spar's rights under this guarantee prejudiced by loss or
diminution of capacity of, or by the bankruptcy, insolvency or
dissolution of, MDSAR or by the loss or diminution of capacity of,
or by the bankruptcy, insolvency or dissolution of, either or both
of the Guarantors or any person or persons who shall execute this
guarantee or who is or are or shall become responsible in any way
for the Indebtedness or any part thereof.
5. The obligations under this guarantee are independent of the
obligations of MDSAR, and a separate action or actions may be
brought against the either or both of the Guarantors whether or not
action is brought against MDSAR and whether or not MDSAR or the
other Guarantor is joined in any such action or actions.
6. Spar shall not be bound to exhaust its recourse against MDSAR,
either Guarantor or others or any securities (which word as used
herein includes other guarantees) it may at any time hold, nor to
value such securities, before requiring or being entitled to payment
from the Guarantors under this guarantee. Each of the Guarantors
renounce all benefits of discussion and division and waives any
right to require Spar to proceed against MDSAR or the other
Guarantor.
7. The Guarantors hereby authorize Spar, without obtaining the consent
of or giving notice or demand to the Guarantors and without
affecting the liability of the Guarantors under this guarantee, from
time to time, to grant to MDSAR or the Guarantors time, renewals,
extensions, releases, discharges or any other indulgences and to
compound with all or any of such persons as Spar shall see fit, all
without in any way prejudicing or affecting any
<PAGE> 3
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of Spar's rights under this guarantee or in any way limiting or
lessening the liability of the Guarantors under this guarantee.
8. The Guarantors hereby waive presentment, demand, protest, notice of
dishonour, notice of protest, notice of non-payment, notice of
acceptance of this guarantee and any other notice required to be
given by law to any guarantor in connection with the delivery,
acceptance, performance, default or enforcement of this guarantee.
9. This guarantee is in addition to and not in substitution for any
other guarantee or any other security, by whomsoever given, at any
time held by Spar.
10. The liability of each of the Guarantors to make payment under this
guarantee shall arise forthwith after demand for payment has been
made in writing on such Guarantor. The liability of each of the
Guarantors shall be as principal debtor in respect of the payment of
the Indebtedness.
11. If, pursuant to the judgment or order of any court or in accordance
with the provisions of applicable law, any amount due or payable
hereunder in Canadian Dollars is paid in U.S. Dollars, such payment
shall discharge or satisfy the obligation of the Guarantors to pay
such amount in Canadian Dollars only to the extent of the amount of
Canadian Dollars that Spar, in accordance with normal baking
procedures of Spar's usual bank, can purchase in the Toronto foreign
exchange market on the date of such payment with the amount of such
payment in U.S. Dollars after payment of any premium or costs of
exchange. The Guarantors shall, as a separate and independent
obligation, which shall not be merged in any such judgment or order
or extinguished by any such payment in U.S. Dollars, pay or cause to
be paid such obligations in Canadian Dollars not so discharged and
satisfied in accordance with the foregoing and indemnify and save
Spar harmless against any losses or damages arising as a result of
any such amount being paid in U.S. Dollars. (For the purposes of
this guarantee "U.S. Dollars" means the lawful money of the United
States of America and "Canadian Dollars" means the lawful money of
Canada.)
12. All payments to be made by the Guarantors are to be made without
set-off, compensation or counterclaim, free and clear of and without
deduction for or on account of any tax, including but not limited to
withholding taxes, except if such deduction is required by law or by
the administration thereof. If any tax is deducted or withheld from
any payments, the Guarantors shall promptly remit to Spar in the
currency in which such payment was made, the equivalent of the
amount of tax so deducted or withheld together with the relevant
receipt issued by the taxing or other receiving authority. If the
Guarantors are prevented by operation of law or otherwise from
paying, causing to be paid or remitting such tax amounts payable
hereunder, such payments will be increased by such amounts as are
necessary to yield and remit to Spar the gross amounts payable
hereunder together with interest at the rates specified in this
guarantee after provision for payment of such tax.
<PAGE> 4
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13. No modification or waiver of or amendment to this guarantee shall be
valid or binding unless set forth in writing and duly executed by
the Guarantors and Spar.
14. Time shall be of the essence of this guarantee and of each and every
part hereof.
15. Every notice, consent, demand and other communication in connection
with this Guarantee and all legal process in regard hereto (a
"notice") shall be validly given, made or served if in writing and
delivered to, or sent via facsimile or other similar form of
recorded communication if to the Guarantors at:
Orbital Sciences Corporation
21700 Atlantic Blvd.
Dulles, VA 20166
USA
Attention: Susan Herlick
-------------------------
Fax: (703) 406-5572
MacDonald, Dettwiler and Associates Ltd.
13800 Commerce Parkway
Richmond, B.C.
V6V 2J3
Attention: Anil Wirasekara
---------------------------
Fax: (604) 278-1837
and if to Spar at:
Spar Aerospace Limited
Suite 2100
121 King Street West
Toronto, Ontario
M5H 4C2
Attention: Vice President, General Counsel and Secretary
--------------------------------------------------------
Fax: (416) 682-7631
or to such other address, number or person as the Guarantors or Spar, as
applicable, may from time to time designate by notice.
16. This Guarantee shall be governed by and construed in accordance with
the laws of the Province of Ontario and the Guarantors agree that
any legal suit, action or proceeding arising out of or relating to
this Guarantee may be instituted in the courts of the Province
<PAGE> 5
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of Ontario and the Guarantors hereby accept and irrevocably submit
to the non-exclusive jurisdiction of the said courts and
acknowledges such courts' competence and agrees to be bound by any
judgment thereof.
17. In this Guarantee words importing number shall include the singular
and the plural.
18. This Guarantee shall extend to and enure to the benefit of the
successors and assigns of Spar, and shall be binding upon the
Guarantors and their respective successors and permitted assigns.
19. This Guarantee may be executed by the parties in counterpart, by the
parties in separate counterparts and by means of facsimile
signature. Each counterpart when so executed and delivered as an
original or facsimile thereof shall be an original, but all
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the undersigned have executed and delivered this Guarantee as
of the 7 day of May, 1999.
ORBITAL SCIENCES CORPORATION
Per: [signed by Jeffrey V. Pirone]
-----------------------------
Name: Jeffrey V. Pirone
Title: Executive Vice President, Chief
Financial Officer
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Per: [signed by Anil Wirasekara]
---------------------------
Name: Anil Wirasekara
Title: CFO
