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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
Date of Report (date of earliest event reported): July 31, 1995
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CEDAR GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10372 23-2577796
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State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization
500 Rue Notre Dame,
Lachine
Quebec, H8S 2B2
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(Address of principal executive office)
Registrant's telephone number: (514) 634-3550
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) Description of the Acquisition; Sources of Funds.
On July 31, 1995 (but effective as of April 1, 1995), Cedar Group Inc.
("the Registrant") acquired 75% of the outstanding Common Shares of Steen
Contractors Limited ("Steen") for a cash purchase price of Cdn $6.3 million.
Steen is an international engineering company, specializing in prime
mechanical, heating, ventilation, and air conditioning contracts for
industrial, commercial, manufacturing and processing plants. The Registrant
will purchase the remaining Common Shares of Steen in two installments. The
first installment, amounting to 15% of Steen's outstanding Common Shares, will
be purchased on May 1, 1996 based upon the net tangible book value per share of
Steen on December 31, 1995. The final installment, amounting to 10% of Steen's
outstanding Common Shares, will be purchased on May 1, 1997 based upon the net
tangible book value per share of Steen on December 31, 1996.
The acquisition of Steen will be accounted for under the purchase
method of accounting and will be given effect from April 1, 1995, the date
under which the Registrant assumed operational control of Steen.
The amount of consideration paid by the Registrant was determined by
negotiation between and among representatives of the Registrant and the
shareholders of Steen.
The payment for the purchase price of the Common Shares of Steen was
obtained by the Registrant pursuant to a Term Loan Agreement with BT Commercial
Corporation ("BTCC") pursuant to which the Registrant borrowed U.S.$5 million
(the "Bridge Loan"). The Bridge Loan is secured by a pledge of the shares
owned by the Company of its two principal operating subsidiaries, Dominion
Bridge Inc. ("Dominion Bridge") and Steen, and is further secured by a
guarantee and a pledge of assets by Dominion Bridge. The Bridge Loan is to be
repaid on or before October 31, 1995. The Registrant is negotiating a
revolving credit facility with BTCC which would refinance the Bridge Loan as
well as provide additional working capital to the Registrant.
Steen's assets consist primarily of cash, accounts receivable,
inventories and property, plant and equipment. The Registrant
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plans for Steen to continue such course of business under its control.
Prior to the acquisition, no material relationship existed between
Steen and the Registrant or any of its affiliates, any director or officer of
the Registrant, or any associate of any such director or officer.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable.
ITEM 5. OTHER EVENTS.
Not Applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
It is impracticable at the time of the filing of this Current Report
to provide the required financial information for Steen required by Regulation
S-B. Accordingly, the Registrant will file the required financial statements
under cover of an Amendment to this Current Report on Form 8-K as soon as
practicable, but in any event, not later than 60 days after the date on which
this Current Report must be filed with the Commission.
(b) Proforma financial information.
It is impracticable at the time of the filing of this Current Report
for the Registrant to provide the complete proforma financial information
required by Regulation S-B. Accordingly, the Registrant will file the required
proforma financial information under cover of an Amendment to this Current
Report on Form 8-K as soon as practicable, but in any event, not later than 60
days after this Current Report must be filed with the Commission.
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(c) Exhibits (referenced to Item 601 of Regulation S-K).
2. Share Purchase Agreement dated as of April 1, 1995.
4. Term Loan Agreement dated as of July 31, 1995 between
Cedar Group, Inc. and BT Commercial Corporation.
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
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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 thereunto duly authorized.
CEDAR GROUP, INC.
Dated: August 11, 1995 By: /s/Michel L. Marengere
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Michel L. Marengere,
Chairman and CEO
(Chief Executive Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number in
Exhibit Rule 0-3(b)
Number Sequential
(Referenced Numbering System
to Item 601 Where Exhibit
of Reg. S-B) Description of Exhibit Can Be Found.
<S> <C>
2. Share Purchase Agreement dated as of April 1, 1995.
4. Term Loan Agreement dated as of July 31, 1995 between Cedar
Group, Inc. and BT Commercial Corporation
</TABLE>
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 1st day of April, 1995
B E T W E E N:
THE PERSONS LISTED IN SCHEDULE "1A" TO THIS AGREEMENT
(hereinafter individually called a "Vendor" and
collectively called the "Vendors"),
OF THE FIRST PART
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THE PERSONS LISTED IN SCHEDULE "1B" TO THIS AGREEMENT
(hereinafter individually called a "Principal" and
collectively called the "Principals"),
OF THE SECOND PART
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CEDAR GROUP, INC., a corporation incorporated under
the laws of the State of Delaware
(hereinafter called the "Purchaser")
OF THE THIRD PART
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STEEN CONTRACTORS LIMITED, a corporation incorporated
under the laws of the Province of Ontario
(hereinafter called the "Corporation")
OF THE FOURTH PART
WITNESSES THAT WHEREAS:
A. The Vendors are the legal, registered and beneficial
owners of all of the issued and outstanding shares in the authorized capital of
the Corporation, an Ontario corporation engaged in the business of mechanical
contracting;
B. The Purchaser has agreed with the Vendors that the
Vendors shall sell, and the Purchaser shall purchase, all of the issued and
outstanding shares of the Corporation, upon and
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subject to the terms and conditions set out in this Agreement, such purchase
and sale to take effect from and to be deemed for all purposes to have been
made on and as of the 1st day of April, 1995;
THEREFORE, in consideration of the respective covenants,
agreements, representations, warranties and indemnities herein contained and
for other good and valuable consideration (the receipt and sufficiency of which
are acknowledged by each party), the parties covenant and agree as follows:
ARTICLE ONE
INTERPRETATION
Section 1.1 Defined Terms: For the purpose of this Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
(a) "Act" means the Business Corporations Act (Ontario)
as in effect on the date hereof,
(b) "Affiliate" has the meaning attributed to that term
in the Act;
(c) "Associate" has the meaning attributed to that term
in the Act;
(d) "Audited 1994 Financial Statements" means the audited
consolidated financial statements of the Corporation
as at and for the financial year ended December 31,
1994, including the notes thereto and the report of
the Corporation's auditors thereon, a copy of which
is annexed hereto as Schedule 2;
(e) "Audited 1995 Financial Statements" means the audited
consolidated financial statements of the Corporation
as at and for the financial year ended December 31,
1995, regardless of any change in the year end of the
Corporation, including the notes thereto and the
report of the Corporation's auditors thereon;
(f) "Audited 1996 Financial Statements" means the audited
consolidated financial statements of the Corporation
as at and for the financial year ended December 31,
1996, regardless of any change in the year end of the
Corporation, including the notes thereto and the
report of the Corporation's auditors thereon;
(g) "Business" means the business currently and
heretofore carried on by the Corporation and its
Subsidiaries consisting of mechanical contracting;
(h) "Business Day" means any day (other than a Saturday
or a Sunday or any statutory holiday) on which the
main branch of the Bank of Montreal in Toronto,
Ontario, is open for business;
(i) "Claim" has the meaning set out in section 9.3;
(j) "Closing Certificates" has the meaning set out in
subsection 5.1(a);
(k) "Closing Date" means July 31, 1995 or such earlier or
later date as may be mutually agreed upon by the
Vendors and the Purchaser;
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(l) "Common Shares" means the common shares in the
capital of the Corporation;
(m) "Contract" means any agreement, indenture, contract,
lease, deed of trust, licence, option, instrument or
other commitment, whether written or oral;
(n) "Direct Claim" has the meaning set out in section 9.3;
(o) "Effective Date" means the effective date of the
purchase and sale of the initial seventy-five percent
(75%) of the Purchased Shares and the date upon which
the Purchaser effected management control, which the
parties acknowledge and agree is to be April 1, 1995
notwithstanding that the actual Closing Date is or
may be other than such date;
(p) "Employee Plans" has the meaning set out in section
3.34;
(q) "Encumbrance" means any encumbrance, lien, charge,
hypothec, pledge, mortgage, title retention
agreement, security interest of any nature, adverse
claim, exception, reservation, easement, right of
occupation, any matter capable of registration
against title, option, right of pre-emption,
privilege or any Contract to create any of the
foregoing;
(r) "Environmental Laws" has the meaning set out in
subsection 3.33(a);
(s) "Environmental Permits" has the meaning set out in
subsection 3.33(b);
(t) "ETA" means the Excise Tax Act (Canada), as amended
from time to time;
(u) "GST" means any and all taxes payable under Part IX
of the ETA or under any provincial legislation
similar to Part IX of the ETA;
(v) "Hazardous Substances" has the meaning set out in
subsection 3.33(a);
(w) "Indemnified Party" has the meaning set out in
section 9.3;
(x) "Intellectual Property" has the meaning set out in
section 3.16;
(y) "Leased Property" has the meaning set out in section
3.11;
(z) "Leases" has the meaning set out in section 3.13;
(aa) "Licences" has the meaning set out in section 3.20;
(ab) "Losses", in respect of any matter, means all claims,
demands, proceedings, losses, damages, liabilities,
deficiencies, costs and expenses (including, without
limitation, all legal and other professional fees and
disbursements, interest, penalties and amounts paid
in settlement) arising directly or indirectly as a
consequence of such matter;
(ac) "Permitted Encumbrances" means:
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(i) liens for taxes, assessments and
governmental charges due and being
contested in good faith and
diligently by appropriate
proceedings (and for the payment of
which adequate provision has been
made);
(ii) servitudes, easements, restrictions,
rights-of-way and other similar
rights in real property or any
interest therein, provided the same
are not of such nature as to
materially adversely affect the use
of the property subject thereto by
the Corporation;
(iii) liens for taxes either not due and
payable or due but for which notice
of assessment has not been given;
(iv) undetermined or inchoate liens,
charges and privileges incidental to
current construction or current
operations and statutory liens,
charges, adverse claims, security
interests or encumbrances of any
nature whatsoever claimed or held by
any governmental authority that have
not at the time been filed or
registered against the title to the
asset or served upon the Corporation
pursuant to law or that relate to
obligations not due or delinquent;
(v) assignments of insurance provided to
landlords (or their mortgagees)
pursuant to the terms of any lease
and liens or rights reserved in any
lease for rent or for compliance
with the terms of such lease;
(vi) security given in the ordinary
course of the Business to any public
utility, municipality or government
or to any statutory or public
authority in connection with the
operations of the Business, other
than security for borrowed money;
(vii) the reservations in any original
grants from the Crown of any real
property or interest therein and
statutory exceptions to title that
do not materially detract from the
value of the real property concerned
or materially impair its use in the
operation of the Business; and
(viii) the Permitted Encumbrances described
in Schedule 3;
(ad) "Purchase Price" has the meaning set out in section
2.2;
(ae) "Purchased Shares" has the meaning set out in section
2.1;
(af) "Real Property" has the meaning set out in section
3.11;
(ag) "Subsidiaries" means the companies listed in Schedule
24 hereto;
(ah) "Tax Act" means the Income Tax Act (Canada), as
amended from time to time;
(ai) "Third Party" has the meaning set out in section 9.5;
(aj) "Third Party Claim" has the meaning set out in
section 9.3; and
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(ak) "Time of Closing" means 10:00 a.m. (Toronto time) on
the Closing Date or such other time on the Closing
Date as may be agreed by the parties.
Section 1.2 Currency: Unless otherwise indicated, all dollar amounts
referred to in this Agreement are expressed in Canadian funds.
Section 1.3 Sections and Headings: The division of this Agreement into
sections and the insertion of headings are for convenience of reference only
and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a section or a Schedule refers to
the specified section of or Schedule to this Agreement.
Section 1.4 Number, Gender and Persons: In this Agreement, words
importing the singular number only shall include the plural and vice versa,
words importing gender shall include all genders and words importing persons
shall include individuals, corporations, partnerships, associations, trusts,
unincorporated organizations, governmental bodies and other legal or business
entities.
Section 1.5 Accounting Principles: Any reference in this Agreement to
generally accepted accounting principles refers to generally accepted
accounting principles as approved from time to time by the Canadian Institute
of Chartered Accountants or any successor institute.
Section 1.6 Entire Agreement: This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether written or oral, including in particular and without limitation that
certain letter of intent between the Purchaser and the Corporation dated March
7, 1995. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided.
Section 1.7 Time of Essence: Time shall be of the essence of this
Agreement.
Section 1.8 Applicable Law: This Agreement shall be construed,
interpreted and enforced in accordance with, and the respective rights and
obligations of the parties shall be governed by, the laws of the Province of
Ontario and the federal laws of Canada applicable therein, and each party
hereby irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of such province and all courts competent to hear
appeals therefrom.
Section 1.9 Severability: If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such determination shall not impair or affect the
validity, legality or enforceability of the remaining provisions hereof, and
each provision is hereby declared to be separate, severable and distinct.
Section 1.10 Successors and Assigns: This Agreement shall enure to the
benefit of and shall be binding on and enforceable by the parties and, where
the context so permits, their respective successors and permitted assigns.
Subject to section 10.7, no party may assign any of its rights or obligations
hereunder without the prior written consent of the other parties.
Section 1.11 Amendment and Waivers: No amendment or waiver of any
provision of this Agreement shall be binding on any party unless consented to
in writing by such party. No waiver
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of any provision of this Agreement shall constitute a waiver of any other
provision, nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided.
Section 1.12 Schedules: The following Schedules are attached to and form
part of this Agreement:
<TABLE>
<S> <C>
Schedule 1A - The Vendors
Schedule 1B - The Principals
Schedule 2 - Audited 1994 Financial Statements
Schedule 3 - Permitted Encumbrances
Schedule 4 - Location of Assets (Intentionally Omitted)
Schedule 5 - Owned and Leased Real Property
Schedule 6 - Intellectual Property
Schedule 7 - Insurance Policies
Schedule 8 - Material Contracts (Intentionally Omitted)
Schedule 9 - Licences and Permits (to be delivered within 7 days
of Closing)
Schedule 10 - Regulatory Consents
Schedule 11 - Third Party Consents
Schedule 12 - Legal and Regulatory Proceedings (to be delivered
within 7 days of Closing)
Schedule 13 - Accounts and Attorneys
Schedule 14 - Directors and Officers
Schedule 15 - Related Party Transactions
Schedule 16 - Environmental Matters
Schedule 17 - Employee Matters
Schedule 18 - Major Customers
Schedule 19 - Product Warranties
Schedule 20 - Form of Non-Competition Agreement
Schedule 21 - Form of Employment Agreements
Schedule 22 - Form of Opinion of Vendor's Counsel
Schedule 23 - Form of Release
Schedule 24 - List of Subsidiaries
Schedule 25 - PASSB Joint Venture Agreement along with all
guarantees, letters of credit and other material
obligations of the Corporation
Schedule 26 - Schedule of Backlog of orders and services (to be
delivered within 7 days of Closing)
Schedule 27 - Leases of Motor Vehicles
Schedule 28 - Compensation (to be delivered within 7 days of
closing)
</TABLE>
ARTICLE TWO
PURCHASE AND SALE OF PURCHASED SHARES
Section 2.1 Purchase and Sale of Purchased Shares: Subject to the terms
and conditions hereof, the Vendors covenant and agree to sell, assign and
transfer to the Purchaser and the Purchaser covenants and agrees to purchase
from the Vendors an aggregate of 140 outstanding Common Shares (the "Purchased
Shares") being all of the issued and outstanding shares of the Corporation on
the Closing Date, as follows:
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(a) on the Closing Date, but with effect as of and from
the Effective Date, the Purchaser will purchase and
the Vendors shall sell (pro rata as between the
Vendors) seventy-five percent (75%) of the Purchased
Shares, being 105 Common Shares;
(b) on May 1, 1996, at the same time and place as the
Closing, the Purchaser shall purchase and the Vendors
shall sell (pro rata as between the Vendors) fifteen
percent (15%) of the Purchased Shares, being 21
Common Shares; and
(c) on May 1, 1997, at the same time and place as the
Closing, the Purchaser shall purchase and the Vendors
shall sell (pro rata as between the Vendors) the
remaining ten percent (10%) of the Purchased Shares,
being 14 Common Shares,
provided that if any closing date is not a Business Day, then the closing of
the purchase and sale of the relevant portion of the Purchased Shares shall
occur on the next ensuing Business Day.
Section 2.2 Purchase Price: The purchase price payable by the Purchaser
to the Vendors for the Purchased Shares (the "Purchase Price") shall be as
follows:
(a) for the Purchased Shares being purchased and sold on
the Closing Day, the sum of sixty thousand dollars
($60,000.00) per Common Share, or an aggregate of six
million three hundred thousand dollars
($6,300,000.00);
(b) for the Purchased Shares being purchased and sold on
May 1, 1996 (or the next ensuing Business Day, if
applicable), the audited net book value per Common
Share as shown by the Audited 1995 Financial
Statements, such net book value per share to be
determined (and written notice thereof to be given to
each of the Vendors) by the Purchaser's outside
auditors, subject to section 2.4, not less than
thirty (30) days prior to such date; and
(c) for the Purchased Shares being purchased and sold on
May 1, 1997 (or the next ensuing Business Day, if
applicable), the audited net book value per Common
Share as shown by the Audited 1996 Financial
Statements, such net book value per share to be
determined (and written notice thereof to be given to
each of the Vendors) by the Purchaser's outside
auditors, subject to section 2.4, not less than
thirty (30) days prior to such date;
all of which sums shall be payable by certified cheques or bankers' drafts in
immediately available funds to or to the order of the Vendors (each as to their
respective pro rata portions of the Purchase Price then being payable), or in
such manner as the Vendors may in writing direct not less than three (3)
Business Days prior to the Time of Closing on the Closing Dates.
Section 2.3 Option to Take Shares of the Purchaser: Notwithstanding
sections 2.2 (b) and (c), any or all of the Vendors may, if they so elect by
written notice to the Purchaser at least fourteen (14) days prior to May 1,
1996 or May 1, 1997, as applicable, elect to receive shares of common stock of
the Purchaser rather than cash for the Purchased Shares to be sold by such
Vendor or Vendors. In that event, each Vendor so electing will be entitled to
receive on the Closing Date (or on the next ensuing Business Day, as
applicable) the number of shares of common stock of the Purchaser as is
determined by dividing the aggregate portion of the Purchase Price which would
otherwise have been payable to such Vendor on such date by that number which is
determined by taking the average
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closing price quoted on the National Securities Dealers' Automated Quotation
System (or on any other stock exchange where the common stock of the Purchaser
is listed for trading, if higher than the price quoted on NASDAQ) over the ten
(10) trading days immediately prior to May 1, 1996 or May 1, 1997, as
applicable, and subtracting fifteen percent (15%) of such average closing price
for the Purchased Shares being purchased on May 1, 1996 and subtracting (10%)
of the average closing price for the Purchased Shares being purchased on May 1,
1997. Any and all such shares in the common stock of the Purchaser will be
issued to the Vendors so electing as fully paid and non-assessable but subject
to (i) any required regulatory approvals; and (ii) any applicable United States
of America and Canadian securities laws and regulations, which may make such
shares subject to resale restrictions.
Section 2.4 Disputes Concerning Net Book Value: A majority of the Vendors
may dispute the calculation by the Purchaser's outside auditors of the net book
value of any of the Common Shares, by notice in writing given to the Purchaser
within five (5) Business Days following the delivery of such auditors' opinion
as to the net book value of the Common Shares disclosed by either the Audited
1995 Financial Statements or the Audited 1996 Financial Statements (as
applicable). Unless such dispute is not resolved promptly by agreement, the
Vendors and the Purchaser may request the firm of chartered accountants
selected by the Vendors and the Purchaser's auditors to select jointly a third
firm of chartered accountants to arbitrate the dispute. If the Vendors'
chartered accountants and the Purchaser's auditors are unable to agree as to
the firm that will arbitrate the dispute, then each of them will nominate two
such firms and one of the four firms so proposed shall be chosen by lot by
counsel for the Purchaser. The firm chosen shall designate a partner (the
"Arbitrator") to determine the matter in dispute as a single arbitrator in
accordance with the Arbitrations Act (Ontario). The cost of the arbitration
shall be in the discretion of the Arbitrator. The decision of the Arbitrator
with respect to any matter in dispute (including as to all procedural matters
and any decision as to costs) shall be final and binding on the Vendors and the
Purchaser and shall not be subject to appeal by either party. The fees and
expenses of the Arbitrator shall be borne equally by the parties.
The parties hereto agree and the Vendors acknowledge that
Cedar may deduct up to $75,000 (pro rata among the Vendors) from the purchase
price for the Purchased Shares being purchased on May 1, 1996 and May 1, 1997
representing one-half of the difference in the cash surrender values of certain
insurance policies that are not reflected in the Audited 1994 Financial
Statements.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Corporation and each of the Vendors hereby severally
represents and warrants to the Purchaser as follows and acknowledge that the
Purchaser is relying on such representations and warranties in connection with
its purchase of the Purchased Shares:
Section 3.1 Organization: Such Vendor, if a corporation, is a corporation
incorporated and validly subsisting under the laws of its jurisdiction of
incorporation and has the corporate power to own or lease its property, to own
those of the Purchased Shares that it is selling hereunder, to enter into this
Agreement and to perform its obligations hereunder. The Corporation is
incorporated and validly subsisting under the laws of Ontario and has the
corporate power to own or lease its property and to carry on the Business as
now being conducted by it, to enter into this Agreement and to perform its
obligations hereunder. The Corporation is duly registered or otherwise
qualified as a
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corporation to do business in each jurisdiction in which the nature of the
Business or the property and assets owned or leased by it makes such
qualification necessary.
Section 3.2 Authorization: This Agreement has been duly authorized,
executed and delivered by such Vendor and by the Corporation and is a legal,
valid and binding obligation of each of such Vendor and the Corporation,
enforceable against such Vendor or the Corporation, as the case may be, by the
Purchaser in accordance with its terms, except only to the extent that such
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may be
granted only in the discretion of a court of competent jurisdiction.
Section 3.3 No Other Agreements to Purchase: No person other than the
Purchaser has any written or oral agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming an agreement
or option for the purchase or acquisition from such Vendor of any of the
Purchased Shares.
Section 3.4 Authorized and Issued Capital: The authorized capital of the
Corporation on the Closing Date will consist of an unlimited number of Common
Shares, of which 140 Common Shares (and no more) will have been duly issued and
be outstanding as fully paid and non-assessable. The Corporation having
redeemed prior to the Closing Date any other shares at a price of $1.00 per
share.
Section 3.5 Options: No person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement, including convertible securities, warrants or
convertible obligations of any nature, for the purchase, subscription,
allotment or issuance of any unissued shares or other securities of the
Corporation and its Subsidiaries.
Section 3.6 Ownership of Purchased Shares: Such Vendor is the beneficial
owner of record of the Purchased Shares listed opposite the name of such Vendor
in Schedule "1" hereto, with good and marketable title thereto, free and clear
of all Encumbrances and, without limiting the generality of the foregoing, none
of such Purchased Shares are subject to any voting trust, shareholder agreement
or voting agreement. Upon completion of the transactions contemplated by this
Agreement, all of the Purchased Shares listed opposite the name of such Vendor
in Schedule "1" hereto will be owned by the Purchaser as the beneficial owner
of record, with a good and marketable title thereto (except for such
Encumbrances as may have been granted by the Purchaser or such Purchased Shares
that have been sold by the Purchaser).
Section 3.7 Subsidiaries: The Corporation does not own and does not have
any agreements of any nature to acquire, directly or indirectly, any shares in
the capital of or other equity or proprietary interests in any person, firm or
corporation, and the Corporation does not have any agreements to acquire or
lease any other business operations, except for the Subsidiaries listed in
Schedule 24.
Section 3.8 No Violation: The execution and delivery of this Agreement by
such Vendor and the consummation of the transactions herein provided for will
not result in either:
(a) the breach or violation of any of the provisions of,
or constitute a default under, or conflict with or
cause the acceleration of any obligation of such
Vendor or the Corporation under:
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(i) any Contract to which the Vendor or
the Corporation is a party or by
which any of them is, or either of
their properties are, bound;
(ii) any provision of the constating
documents, by-laws or resolutions of
the board of directors (or any
committee thereof) or shareholders
of the Vendor (if a corporation) or
the Corporation;
(iii) any judgment, decree, order or award
of any court, governmental body or
arbitrator having jurisdiction over
the Vendor or the Corporation;
(iv) any licence, permit, approval,
consent or authorization held by the
Vendor or the Corporation or
necessary to the ownership of the
Purchased Shares or the operation of
the Business; or
(v) any applicable law, statute,
ordinance, regulation or rule; or
(b) the creation or imposition of any Encumbrance on any
of the Purchased Shares or any of the property or
assets of the Corporation.
Section 3.9 Business of the Corporation: The Business is the only
business operation carried on by the Corporation, and the property and assets
owned or leased by the Corporation are sufficient to carry on the Business.
During the two years preceding the date of this Agreement, there has not been
any significant interruption of operations (being an interruption of more than
one day) of the Business due to inadequate maintenance of any of the property
and assets owned and used by the Corporation. With the exception of inventory
in transit, all the tangible assets of the Corporation are situate at the
locations set out in Schedule 4.
Section 3.10 Title to Personal and Other Property: The property and assets
of the Corporation (other than the Real Property and the Leased Property) are
owned beneficially by the Corporation as the beneficial owner thereof with a
good and marketable title thereto, free and clear of all Encumbrances other
than the Permitted Encumbrances.
Section 3.11 Location of Real Property: Schedule 5 sets forth a municipal
address and a complete and accurate legal description of all the Real Property
owned by the Corporation (the "Real Property") and leased by the Corporation
(the "Leased Property"). The Corporation does not own or lease and has not
agreed to acquire or lease any real property or interest in real property other
than the Real Property and the Leased Property.
Section 3.12 Title to Real Property: The Corporation has the exclusive
right to possess, use and occupy, and has good and marketable title in fee
simple to, all the Real Property, free and clear of all Encumbrances, easements
or other restrictions of any kind other than Permitted Encumbrances. All
buildings, structures, improvements and appurtenances situated on the Real
Property or the Leased Property are in good operating condition and in a state
of good maintenance and repair, are adequate and suitable for the purposes for
which they are currently being used and the Corporation has adequate rights of
ingress and egress for the operation of the Business in the ordinary course.
None of such buildings, structures, improvements or appurtenances (or any
equipment therein), nor the operation or maintenance thereof, violates any
restrictive covenant or any provision of any federal, provincial or municipal
law, ordinance, rule or regulation, or encroaches on any property owned by
others. Without limiting the generality of the foregoing:
<PAGE> 11
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(a) the Real Property, the Leased Property, the current
uses thereof and the conduct of the Business comply
with all regulations, statutes, enactments, laws and
by-laws including, without limitation, those dealing
with zoning, parking, access, loading facilities,
landscaped areas, building construction, fire and
public health and safety and Environmental Laws; and
(b) the Permitted Encumbrances constitute all of the
Encumbrances, agreements, indentures and other
matters that affect the Real Property or the Leased
Property.
Section 3.13 Real Property Leases: The Corporation is not a party to any
lease or agreement in the nature of a lease in respect of any real property,
whether as lessor or lessee, other than the leases (the "Leases") described in
Schedule 5 relating to the Leased Property. Schedule 5 sets out the parties to
each of the Leases, their dates of execution and expiry dates, any options to
renew, the locations of the leased lands and premises and the rent payable
thereunder. Except as described in Schedule 5, the Corporation occupies the
Leased Property and has the exclusive right to occupy and use the Leased
Property. Each of the Leases is in good standing and in full force and effect
without amendment thereto, and neither the Corporation nor any other party
thereto is in breach of any covenants, conditions or obligations contained
therein. The Vendor has provided a true copy of each Lease to the Purchaser.
Section 3.14 INTENTIONALLY OMITTED
Section 3.15 INTENTIONALLY OMITTED
Section 3.16 INTENTIONALLY OMITTED
Section 3.17 Insurance: Schedule 7 sets out all insurance policies
(specifying the insurer, the amount of the coverage, the type of insurance, the
policy number and any pending claims thereunder) maintained by the Corporation
on its property and assets or personnel as of the date hereof and true and
complete copies of the most recent inspection reports, if any, received from
insurance underwriters or others as to the condition of the property and assets
of the Corporation. The Corporation is not in default with respect to any of
the provisions contained in any such insurance policy and has not failed to
give any notice or present any claim under any such insurance policy in a due
and timely fashion. The Corporation has provided to the Purchaser a true copy
of each insurance policy referred to in Schedule 7.
Section 3.18 No Expropriation: No property or asset of the Corporation has
been taken or expropriated by any federal, provincial, state, municipal or
other authority nor has any notice or proceeding in respect thereof been given
or commenced nor is the Vendor or the Corporation aware of any intent or
proposal to give any such notice or commence any such proceeding.
Section 3.19 Agreements and Commitments: Except as described on Schedules
5, 6, 8, 17, 19, and 21, the Corporation is not a party to or bound by any
Contract relating to the property, assets, Business or operations of the
Corporation, including, without limiting the generality of the foregoing:
(a) any distributor, sales, advertising, agency or
manufacturer's representative Contract;
(b) INTENTIONALLY OMITTED
<PAGE> 12
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(c) any continuing Contract for the purchase of
materials, supplies, equipment or services other than
in the ordinary course of business;
(d) any employment or consulting Contract or any other
written Contract with any officer, employee or
consultant other than oral Contracts of indefinite
hire terminable by the employer without cause on
reasonable notice;
(e) any profit sharing, bonus, stock option, pension,
retirement, disability, stock purchase, medical,
dental, hospitalization, insurance or similar plan or
agreement providing benefits to any current or former
director, officer, employee or consultant or other
than as provided for in the employment agreements
contemplated herein;
(f) any trust indenture, mortgage, promissory note, loan
agreement, guarantee or other Contract for the
borrowing of money or a leasing transaction of the
type required to be capitalized in accordance with
generally accepted accounting principles;
(g) any Contract for capital expenditures other than in
the ordinary course of business;
(h) INTENTIONALLY OMITTED
(i) any Contract pursuant to which the Corporation is a
lessor of any machinery, equipment, office furniture,
fixtures or other personal property except for the
motor vehicles listed in Schedule 27;
(j) any confidentiality, secrecy or non-disclosure
Contract (whether the Corporation is a beneficiary or
obligor thereunder) relating to any proprietary or
confidential information or any non-competition or
similar Contract other than in the ordinary course of
business;
(k) INTENTIONALLY OMITTED
(l) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any other similar
commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other person
(except for cheques endorsed for collection) other
than guarantees in favour of Subsidiaries provided in
the ordinary course of business and as provided for
in the joint venture agreement dated the 22nd day of
November 1990 among PCL Industrial Constructors Inc.,
Aker Stord a.s., Steen Contractors Ltd. and Becker
Contractors Ltd. (the "PASSB Joint Venture
Agreement");
(m) INTENTIONALLY OMITTED
(n) any Contract entered into by the Corporation other
than in the ordinary course of the Business.
The Corporation has performed all of the obligations
required to be performed by it and is entitled to all benefits under, and is
not in default or alleged to be in default in respect of, any Contract relating
to the Business to which it is a party or by which it is bound; all such
Contracts are in good standing and in full force and effect, and no event,
condition or occurrence exists that,
<PAGE> 13
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after notice or lapse of time or both, would constitute a default under any of
the foregoing. The Vendor has provided to the Purchaser a true and complete
copy of each Contract listed or described on Schedules 5, 6, 8,17 and 19 and
all amendments thereto.
Section 3.20 Compliance with Laws, Governmental Authorization: To the best
of the knowledge of the Corporation, the Corporation has complied with all
laws, statutes, ordinances, regulations, rules, judgments, decrees or orders
applicable to the Business or the Corporation, except for acts of
non-compliance which are in the aggregate not material. Schedule 9 sets out a
complete and accurate list of all licences, permits, approvals, consents,
certificates, registrations and authorizations (whether governmental,
regulatory or otherwise) (the "Licences") held by or granted to the
Corporation, and there are no other licences, permits, approvals, consents,
certificates, registrations or authorizations necessary to carry on the
Business or to own or lease any of the property or assets utilized by the
Corporation. Each Licence is valid, subsisting and in good standing and the
Corporation is not in default or breach of any Licence and, to the knowledge of
the Vendor, no proceeding is pending or threatened to revoke or limit any
Licence. The Vendor has provided a true and complete copy of each Licence and
all amendments thereto to the Purchaser.
Section 3.21 Consents and Approvals: There is no requirement to make any
filing with, give any notice to or obtain any licence, permit, certificate,
registration, authorization, consent or approval of, any governmental or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement, except for the filings,
notifications, licences, permits, certificates, registrations, consents and
approvals described in Schedule 10 or that relate solely to the identity of the
Purchaser or the nature of any business carried on by the Purchaser. There is
no requirement under any Contract relating to the Business or the Corporation
to which the Vendor or the Corporation is a party or by which it is bound to
give any notice to, or to obtain the consent or approval of, any party to such
agreement, instrument or commitment relating to the consummation of the
transactions contemplated by this Agreement except for the notifications,
consents and approvals described in Schedule 11.
Section 3.22 Financial Statements: The Audited 1994 Financial Statements
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods, are correct and complete and
present fairly the assets, liabilities (whether accrued, absolute, contingent
or otherwise) and financial condition of the Corporation as at the date thereof
and the sales, earnings and results of operations of the Corporation for the
respective period covered by the Audited 1994 Financial Statements.
Section 3.23 Books and Records: The books and records of the Corporation
fairly and correctly set out and disclose in accordance with generally accepted
accounting principles the financial position of the Corporation as at the date
hereof and all financial transactions of the Corporation have been accurately
recorded in such books and records.
Section 3.24 Absence of Changes: Since the date of the Audited 1994
Financial Statements, the Corporation has carried on the Business and conducted
its operations and affairs only in the ordinary and normal course consistent
with past practice and there has not been:
(a) any material adverse change in the condition
(financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the
Corporation;
<PAGE> 14
- 14 -
(b) any damage, destruction or loss (whether or not
covered by insurance) materially affecting the
property or assets of the Corporation;
(c) any material obligation or liability (whether
absolute, accrued, contingent or otherwise, and
whether due or to become due) incurred by the
Corporation, other than those incurred in the
ordinary and normal course and consistent with past
practice;
(d) any material payment, discharge or satisfaction of
any material Encumbrance, liability or obligation of
the Corporation (whether absolute, accrued,
contingent or otherwise, and whether due or to become
due) other than payment of accounts payable and tax
liabilities incurred in the ordinary course of
business consistent with past practice;
(e) any issuance or sale by the Corporation, or any
Contract entered into by the Corporation, for the
issuance or sale by the Corporation, of any shares in
the capital of or securities convertible into or
exercisable for shares in the capital of the
Corporation;
(f) any labour trouble materially adversely affecting the
Corporation;
(g) any licence, sale, assignment, transfer, disposition,
pledge, mortgage or granting of a security interest
or other Encumbrance on or over any property or
assets of the Corporation, other than sales of
inventory to customers in the ordinary and normal
course of the Business;
(h) any material write-down of the value of any inventory
or any write-off as uncollectible of any accounts or
notes receivable or any portion thereof of the
Corporation in amounts exceeding $100,000 in the
aggregate;
(i) any cancellation of any debts or claims or any
amendment, termination or waiver of any rights of
value to the Corporation in amounts exceeding $10,000
in each instance or $100,000 in the aggregate;
(j) any general increase in the compensation of employees
of the Corporation (including, without limitation,
any increase pursuant to any Employee Plan or
commitment), or any increase in any such compensation
or bonus payable to any officer, employee, consultant
or agent thereof or the execution of any employment
contract with any officer or employee or the making
of any loan to, or engagement in any transaction
with, any employee, officer or director of the
Corporation except as disclosed in Schedule 28;
(k) any capital expenditures or commitments of the
Corporation in excess of $50,000 in the aggregate;
(l) any forward purchase commitments in excess of the
requirements of the Corporation for normal operating
inventories or at prices higher than the current
market prices; or
<PAGE> 15
- 15 -
(m) any forward sales commitments other than in the
ordinary and normal course of the Business or any
failure to satisfy any accepted order for goods or
services.
Section 3.25 Taxes and Governmental Remittances: The Corporation has duly
filed on a timely basis all governmental reports and returns, including,
without limitation, income tax, employer health tax, commodity tax reports and
returns, customs duties and sales tax returns required to be filed by it in
relation to its business and has duly paid or remitted all taxes and
governmental fees and charges, including, without limitation, income taxes,
retail sales taxes, goods and services taxes, employee remuneration withholding
taxes and deductions, health taxes, workers' compensation charges, Canada
Pension and unemployment insurance premiums and other similar taxes and fees,
which are due and payable and provision has been made for such payments payable
for the current period for which reports and returns are not yet required to be
filed and there are no agreements, waivers or other arrangements providing for
an extension of time with respect to the filing of any report or return by, or
payment of any tax, governmental charge or deficiency and there are no actions,
suits, proceedings, investigations or claims now threatened or pending against
the Corporation in respect of taxes, governmental charges or assessments, or
any matters under discussion with any governmental authority relating to taxes,
governmental charges or assessments asserted by any such authority. The
Corporation has withheld from each payment made to any of its past or present
employees, officers or directors, and to any non-resident of Canada, the amount
of all taxes and other deductions required to be withheld therefrom and has
paid the same to the proper tax or other receiving officers within the time
required under any applicable legislation. The Corporation has remitted to the
appropriate tax authority when required by law to do so all amounts collected
by it on account of GST. The Canadian federal income tax liability of the
Corporation has been assessed by Revenue Canada for all fiscal years up to and
including the fiscal year ended December 31, 1993 and there are no agreements,
waivers or other arrangements providing for an extension of time with respect
to the filing of any tax return by, or payment of any tax, governmental charge
or deficiency against, the Corporation. The Vendor has provided to the
Purchaser a true copy of all tax returns filed by the Corporation in respect of
the five last completed fiscal years of the Corporation as well as a tax return
filed by the Corporation for the year ended December 31, 1994.
Section 3.26 Litigation: Except as described in Schedule 12, there are no
actions, suits or proceedings (whether or not purportedly on behalf of the
Corporation) pending or, to the knowledge of such Vendor or the Corporation,
after due inquiry, threatened against or affecting, the Corporation at law or
in equity, or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or by or before an arbitrator or
arbitration board. Neither the Vendor nor the Corporation is aware of any
ground on which any such action, suit or proceeding might be commenced with any
reasonable likelihood of success.
Section 3.27 Residency: Such Vendor is a resident of Canada for the
purposes of the Tax Act.
Section 3.28 Accounts and Attorneys: Schedule 13 sets forth a true and
complete list showing:
(a) the name of each bank, trust company or similar
institution in which the Corporation has accounts or
safe deposit boxes, the number or designation of each
such account and safe deposit box and the names of
all persons authorized to draw thereon or to have
access thereto; and
<PAGE> 16
- 16 -
(b) the name of each person, firm, corporation or
business organization holding a general or special
power of attorney from the Corporation and a summary
of the terms thereof.
Section 3.29 Directors and Officers: Schedule 14 sets forth the names and
titles of all the officers and directors of the Corporation.
Section 3.30 Dividends: Since the date of the Audited 1994 Financial
Statements the Corporation has not, directly or indirectly, declared or paid
any dividends or declared or made any other distribution on any of its shares
of any class and has not, directly or indirectly, redeemed, purchased or
otherwise acquired any of its outstanding shares of any class or agreed to do
so.
Section 3.31 Non-Arm's Length Transactions: The Corporation has not since
the date of the Audited 1994 Financial Statements made any payment or loan to,
or borrowed any moneys from or is otherwise indebted to, any officer, director,
employee, shareholder or any other person not dealing at arm's length with the
Corporation (within the meaning of the Tax Act), except as disclosed in the
Audited 1994 Financial Statements and in Schedule 15 and except for usual
officer, director and employee reimbursements as compensation paid in the
ordinary and normal course of the Business. Except for Contracts of employment,
the Corporation is not a party to any Contract with any officer, director,
employee, shareholder or any other person not dealing at arm's length with the
Corporation (within the meaning of the Tax Act). No officer, director or
shareholder of the Corporation and no entity that is an Affiliate or Associate
of one or more of such individuals:
(a) owns, directly or indirectly, any interest in (except
for shares representing less than one per cent of the
outstanding shares of any class or series of any
publicly traded company), or is an officer, director,
employee or consultant of, any person which is, or is
engaged in business as, a competitor of the Business
or the Corporation or a lessor, lessee, supplier,
distributor, sales agent or customer of the Business
or the Corporation;
(b) owns, directly or indirectly, in whole or in part,
any property that the Corporation uses in the
operation of the Business; or
(c) has any cause of action or other claim whatsoever
against, or owes any amount to, the Corporation in
connection with the Business, except for any
liabilities reflected in the Audited Financial
Statements and claims in the ordinary and normal
course of business, such as for accrued vacation pay
and accrued benefits under the Employee Plans.
Section 3.32 Environmental:
(a) For the purpose of this Section 3.32:
(i) "Governmental Authority" means any federal,
provincial, state, regional or municipal
political subdivision or agency thereof and
any entity or person exercising executive,
legislative, judicial, regulatory or
administrative functions of, or pertaining
to, government;
<PAGE> 17
- 17 -
(ii) "Hazardous Substance" means any substance or
material that is prohibited, controlled or
regulated by any Governmental Authority
including, without limitation, any
contaminant, pollutant, dangerous substance,
toxic substance, designated substance,
controlled product, hazardous waste, subject
waste, hazardous material, dangerous good or
petroleum, its derivatives, by-products or
other hydrocarbons, all as defined in or
pursuant to any Laws, Regulations, or Orders;
(iii) "Laws" means all applicable laws, including
statutes or ordinates of any Governmental
Authority in effect on the date thereof,
relating to environmental, occupational
health and safety, workers' compensation or
transportation matters;
(iv) "Notice" means any written citation, Order,
claim, litigation, investigation, proceeding,
judgement, letter or other written
communication actual or, to the best of the
knowledge and belief of the Vendors,
threatened, from any personal, including
Governmental Authority;
(v) "Orders" means all applicable orders,
decisions, directives, directions or the like
rendered in writing by any Governmental
Authority as in effect on the date thereof;
(vi) "Permits" means all permits, licenses,
certificates, approvals, authorizations,
registrations or the like issued pursuant to
any Laws or Regulations by any Governmental
Authority;
(vii) "Regulations" means all rules, regulations or
the like as in effect on the date thereof
promulgated under or pursuant to any Laws;
(viii) "Release" includes release, discharge, add,
deposit, emit, spill, leak, pump, pour,
empty, inject, escape, leach, migrate,
disperse, dispose or dump; and
(ix) "Remedial Action" means any remediation,
clean-up, alteration or other corrective
action or work relating to the operations of
the Business;
(b) Except as described in Schedule 16, the Business has
been operated and the Corporation has been and is in
compliance in all material respects with all Laws,
Regulations, Orders and Permits and neither such
Vendor nor the Corporation has ever received any
Notice of material non-compliance or knows of any
facts which could give rise to a Notice of material
non-compliance under any Laws, Regulations, Orders or
Permits;
(c) The Corporation has obtained all Permits required for
the operation of the Business. Each Permit is valid,
subsisting and in good standing and the Corporation
is not in default or breach of any Permit and no
proceeding is pending, or threatened, to revoke or
limit any Permit;
(d) Neither such Vendor nor the Corporation has ever used
any of the assets of the Corporation, or permitted
them to be used, to generate, manufacture, refine,
treat,
<PAGE> 18
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transport, store, handle, dispose, transfer, produce
or process Hazardous Substances, except in material
compliance with all existing Laws, Regulations,
Orders and Permits;
(e) Such Vendor and the Corporation have never received
any notice of, nor been prosecuted for an offence
alleging, non-compliance with any Laws, Regulations,
Orders or Permits and neither such Vendor nor the
Corporation has settled any allegation on
noncompliance short of prosecution. There are no
orders or directions relating to environmental
matters requiring any work, repairs, construction or
capital expenditures with respect to the Business or
any property of the Corporation, nor has the
Corporation received notice of any of the same;
(f) The Corporation has not caused or permitted, nor does
it have any knowledge of, the Release, in any manner
whatsoever, of any Hazardous Substance on or from any
of its properties (including any of the Leased
Property) or assets or any property or facility that
it previously owned or leased, or any such release on
or from a facility owned or operated by third parties
but with respect to which the Corporation is or may
reasonably be alleged to have liability;
(g) All Hazardous Substances and all other wastes and
other materials and substances ever used in whole or
in part by the Corporation or resulting from the
Business have been disposed of, treated and stored in
compliance with all Environmental Laws; and
(h) There have been no claims or any other legal or
administrative actions, actual or, to the best of
such Vendors' knowledge and belief, pending or
threatened and which could or did result in an action
or claim against the Corporation or such Vendor by
any of the employees or former employees of the
Business or their respective dependents, heirs or
legal personal representatives under any applicable
Laws, Regulations or Orders except as listed and
described in Schedule 16.
Section 3.33 Employee Plans: Schedule 17 identifies each retirement,
pension, bonus, stock purchase, profit sharing, stock option, deferred
compensation, severance or termination pay, insurance, medical, hospital,
dental, vision care, drug, sick leave, disability, salary continuation, legal
benefits, unemployment benefits, vacation, incentive or other compensation plan
or arrangement or other employee benefit that is maintained or otherwise
contributed to, or required to be contributed to, by the Corporation for the
benefit of employees or former employees of the Corporation (individually a
"Plan" and collectively the "Plans"). With respect to the Plans, the
Corporation has delivered to the Purchaser copies, as amended to the date
hereof, of: (i) the Plan documents and, where applicable, related trust and
other funding agreements, and any related agreements which are in writing, all
written interpretations thereof and written descriptions thereof which have
been distributed to employees; (ii) existing summary plan descriptions; (iii)
Revenue Canada Customs, Excise and Taxation, Pension Commission of Ontario and
other regulatory authority letters relating to each Plan, where applicable;
(iv) copies of the most recent actuarial evaluations filed with the regulatory
authorities in respect of the Pension Plans; (v) to the extent required to be
filed, the most recent Annual Information Return (Form 2 and accompanying
Schedules for each Plan and applicable financial statements) and Statement of
Investment Policies and Goals with accompanying Investment Policy Return as
filed with the Pension Commission of Ontario; (v) audited financial statements,
if any; and (vi) a description of any Plan which is not in writing, and the
information contained in such documents and descriptions is true and correct in
all material
<PAGE> 19
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respects. No material changes have occurred which would affect the actuarial
or financial statements required to be provided by the Corporation to the
Purchaser hereunder. Each Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Employee Plan. Except as
described in Schedule 17:
(a) All of the Pension Plans are fully funded on a going
concern basis, a solvency basis and an accounting
basis, in accordance with the provisions of such
Pension Plans, Applicable Legislation, generally
accepted accounting rules and generally accepted
actuarial practice;
(b) There have been no investments of "pension fund"
assets contrary to Applicable Legislation nor has
there been any transfer of assets or other payment of
money out of a "pension fund" other than in
accordance with Applicable Legislation. All
investments and transfers of pension fund assets have
been in full compliance with the terms of the Pension
Plan and related trust or other funding agreements;
(c) The Corporation does not maintain any Plan providing
post-retirement benefits other than pension benefits
provided under the Pension Plans registered in
accordance with Applicable Legislation. The
Corporation is not currently liable for
post-retirement benefits with respect to the Business
under any Plan which has been wound up and is not now
maintained by the Corporation;
(d) No notice has been received by the Corporation of any
complaints or other proceedings of any kind involving
the Corporation or, to the Vendor's or the
Corporation's knowledge, any of the employees of the
Corporation before any pension board or committee
relating to any Plan or to the Corporation;
(e) There is no agreement affecting any of the Plans that
requires or permits a retroactive increase in
premiums or payments due thereunder;
(f) The Corporation shall continue to administer each of
the Plans in accordance with their terms and all
Applicable Legislation; and
(g) The assets of each Plan are at least equal to the
liabilities of such Plans based on the actuarial
assumptions utilized in the most recent valuation
performed by the actuary for such Plan, and neither
the Purchaser nor any of its Associates or Affiliates
(other than the Corporation) will incur any liability
with respect to any Plan as a result of the
transactions contemplated by this Agreement.
Section 3.34 Collective Agreements: Except as described in Schedule 17, the
Corporation has not made any Contracts with any labour union or employee
association nor made commitments to or conducted negotiations with any labour
union or employee association with respect to any future agreements and, except
as set out in Schedule 17, neither the Vendor nor the Corporation is aware of
any current attempts to organize or establish any labour union or employee
association with respect to any employees of the Corporation, nor is there any
certification of any such union with regard to a bargaining unit.
<PAGE> 20
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Section 3.35 Employees: Schedule 17 contains a complete and accurate list
of the names of all individuals who are salaried employees of the Corporation
specifying the length of service, age, title, rate of salary and commission
structure for each such employee.
No notice has been received by the Corporation of any
complaint filed by any of the employees against the Corporation claiming that
the Corporation has violated the Employment Standards Act (Ontario) or the
Human Rights Code (Ontario) (or any applicable employee or human rights or
similar legislation in the other jurisdictions in which the Business is
conducted or the Corporation operates) or of any complaints or proceedings of
any kind involving the Corporation or, to such Vendor's and the Corporation's
knowledge, after due inquiry, any of the employees of the Corporation before
any labour relations board, except as disclosed in Schedule 17. There are no
outstanding orders or charges against the Corporation under the Occupational
Health and Safety Act (Ontario) (or any applicable health and safety
legislation in the other jurisdictions in which the Business is conducted). All
levies, assessments and penalties made against the Corporation pursuant to the
Workers' Compensation Act (Ontario) (and any applicable workers' compensation
legislation in the other jurisdictions in which the Business is conducted) have
been paid by the Corporation and the Corporation has not been reassessed under
any such legislation during the past years.
Section 3.36 Employee Accruals: All accruals for unpaid vacation pay,
premiums for unemployment insurance, health premiums, Canada Pension Plan
premiums, accrued wages, salaries and commissions and employee benefit plan
payments have been reflected in the books and records of the Corporation.
Section 3.37 Customers and Suppliers: Schedule 18 sets out the major
customers of the Corporation (being those customers of the Corporation
accounting for more than 5% of sales for the period 1993 to December 31, 1994
and there has been no termination or cancellation of, and no modification or
change in, the Corporation's business relationship with any major customer or
group of major customers. The Corporation has no reason to believe that the
benefits of any relationship with any of the major customers or suppliers of
the Corporation will not continue after the Closing Date in substantially the
same manner as prior to the date of the Agreement.
Section 3.38 Product Warranties: Schedule 19 is a complete list of all
express, written warranties given to purchasers of products or services
supplied by the Corporation.
Section 3.39 Attached as Schedule 25 hereto is a true copy of the PASSB
Joint Venture Agreement and any amendments thereto along with all guarantees,
letters of credit and other material obligations of the Corporation under the
PASSB Joint Venture Agreement. Except as disclosed in Schedule 25, the
Corporation has fulfilled its material obligations and is not in default under
the PASSB Joint Venture Agreement.
Section 3.40 Attached as Schedule 26 hereto is an estimate of the backlog
of orders and services contracted for by the Corporation. Attached as Schedule
27 hereto is a list of the leases for motor vehicles entered into by the
Corporation.
Section 3.41 Full Disclosure: Neither this Agreement nor any document to be
delivered pursuant to this Agreement by such Vendor or the Corporation nor any
certificate, report, statement or other document furnished by such Vendor or
the Corporation in connection with the negotiation of this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading.
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There has been no event, transaction or information that has come to the
attention of such Vendor or the Corporation that has not been disclosed to the
Purchaser in writing that could reasonably be expected to have a material
adverse effect on the assets, business, earnings, prospects, properties or
condition (financial or otherwise) of the Corporation.
Any reference to the Corporation for the purposes of
the representations and warranties provided for in this Article III shall mean
the Corporation on a consolidated basis and shall therefore include the
Subsidiaries.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor as follows
and acknowledges and confirms that the Vendor is relying on such
representations and warranties in connection with the sale by the Vendor of the
Purchased Shares:
Section 4.1 Organization: The Purchaser is a corporation incorporated and
validly subsisting under the laws of the State of Delaware and it has the
corporate power to enter into and deliver this Agreement and perform its
obligations hereunder.
Section 4.2 Investment Canada: The Purchaser is a NAFTA Investor within
the meaning of the Investment Canada Act (Canada).
Section 4.3 No Violation: The execution and delivery of this Agreement by
the Purchaser and the consummation of the transactions provided for herein will
not result in the violation of, or constitute a default under, or conflict with
or cause the acceleration of any obligation of the Purchaser under:
(a) any Contract to which the Purchaser is a party or by
which it is bound;
(b) any provision of the constating documents or by-laws
or resolutions of the board of directors (or any
committee thereof) or shareholders of the Purchaser;
(c) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction
over the Purchaser; or
(d) any applicable, law, statute, ordinance, regulation
or rule.
Section 4.4 Authorization: This Agreement has been duly authorized,
executed and delivered by the Purchaser and is a legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser by the Vendor in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the enforcement of rights of creditors
generally and except that equitable remedies may only be granted in the
discretion of a court of competent jurisdiction.
Section 4.5 Consents and Approvals: There is no requirement for the
Purchaser to make any filing with, give any notice to or obtain any licence,
permit, certificate, registration, authorization, consent or approval of, any
government or regulatory authority as a condition to the lawful consummation of
the transactions contemplated by this Agreement except for the issuance of
shares of Common Stock for the remaining 25% of the Purchased Shares. In this
regard, the Purchaser covenants and
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agrees to make application to the appropriate regulatory authority immediately
upon being notified by a Vendor that it has elected to receive shares of common
stock pursuant to Section 2.3.
ARTICLE FIVE
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 5.1 Survival of Representations and Warranties of the Vendors: To
the extent that they have not been fully performed at or prior to the Time of
Closing, the covenants, representations and warranties of each of the Vendors
contained in this Agreement and any agreement, instrument, certificate or other
document executed or delivered pursuant hereto shall survive the closing of the
transactions contemplated hereby until the third anniversary of the Closing
Date and, notwithstanding such closing, nor any investigation made by or on
behalf of the Purchaser, shall continue in full force and effect for the
benefit of the Purchaser during such period, except that a claim for any breach
of any of the representations and warranties contained in this Agreement or in
any agreement, instrument, certificate or other document executed or delivered
pursuant hereto involving fraud or fraudulent misrepresentation may be made at
any time following the Closing Date, subject only to applicable limitation
periods imposed by law.
Section 5.2 Expiry of the Representations and Warranties of the Purchaser:
The representations and warranties of the Purchaser contained in this Agreement
or in any document, certificate or undertaking given pursuant hereto shall
terminate on the third anniversary of the Closing Date.
ARTICLE SIX
COVENANTS
Section 6.1 Delivery of Books and Records: At the Time of Closing on the
Closing Date there shall be delivered to the Purchaser, by the Vendors and the
Corporation, all of the books and records of and relating to the Corporation
and the Business. The Purchaser agrees that it will preserve the books and
records so delivered to it for a period of six years from the Closing Date, or
for such longer period as is required by any applicable law, and will permit
the Vendors or their respective authorized representatives reasonable access
thereto in connection with the affairs of the Vendors relating to such books
and records, but the Purchaser shall not be responsible or liable to the
Vendors for or as a result of any accidental loss or destruction of or damage
to any such books or records.
Section 6.2 Conduct Prior to Closing: Without in any way limiting any
other obligations of the Vendors and the Corporation hereunder, during the
period from the date hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course. The Vendors
shall cause the Corporation to conduct, and the
Corporation shall conduct, the Business and the
operations and affairs of the Corporation only in the
ordinary and normal course of business consistent
with past practice, and the Corporation shall not,
without the prior written consent of the Purchaser,
enter into any transaction or refrain from doing any
action that, if effected before the date of this
Agreement, would constitute a breach of any
representation, warranty, covenant or other
obligation of the Vendors or the Corporation
contained herein, and provided further that the
Vendors shall not enter into any material supply
arrangements relating to the Corporation or make any
material decisions or enter into any material
Contracts with respect to the Corporation
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without the consent of the Purchaser, which consent
shall not be unreasonably withheld;
(b) Continue Insurance. The Vendors shall cause the
Corporation to continue, and the Corporation shall
continue, to maintain in full force and effect all
policies of insurance or renewals thereof now in
effect, shall take out, at the expense of the
Purchaser, such additional insurance as may be
reasonably requested by the Purchaser and shall give
all notices and present all claims under all policies
of insurance in a due and timely fashion;
(c) Regulatory Consents. The Vendors shall use their best
efforts to obtain or cause the Corporation to obtain,
and the Corporation shall use its best efforts to
obtain, at or prior to the Time of Closing on the
Closing Date, from all appropriate federal,
provincial, state, municipal or other governmental or
regulatory bodies, the licences, permits, consents,
approvals, certificates, registrations and
authorizations described in Schedule 10;
(d) Contractual Consents. The Vendors shall use their
best efforts to give or obtain or cause the
Corporation to give or obtain, and the Corporation
shall use its best efforts to obtain, the notices,
consents and approvals described in Schedule 11;
(e) Preserve Goodwill. The Vendors shall use their best
efforts to preserve, and cause the Corporation to
preserve intact, and the Corporation shall use its
best efforts to preserve intact, the Business and the
property, assets, operations and affairs of the
Corporation and to carry on the Business and the
affairs of the Corporation as currently conducted,
and to promote and preserve for the Purchaser the
goodwill of suppliers, customers and others having
business relations with the Corporation;
(f) Discharge Liabilities. The Vendors shall cause the
Corporation to pay and discharge, and the Corporation
shall pay and discharge, the liabilities of the
Corporation in the ordinary course in accordance and
consistent with the previous practice of the
Corporation, except those contested in good faith by
the Corporation;
(g) Corporate Action. The Vendors shall use their best
efforts to take and cause the Corporation to take,
and the Corporation shall use its best efforts to
take, all necessary corporate action, steps and
proceedings to approve or authorize, validly and
effectively, the execution and delivery of this
Agreement and the other agreements and documents
contemplated hereby and to complete the transfer of
the Purchased Shares to the Purchaser and to cause
all necessary meetings of directors and shareholders
of any corporate Vendors and the Corporation to be
held for such purpose; and
(h) Best Efforts. The Vendors shall use their best
efforts to satisfy the conditions contained in
section 7.1.
Section 6.3 Delivery of Documents: The Vendors shall deliver to the
Purchaser all necessary transfers, assignments and other documentation
reasonably required to transfer the Purchased Shares to the Purchaser with a
good and marketable title, free and clear of all Encumbrances, except for
Permitted Encumbrances.
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Section 6.4 Delivery of Vendors' and Corporation's Corporate and Closing
Documentation: Each corporate Vendor and the Corporation shall deliver to the
Purchaser two copies, certified by a senior officer of such Vendor and the
Corporation, respectively, dated as of the Closing Date, of the constating
documents and bylaws of each of the corporate Vendors and the Corporation and
of the resolutions of each of the corporate Vendors and the Corporation
authorizing the execution, delivery and performance by such Vendors and the
Corporation of this Agreement and any documents to be provided by either of
them pursuant to the provisions hereof. The Vendors shall also execute and
deliver or cause to be executed and delivered to the Purchaser two copies of
such other documents relevant to the closing of the transaction contemplated
hereby as the Purchaser, acting reasonably, may request.
Section 6.5 Delivery of Purchaser's Closing Documentation: The Purchaser
shall deliver to the Vendors two copies, certified by a senior officer of the
Purchaser, dated as of the Closing Date, of its constating documents and
by-laws and of the resolution authorizing the execution, delivery and
performance by the Purchaser of this Agreement and any documents to be provided
by it pursuant to the provisions hereof. The Purchaser shall also execute and
deliver or cause to be executed and delivered two copies of each of such other
documents relevant to the closing of the transactions contemplated hereby as
the Vendors, acting reasonably, may request.
ARTICLE SEVEN
CONDITIONS OF CLOSING
Section 7.1 Conditions of Closing in Favour of the Purchaser: The sale and
purchase of the Purchased Shares is subject to the following terms and
conditions for the exclusive benefit of the Purchaser, to be fulfilled or
performed at or prior to the Time of Closing on the Closing Date (or on the
next ensuing Business Day, as applicable):
(a) Representations and Warranties. The representations
and warranties of each of the Vendors contained in
this Agreement shall be true and correct in all
material respects at each such Time of Closing, with
the same force and effect as if such representations
and warranties were made at and as of such time, and
certificates of each Vendor and of the President and
Vice-President, Finance of the Corporation dated the
Closing Date to that effect shall have been delivered
to the Purchaser, such certificates to be in form and
substance satisfactory to the Purchaser, acting
reasonably;
(b) Covenants. All of the terms, covenants and conditions
of this Agreement to be complied with or performed by
the Vendors and the Corporation at or before the Time
of Closing shall have been complied with or performed
in all material respects and certificates of each of
the Vendors and the President and the Vice-President,
Finance of the Corporation dated the Closing Date to
that effect shall have been delivered to the
Purchaser, such certificates to be in form and
substance satisfactory to the Purchaser, acting
reasonably;
(c) Regulatory Consents. There shall have been obtained,
from all appropriate federal, provincial, municipal
or other governmental or administrative bodies, such
licences, permits, consents, approvals, certificates,
registrations and authorizations as are required to
be obtained by the Vendors to permit the change of
ownership of the
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Purchased Shares contemplated hereby including,
without limitation, those described in Schedule 10;
(d) Contractual Consents. The Vendors shall have given or
obtained the notices, consents and approvals
described in Schedule 11, in each case in form and
substance satisfactory to the Purchaser, acting
reasonably;
(e) Material Adverse Change. There shall have been no
material adverse changes in the condition (financial
or otherwise), assets, liabilities, operations,
earnings, business or prospects of the Corporation
since the date of the Audited 1994 Financial
Statements;
(f) No Action or Proceeding. No legal or regulatory
action or proceeding shall be pending or threatened
by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Shares
contemplated hereby;
(g) No Material Damage. No material damage by fire or
other hazard to the whole or any material part of the
property or assets of the Corporation shall have
occurred from the date hereof to the Time of Closing;
(h) Legal Matters. All actions, proceedings, instruments
and documents required to implement this Agreement,
or instrumental thereto, and all legal matters
relating to the purchase of the Purchased Shares,
shall have been approved as to form and legality by
Smith, Lyons, Torrance, Stevenson & Mayer, Barristers
and Solicitors, counsel for the Purchaser, acting
reasonably;
(i) Non-Competition Agreements. The Vendors listed in
Schedule 20 and the individuals holding de facto or
de jure control of any of such Vendors which are
corporations, shall have executed and delivered to
the Purchaser a non-competition agreement in the form
of the non-competition agreement contemplated in this
Agreement or in the Employment Agreement.
(j) Employment Agreements. The Vendors listed in
Schedule 21 shall have executed and delivered to the
Purchaser employment agreements in the form of the
employment agreements annexed hereto as Schedule 21;
(k) Legal Opinion. The Corporation (at the cost of the
Vendors) shall have delivered to the Purchaser a
favourable opinion of Stikeman, Elliott, counsel to
the Corporation, in the form annexed hereto as
Schedule 22;
(l) Resignation of Directors and Officers. Such directors
and officers of the Corporation as the Purchaser may
specify shall have resigned in favour of nominees of
the Purchaser effective as of the Time of Closing on
the Closing Date; and
(m) Release by Vendors, Directors and Officers. The
Vendors and such directors and officers of the
Corporation as the Purchaser may specify shall have
executed and delivered, at the Time of Closing on the
Closing Date, releases in favour of the Corporation
in the form annexed hereto as Schedule 23.
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If any of the conditions contained in this section
7.1 shall not be performed or fulfilled at or prior to the Time of Closing on
the Closing Date (or on the first or second anniversary thereof, as applicable)
to the satisfaction of the Purchaser, acting reasonably, the Purchaser may, by
notice to the Vendors, terminate this Agreement and the obligations of the
Vendors and the Purchaser then remaining under this Agreement, other than the
obligations contained in sections 10.3, 10.4 and 10.5, provided that the
Purchaser may also bring an action pursuant to Article IX against the Vendors,
or any of them as may be appropriate, for damages suffered by the Purchaser
where the nonperformance or non-fulfilment of the relevant condition is as a
result of a breach of covenant, representation or warranty by any or all of the
Vendors. Any such condition may be waived in whole or in part by the Purchaser
without prejudice to any claims it may have for breach of covenant,
representation or warranty.
Section 7.2 Conditions of Closing in Favour of the Vendors: The purchase
and sale of the Purchased Shares is subject to the following terms and
conditions for the exclusive benefit of the Vendors, to be fulfilled or
performed at or prior to the Time of Closing on the Closing Date:
(a) Representations and Warranties. The representations
and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material
respects at the Time of Closing on the Closing Date,
with the same force and effect as if such
representations and warranties were made at and as of
such time, and a certificate of the President and the
Vice-President, Finance of the Purchaser dated the
Closing Date to that effect shall have been delivered
to the Vendors, such certificate to be in form and
substance satisfactory to the Vendors, acting
reasonably;
(b) Covenants. All of the terms, covenants and
conditions of this Agreement to be complied with or
performed by the Purchaser at or before the Time of
Closing on the Closing Date shall have been complied
with or performed in all material respects and a
certificate of the President or the Chairman of the
Purchaser dated the Closing Date to that effect shall
have been delivered to the Vendors, such certificate
to be in form and substance satisfactory to the
Vendors, acting reasonably;
(c) Consulting Agreements. The Corporation shall have
executed and delivered to the Vendors listed in
Schedule 21 management consulting agreements in the
form of the agreements annexed hereto as Schedule 21.
(d) No Action or Proceeding. No legal or regulatory
action or proceeding shall be pending or threatened
by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Shares
contemplated hereby; and
(e) Legal Matters. All actions, proceedings, instruments
and documents required to implement this Agreement,
or instrumental thereto, shall have been approved as
to form and legality by Stikeman, Elliott, counsel
for the Vendors, acting reasonably.
If any of the conditions contained in this section
7.2 shall not be performed or fulfilled at or prior to the Time of Closing on
the Closing Date to the satisfaction of the Vendors, acting reasonably, all
(but not less than all) of the Vendors may, by notice to the Purchaser,
terminate this Agreement and the obligations of the Vendors and the Purchaser
then remaining under this Agreement, other than the obligations contained in
sections 10.3, 10.4 and 10.5, provided that the Vendors may also bring an
action pursuant to Article IX against the Purchaser for damages
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suffered by the Vendors where the nonperformance or non-fulfilment of the
relevant condition is as a result of a breach of covenant, representation or
warranty by the Purchaser. Any such condition may be waived in whole or in part
by the Vendors without prejudice to any claims it may have for breach of
covenant, representation or warranty.
ARTICLE EIGHT
CLOSING ARRANGEMENTS
Section 8.1 Place of Closing: All closings of the transactions
contemplated by this Agreement shall take place at the Time of Closing on the
Closing Date, the first or second anniversary thereof, or the next ensuing
Business Days, as applicable, at the offices of Messrs. Smith, Lyons, Torrance,
Stevenson & Mayer, local Ontario agents for counsel for the Purchaser, Toronto,
Ontario or such other location as the parties agree.
Section 8.2 Transfer: At each applicable Time of Closing, upon fulfilment
of all the conditions set out in Article VII that have not been waived in
writing by the Purchaser or the Vendors, the Vendors shall deliver to the
Purchaser certificates respecting all the Purchased Shares which are then being
purchased and sold, duly endorsed in blank for transfer, with all exigible
security transfer taxes paid, and will cause transfers of such shares to be
duly and regularly recorded in the name of the Purchaser, or its nominee(s),
and will cause a meeting of the board of directors of the Corporation to be
held, at which the directors and officers of the Corporation specified by the
Purchaser will resign in favour of nominees of the Purchaser whereupon, subject
to all other terms and conditions hereof being complied with, payment of the
portion of the Purchase Price which is then payable shall be paid and
satisfied, and/or any shares in the capital stock of the Purchaser which any of
the Vendors have elected to receive rather than cash shall be issued, in the
manner provided in Article II.
Section 8.3 Further Assurances: Each party to this Agreement covenants and
agrees that, from time to time subsequent to the Closing Date, it will, at the
request and expense of the requesting party, execute and deliver all such
documents, including, without limitation, all such additional conveyances,
transfers, consents and other assurances and do all such other acts and things
as any other party hereto, acting reasonably, may from time to time request be
executed or done in order to better evidence or perfect or effectuate any
provision of this Agreement or of any agreement or other document executed
pursuant to this Agreement or any of the respective obligations intended to be
created hereby or thereby.
ARTICLE NINE
INDEMNIFICATION
Section 9.1 Indemnification by the Vendors: Each of the Vendors and, in
the case of each of the Vendors that is a corporation, the Principal thereof
listed in Schedule 1B opposite the name of such corporate Vendor severally
agrees to indemnify and save harmless the Purchaser from all Losses suffered or
incurred by the Purchaser as a result of or arising directly or indirectly out
of or in connection with:
(a) any breach by such Vendor or the Corporation of or
any inaccuracy of any representation or warranty of
such Vendor contained in this Agreement or in any
agreement, certificate or other document delivered
pursuant hereto (provided that the Vendor shall not
be required to indemnify or save harmless the
Purchaser in respect
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of any breach or inaccuracy of any representation or
warranty unless the Purchaser shall have provided
notice to the Vendor in accordance with section 9.3
on or prior to the expiration of the applicable time
period related to such representation and warranty
set out in section 5.1);
(b) any breach or non-performance by such Vendor or the
Corporation of any covenant to be performed by it
that is contained in this Agreement or in any
agreement, certificate or other document delivered
pursuant hereto;
(c) all debts, liabilities or contracts whatsoever
(whether accrued, absolute, contingent or otherwise)
of the Corporation existing at the Time of Closing on
the Closing Date, including any liabilities for
federal, provincial, sales, excise, income, corporate
or other taxes of the Corporation for any period up
to and including the Time of Closing on the Closing
Date, and not disclosed on, provided for or included
in the balance sheets forming part of the Audited
1994 Financial Statements, except those liabilities:
(i) disclosed in this Agreement or any Schedule
hereto; or
(ii) accruing or incurred subsequent to the date
of Audited 1994 Financial Statements in the
ordinary course of the Business; or
(iii) accruing or incurred due to any action taken
by the Corporation after the Closing Date,
including without limitation the changing of
the Fiscal Year End of the Corporation or
the changing of the method or reporting
income by the Corporation.
In the case of the Vendors being liable to indemnify
the Purchaser pursuant to paragraph 9.1(c) above as a
result of any tax reassessment, such liability shall
be net of any consequential reassessment in any
other taxation year (including a taxation year
subsequent to the Time of Closing on the Closing
Date) that reduces the taxable income in that other
year by the amount of the taxable income so
reassessed in the period up to and including the Time
of Closing on the Closing Date.
Section 9.2 Indemnification by the Purchaser: The Purchaser agrees to
indemnify and save harmless the Vendors from all Losses suffered or incurred by
the Vendors, or any of them, as a result of or arising directly or indirectly
out of or in connection with:
(a) any breach by the Purchaser of or any inaccuracy of
any representation or warranty contained in this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant
hereto; and
(b) any breach or non-performance by the Purchaser of any
covenant to be performed by it that is contained in
this Agreement or in any agreement, certificate or
other document delivered pursuant hereto.
Section 9.3 Notice of Claim: In the event that a party (the "Indemnified
Party") shall become aware of any claim, proceeding or other matter (a "Claim")
in respect of which another party (the
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"Indemnifying Party") agreed to indemnify the Indemnified Party pursuant to
this Agreement, the Indemnified Party shall promptly give written notice
thereof to the Indemnifying Party. Such notice shall specify whether the Claim
arises as a result of a claim by a person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a "Direct Claim"),
and shall also specify with reasonable particularity (to the extent that the
information is available) the factual basis for the Claim and the amount of the
Claim, if known.
If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any Claim in time to contest
effectively the determination of any liability susceptible of being contested,
the Indemnifying Party shall be entitled to set off against the amount claimed
by the Indemnified Party the amount of any Losses incurred by the Indemnifying
Party resulting from the Indemnified Party's failure to give such notice on a
timely basis.
Section 9.4 Direct Claims: With respect to any Direct Claim, following
receipt of notice from the Indemnified Party of the Claim, the Indemnifying
Party shall have 60 days to make such investigation of the Claim as is
considered necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate the Claim,
together with all such other information as the Indemnifying Party may
reasonably request. If both parties agree at or prior to the expiration of such
60 day period (or any mutually agreed upon extension thereof) to the validity
and amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the Claim, failing which the
matter shall be referred to binding arbitration in such manner as the parties
may agree or shall be determined by a court of competent jurisdiction.
Section 9.5 Third Party Claims: With respect to any Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim and, in
such event, the Indemnifying Party shall reimburse the Indemnified Party for
all the Indemnified Party's out-of-pocket expenses as a result of such
participation or assumption. If the Indemnifying Party elects to assume such
control, the Indemnified Party shall have the right to participate in the
negotiation, settlement or defence of such Third Party Claim and to retain
counsel to act on its behalf, provided that the fees and disbursements of such
counsel shall be paid by the Indemnified Party unless the Indemnifying Party
consents to the retention of such counsel or unless the named parties to any
action or proceeding include both the Indemnifying Party and the Indemnified
Party and a representation of both the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate due to the actual or potential
differing interests between them (such as the availability of different
defences). If the Indemnifying Party, having elected to assume such control,
thereafter fails to defend the Third Party Claim within a reasonable time, the
Indemnified Party shall be entitled to assume such control, and the
Indemnifying Party shall be bound by the results obtained by the Indemnified
Party with respect to such Third Party Claim. If any Third Party Claim is of a
nature such that the Indemnified Party is required by applicable law to make a
payment to any person (a "Third Party") with respect to the Third Party Claim
before the completion of settlement negotiations or related legal proceedings,
the Indemnified Party may make such payment and the Indemnifying Party shall,
forthwith after demand by the Indemnified Party, reimburse the Indemnified
Party for such payment. If the amount of any liability of the Indemnified Party
under the Third Party Claim in respect of which such payment was made, as
finally determined, is less than the amount that was paid by the Indemnifying
Party to the Indemnified Party, the Indemnified Party shall, forthwith after
receipt of the difference from the Third Party, pay the amount of such
difference to the Indemnifying Party.
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Section 9.6 Settlement of Third Party Claims: If the Indemnifying Party
fails to assume control of the defence of any Third Party Claim, the
Indemnified Party shall have the exclusive right to contest, settle or pay the
amount claimed. Whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defence of any Third Party Claim, the Indemnifying
Party shall not settle any Third Party Claim without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed;
provided, however, that the liability of the Indemnifying Party shall be
limited to the proposed settlement amount if any such consent is not obtained
for any reason.
Section 9.7 Co-operation: The Indemnified Party and the Indemnifying Party
shall co-operate fully with each other with respect to Third Party Claims, and
shall keep each other fully advised with respect thereto (including supplying
copies of all relevant documentation promptly as it becomes available).
Section 9.8 Exclusivity: The provision of this Article IX shall apply to
any Claim for breach of any covenant, representation, warranty or other
provision of this Agreement or any agreement, certificate or other document
delivered pursuant hereto (other than a claim for specific performance or
injunctive relief) with the intent that all such Claims shall be subject to the
limitations and other provisions contained in this Article IX.
Section 9.9 Limitation: The Indemnifying Party shall not be obligated to
make any indemnification payment hereunder to the Indemnified Party in respect
of: (i) any Claim or Loss to the extent such Claim or Loss, aggregated with
other losses which the Indemnified Party is entitled to receive
indemnification, exceeds the Purchase Price; (ii) unless such Loss,
individually or in the aggregate with other Claims and Losses, exceeds
$100,000, in which case the Indemnifying Party shall, subject to the limitation
set out in (i) above, be responsible only for the amount in excess of $100,000;
and (iii) any Claim made after the third anniversary of the Closing Date.
ARTICLE TEN
MISCELLANEOUS
Section 10.1 Confidentiality of Information: In the event that the
transactions contemplated herein are not consummated for any reason, the
Purchaser covenants and agrees that, except as otherwise authorized by the
Vendors or required by applicable laws, policies or regulations, neither the
Purchaser nor its representatives, agents or employees will disclose to third
parties, directly or indirectly, any confidential information or confidential
data relating to the Corporation or the Business discovered by the Purchaser or
its representatives as a result of the Vendors and the Corporation making
available to the Purchaser and its representatives the information requested by
them in connection with the transactions contemplated herein.
Section 10.2 Notices:
(a) Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be delivered in
person, transmitted by telecopy or similar means of recorded
electronic communication or sent by registered mail, charges
prepaid, addressed as follows:
<PAGE> 31
- 31 -
(i) if to the Vendors, to their respective
addresses as set out in Schedule "1" to this
Agreement (to the attention of the President,
in the case of corporate Vendors):
(ii) if to the Purchaser:
500 Rue Notre Dame
Lachine, Quebec
H8S 2B2
Attention:
Telecopier No.: (514) 636-6247
(iii) if to the Corporation:
37 Dufflaw Road
Toronto, Ontario
M6A 2W2
Attention:
Telecopier No.: (416) 787-7412
(b) Any such notice or other communication shall be
deemed to have been given and received on the day on
which it was delivered or transmitted (or, if such
day is not a Business Day, on the next following
Business Day) or, if mailed, on the third Business
Day following the date of mailing; provided, however,
that if at the time of mailing or within three
Business Days thereafter there is or occurs a labour
dispute or other event that might reasonably be
expected to disrupt the delivery of documents by
mail, any notice or other communication hereunder
shall be delivered or transmitted by means of
recorded electronic communication as aforesaid.
(c) Any party may at any time change its address for
service from time to time by giving notice to the
other parties in accordance with this section 10.2.
Section 10.3 Commissions, etc.: Each of the Vendors agrees to indemnify and
save harmless the Purchaser from and against all Losses suffered or incurred by
the Purchaser in respect of any commission or other remuneration payable or
alleged to be payable to any broker, agent or other intermediary who purports
to act or have acted for or on behalf of such Vendor.
Section 10.4 Consultation: The parties shall consult with each other before
issuing any press release or making any other public announcement with respect
to this Agreement or the transactions contemplated hereby and, except as
required by any applicable law or regulatory requirement, neither the Vendors
nor the Purchaser shall issue any such press release or make any such public
announcement without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed.
<PAGE> 32
- 32 -
Section 10.5 Disclosure: Prior to any public announcement of the
transaction contemplated hereby pursuant to section 10.4, neither party shall
disclose this Agreement or any aspect of such transaction except to its board
of directors, its senior management, its legal, accounting, financial or other
professional advisors, any financial institution contacted by it with respect
to any financing required in connection with such transaction and counsel to
such institution, or as may be required by any applicable law or any regulatory
authority or stock exchange having jurisdiction.
Section 10.6 Assignment by Purchaser: The Purchaser may assign its rights
under this Agreement in whole or in part to any other person; provided,
however, that any such assignment shall not relieve the Purchaser from any of
its obligations hereunder.
Section 10.7 Best Efforts: The parties acknowledge and agree that, for all
purposes of this Agreement, an obligation on the part of any party to use its
best efforts to obtain any waiver, consent, approval, permit, licence or other
document shall not require such party to make any payment to any person for the
purpose of procuring the same, other than payments for amounts due and payable
to such person, payments for incidental expenses incurred by such person and
payments required by any applicable law or regulation.
Section 10.8 Counterparts: This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the Vendors by their
signatures opposite their respective names in Schedule "1" hereto (by the hands
of their duly authorized signing officers in that behalf, in the case of
corporate Vendors), and by the other parties below:
<TABLE>
<S> <C>
CEDAR GROUP, INC.
Per: /s/ Michel L. Marengere
-----------------------------------------------------------------
c/s
Per: /s/ Nicolas Matossian
-----------------------------------------------------------------
STEEN CONTRACTORS LIMITED
Per: /s/ Henry J. Slade
-----------------------------------------------------------------
c/s
Per: /s/ Matthew McCluggage
-----------------------------------------------------------------
H & M HOLDINGS CORP.
Per: /s/ Henry J. Slade
-----------------------------------------------------------------
/s/ Adam Folk
-------------------------------------------------------------------------
Witness ADAM FOLK
</TABLE>
<PAGE> 33
- 33 -
<TABLE>
<S> <C>
SIMPKINS HOLDINGS LIMITED
Per: /s/ Arthur Chalkley Simpkins
-----------------------------------------------------------------
BUILDERS' CONSULTANTS GROUP INC.
Per: /s/ Matthew McCluggage
-----------------------------------------------------------------
/s/ Henry J. Slade
-------------------------------------------------------------------------
Witness HENRY J. SLADE
/s/ Arthur Chalkley Simpkins
-------------------------------------------------------------------------
Witness ARTHUR CHALKLEY SIMPKINS
/s/ Matthew McCluggage
-------------------------------------------------------------------------
Witness MATTHEW MCCLUGGAGE
</TABLE>
<PAGE> 1
TERM LOAN AGREEMENT
dated as of
July 31, 1995
between
CEDAR GROUP, INC.
and
BT COMMERCIAL CORPORATION
<PAGE> 2
CEDAR GROUP, INC.
TERM LOAN AGREEMENT
This Term Loan Agreement (this "Agreement") is dated as of July 31,
1995, and entered into by and among CEDAR GROUP, INC., a Delaware corporation
(the "Borrower"), and BT Commercial Corporation, a Delaware corporation
("BTCC").
R E C I T A L S :
WHEREAS, the Borrower has entered into an agreement (the
"Acquisition Agreement") to acquire (the "Acquisition") all of the outstanding
Capital Stock of Steen Contractors Limited, an Ontario corporation ("Steen"),
75% of which will be acquired (the "Initial Acquisition") on the Closing Date
and the remainder of which will be acquired by the Borrower thereafter in
accordance with the terms of the Acquisition Agreement;
WHEREAS, the Borrower desires that the Lender make the Loan to the
Borrower, the proceeds of which will be used to fund the Initial Acquisition;
WHEREAS, the Lender desires that the Borrower secure its
obligations owing to the Lender hereunder by granting to the Lender a valid,
perfected, first priority security interest in all of the Initial Pledged
Collateral;
WHEREAS, the Lender desires that the Guarantor guarantee the
obligations of the Borrower owing to the Lender hereunder;
WHEREAS, the Lender is willing, upon the terms and conditions set
forth herein (including the agreement to provide additional collateral as set
forth herein), to make the Loan to the Borrower;
WHEREAS, there is a letter between BTCC and the Borrower, dated
June 27, 1995, with respect to a possible U.S. $25,000,000 senior revolving
credit facility that may be made available to the Borrower and its
Subsidiaries, subject to the terms and conditions of such letter (it being
understood that there is no commitment or understanding with respect to the
extension of any or all of such facility);
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the
4
<PAGE> 3
Borrower and the Lender agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. The following terms used in
this Agreement shall have the following meanings: "Acquisition" has the meaning
assigned to that term in the recitals hereto.
"Acquisition Agreement" has the meaning assigned to that term in
the recitals hereto.
"Acquisition Document" means the Acquisition Agreement and all
agreements, documents and instruments executed or delivered in connection with
the Acquisition.
"Affiliate," as applied to any Person, means any other Person or
group of Persons acting in concert directly or indirectly controlling,
controlled by, or under common control with, that Person. For the purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.
No Lender and no Affiliate of any Lender shall be deemed an Affiliate of any
Company.
"Agreement" has the meaning assigned to that term in the first
paragraph hereto.
"Bankruptcy Law" means Title 11 of the United States Code, the
Bankruptcy and Insolvency Act of Canada, the Companies' Creditors Arrangement
Act of Canada, or any other bankruptcy, solvency, liquidation, receivership or
similar statute or law of any United States or Canadian Federal, state,
provincial or local jurisdiction, now or hereafter existing.
"Borrower" has the meaning assigned to that term in the first
paragraph of this Agreement.
"BTCC" has the meaning assigned to that term in the first paragraph
of this Agreement.
"Business Day" shall mean any day on which commercial banks are
open for business and are not required or authorized by law to close in New
York City.
5
<PAGE> 4
"Capital Lease" means any lease of any property (whether real,
personal or mixed) which is or should be capitalized on the balance sheet of
the lessee in accordance with GAAP and Statement No. 13 of the Financial
Accounting Standards Board.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, partnership interests, participations, rights in or other equivalents
(however designated) of such Person, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into the foregoing.
"Capitalized Lease Obligation" means the amount of liability
reflecting the aggregate discounted amount of future payments under all Capital
Leases calculated in accordance with GAAP and Statement No. 13 of the Financial
Accounting Standards Board.
"Cash Equivalents" means marketable direct obligations issued or
unconditionally guaranteed by the United States of America or Canada or issued
by any agency thereof and backed by the full faith and credit of the United
States of America or Canada, in each case maturing not later than the Maturity
Date.
"Closing Date" means July 31, 1995.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means (i) the Initial Pledged Collateral and (ii) such
other assets securing the Loan pursuant to Section 5.09.
"Collateral Documents" means the Securities Pledge Agreement and
each other instrument or document delivered by any Company to the Lenders in
order to grant to the Lenders Liens on any Collateral or to perfect any such
Liens.
"Companies" means the Borrower and each of its Subsidiaries; and
"Company" means any of them.
"Contingent Liabilities" means contingent claims, obligations or
liabilities of whatever nature or kind, including environmental and pension
liabilities arising under United States federal or state or Canadian federal,
provincial or territorial law, rule or regulation or imposed by any
Governmental Authority (other than instruments required in the ordinary course
of business of the Companies, such as but not limited to, bonding instruments,
letters of credit or parental guarantees (but not relating to indebtedness for
money borrowed) and not exceeding in the aggregate
6
<PAGE> 5
U.S. $300,000,000).
"Default" means a condition or event which, after notice or lapse
of time or both, would constitute an Event of Default if that condition or
event was not cured or removed within any applicable grace or cure period.
"Documents" means each of the Loan Documents and the Acquisition
Documents.
"Dominion" means Dominion Bridge, Inc., a Canadian corporation.
"Event of Default" has the meaning assigned to that term in Article
VI.
"Exchange Act" means the Securities Exchange Act of 1934.
"Federal Funds Rate" means on any one day the weighted average of
the rate on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers with respect to such day as
published on the next succeeding day by the Federal Reserve Bank of New York;
provided, however, that if such day is not a Business Day, the Federal Funds
Rate shall be measured as of the immediately preceding Business Day.
"Free Cash Balance" means the sum of U.S. Dollars, Canadian Dollars
and Cash Equivalents of the Borrower that are not subject to any Liens and are
held in an account of the Borrower at the Royal Bank of Canada (it being
expressly understood that Free Cash Balance shall not include any U.S. Dollars,
Canadian Dollars or Cash Equivalents of any of the Borrower's Subsidiaries).
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" means any United States or Canadian
Federal, state, provincial, local or other court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantee" means (i) any guarantee of the payment or
7
<PAGE> 6
performance of, or any contingent obligation in respect of, any Indebtedness or
other obligation of any other Person, (ii) any other arrangement whereby credit
is extended to one obligor on the basis of any promise or undertaking of
another Person, (a) to pay the Indebtedness of such obligor, (b) to purchase an
obligation owed by such obligor, (c) to purchase or lease assets under
circumstances that would enable such obligor to discharge one or more of its
obligations or (d) to maintain the capital, working capital, solvency or
general financial condition of such obligor, in each case whether or not such
arrangement is disclosed in the balance sheet of such other Person or is
referred to in a footnote thereto, and (iii) any liability as a general partner
of a partnership in respect of Indebtedness or other obligations of such
partnership; provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any guarantee and the amount of Indebtedness resulting from such
guarantee shall be the greater of (x) the amount which would have to be carried
on the balance sheet of the guarantor in respect of such guarantee and (y) the
amount which would have to be carried on the balance sheet of the Person whose
obligations were guaranteed in respect of such obligations (but only to the
extent of the amount guaranteed), in each case determined in accordance with
GAAP.
"Guarantee" means a guarantee of the Obligations by the Guarantor,
substantially in the form of Exhibit C.
"Guarantor" means Dominion.
"Indebtedness," as applied to any Person, means, without
duplication, (i) indebtedness for borrowed money owed by that Person, (ii)
notes payable and drafts accepted, in each case representing extensions of
credit to such Person, (iii) any obligation owed by that Person for all or any
part of a deferred purchase price of property or services which purchase price
is due more than one year from the date of incurrence of the obligation in
respect thereof (iv) Indebtedness evidenced by a note, or similar written
instrument, or liabilities secured by any Lien existing on property owned or
acquired by such Person or a Subsidiary thereof, whether or not the liability
secured thereby shall have been assumed, (v) all Capitalized Lease Obligations,
(vi) all guarantees, (vii) all indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed by such first Person, (viii) all obligations of
such Person to pay a specified purchase price for goods or services whether or
not delivered or accepted (i.e., take-or-pay and similar obligations) and (ix)
all obligations of such Person under interest rate agreements; provided,
however, that Indebtedness shall not include trade payables, accrued expenses,
accrued dividends and accrued income taxes, in each case arising in
8
<PAGE> 7
the ordinary course of business and payable and paid in accordance with
customary practice.
"Initial Acquisition" has the meaning assigned to that term in the
first paragraph of this Agreement.
"Initial Pledged Collateral" means (i) all of the Capital Stock of
Dominion other than the UDIL Shares and (ii) all of the Capital Stock of Steen
being acquired in the Initial Acquisition.
"Interest Payment Date" means the last day of each month commencing
with the month of August 1995.
"Lenders" means BTCC and, in the event that BTCC assigns any part
of the Loan to any other Person or Persons in accordance with Section 7.04,
such other Person or Persons; and "Lender" means BTCC or, if there shall be
more than one Lender, any one of the Lenders.
"Lien" means any lien, mortgage, pledge, security interest,
hypothecation, charge or encumbrance of any kind, whether or not arising by
agreement or operation of law (including any construction lien, any conditional
sale or other title retention agreement or lease in the nature thereof, any
sale of receivables with recourse against the seller or any other Person except
the account debtors and any agreement to give any security interest), or any
subordination arrangement in respect of assets, including any agreement to give
any of the foregoing.
"Loan" has the meaning assigned to that term in Section 2.01(a).
"Loan Documents" means this Agreement, each of the Notes, the
Guarantee and each of the Collateral Documents.
"Loan Parties" means the Borrower, the Guarantor and any Affiliate
of any of them which is or becomes a party to a Loan Document; and "Loan Party"
means any of them.
"Margin Stock" has the meaning assigned to that term in Regulation
U of the Board of Governors of the Federal Reserve System.
"Material Adverse Effect" means (i) a material adverse effect on
the condition (financial or other), business, results of operations, prospects,
properties, assets or liabilities of either the Borrower or Dominion and its
respective Subsidiaries, in each case, taken as a whole, (ii) an adverse effect
on the rights or
9
<PAGE> 8
remedies of the Lenders or the ability of any Loan Party to perform its
obligations to the Lenders under any Loan Document to which it is, or will be,
a party or (iii) an adverse effect on the ability of the Borrower to refinance
the Loan at maturity.
"Maturity Date" means October 31, 1995.
"Note" means a promissory note of the Borrower issued pursuant to
Section 2.01(b) or Section 7.04(e) and in substantially the form of Exhibit A,
as the same may be modified, endorsed or amended from time to time.
"Obligations" means all obligations of every nature of each Loan
Party from time to time owed to the Lenders or any of them under or in
connection with the Loan.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chief executive
officer or chief operating officer in such Person's official capacity and not
individually; provided, however, that every Officer's Certificate with respect
to the compliance with a condition precedent to the making of the Loan
hereunder shall include (i) a statement that such officer has read such
condition and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of such officer, such
Person has made or has caused to be made such examination or investigation as
is reasonably necessary to enable such Person to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of such officer, such condition has been complied
with.
"Organizational Documents" means (i) the articles of incorporation
of each Company that is a corporation, which for purposes of Section 3.01(d)
shall be certified as of a recent date by the Secretary of State of the state
of incorporation of such Company, (ii) the by-laws of each Company that is a
corporation, which for purposes of Section 3.01(d) shall be certified as of a
recent date by the corporate secretary or assistant secretary of such Company,
and (iii) comparable organizational documents of each Company that is not a
corporation.
"Other Taxes" has the meaning assigned to that term in Section
2.05(a).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other
10
<PAGE> 9
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Prime Rate" means, at any time, the higher of:
(a) the rate announced by Bankers Trust Company from time to
time at its principal office as its prime lending rate (it being understood
that the Prime Rate is not intended to be the lowest rate of interest
determined by Bankers Trust Company in connection with extensions of credit);
and
(b) the Federal Funds Rate then in effect plus 1/2 of 1%.
"Register" has the meaning assigned to that term in Section 7.04(c).
"Requisite Lenders" means one or more Lenders holding more than 50%
of the outstanding Loan.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Securities Pledge Agreement" means the securities pledge agreement
relating to the Borrower's pledge of its entire equity interest in each of its
Subsidiaries, in substantially the form of Exhibit B.
"Steen" has the meaning assigned to that term in the recitals
hereto.
"Subsidiary" of any Person means any corporation or other entity of
which such Person, directly or indirectly, shall at the time (a) own shares of
any class or classes having power for the election of at least a majority of
the members of the Board of Directors (or the governing body) of such
corporation or other entity other than shares or other interests having such
power only by reason of the happening of a contingency or (b) otherwise have
the legal right to elect such a majority other than by reason of the happening
of a contingency.
"Taxes" has the meaning assigned to that term in Section 2.05(a).
"UDIL" means United Dominion Industries Ltd.
"UDIL Sale" means the sale of the UDIL Shares by UDIL
11
<PAGE> 10
to the Borrower for aggregate consideration of not more than Can. $2,000,000 in
cash and 1,592,167 shares of common stock of the Borrower.
"UDIL Shares" means the 9,552,000 shares of the Guarantor's Class A
Preferred Stock owned by UDIL.
"U.S. Dollars" or the sign "$" means the lawful money of the United
States of America.
"Wholly Owned Subsidiary" means any Subsidiary of which all of the
outstanding voting securities (other than directors' qualifying or similar
shares required to be held by applicable law, not in any event to exceed 5% of
the total outstanding voting securities) are owned by the Borrower or any
Wholly Owned Subsidiary of the Borrower.
SECTION 1.02. Accounting Terms; Financial Statements. For the
purposes of this Agreement, all accounting terms not otherwise defined herein
have the meanings assigned to them in conformity with GAAP. All computations
and determinations for purposes of determining compliance with the financial
requirements of this Agreement shall be made in accordance with GAAP as
utilized in the preparation of the audited financial statements of the Borrower
for the fiscal year ended September 30, 1994 contained in the Borrower's Annual
Report on Form 10-K for the fiscal year ended September 30, 1994.
SECTION 1.03. Other Definitional Provisions. (a) The definitions
in Section 1.01 shall apply equally to both the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation."
(b) Unless the context shall otherwise require, all references
herein to (i) Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement, (ii) Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons, (iii) agreements and other contractual
instruments include subsequent amendments, assignments, and other modifications
thereto to the date hereof and thereafter, but in the case of any amendment,
assignment or modification after the date hereof, only to the extent such
amendments, assignments or other modifications thereto are not prohibited by
their terms or the terms of any Loan Document, (iv) statutes and related
regulations
12
<PAGE> 11
include any amendments of the same and any successor statutes and regulations
and (v) time shall be deemed to be to New York City time.
ARTICLE II
THE LOAN
SECTION 2.01. Amount of the Loan; Note. (a) Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of the Loan Parties set forth in the Loan Documents, the Lender
hereby agrees to lend (the "Loan") to the Borrower U.S. $5,000,000 (Five
Million U.S. Dollars).
(b) The Borrower's obligation to pay the principal of, and
interest on, the Loan shall be evidenced by a Note, with appropriate insertions
therein as to date and principal amount, payable to the order of the Lender.
The Lender is hereby authorized by the Loan Parties to record the date and
amount of each payment or prepayment of principal of the Loan on the schedule
(and any continuations thereof) annexed to and constituting a part of the Note
held by such Lender. No failure to so record or any error in so recording
shall affect the obligation of the Borrower to repay the Loan, with interest
thereon, as herein provided.
(c) Disbursement of the Loan. On the Closing Date, the Lender
will make the Loan available to the Borrower in immediately available funds in
U.S. Dollars to an account specified by the Borrower.
SECTION 2.02. Interest. (a) Interest Rate. The Borrower agrees
to pay interest in respect of the unpaid principal amount of the Loan from and
including the Closing Date to but not including the date repaid at the rate per
annum equal to the sum of the Prime Rate in effect from time to time plus 2.0%.
(b) Default Interest. If the Borrower shall default in the
payment of the principal of, or interest on, the Loan or any other amount due
hereunder, whether by scheduled maturity, notice of prepayment, acceleration or
otherwise, the Borrower shall, on demand by the Requisite Lenders from time to
time, pay interest, to the full extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum equal to the Prime Rate in effect from
time to time plus 4.0%.
(c) Interest Payments. Interest on the Loan shall be payable in
arrears on each Interest Payment Date, upon any
13
<PAGE> 12
prepayment of the Loan (to the extent accrued on the amount being prepaid) and
when the Loan is due and payable (whether at maturity, by acceleration or
otherwise).
(d) Computation of Interest. Interest on the Loan shall be
computed on the actual number of days elapsed over a year of 365 (366) days.
SECTION 2.03. Fee. The Borrower agrees to pay to BTCC the fee set
forth in the letter agreement dated of even date herewith between the Borrower
and BTCC.
SECTION 2.04. Repayments and Payments. (a) Voluntary Prepayments.
The Borrower shall have the right to prepay the Loan in whole at any time or in
part from time to time without premium or penalty. The Borrower shall give
irrevocable notice to the Lenders of each proposed prepayment hereunder at
least one Business Day prior to the date of the proposed prepayment. Such
notice shall specify the proposed prepayment date (which shall be a Business
Day) and the principal amount of the proposed prepayment. No partial
prepayment of the Loan pursuant to this Section 2.04(a) shall be in an amount
less than $500,000 or in an amount which is not an integral multiple of
$100,000. All prepayments pursuant to this Section 2.04(a) shall be applied
pro rata among the Lenders.
(b) Repayments. The Loan shall be repaid in full on the Maturity
Date.
(c) Manner and Time of Payment. All payments of principal,
interest and fees under the Loan Documents shall be made without defense,
set-off or counterclaim and in U.S. Dollars in immediately available funds and
delivered, not later than 12:00 noon on the date when due, to the accounts of
the Lenders specified therefor. If payment is so received after such time,
then for all purposes of this Agreement (including Section 2.02), such payment
shall be deemed received on the next succeeding Business Day. Whenever any
payment shall be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day.
SECTION 2.05. Payment of Additional Amounts. (a) All payments
made by any Loan Party under any Loan Document shall be made without setoff,
counterclaim or other defense. All such payments will be made free and clear
of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any United States, international or foreign taxing
authorities, any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to
14
<PAGE> 13
such payments (but excluding any tax imposed on or measured by the overall net
income of a Lender pursuant to the laws of the jurisdiction in which it is
organized or in which the principal office or applicable lending office of such
Lender is located and all interest, penalties, additions to tax, expenses other
than penalties or similar liabilities with respect thereto (collectively,
"Taxes"). In addition, the Borrower shall pay any present or future stamp,
documentary, excise, or similar taxes, charges or levies that arise from any
payment made hereunder or under any Note or from the execution, delivery or
registration of this Agreement, any Note or the other Loan Documents
(hereinafter referred to as "Other Taxes"). If any Taxes or Other Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes and
Other Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes or Other Taxes, will
not be less than the amount provided for herein or in such Note. The Borrower
will furnish to the Lenders within 30 days after the date the payment of any
Taxes or Other Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower. The Borrower agrees to
indemnify and hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes or Other Taxes so levied or
imposed and paid by such Lender.
(b) Without prejudice to the provisions of Section 2.05(a), if any
Lender is required by law to make any payment on account of any Tax on or in
relation to any sum received or receivable hereunder by such Lender, or any Tax
liability in respect of any such payment is imposed, levied or assessed against
such Lender by any relevant taxation authority, the Borrower will, upon demand
of such Lender, promptly indemnify such Lender against such Tax payment or
liability.
ARTICLE III
CONDITIONS TO THE LOAN
The obligation of the Lender to make the Loan on the Closing Date
is subject to the prior or concurrent satisfaction of each of the following
conditions:
SECTION 3.01. Officers' Certificates. The Lender shall have
received an Officers' Certificate dated the Closing Date, in form and substance
satisfactory to the Lender, stating that, each of the conditions set forth in
Sections 3.03 (last sentence only), 3.05, 3.06, 3.07 and 3.08(a) are satisfied
as of
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the Closing Date.
SECTION 3.02. Opinions of Counsel. The Lender shall have received
opinions, in form and substance satisfactory to the Lender, addressed to the
Lender and dated the Closing Date from (i) Smith, Lyons, Torrance, Stevenson &
Mayer, Canadian counsel to the Loan Parties, substantially in the form of
Exhibit D-1, and (ii) Clark, Ladner, Fortenbaugh & Young, U.S. counsel to the
Loan Parties, substantially in the form of Exhibit D-2.
SECTION 3.03. Organizational Documents, Etc. The Lender shall
have received copies of (i) each Organizational Document of the Borrower, the
Guarantor and Steen and (ii) each agreement entered into by any Loan Party, as
of the Closing Date, governing the terms and relative rights of the Capital
Stock, partnership interests or other equity interests of each such party and
any such agreements entered into by partners or shareholders (as applicable)
relating to each such party, certified as true and complete by an appropriate
officer or Governmental Authority, and the provisions of each of the foregoing
shall be satisfactory to the Lender. Each such Organizational Document shall
be in full force and effect.
SECTION 3.04. Corporate Proceedings. All corporate, partnership,
legal and other proceedings in connection with the authorization, execution and
delivery by the Loan Parties of the Loan Documents and the transactions to
occur on the Closing Date shall be satisfactory in form and substance to the
Lender. The Lender shall have received all information and copies of all
certificates, documents and papers, including records of corporate, partnership
and other proceedings and governmental approvals, if any, which the Lender
reasonably may have requested in connection therewith, such documents and
papers where appropriate to be certified by proper corporate or partnership
authorities or Governmental Authorities.
SECTION 3.05. No Defaults. Before and after giving effect to the
Loan and the Acquisition, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) no default shall have occurred, and no
event shall have occurred and no condition shall exist that with the lapse of
time or notice or both would constitute a default, with respect to any
indebtedness for money borrowed or any other material obligation of any
Company.
SECTION 3.06. Representations and Warranties. Before and after
giving effect to the Loan and the Acquisition, all representations and
warranties of each of the Loan Parties contained in the Loan Documents shall be
true and correct.
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SECTION 3.07. No Injunction. There shall not exist any temporary
or permanent judgment, order, injunction or other restraint issued or filed by
a court of competent jurisdiction with respect to the making of the Loan or the
consummation of the Acquisition.
SECTION 3.08. Acquisition. (a) The Lender shall have received
true and complete copies of all of the Acquisition Documents. Any amendment,
modification, waiver or forbearance of any provision of any Acquisition
Document shall be in form and substance satisfactory to the Lender.
(b) The Acquisition shall occur simultaneously with, or
immediately after, the funding of the Loan and on terms satisfactory to the
Lender.
SECTION 3.09. Delivery of Notes. The Borrower shall have
delivered to the Lender a Note duly executed by the Borrower in accordance with
Section 2.01(b).
SECTION 3.10. Guarantee. The Guarantor shall have duly executed
and delivered the Guarantee.
SECTION 3.11. Pledge of Stock. The Borrower shall have duly
executed and delivered the Securities Pledge Agreement. The Borrower shall
have delivered, in order to perfect the security interest of the Lender
therein, all of the Initial Pledged Collateral; provided, however, that the
shares of stock of Steen may be delivered immediately after the consummation of
the Initial Acquisition in a manner satisfactory to the Lender.
SECTION 3.12. Payment of Fees. All fees and reimbursable expenses
due and payable to the Lender and its counsel pursuant to the Loan Documents
and their respective commitment letters, fee letters and otherwise shall have
been paid in full to each such Person.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Lender to enter into this Agreement and the
other Loan Documents and to make the Loan hereunder, the Borrower makes each of
the following representations, warranties and agreements, all of which shall
survive the execution and delivery of this Agreement and the making of any Loan
(it being understood that, as used in this Article IV, Steen shall be deemed a
Subsidiary of the Borrower).
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SECTION 4.01. Organizational Status. Each Company is a duly
organized and validly existing corporation or limited liability company, as the
case may be, under the laws of its jurisdiction of organization. Each Company
has the organizational power and authority to own its respective property and
assets and to transact the business in which it is engaged and presently
proposes to engage. Each Company is in good standing in its jurisdiction of
organization and is duly qualified or authorized to do business and is in good
standing in all jurisdictions where it is required to be so qualified or
authorized except where the failure to be so qualified or authorized could not,
singly or in the aggregate with all such other failures, reasonably be expected
to have a Material Adverse Effect.
SECTION 4.02. Organizational Power and Authority. Each Company has
the organizational power and authority to execute, deliver and carry out the
terms and provisions of each Document to which it is, or will be, a party and
has taken all necessary organizational action to authorize the execution,
delivery and performance of each such Document. This Agreement constitutes and
each other Document (when executed and delivered by any Company) will
constitute, the legal, valid and binding obligation of each such Company
enforceable against such Company in accordance with its terms.
SECTION 4.03. No Conflict. The execution, delivery and
performance by any Company of any of the Documents to which it is, or will be,
a party, compliance with the terms and provisions thereof and the consummation
of the transactions contemplated therein (i) will not contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any Governmental Authority, which contravention, singly or in the
aggregate with all such other contraventions, could reasonably be expected to
have a Material Adverse Effect, (ii) will not violate or otherwise result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
any Company pursuant to the terms of, any indenture, mortgage, deed of trust,
agreement or other instrument to which any Company is a party or by which the
property or assets of any Company is bound or to which they may be subject,
which violation, breach, default or imposition of Lien, singly or in the
aggregate with all such other violations, breaches, defaults or impositions of
Liens, could reasonably be expected to have a Material Adverse Effect and (iii)
will not violate any provision of any Organizational Document.
SECTION 4.04. Litigation. There is no action, suit or
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proceeding pending or, to the best knowledge of the Borrower, threatened with
respect to any Company before any arbitrator, Governmental Authority or
self-regulatory authority that, singly or in the aggregate with all other such
actions, suits and proceedings, could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.05. Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System, and no part of the proceeds of any Loan hereunder will
be used to purchase or carry any Margin Stock in violation of Regulation U or
to extend credit for the purpose of purchasing or carrying any Margin Stock in
violation of Regulation U.
SECTION 4.06. Government Regulation. No Company (i) is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, (ii) is
subject to regulation under the Federal Power Act or the Interstate Commerce
Act, (iii) is subject to any other statute or regulation which regulates the
incurrence of indebtedness for borrowed money, other than Federal and state
securities laws or (iv) is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940.
SECTION 4.07. True and Complete Disclosure. The information
contained in the Documents and the annexes, schedules and other attachments
thereto, when taken together with the Borrower's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994 and the Borrower's Quarterly Reports
on Form 10-Q for the fiscal quarters ended December 31, 1994 and March 31,
1995, is, and all other such information hereafter furnished, is and will be
(as of their respective dates and the Closing Date), true and accurate in all
material respects and not incomplete by omitting to state anything necessary to
make such information not misleading at such time. There is nothing of which
the Borrower is aware which has not been so disclosed to the Lenders in writing
pursuant to the terms of this Agreement prior to the date hereof which, singly
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect. All statements of fact and representations concerning the present and
anticipated business, operations, prospects, affairs and assets of each
Company, the Documents and the transactions referred to therein are true and
correct in all material respects, and all assumptions with respect thereto
contained therein are reasonable in all material respects.
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SECTION 4.08. Acquisition Documents. (a) The Acquisition
Documents constitute all material agreements and understandings of the parties
thereto relating to the subject matter thereof. There has been no material
breach or default of any provision of any Acquisition Document.
(b) To the best of the Borrower's knowledge, all representations
and warranties set forth in the Acquisition Documents by the parties thereto
were true and correct in all material respects as of the time as of which such
representations and warranties were made and are true and correct in all
material respects on the Closing Date (except to the extent that such
representations and warranties expressly relate to an earlier date) as if such
representations and warranties were made on and as of such date.
SECTION 4.09. Consents. All necessary material governmental and
third party approvals in connection with the Acquisition, the transactions
contemplated by this Agreement and the other transactions contemplated by, or
referred to in, the Documents have been or, prior to the time when required
will have been, obtained and remain in effect. All applicable waiting periods
have or, prior to the time when required, will have expired without, in all
such cases, any action being taken by any competent authority which restrains,
prevents or imposes materially adverse conditions upon or unduly hinders the
consummation of the Acquisition or the other transactions contemplated hereby
or by the Acquisition Documents.
SECTION 4.10. Financial Condition; Financial Statements. (a) On
and as of the Closing Date, after giving effect to all Indebtedness and other
obligations to be Incurred by the Companies on such date, (i) no final
judgments against any Company in actions for money damages with respect to
pending or threatened litigation will have been rendered in an amount such that
such Company will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered), (ii) the sum of the assets, at a fair
valuation, of the Borrower will exceed its debts, (iii) no Company will have
incurred or intended to, or believe that it will, incur debts beyond its
ability to pay such debts as such debts mature and (iv) the Borrower will have
sufficient capital with which to conduct its business. For purposes of this
Section 4.12, "debt" means any liability on a claim, and "claim" means any (x)
right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured; or (y) right to
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an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) There has been delivered to each Lender a true and complete
copy of each of the financial statements included in the reports referred to in
Section 4.07. All such financial statements (except pro forma financial
statements) have been prepared in accordance with GAAP, except, in the case of
unaudited financial statements, for the absence of footnote disclosures. All
such financial statements present fairly the consolidated financial position,
results of operations and cash flows of the Persons to whom they pertain as of
each date or for each period to which they relate.
(c) No Company has, as of the dates of the financial statements
delivered hereunder, as of the date hereof or the Closing Date, any material
Contingent Liability or liability for taxes, long-term lease or unusual forward
or long-term commitment which is not reflected in such financial statements or
the notes thereto.
SECTION 4.11. Tax Returns and Payments. Each Company has filed
all United States or Canadian federal, provincial or state income tax returns
and reports and all other material tax returns and reports, domestic and
foreign, required to be filed by it and has paid all material taxes and
assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith and by proper
proceedings with adequate reserves maintained in respect thereof to the extent
required by GAAP. Each Company has paid, or has provided adequate reserves in
accordance with GAAP for the payment of, all federal, provincial, state, local
and foreign income taxes and all other material taxes applicable to all prior
fiscal years and for the current fiscal year to the date of this representation
and warranty.
SECTION 4.12. Compliance with Statutes, Etc. Each Company is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all Governmental Authorities (including
those relating to pollution and environmental standards and controls, equal
employment opportunity and employee safety) in respect of the conduct of its
business and the ownership of its property other than those the non-compliance
with which, singly or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.13. Properties. Each Company has good and
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valid title to all properties owned by it, including, on and after the Closing
Date, all material property reflected in the consolidated balance sheets of the
Companies delivered pursuant to Section 4.10 free and clear of all Liens, other
than as permitted by Section 5.07(v).
SECTION 4.14. Subsidiaries; Capital Stock. All of the direct and
indirect Subsidiaries of the Borrower and the actual and percentage ownership
interest of the Borrower therein, immediately after giving effect to the
Initial Acquisition, are identified in Schedule 4.14. The Capital Stock of
each Company is duly authorized, validly issued, fully paid and nonassessable
and not subject to any Lien other than the Liens created by the Collateral
Documents in favor of the Lenders. The authorized and outstanding Capital
Stock of each Company is as set forth in Schedule 4.14. None of the Capital
Stock of any Company is Margin Stock.
SECTION 4.15. Security Interest. There has been created a valid,
enforceable and duly perfected first priority security interest in and Lien for
the benefit of the Lenders, in the Initial Pledged Collateral. No filings or
recordings are required in order to perfect the security interests created
under the Securities Pledge Agreement.
SECTION 4.16. Contingent Liabilities. The Borrower and its
Subsidiaries do not have any Contingent Liabilities.
SECTION 4.17. Trade Accounts. Each Company has paid all trade
accounts, including contractors and subcontractors, in the ordinary course of
business, and there are no arrearages on any trade account of any Company other
than those being contested in good faith, which not material to the Companies,
singly or in the aggregate.
ARTICLE V
COVENANTS
The Borrower covenants and agrees that on the Closing Date and
thereafter for so long as this Agreement is in effect and until the Loan and
the Notes, together with interest thereon and all other Obligations, are repaid
in full:
SECTION 5.01. Information Covenants. The Borrower will furnish to
each Lender:
(a) Financial Statements. As soon as available
to the management of the Borrower, and in any
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event within thirty (30) days of the end of
each month, consolidated and consolidating
balance sheets and income statements of
the Borrower and its Subsidiaries for such
fiscal month and for the period from the
beginning of the then current fiscal year to
the end of such fiscal month.
(b) Compliance Certificate. At the time of the
delivery of financial statements pursuant to
Section 5.01(a), an Officers' Certificate, in
form and substance satisfactory to the
Requisite Lenders, to the effect that no
Default or Event of Default exists or, if any
Default or Event of Default does exist,
specifying the nature and extent thereof.
(c) Notice of Default or Litigation. Promptly,
and in any event within three (3) days after
the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event or
the existence of any condition that
constitutes a Default or Event of Default,
which notice shall specify the nature
thereof, the period of existence thereof (to
the extent known) and what action the
Borrower proposes to take with respect
thereto and (y) any pending action, suit or
proceeding that would, if in existence on the
date hereof would result in the
representations and warranties in Section
4.04 being incorrect (if being made as of
such date).
(d) Free Cash Balance Certificate. On the 15th
day and on the last day of each month, an
Officer's Certificate, in form and substance
satisfactory to the Requisite Lenders,
setting forth in reasonable detail the
calculation of the Borrower's compliance with
Section 5.08 on each day since delivery of
the previous such certificate.
(e) Other Information. Promptly upon
transmission thereof, copies of any public
filings and registrations with, and public
reports to, the SEC by any Company with
respect to its securities (other than
registration statements on Form S-8, filings
under Section 16(a) of the Exchange Act and
routine filings relating
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to employee benefit plans) and, to the extent
not previously provided to the Lenders,
copies of all financial statements, proxy
statements, material notices and reports
provided by any Company to its shareholders
or debentureholders and, with reasonable
promptness, such other information or
documents (financial or otherwise) as the
Requisite Lenders may reasonably request from
time to time.
SECTION 5.02. Books, Records and Inspections. The Borrower will
keep, and will cause each of its Subsidiaries to keep, proper records and books
of account. The Borrower will, and will cause each of its Subsidiaries to,
upon reasonable prior notice to the chief financial officer, controller or any
other authorized officer of the Borrower, permit officers and designated
representatives of the Lenders to visit and inspect any of the properties or
assets of the Companies, and to examine the books of account of the Companies
and discuss the affairs, finances and accounts of the Companies with, and be
advised as to the same by, their officers and independent accountants, all at
such reasonable times and intervals and to such reasonable extent as the
Lenders may desire.
SECTION 5.03. Insurance. The Borrower will, and will cause each
of its Subsidiaries to, at all times maintain in full force and effect
insurance (including bonding insurance) with financially sound and reputable
insurers in such amounts, covering such risks and liabilities and with such
deductibles or self-insured retentions as are in effect at the date hereof with
respect to its respective businesses. Notwithstanding the foregoing, each of
the Loan Parties shall maintain such insurance as required pursuant to the
Collateral Documents and shall otherwise comply with all provisions of the
Collateral Documents relating to insurance.
SECTION 5.04. Payment of Taxes. The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon it
or, to the extent the Borrower or such Subsidiary, respectively, is liable
therefor, upon its income or profits, or upon any properties belonging to it,
prior to the date on which penalties attach thereto, and all claims which, if
unpaid, might become a Lien or charge upon any properties of the Borrower or
such Subsidiary; provided, however, that the Borrower shall not be required to
pay any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings with adequate reserves maintained in
respect thereof to the extent
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required by GAAP.
SECTION 5.05. Compliance with Statutes, Etc. The Borrower will,
and will cause each of its Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed
by, all Governmental Authorities.
SECTION 5.06. Use of Proceeds. The Borrower will use all proceeds
of the Loan only to fund the Initial Acquisition.
SECTION 5.07. Maintenance of Business. The Borrower will do, and
will cause each of its Subsidiaries to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence, material
corporate rights, corporate licenses, corporate franchises and authority. The
Borrower will, and will cause each of its Subsidiaries to, use its respective
best efforts to preserve intact its current business organization, keep its
assets in serviceable condition, preserve the relationships with its customers,
suppliers, contractors, subcontractors and others having business dealings with
it and pay its trade accounts (including with contractors and subcontractors)
in the ordinary course of business. Without limiting the generality of the
foregoing, the Borrower will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly:
(i) alter in a fundamental or substantial manner
the character or scope of the business of
the Borrower and its Subsidiaries taken as a
whole from that conducted immediately prior
to the Closing Date;
(ii) sell, transfer or otherwise dispose, in a
single transaction or series of related
transactions, all or a substantial portion of
the Borrower's consolidated assets, or enter
into a transaction of consolidation or
merger or other transactions outside the
ordinary course of its business;
(iii) acquire, sell, lease, encumber or dispose of
any assets or any shares or other equity
interests in or securities of any
corporation, partnership, association or
other business organization or division
thereof, other than purchases and sales of
assets in the ordinary course of business of
the Borrower or such Subsidiary (other than
in the UDIL Sale);
(iv) create, incur, assume or suffer to exist any
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Indebtedness other than (A) Indebtedness
existing on the date hereof, (B) the
Obligations and (C) additional Indebtedness
not to exceed $500,000;
(v) create, incur, assume or suffer to exist any
Lien upon or with respect to any of its
property or assets (whether real or personal,
tangible or intangible and whether now owned
or hereafter acquired) other than (A) Liens
existing on the date hereof and (B) Liens
arising by operation of law;
(vi) (A) declare or pay any dividend or make any
distribution on shares of the Capital Stock
of the Borrower or such Subsidiary to holders
of such Capital Stock (other than the
Borrower), (B) purchase, redeem or otherwise
acquire or retire for value any Capital Stock
of the Borrower or such Subsidiary (other
than in the UDIL Sale), or any warrants,
rights or options to acquire shares of any
class of such Capital Stock, (C) make any
principal payment on, or purchase, defease,
redeem, prepay, decrease or otherwise acquire
or retire for value, prior to any scheduled
final maturity, scheduled repayment or
scheduled sinking fund payment, any
Indebtedness of the Borrower or such
subsidiary, or (D) make any loan, advance or
other extension of credit or capital
contribution; purchase or acquire Capital
Stock, bonds, notes, debentures or other
securities or evidences of Indebtedness
issued by any other Person (whether by
merger, consolidation, amalgamation or
otherwise and whether or not purchased
directly from the issuer of such securities
or evidences of Indebtedness); or make any
investments in any other Person;
(vii) enter into, adopt or amend any
employment or severance agreement or
arrangement (other than such
amendments as are required to comply
with applicable law) or increase in
any manner the compensation or
fringe benefits of, or modify the
employment terms of, its directors,
officers or employees, generally or
individually (other than the
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grant of stock options in the
ordinary course of business);
(viii) change its independent accountants,
accounting periods or, except to the extent
required by a change in GAAP, accounting
methods, principles or practices;
(ix) sell, assign, transfer or license any
intellectual property, except for licenses of
intellectual property in the ordinary course
of business of the Borrower or such
Subsidiary;
(x) enter into, amend, terminate, take or omit to
take any action that would constitute a
violation of or default under, or waive any
rights under, any material contract or
agreement or any material permit;
(xi) make or commit to make any capital
expenditure in excess of $500,000, singly or
in the aggregate;
(xii) enter into any transaction with any of its
Affiliates (including any of its
subsidiaries), other than any transaction
with any of its Subsidiaries that (a) is
entered into in the ordinary course of
business of the Borrower and (b) is not,
singly or in the aggregate with all
such other transactions, material; or
(xiii) take any action or fail to take any
reasonable action permitted by this Agreement
if such action or failure to take action
would result in any of the representations
and warranties of the Borrower set forth in
this Agreement becoming untrue in any
material respect.
SECTION 5.08. Free Cash Balance. The Borrower will at all times
maintain a Free Cash Balance of at least $2,250,000 (determined daily but
calculated on a rolling thirty day average).
SECTION 5.09. Security Interests. (a) As soon as practicable
after the Closing Date but in no event later than the date which is thirty (30)
days after the Closing Date, the Borrower shall, and shall cause the Guarantor
to, execute and deliver such collateral documents, in form and substance
satisfactory to the
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Requisite Lenders, as requested by the Requisite Lenders to grant to the
Lenders a valid, perfected, first priority Lien on and security interest in all
of the assets of the Guarantor.
(b) The Borrower shall duly and punctually perform, and cause each
of its Subsidiaries which is a Loan Party to duly and punctually perform, any
and all acts and, at its expense, will promptly execute, and cause each of its
Subsidiaries to promptly execute, any and all further instruments and documents
and take such action as the Lenders deem necessary to obtain the full benefits
of this Agreement and the Collateral Documents and of the rights and powers
herein and therein granted (including the recording and filing of any
Collateral Documents and any and all supplements and amendments thereto and
instruments of conveyance, transfer, assignment or further assurance, financing
statements and continuation statements under the applicable laws, rule or
regulation, as may, in the reasonable judgment of the Lenders, be necessary or
desirable in order to grant and/or maintain for the benefit of the Lenders a
valid and perfected first priority Lien on the Collateral, subject to no other
Liens (except as permitted by the Collateral Documents).
(c) The Borrower shall undertake to deliver or cause to be
delivered to the Lenders from time to time such other documentation, consents,
authorizations, approvals and orders in form and substance satisfactory to the
Lenders as the Lenders shall deem reasonably necessary or advisable to perfect
or maintain the Liens for the benefit of the Lenders, including assets which
are required to become Collateral after the Closing Date.
ARTICLE VI
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each,
an "Event of Default"):
SECTION 6.01. Payments. The Borrower shall (i) default in the
payment when due of any principal of the Loan when due; or (ii) default in the
payment when due of any interest on the Loan or any other amounts owing under
any Loan Document; or
SECTION 6.02. Representations, Etc. Any representation, warranty
or statement made or deemed made by, or on behalf of, any Loan Party in any
Loan Document or in any other Document or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
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SECTION 6.03. Covenants. The Borrower shall (a) default in the
due performance or observance of any term, covenant or agreement contained in
Section 5.01(c)(x), 5.06(i), 5.07 or 5.08, or (b) default in the due
performance or observance of any term, covenant or agreement (other than those
referred to in Section 6.01 or 6.02 or clause (a) of this Section 6.03)
contained in this Agreement and such default under this clause (b) shall
continue unremedied for a period of at least 10 days after notice from the
Requisite Lenders; or
SECTION 6.04. Default Under Other Agreements. (a) Any Company
shall (i) default in any payment with respect to any Indebtedness (other than
the Loan) beyond the period of grace, if any, specifically provided in the
instrument or agreement governing such Indebtedness or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness in excess of $1,000,000 referred to in clause (i) above in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, any such Indebtedness to become due prior to its stated maturity and
such default or event or condition shall continue beyond the period of grace,
if any, specifically provided in the instrument or agreement governing such
Indebtedness (after giving effect to any consent or waiver obtained and then in
effect thereunder); or (b) any such Indebtedness referred to in clause (a)(i)
above shall, in accordance with its terms, be declared to be due and payable,
or required to be prepaid other than by a regularly scheduled or required
prepayment prior to the stated maturity thereof; or
SECTION 6.05. Bankruptcy, Etc. Any Company shall commence a
voluntary case concerning itself under any Bankruptcy Law; or an involuntary
case is commenced against any Company and the petition is not controverted
within ten (10) days, or is not dismissed within sixty (60) days, after
commencement of the case; or a custodian is appointed for, or takes charge of,
all or substantially all of the property of any Company; or any Company
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating
to any Company; or there is commenced against any Company any such proceeding
which remains undismissed for a period of sixty (60) days; or any Company is
adjudicated (by any court of competent jurisdiction) insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or any Company suffers any appointment of any custodian or the like
for it or any substantial
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part of its property to continue undischarged or unstayed for a period of sixty
(60) days; or any Company makes a general assignment for the benefit of
creditors; or any Company shall admit in writing its inability to pay its debts
as they become due; or any corporate or other action is taken by any Company
for the purpose of effecting any of the foregoing; or
SECTION 6.06. Judgments. One or more judgments, attachments or
decrees shall be entered against one or more Companies involving a liability of
$1,000,000 or more and any such judgments, attachments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within ten
(10) days from the entry thereof; or
SECTION 6.07. Change of Control. (a) Any Person or "group" of
Persons (as defined in Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) either (1) is, becomes or announces an intention to become, by
purchase, tender offer, exchange offer, open market purchases, privately
negotiated purchases or otherwise, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except that
a Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire at the time of determination, whether such
right is exercisable immediately or after the passage at the time of
determination of 90 days or less), directly or indirectly, of voting stock of
the Borrower having more than 15% of the total voting power of the outstanding
voting stock of the Borrower or (2) otherwise has the ability to elect,
directly or indirectly, a majority of the members of the Board of Directors of
the Borrower; provided, however, that for purposes of this Section 5.15(a), a
Person shall not be deemed the beneficial owner of any securities in respect of
which beneficial ownership by such Person arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation that
is made pursuant to, and in accordance with applicable law for a shareholder
meeting, or, if such Company is at the time required to file reports under
Section 13 or 15 of the Exchange Act, and is not then reportable on Schedule
13D (or any successor schedule, form or report) under the Exchange Act; or
(b) Individuals who on the Closing Date constituted the Board of
Directors of the Borrower shall cease for any reason to constitute a majority
of the Board of Directors of the Borrower then in office; or
SECTION 6.08. Material Adverse Effect. There shall have occurred
or become known any event or condition which could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; or
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SECTION 6.09. Conflicting Agreements. Any Company shall enter
into any contract, agreement, instrument or understanding that has the effect
of restricting such Company from (x) Incurring or repaying Indebtedness, (y)
granting Liens to any Person or (z) making distributions in respect of its
Capital Stock (other than, in the case of Steen, agreements in effect on the
date hereof); or
SECTION 6.10. Guarantee. The Guarantee shall cease to be in full
force and effect, or the Guarantor shall disavow its obligations under the
Guarantee; or
SECTION 6.11. Collateral Document Default. (a) Any Collateral
Document (together with any other security documents delivered or to be
delivered thereunder) after delivery thereof shall for any reason fail to
create or cease to maintain a valid and duly perfected (assuming, in the case
of Collateral the perfection of a security interest in which requires
possession by the Lenders in New York State, that such Collateral is so
possessed) security interest in and Lien upon any of the Collateral having the
priority purported to be created thereby; or
(b) Any of the Collateral shall become subject to any Lien other
than a Lien expressly permitted under Section 5.07(vi), and such Lien shall not
have been discharged or removed within 5 Business Days of its attaching to such
Collateral;
(c) Enforceability of the Lenders' security interest in any
Collateral shall be contested by any Loan Party; or
SECTION 6.12. UDIL Sale. On or prior to the date which is thirty
(30) days after the Closing Date, (i) the UDIL Sale shall not have been
consummated on terms and conditions satisfactory to the Requisite Lenders or
(ii) the Lenders shall have received a letter from UDIL acknowledging that the
Lenders have a first priority Lien on, and security interest in, all of the
assets and property of Dominion;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.05 in respect of the Borrower, the unpaid principal
amount of and accrued interest on the Loan and all Notes then outstanding to
the Borrower shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by the Borrower, and (ii) upon the occurrence and
during the continuance of any other Event of Default, the Requisite Lenders, by
written notice to the Borrower, may declare the Loan and all Notes then
outstanding to the Borrower to be, and the same shall forthwith become, due and
payable, together with accrued
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interest thereon and any other Obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy, at the addresses set forth on the
signature pages hereto or in the assignment agreement pursuant to which a
Lender became a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given if mailed, telecopied or sent by overnight courier, when deposited in the
mail, telecopied or delivered to the overnight courier and if delivered by
hand, when received at the address specified pursuant to this Section 7.01.
SECTION 7.02. Survival. All covenants, agreements,
representations and warranties made by any of the Loan Parties in any Loan
Document and in the certificates or other instruments prepared or delivered in
connection with or pursuant to any Loan Document shall be considered to have
been relied upon by the Lenders and shall survive the making of the Loan
regardless of any investigation made by any of the Lenders or on their behalf,
and shall continue in full force and effect as long as any obligation is
outstanding and unpaid or the Commitments have not been terminated.
SECTION 7.03. Independence of Representations, Warranties and
Covenants. The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any representation,
warranty or covenant shall be deemed to be an exception to any other
representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exception be deemed to permit any action or
omission that would be in contravention of applicable law.
SECTION 7.04. Benefit; Successors and Assigns. (a) This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that the Borrower shall
not have the right to assign or delegate any of its rights or obligations
hereunder or any interest herein without the prior written consent of each
Lender.
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(b) The Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement pursuant
to an assignment agreement acceptable to the Lender. The assignment shall be
deemed effective at the close of business on the date of acceptance and
recordation in the Register pursuant to Section 7.04(c). Upon such
effectiveness, (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned, be released from its obligations under this
Agreement (and, in the case of an assignment covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto (but shall continue to be entitled
to the benefits of Section 7.05).
(c) The Borrower shall maintain a register (the "Register") for
the recordation of the names and addresses of the Lenders and the principal
amount of the Loan owing to each Lender pursuant to the terms hereof from time
to time, which register shall be available for inspection by each party hereto,
at any reasonable time and from time to time upon reasonable prior notice.
(d) If requested by the assignee Lender, the Borrower shall issue
one or more new Notes to the assignee for the portion of the Loan being
assigned.
(e) Any Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement; provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower and the other Lenders shall continue to deal solely and
directly with such selling Lender in connection with such Lender's rights and
obligations under this Agreement.
(f) Any Lender may at any time pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank; provided, however, that no
such pledge shall release any Lender from its obligations hereunder or
substitute such Federal Reserve Bank for such Lender as a party hereto.
SECTION 7.05. Expenses; Indemnity. (a) The Borrower hereby
agrees to pay all reasonable out-of-pocket expenses incurred by the Lenders in
connection with entering into this Agreement and the other Loan Documents, with
any amendments, modifications or waivers of the provisions hereof or thereof,
or with the
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enforcement of any of its rights in connection with any Loan Document or in
connection with the Loan made hereunder, including the fees and disbursements
of United States and Canadian counsels to be Lenders, any local counsel and the
allocated cost of internal counsel.
(b) The Borrower agrees to indemnify each of the Lenders, each of
their Affiliates and the directors, officers, employees and agents of each of
the foregoing (each, an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any Indemnitee relating to or arising out of (i) the execution
or delivery of any Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of any of the transactions contemplated thereby,
(ii) any enforcement of any Lender's rights in connection with any Loan
Document or in connection with the Loan, (iii) the proposed or actual use of
the proceeds of the Loan or (iv) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto (collectively, the "indemnified liabilities"); provided, however,
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a final and nonappealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Borrower shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.
(c) The provisions of this Section 7.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of the Loan or the Notes, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of any Lender. All amounts due under this
Section 7.05 shall be payable on written demand therefor.
SECTION 7.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law and without prior
written notice (which notice is hereby waived by the Borrower), to recoup, set
off and
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apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or obligations of the Borrower now or hereafter existing
under any Loan Document held by such Lender, irrespective of whether or not
such Lender shall have made any demand under such Loan Document and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after such setoff and application made by such Lender, but the failure
to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section 7.06 are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.
SECTION 7.07. Waivers; Amendment. (a) No failure or delay of any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lenders under the Loan
Documents are cumulative and are not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Company in any case shall entitle such party
to any other or further notice or demand in similar or other circumstances.
(b) No Loan Document nor any provision thereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Requisite Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of any Loan, or
extend the maturity of or date for the payment of any principal or interest on
any Loan, or decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) limit or release any
Guarantee, without the prior written consent of each Lender, or (iii) amend or
modify the provisions of this Section or the proviso of Section 7.04(a), or the
definition of "Requisite Lenders", without the prior written consent of each
Lender. Each Lender shall be bound by any waiver, amendment or modification
authorized by this Section 7.07 and any consent by any Lender pursuant to this
Section 7.07 shall bind any assignee of its rights and interests hereunder.
SECTION 7.08. Applicable Law. THIS AGREEMENT AND THE
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OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 7.09. Jurisdiction; Consent to Service of Process. (a)
The Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof (each, a "New York Court"), in any action or
proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Subject to the foregoing and to
paragraph (b) below, nothing in this Agreement shall affect any right that any
party hereto may otherwise have to bring any action or proceeding relating to
any Loan Document against any other party hereto in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to any Loan Document in any New York
Court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) The Borrower hereby consents to the service of process out of
any New York Court in any proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower at its address
specified pursuant to Section 7.01, such service to become effective 30 days
after such mailing. The Borrower designates and appoints CT Corporation
System, 1633 Broadway, New York, New York 10019 and such other persons as may
irrevocably agree in writing to serve as its agent to receive on its behalf,
service of all process in any proceedings in any court, such service being
hereby acknowledged by the Borrower to be effective and binding in every
respect. If any agent appointed by the Borrower refuses to receive and forward
such service, the Borrower hereby agrees that service upon it by mail shall
constitute sufficient service. Nothing in this Guarantee will
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affect the right of any Guaranteed Party to serve process in any other manner
permitted by law.
SECTION 7.10. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT. Each party
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and other parties hereto have been induced to enter into
the Loan Documents by, among other things, the mutual waivers and certification
in this Section 7.10.
SECTION 7.11. Entire Agreement; Benefit. This Agreement and the
other Loan Documents constitute the entire contract among the parties relative
to the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement, the other
Loan Documents and such letter agreement. Nothing in any Loan Document,
expressed or implied, is intended to confer upon any party other than the
parties thereto (other than any other Indemnitee) any rights, remedies,
obligations or liabilities under or by reason of the Loan Documents.
SECTION 7.12. Severability. In the event any one or more of the
provisions contained in any Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.13. Language. The parties have agreed that this document
and all related documents should be drafted in the English language.
SECTION 7.14. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
SECTION 7.15. Headings. Article and Section headings and the
Tables of Contents, Exhibits and Schedules used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into
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consideration in interpreting, this Agreement.
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WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
CEDAR GROUP, INC.
By: /s/ Michel L. Marengere
Name: Michel L. Marengere
Title: Chairman and C.E.O.
Notice Address:
CEDAR GROUP, INC.
500 Notre Dame Street
Lachine, Quebec
H8S 2B2 Canada
Attention: Michel L. Marengere
Telephone: (514) 634-3551
Telecopier: (514) 636-6247
BT COMMERCIAL CORPORATION
By: /s/ Rita Dagdelen-Keskinyan
Name: Rita Dagdelen-Keskinyan
Title: S.V.P.
Notice Address:
BT COMMERCIAL CORPORATION
14 Wall Street, 3rd Floor
New York, New York 10005
Attention: Bruce Addison
Telephone: (212) 618-3481
Telecopier: (212) 618-2640
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