SHARE PURCHASE AGREEMENT
AMONG
THE SHAREHOLDERS OF PJAX, INC.
AND
VITRAN CORPORATION
AND
VITRAN CORPORATION INC.
DATED OCTOBER 2, 2006
TABLE OF CONTENTS
1. INTERPRETATION.......................................................... 2
1.1 DEFINED TERMS.................................................... 2
1.2 CURRENCY......................................................... 7
1.3 SECTIONS AND HEADINGS............................................ 7
1.4 NUMBER, GENDER AND PERSONS....................................... 7
1.5 ACCOUNTING PRINCIPLES............................................ 8
1.6 ENTIRE AGREEMENT................................................. 8
1.7 TIME OF ESSENCE.................................................. 8
1.8 APPLICABLE LAW................................................... 8
1.9 SEVERABILITY..................................................... 8
1.10 CONSTRUCTION..................................................... 9
1.11 KNOWLEDGE........................................................ 9
1.12 SCHEDULES........................................................ 9
2. PURCHASE AND SALE OF PURCHASED SHARES................................... 10
2.1 PURCHASE AND SALE OF PURCHASED SHARES............................ 10
2.2 PURCHASE PRICE................................................... 10
2.3 VITRAN SHARES.................................................... 11
2.4 SEPTEMBER 30, 2006 FINANCIAL STATEMENTS.......................... 11
2.5 DISPUTES CONCERNING SEPTEMBER 30, 2006 FINANCIAL STATEMENTS...... 11
2.6 CASH ON CLOSING.................................................. 12
2.7 ADJUSTMENT FOR INDEBTEDNESS...................................... 12
3. REPRESENTATIONS AND WARRANTIES OF THE VENDORS........................... 13
3.1 ORGANIZATION AND STATUS.......................................... 13
3.2 AUTHORIZED AND ISSUED CAPITAL.................................... 13
3.3 NO OPTIONS....................................................... 13
3.4 NO SUBSIDIARIES.................................................. 13
3.5 NO VIOLATION..................................................... 13
3.6 BUSINESS OF THE CORPORATION...................................... 14
3.7 TITLE TO PERSONAL PROPERTY....................................... 14
3.8 LOCATION OF LEASED REAL PROPERTY................................. 15
3.9 STATUS OF REAL PROPERTY.......................................... 15
3.10 REAL PROPERTY LEASES............................................. 16
3.11 INTELLECTUAL PROPERTY............................................ 17
3.12 AGREEMENTS AND COMMITMENTS....................................... 17
3.13 COMPLIANCE WITH LAWS............................................. 19
3.14 PERMITS AND LICENSES............................................. 19
3.15 CONSENTS AND APPROVALS........................................... 19
3.16 FINANCIAL STATEMENTS............................................. 19
3.17 FINANCIAL BOOKS AND RECORDS...................................... 20
3.18 ACCOUNTS RECEIVABLE.............................................. 20
3.19 FREIGHT DAMAGE CLAIMS............................................ 20
3.20 CORPORATE RECORDS................................................ 20
3.21 ABSENCE OF CHANGES............................................... 21
3.22 TAXES............................................................ 22
3.23 LITIGATION AND OTHER PROCEEDINGS................................. 23
3.24 ACCOUNTS AND POWERS OF ATTORNEYS................................. 24
3.25 DIRECTORS AND OFFICERS........................................... 24
3.26 RELATED PARTY TRANSACTIONS....................................... 24
3.27 ENVIRONMENTAL.................................................... 25
3.28 EMPLOYEE PLANS................................................... 26
3.29 COLLECTIVE AGREEMENTS............................................ 27
3.30 EMPLOYEES........................................................ 27
3.31 EMPLOYEE ACCRUALS................................................ 28
3.32 BONUS PAYMENTS................................................... 28
3.33 WORKER'S COMPENSATION............................................ 28
3.34 CUSTOMERS........................................................ 28
3.35 OWNER-OPERATORS.................................................. 28
3.36 PRODUCT WARRANTIES............................................... 29
3.37 ILLEGAL PAYMENTS................................................. 29
3.38 INDEBTEDNESS..................................................... 29
3.39 SECURITIES LAWS.................................................. 29
3.40 BINDING NATURE................................................... 29
3.41 NO CONFLICT...................................................... 29
3.42 OWNERSHIP OF PURCHASED SHARES.................................... 30
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................... 30
4.1 ORGANIZATION..................................................... 30
4.2 CORPORATE POWER AND AUTHORIZATION................................ 30
4.3 NO VIOLATION..................................................... 30
4.4 FINANCIAL ABILITY................................................ 31
4.5 CONSENTS AND APPROVALS........................................... 31
5. REPRESENTATIONS AND WARRANTIES OF VITRAN................................ 31
5.1 ORGANIZATION..................................................... 31
5.2 CORPORATE POWER AND AUTHORIZATION................................ 31
5.3 NO VIOLATION..................................................... 31
5.4 VITRAN'S FINANCIAL STATEMENTS.................................... 32
5.5 REPORTING ISSUER................................................. 32
5.6 LISTINGS......................................................... 32
5.7 CONSENTS AND APPROVALS........................................... 32
5.8 VITRAN SHARES.................................................... 32
6. COVENANTS............................................................... 33
6.1 DELIVERY OF BOOKS AND RECORDS.................................... 33
6.2 CONDUCT PRIOR TO CLOSING......................................... 33
6.3 DELIVERY OF TRANSFER DOCUMENTS................................... 34
6.4 REGULATORY CONSENTS OF THE CORPORATION........................... 34
6.5 DELIVERY OF CLOSING DOCUMENTATION BY THE VENDORS................. 34
6.6 DELIVERY OF PURCHASER'S CLOSING DOCUMENTATION.................... 34
6.7 REGULATORY CONSENTS OF THE PURCHASER............................. 35
6.8 SECTION 338(H)(10) ELECTION...................................... 35
6.9 REMOVAL OF PERSONAL ITEMS........................................ 37
6.10 RESTRICTION ON TRANSFER OF SHARES................................ 37
6.11 DELIVERY OF ACQUISITION AGREEMENT................................ 37
6.12 TAX COOPERATION.................................................. 37
6.13 DELIVERY OF EMPLOYMENT AGREEMENT................................. 38
7. CLOSING ARRANGEMENTS.................................................... 38
7.1 PLACE OF CLOSING................................................. 38
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7.2 TRANSFER......................................................... 38
7.3 FURTHER ASSURANCES............................................... 38
8. CONDITIONS OF CLOSING................................................... 38
8.1 CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER................. 38
8.2 NON-PERFORMANCE BY THE VENDORS................................... 40
8.3 CONDITIONS OF CLOSING IN FAVOUR OF THE VENDORS................... 40
8.4 NON-PERFORMANCE BY THE PURCHASER................................. 41
9. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES................... 41
9.1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES............ 41
10. INDEMNIFICATION........................................................ 42
10.1 INDEMNIFICATION BY THE VENDORS................................... 42
10.2 INDEMNIFICATION BY THE PURCHASER................................. 42
10.3 LIMITATION ON OBLIGATION TO INDEMNIFY............................ 42
10.4 NOTICE OF CLAIM.................................................. 43
10.5 DIRECT CLAIMS.................................................... 43
10.6 THIRD PARTY CLAIMS............................................... 43
10.7 SETTLEMENT OF THIRD PARTY CLAIMS................................. 44
10.8 CO-OPERATION..................................................... 44
10.9 EXCLUSIVITY...................................................... 45
11. MISCELLANEOUS.......................................................... 45
11.1 CONFIDENTIALITY OF INFORMATION................................... 45
11.2 NOTICES.......................................................... 46
11.3 COMMISSIONS, ETC................................................. 47
11.4 EXPENSES......................................................... 47
11.5 CONSULTATION..................................................... 47
11.6 DISCLOSURE....................................................... 48
11.7 SUCCESSORS AND ASSIGNS........................................... 48
11.8 AMENDMENT AND WAIVERS............................................ 48
11.9 COUNTERPARTS..................................................... 49
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 2nd day of October, 2006.
A M O N G:
THE INDIVIDUAL SHAREHOLDERS OF
PJAX, INC. NAMED ON
SCHEDULE A
(hereinafter called the "VENDORS")
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VITRAN CORPORATION,
a corporation incorporated under the laws of
the State of Nevada,
(hereinafter called the "PURCHASER"),
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VITRAN CORPORATION INC.,
a corporation incorporated under the laws of
the Province of Ontario,
(hereinafter called "VITRAN")
WHEREAS the Vendors desire to sell, and the Purchaser desires to purchase,
all of the issued and outstanding shares of the capital stock of PJAX, Inc., a
corporation incorporated under the laws of the Commonwealth of Pennsylvania,
(the "CORPORATION") for the consideration and on the terms and conditions set
forth in this Agreement;
AND WHEREAS immediately upon giving effect to the purchase of all of the
issued and outstanding shares of the capital stock of the Corporation by the
Purchaser pursuant to this Agreement, the Corporation will purchase the
Woodhurst Assets and the Northridge Assets;
THIS AGREEMENT WITNESSES THAT 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 agree as follows:
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1. INTERPRETATION
1.1 DEFINED TERMS.
In addition to any other terms defined in this Agreement, 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) "338 TAXES" has the meaning set out in subsection 6.8(b);
(b) "ANNUAL FINANCIAL STATEMENTS" means the annual audited financial
statements of the Corporation for the fiscal years ended December 31,
2005 and December 31, 2004, copies of which financial statements are
annexed hereto as Schedule 1.1(b);
(c) "APPLICABLE INCOME TAXES" has the meaning set out in subsection
6.8(a);
(d) "ACQUISITION AGREEMENT" means the agreement for the purchase and sale
of the Northridge Assets and the Woodhurst Assets between the
Corporation (as purchaser) and Northridge Enterprises, L.P. and
Woodhurst Realty, LLC (as sellers), in the form agreed to by the
parties thereto;
(e) "BUSINESS" means the business currently and heretofore carried on by
the Corporation consisting of the provision of less than truckload
transportation services and related services, including the provision
of truckload transportation services;
(f) "BUSINESS DAY" means any day other than a Saturday, a Sunday or a
statutory holiday in either of the State of Pennsylvania or the
Province of Ontario;
(g) Intentionally Deleted;
(h) "CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended;
(i) "CLAIM" has the meaning set out in Section 10.4;
(j) "CLOSING ADJUSTMENTS" means (i) any salary, bonuses, fringe benefits,
perquisites or other compensation, distributions or other payments
between the Vendors and the Corporation and (ii) with respect to the
September 30, 2006 Financial Statements, any adjustments or
modifications in reserves and accruals, whether made by or at the
request or suggestion of the Vendors, the Purchaser or Vitran, related
to (a) allowance for doubtful accounts receivable; (b) incurred but
not reported health care expenses; (c) revenue adjustment accrual; (d)
revenue reduction for shipments picked up but not delivered; (e)
incurred but not reported workers compensation claims (including
developed claims); (f) vacation and sick pay; (g) automobile liability
claims; (h) general liability claims; (i) freight loss or
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damage claims; (j) accrued bonuses; (k) accrued audit fees; (l)
accrued tax and legal services fees; and (m) accrued third party
repairs and maintenance;
(k) "CLOSING DATE" means October 2, 2006, or such other date as may be
mutually agreed by the parties;
(l) "CODE" has the meaning set out in Section 3.22;
(m) "CONTRACT" means any agreement, indenture, contract, lease, deed of
trust, license, option, instrument or other commitment, whether
written or oral;
(n) "CONTROL" shall be deemed to occur between a corporation and another
person if:
(i) voting securities of the corporation carrying more than 50% of
the votes for the election of directors are held, otherwise than
by way of security only, by or for the benefit of the other
person; and
(ii) the votes carried by such securities are entitled, if exercised,
to elect a majority of the board of directors of the corporation;
(o) "DIRECT CLAIM" has the meaning set out in Section 10.4;
(p) "EBIT" means at any time, without duplication, the net income of the
Corporation determined in accordance with generally accepted
accounting principals for the relevant period (i) plus the following
(to the extent that any of the following items were deducted in
calculating such net income) and/or (ii) minus the following (to the
extent any of the following items were added in calculating such net
income), total net interest expense/income, dividends expense/income
and taxes expense/recovery;
(q) "EBIT CALCULATION" has the meaning set out in Section 2.4;
(r) "ERISA" means the Employee Retirement Security Act of 1974, as
amended;
(s) "ELECTION" has the meaning set out in subsection 6.8(a);
(t) "EMPLOYEE PLANS" means the employee benefit plans (as defined in ERISA
Section 3(3)) established by or for the employees of the Corporation
and all other plans, programs, funds, arrangements and contractual
undertakings, whether for the benefit of a single individual or for
more than one individual, and whether or not funded, which is in the
nature of (i) an employee pension benefit plan as defined in ERISA
Section 3(2), (ii) an employee welfare benefit plan (as defined in
ERISA Section 3(1)), or (iii) any incentive or other benefit
arrangement for employees, their beneficiaries and/or their
dependents;
(u) "ENCUMBRANCE" means any encumbrance, lien, charge, pledge, mortgage,
title retention agreement, security interest of any nature, adverse
claim, exception,
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reservation, easement, restriction, 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;
(v) "ENVIRONMENTAL LAWS" means any Law with respect to any Hazardous
Materials, drinking water, groundwater, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste
water, storm water run-off waste emissions, wells or otherwise
concerning pollution, or the protection of the environment; without
limiting the generality of the foregoing, the term will encompass the
following statutes and regulations promulgated thereunder and any
similar applicable state or local statute or regulation as in effect
on the Closing Date: (i) CERCLA, (ii) RCRA, (iii) the Hazardous
Materials Transportation Act, (iv) the Toxic Substances Control Act,
(v) the Clean Water Act, (vi) the Clean Air Act, (vii) the Safe
Drinking Water Act, (viii) the National Environmental Policy Act of
1969, and (ix) Title III of the Superfund Amendment and
Reauthorization Act of 1986;
(w) "FINANCIAL STATEMENTS" means the Annual Financial Statements and the
Interim Period Financial Statements;
(x) "GOVERNMENTAL ENTITY" means any government or any governmental agency,
bureau, board, commission, department, regulatory agency, or political
subdivision, whether federal, state or local, domestic or foreign;
(y) "HAZARDOUS MATERIALS" means each and every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as hazardous or toxic under
any Environmental Law or the Release of which is prohibited under any
Environmental Law; without limiting the generality of the foregoing,
the term will include (i) "hazardous substances" as defined in CERCLA
or the Superfund Amendments and Reauthorization Act of 1986, each as
amended and all regulations promulgated thereunder, (ii) "hazardous
waste" as defined in RCRA, as amended, and all regulations promulgated
thereunder, (iii) "hazardous Materials" as defined in the Hazardous
Materials Transportation Act, as amended, and all regulations
promulgated thereunder, and (iv) "chemical substance or mixture" as
defined in the Toxic Substances Control Act, as amended, and all
regulations promulgated thereunder;
(z) "INDEMNIFIED PARTY" has the meaning set out in Section 10.4;
(aa) "INDEMNIFYING PARTY" has the meaning set out in Section 10.4;
(bb) "INTELLECTUAL PROPERTY" has the meaning set out in Section 3.11;
(cc) "INTERIM PERIOD FINANCIAL STATEMENTS" means the unaudited financial
statements of the Corporation as at and for the eight month period
ended
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August 31, 2006, a copy of which financial statements are annexed
hereto as Schedule 1.1(cc);
(dd) "LAW" means any federal, state, local or municipal, domestic or
foreign, constitutional provision, statute, law, by-law, rule,
regulation, Permit, decree, injunction, judgment, order, or legally
binding ruling, determination, common law rule, finding or writ of any
Governmental Entity or any court of other tribunal;
(ee) "LEASED REAL PROPERTY" has the meaning set out in Section 3.8;
(ff) "LICENSE" has the meaning set out in Section 3.14;
(gg) "LOAN BALANCE" and "DEBT" have the respective meanings set out in
Section 2.7;
(hh) "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 and consultant fees and disbursements, interest,
penalties and amounts paid in settlement) arising directly or
indirectly as a consequence of such matter;
(ii) "MATERIAL ADVERSE CONSEQUENCE" and "MATERIAL ADVERSE CHANGE" mean any
one or more consequences or changes having the potential to produce
adverse financial consequences or changes to or for the Corporation of
more than $100,000 provided that any consequences or changes involving
amounts of $25,000 or less will not be considered in determining
whether a Material Adverse Consequence or a Material Adverse Change
has occurred;
(jj) "MATERIAL CONTRACT" means any Contract if it requires or may require
the provision by the Corporation to any person of goods or services,
or the making of a financial obligation by the Corporation in excess
of $50,000, excluding, however, any Contract which requires the
Corporation to provide transportation service at a fixed rate if such
Contract is not terminable without penalty in less than 60 days;
(kk) "NORTHRIDGE ASSETS" means all of the real estate owned by Northridge
Enterprises, L.P. as described in the Acquisition Agreement;
(ll) "ORDER" means any agreement or any judgment, order, writ, prohibition,
injunction, decree, award, or other requirement of any Governmental
Entity;
(mm) "PERMIT" means any license, permit, approval, authorization, consent,
registration, franchise, certificate of authority or order,
certificate of occupancy, building, safety and fire and health
approval, including, for greater certainty, the business permit
license of each terminal owned or operated by the Corporation, or any
waiver of the foregoing, issued by any Governmental Entity;
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(nn) "PERMITTED ENCUMBRANCES" are those Encumbrances described in Schedule
1.1 (nn);
(oo) Intentionally Deleted;
(pp) "PROCEEDINGS" has the meaning set out in Section 3.23;
(qq) "PURCHASE PRICE" has the meaning set out in Section 2.2;
(rr) "PURCHASED SHARES" has the meaning set out in Section 2.1;
(ss) "PURCHASER 338 PAYMENTS" has the meaning set out in subsection 6.8(b);
(tt) "PURCHASER'S REPRESENTATIVES" has the meaning set out in Section 10.1;
(uu) "RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended;
(vv) "REAL PROPERTY LEASES" has the meaning set out in Section 3.10;
(ww) "RELATED AGREEMENTS" means the Employment Agreement, the
non-competition agreements referred to in subsection 8.1(g) and the
Acquisition Agreement;
(xx) "RELATED PARTY" means (i) any of the Vendors, (ii) any parent, child,
spouse or sibling of any of the Vendors, or (iii) any person which is
controlled by any of the Vendors and/or any parent, child, spouse or
sibling of any of the Vendors;
(yy) "RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching,
dumping, discarding, burying, abandoning or disposing into the
environment;
(zz) "SECURITIES ACT" means the Securities Act of 1933, as amended;
(aaa) "SEPTEMBER 30, 2006 BALANCE SHEET" has the meaning set out in Section
2.4;
(bbb) "SEPTEMBER 30, 2006 FINANCIAL STATEMENTS" has the meaning set out in
Section 2.4;
(ccc) "SEPTEMBER 30, 2006 INCOME STATEMENT" has the meaning set out in
Section 2.4;
(ddd) "SUBSIDIARY" means a corporation which is controlled, directly or
indirectly, by another corporation;
(eee) "TAXES" means all taxes, assessments, charges, duties, fees,
registrations, levies or other governmental charges (including
interest, penalties or additions associated therewith) including
without limitation federal, state, city, county, foreign or other
income, franchise, gross receipts, license, employment, excise,
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severance, stamp, occupation, premium, windfall profits, capital
stock, profits, registration, alternative or add-on minimum,
estimated, real property, personal property, tangible, withholding,
source deductions from payroll, Federal Insurance Contributions Act,
payroll taxes, unemployment compensation, workers' compensation,
employee related taxes, disability, transfer, sales, use, gasoline,
fuel, excise, goods and services, value added, customs duty, gross
receipts and all other taxes of any kind affecting the Corporation and
for which the Corporation may have any liability imposed by any
Governmental Entity, whether disputed or not, including any interest,
penalty, or addition thereto, and including any obligations to
indemnify or otherwise assume or succeed to the tax liability of any
other person;
(fff) "THIRD PARTY" has the meaning set out in Section 10.6;
(ggg) "THIRD PARTY CLAIM" has the meaning set out in Section 10.4;
(hhh) "TIME OF CLOSING" means 8:00 a.m. Eastern Daylight Savings time on
the Closing Date;
(iii) "VITRAN SHARES" means the common shares in the capital of Vitran; and
(jjj) "WOODHURST ASSETS" means all of the real estate owned by Woodhurst
Realty, LLC, as described in the Acquisition Agreement.
1.2 CURRENCY.
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are dollars of the United States of America.
1.3 SECTIONS AND HEADINGS.
The division of this Agreement into Articles and Sections and the insertion
of headings and a table of contents are for convenience of reference only
and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, Section or
Schedule refers to the specified Article or Section of, or Schedule to,
this Agreement.
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 persons shall include individuals, corporations, companies,
partnerships, limited liability companies, limited liability partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities.
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1.5 ACCOUNTING PRINCIPLES.
Except as otherwise noted, any reference in this Agreement to generally
accepted accounting principles refers to generally accepted accounting
principles applicable in the United States as approved at the applicable
time by the Financial Accounting Standards Board.
1.6 ENTIRE AGREEMENT.
This Agreement, including the Schedules attached hereto, 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. 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.
1.7 TIME OF ESSENCE.
Time shall be of the essence of this Agreement.
1.8 APPLICABLE LAW.
All questions concerning the construction, validity and interpretation of
this Agreement and the Schedules hereto will be governed by the internal
law, and not the law of conflicts, of the Commonwealth of Pennsylvania,
except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement and as to those matters the law of the jurisdiction under which
such entity derives its power shall govern. Each party hereby waives trial
by jury in any judicial proceeding involving, directly or indirectly, any
matter, in any way arising out of or related to, or in connection with this
Agreement whether sounding in contract, tort or otherwise. Any such matter
shall be heard in the United States District Court for the Western District
of Pennsylvania sitting in Pittsburgh, Pennsylvania, to the extent that it
has subject matter jurisdiction thereover and not in state court, and if
the said federal court does not have subject matter jurisdiction, in the
Court of Common Pleas of Allegheny County, Pennsylvania, which courts shall
have sole and exclusive jurisdiction over any such matter.
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.
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1.10 CONSTRUCTION.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rule of strict
construction will be applied against any party.
1.11 KNOWLEDGE.
For the purposes of any reference in this Agreement to the "knowledge of
the Vendors", shall mean, in the case of Donald J. Hammel, his actual
knowledge and, in the case of all of other Vendors, the actual knowledge
that each Vendor has after such due enquiry as a prudent person holding a
similar position in a trucking company would undertake.
1.12 SCHEDULES.
The following Schedules are attached to and form part of this Agreement:
Schedule A - The Vendors
Schedule 1.1(b) - Annual Financial Statements
Schedule 1.1(cc) - Interim Period Financial Statements
Schedule 1.1 (nn) - Permitted Encumbrances
Schedule 2.1 - Purchased Shares
Schedule 2.2 - Purchase Price
Schedule 2.3 - Vitran Shares
Schedule 2.4 - September 30, 2005 Financial Statements
Schedule 3.1 - Jurisdictions in which Business is Located
Schedule 3.8 - Leased Real Property
Schedule 3.9(a) - Current Uses and Improvements
Schedule 3.9(d) - Accounts Payable
Schedule 3.9(f) - Capital Expenditure
Schedule 3.12 - Contracts
Schedule 3.15 - Consents and Approvals
Schedule 3.21 - Absence of Changes
Schedule 3.23 - Proceedings
Schedule 3.24 - Accounts and Power of Attorneys
Schedule 3.25 - Directors and Officers
Schedule 3.27 - Environmental and Health
Schedule 3.28 - Employee Plans
Schedule 3.34A - Customers
Schedule 3.34B - Rebates, Discounts and Allowances
Schedule 3.38 - Indebtedness
Schedule 4.5 - Purchaser's Consents and Approvals
Schedule 5.4 - Vitran's Financial Statements
Schedule 5.7 - Vitran's Consents and Approvals
Schedule 6.2(c) - Material Contracts of the Vendor
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2. PURCHASE AND SALE OF PURCHASED SHARES
2.1 PURCHASE AND SALE OF PURCHASED SHARES.
Subject to the terms and conditions of this Agreement, each of the Vendors
covenants and agrees to sell, assign and transfer to the Purchaser and the
Purchaser covenants and agrees to purchase, and Vitran covenants and agrees
to cause the Purchaser to so purchase from the Vendors on the Closing Date
that number and class of shares of the Corporation set out opposite the
name of each of the Vendors on Schedule 2.1 (collectively, the "PURCHASED
SHARES"), being all of the issued and outstanding shares of the capital
stock of the Corporation.
2.2 PURCHASE PRICE.
The consideration payable by the Purchaser to the Vendors for the Purchased
Shares and in respect of each of the Vendors entering into the
Non-Competition Agreement shall be $76,985,000, subject to adjustment in
accordance with Sections 2.6, 2.7 and 6.8 and Article 10 (the "PURCHASE
PRICE"), to be paid and satisfied as follows:
(a) $65,005,000 by wire transfer at the Time of Closing of immediately
available funds to the trust account of Vuono & Gray, LLC;
(b) $10,000,000, plus any accrued and unpaid interest on the amount
payable, to be paid on the date that both the September 30, 2006
Financial Statements and the EBIT Calculation are finally determined
pursuant to Section 2.4, provided that the EBIT Calculation is at
least $1,200,000 greater than the EBIT for the three months ending
September 30, 2005 excluding the Closing Adjustments, by wire transfer
of immediately available funds to the order of the each of the Vendors
as set out on Schedule 2.2 or as the Vendors may in writing direct.
For each dollar that the EBIT Calculation is less than $1,200,000 the
amount payable pursuant to this Section 2.2(b) will be reduced by $8.
The interest rate payable on the amount payable shall be simple
interest of 3% per annum;
(c) $1,980,000 to be paid on the date that is thirty (30) days after the
first anniversary of the Closing Date less all amounts payable by the
Vendors pursuant to Article 10, plus any accrued and unpaid interest
on the amount payable, by wire transfer of immediately available funds
to the order of the each of the Vendors as set out on Schedule 2.2 or
as the Vendors may in writing direct. The interest rate payable on the
amount payable shall be simple interest of 4% per annum; and
(d) the amount payable by the Purchaser, if any, pursuant to subsection
6.8(b) at the time required by subsection 6.8(b).
The Vendors shall provide the wire transfer instructions of Vuono & Gray,
LLC to the Purchaser at least two (2) Business Days prior to the Closing
Date.
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2.3 VITRAN SHARES.
On the Closing Date, the Vendors shall subscribe for and purchase, as set
out on Schedule 2.3, and Vitran shall allot and issue to the Vendors, as
set out on Schedule 2.3, at an aggregate subscription price of $13,200,000
that number of fully paid non-assessable Vitran Shares, rounded to the
nearest whole number, equal to $13,200,000 divided by $19.50 (which was the
closing price of Vitran Shares on NASDAQ on September 29, 2006 plus $1.00),
being 676,923 Vitran Shares. The subscription price for the Vitran Shares
shall be paid by wire transfer of immediately available funds from the
amount deposited in the trust account of Vuono & Gray, LLC pursuant to
subsection 2.2(a) in accordance with the wire transfer instructions
provided by Vitran to the Vendors at least two (2) Business Days prior to
the Closing Date. Vitran shall deliver to the Vendors share certificate(s)
by 5:00 p.m. Eastern Daylight Savings time on Wednesday, October 4, 2006
evidencing such Vitran Shares registered in the name of each of the Vendors
as set out on Schedule 2.3 bearing all legends required by applicable
securities laws.
2.4 SEPTEMBER 30, 2006 FINANCIAL STATEMENTS.
As soon as is practicable, and in any event not later than sixty (60) days
following the Closing Date, the Purchaser shall deliver to the Vendors, at
Purchaser's cost, an audited balance sheet for the Corporation as at
September 30, 2006 (the "SEPTEMBER 30, 2006 BALANCE SHEET") and an audited
income statement for the Corporation for the period of January 1, 2006 to
September 30, 2006 (the "SEPTEMBER 30, 2006 INCOME STATEMENT"), each of
which shall be reported on without qualification by KPMG, together with a
calculation of EBIT for the three months ending September 30, 2006
excluding the Closing Adjustments (the "EBIT CALCULATION"). The September
30, 2006 Balance Sheet and the September 30, 2006 Income Statement
(together, the "SEPTEMBER 30, 2006 FINANCIAL STATEMENTS") and the EBIT
Calculation shall be prepared in accordance with generally accepted
accounting principles consistent with those used in the preparation of the
September 30, 2005 financial statements of the Corporation which are
attached as Schedule 2.4 and with EBIT calculation for the three months
ending September 30, 2005 and shall present fairly the financial position
of the Corporation as at the Closing Date and the sales, earnings and
results of operations for the period between January 1, 2006 and September
30, 2006.
2.5 DISPUTES CONCERNING SEPTEMBER 30, 2006 FINANCIAL STATEMENTS.
The Vendors shall have a period of twenty (20) days from the date they
receive the September 30, 2006 Financial Statements and the EBIT
Calculation in which to review the same. For the purpose of such review,
the Purchaser agrees to permit the Vendors and their authorized
representatives to examine all schedules and other documentation used in
the preparation of the September 30, 2006 Financial Statements and the EBIT
Calculation. If no objection to the September 30, 2006 Financial Statements
is given to the Purchaser by the Vendors within such twenty (20) day
period, the September 30, 2006 Financial Statements shall be deemed to have
been approved as of the last day of
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such twenty (20) day period. If the Vendors objects to any part of the
September 30, 2006 Financial Statements within such twenty (20) day period
by giving notice to the Purchaser setting out in reasonable detail the
nature of such objection, the parties agree to attempt to resolve the
matters in dispute within fifteen (15) days from the date the such notice
is received by the Vendors. If all matters in dispute are resolved by the
parties, the September 30, 2006 Financial Statements shall be modified to
the extent required to give effect to such resolution and shall be deemed
to have been approved as of the date of such resolution. If the parties
cannot resolve all matters in dispute within such fifteen (15) day period,
all unresolved matters shall be submitted to the Pittsburgh, Pennsylvania,
office of Ernst & Young LLP ("ERNST & YOUNG") for resolution, and Ernst &
Young shall be given access to all materials and information reasonably
requested by it for such purpose. The Vendors represent and warrant that
Ernst & Young has not provided any products or services to the Corporation
or the Vendors within the last five (5) years prior to the date hereof.
Vitran and the Purchaser represent and warrant that Ernst & Young has not
provided any product or services to either of them within the last five (5)
years prior to the date hereof. The rules and procedures to be followed by
Ernst & Young in resolving the matters in dispute shall be determined by
Ernst & Young in its discretion. Ernst & Young's determination of all such
matters shall be final and binding on both parties and shall not be subject
to appeal by either party. The fees and expenses of Ernst & Young shall be
borne equally by the parties. The September 30, 2006 Financial Statements
shall be modified to the extent required to give effect to Ernst & Young's
determination and shall be deemed to have been approved as of the date of
such determination.
2.6 CASH ON CLOSING.
The Corporation shall have cash in the bank on the close of business on
September 29, 2006 in an amount of $1,500,000. The Vendors represent and
warrant that such cash amount should be sufficient to carry on the Business
in the ordinary course consistent with past practice for the period ending
forty-five (45) days after the Closing and should further amounts be
required, the Vendors shall reimburse the Purchaser for the amount of any
deficiency, such reimbursement to be made initially from the amount
described in subsection 2.2(b) and such reimbursement shall reduce the
Purchase Price.
2.7 ADJUSTMENT FOR INDEBTEDNESS.
The Vendors and the Purchasers acknowledge and agree that the Purchase
Price has been determined based on the assumption that the aggregate
amounts owing by the Corporation, as at the Closing Date, under its
existing term loan from National City Bank of Pennsylvania under its
outstanding capital leases (such amounts collectively the "DEBT") is
$22,640,000 (the "LOAN BALANCE"). To the extent that the actual amount
outstanding on the Debt is greater than the Loan Balance by more than
$1,000, the Vendors shall pay to the Purchaser the amount of such excess
and the Purchase Price shall be reduced accordingly, such repayment to be
made initially from the amount described in subsection 2.2(b). To the
extent that the actual amount outstanding on the Debt is less than the Loan
Balance by more than $1,000, the Purchaser shall pay to the
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Vendors the amount of such difference and the Purchase Price shall be
increased accordingly.
3. REPRESENTATIONS AND WARRANTIES OF THE VENDORS
Each Vendor represents and warrants to the Purchaser as follows and
acknowledges that the Purchaser is relying on such representations and
warranties in connection with its purchase of the Purchased Shares:
3.1 ORGANIZATION AND STATUS.
The Corporation is a corporation validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania. The Corporation is duly
registered, licensed or qualified to carry on business under the laws of
each of the jurisdictions set out in Schedule 3.1, being the only
jurisdictions in which the nature of the Business and its conduct makes
such registration, licensing or qualification necessary.
3.2 AUTHORIZED AND ISSUED CAPITAL.
The authorized capital of the Corporation consists of 100,000 shares of
common stock, par value of $1.00 per share, of which 9,488 shares of common
stock (and no more) have been duly issued and are outstanding as fully paid
and non-assessable.
3.3 NO OPTIONS.
No person has any agreement or option or any right or privilege (whether by
or at 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.
3.4 NO SUBSIDIARIES.
The Corporation does not have any Subsidiaries, is not a party to any
agreement of any nature to acquire, directly or indirectly, any shares in
the capital of, or other equity or proprietary interests in, any person, or
is a party to any agreement to acquire or lease any other business
operations.
3.5 NO VIOLATION.
The execution and delivery of this Agreement by any of the Vendors or the
Corporation and the consummation of the transactions herein provided for
will not result in:
(a) subject to obtaining the consents and approvals set out in Schedule
3.15, the breach or violation of any of the provisions of, or
constitute a default under, or
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conflict with or cause the acceleration of any obligation or debt of
any of the Vendors or the Corporation under:
(i) any Contract to which any of the Vendors or the Corporation is a
party or by which any of them or any of their properties or
assets may be bound or affected;
(ii) any provision of the articles of incorporation, by-laws or
resolutions of the board of directors (or any committee thereof)
or shareholders of the Corporation;
(iii) any judgment, decree, order or award of any court, Governmental
Entity or arbitrator having jurisdiction over any of the Vendors
or the Corporation;
(iv) any Permit or License held by the Corporation or necessary to the
ownership of the Purchased Shares or the operation of the
Business; or
(v) any applicable Law; or
(b) the creation or imposition of any Encumbrance on any of the property
or assets of the Corporation or on any of the Purchased Shares.
3.6 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 as currently conducted.
3.7 TITLE TO PERSONAL PROPERTY.
The personal property of the Corporation (excluding leased personal
property) is owned by the Corporation as the absolute and beneficial owner
thereof with good and valid title thereto, free and clear of all
Encumbrances except for Permitted Encumbrances. At the Time of Closing, the
Corporation shall have the exclusive right to possess, use, occupy and
dispose of all of its personal property, subject to lease terms and
conditions and Permitted Encumbrances. The Purchaser acknowledges having
been provided with a list of tractors, trailers and forklifts used in the
Business. Except for vehicles which are out of service for repairs in the
ordinary course of business and all such repairs do not result in a
Material Adverse Consequence, the tractors, trailers and forklifts used in
the Business are in reasonable repair having regard to the age thereof and
in compliance with the United States Department of Transportation running
standards in all material respects. Subject to the foregoing the Purchaser
is accepting such personal property without any other warranty as to its
condition or state of repair.
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3.8 LOCATION OF LEASED REAL PROPERTY.
Schedule 3.8 sets forth the municipal addresses of any real property
currently leased by the Corporation (the "LEASED REAL PROPERTY"). The
Corporation does not own nor has agreed to acquire, lease or license, any
other real property or interest in real property.
3.9 STATUS OF REAL PROPERTY.
None of the Vendors nor the Corporation have received any notice that the
Leased Real Property or the operation or maintenance thereof, violates any
restrictive covenant or any provision of any federal, state or municipal
law, ordinance, rule or regulation, or encroaches on any property owned by
others. Without limiting the generality of the foregoing:
(a) except as set forth in Schedule 3.9(a), none of the Vendors nor the
Corporation have received any notice from any Governmental Entity and
none of the Vendors has any knowledge that the Leased Real Property,
the current uses thereof and the conduct of the Business do not comply
with all Laws including, without limitation, Laws dealing with zoning,
parking, access, loading facilities, landscaped areas, building
construction, fire and public health and safety and Environmental
Laws;
(b) except as set forth in Schedule 3.9(a), no alteration, repair,
improvement or other work has been ordered, directed or requested in
writing by any Governmental Entity to be done or performed to or in
respect of the Leased Real Property to any of the plumbing, heating,
elevating, water, drainage or electrical systems, fixtures or works by
any municipal, state or other competent authority, which alteration,
repair, improvement or other work has not been completed, and no
written notification has been received by the Corporation of any such
outstanding work being ordered, directed or requested, other than
those which have been complied with in all respects;
(c) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Leased Real Property at the
request of the Corporation have been fully paid and satisfied, and no
person having performed such work or services or having placed or
furnished such material is entitled to claim any Encumbrance against
the Leased Real Property or any part thereof, other than current
accounts in respect of which the payment due date has not yet passed;
(d) except as set forth in Schedule 3.9(d), none of the Vendors nor the
Corporation have received any notice from any Governmental Entity and
none of the Vendors has any knowledge that there are amounts owing in
respect of the Leased Real Property by the Corporation to any
municipal corporation or to any other person or commission owning or
operating a public utility for water, gas, electrical power or energy,
steam or hot water, or for the use thereof, other than current
accounts in respect of which the payment due date has not yet passed;
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(e) no part of the Leased Real Property has been taken or expropriated by
any federal, state, municipal or other competent authority nor has any
notice or proceeding in respect thereof been given or commenced nor do
the Vendors have knowledge of any intent or proposal to give any such
notice or commence any such proceeding;
(f) none of the Vendors nor the Corporation have received any notice from
any lessor or Governmental Entity and none of the Vendors has any
knowledge that there are any material or structural repairs or
replacements which are necessary in order to comply with applicable
Law (except with respect to the Americans with Disabilities Act and
the Occupational Safety and Health Act of 1970 which is dealt with in
Sections 3.13 and 3.27) and without limiting the generality of the
foregoing, none of the Vendors nor the Corporation have received any
notice from any lessor or Governmental Entity that there are repairs
to or replacements of the roof or the mechanical, electrical, heating,
ventilating, air conditioning, plumbing or drainage equipment or
systems which are necessary for continued operations and none of the
Leased Real Property is currently undergoing any alteration or
renovation except as set forth in Schedule 3.9(f). The Purchaser
acknowledges having inspected the Leased Real Property and, subject to
the foregoing representations and warranties, is accepting the Lease
Real Property in reliance upon such inspections, AS IS, without
further warranties as to its condition or state of repair; and
(g) all of the Leased Real Property has access to public roads, and none
of the Vendors nor the Corporations have received any notice from any
Governmental Entity and none of the Vendors has any knowledge that
there are outstanding levies, charges or fees assessed against the
Leased Real Property by any competent authority (including development
or improvement levies, charges or fees) except for ad valorem or
special taxes shown of pubic record.
The representations and warranties of Woodhurst Realty, LLC and Northridge
Enterprises, L.C. set out in the Acquisition Agreement are true and
correct.
3.10 REAL PROPERTY LEASES.
The Corporation is not 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 "REAL PROPERTY LEASES") described in Schedule 3.8
relating to the Leased Real Property. Except as described in Schedule 3.8,
the Corporation occupies the Leased Real Property and, subject to the
rights of other tenants in common areas and portions of real property
adjacent to or shared with the Leased Real Property, has the exclusive
right to occupy and use the Leased Real Property. Except as described in
Schedule 3.8, each of the Real Property Leases is in good standing and in
full force and effect without amendment thereto, free and clear of any
Encumbrances, and neither the Corporation nor any other party thereto is in
breach of any covenants, conditions or obligations contained therein or has
received or given notice alleging such breach. None of the Vendors nor the
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Corporation have received any notice from any lessor and none of the
Vendors has any knowledge that any construction, alteration or other
leasehold improvement work with respect to any Real Property Lease remains
to be performed or paid for by the Corporation. None of the Vendors nor the
Corporation have received any notice from any lessor and none of the
Vendors has any knowledge that there are at the present time any disputes
between the Corporation and any lessor relating to provisions of any Real
Property Leases, the state of repair of the premises demised thereunder,
the payment of rent, the calculation or payment of operating costs, realty
taxes, or other payments or amounts. The Purchaser acknowledges having
received a true and correct copy of each Real Property Lease and all
amendments thereto.
3.11 INTELLECTUAL PROPERTY.
The Corporation has the right to use of all registered or pending
registrations for any brand names, business names, trade-marks, service
marks, copyrights, or patents, and has the right to use all trade secrets,
know-how, computer software, designs and other industrial or intellectual
property used in the Business (the "INTELLECTUAL PROPERTY"). To the
knowledge of the Vendors, there exist no claims of any infringement or
breach of any industrial or intellectual property rights of any other
person, and neither the Corporation nor the Vendors has received any notice
that the conduct of the Business, including the use of the Intellectual
Property, infringes upon or breaches any industrial or intellectual
property rights of any other person, or the trade secrets, know-how or
confidential or proprietary information of any other person. To the
knowledge of the Vendors, there exists no infringement or violation of any
of the rights of the Corporation in the Intellectual Property, nor does
there exist any state of facts which casts doubt on the validity or
enforceability of any of the Intellectual Property.
3.12 AGREEMENTS AND COMMITMENTS
Except as disclosed on Schedule 3.12, the Corporation is not a party to or
bound by any Contract of the following nature:
(a) any continuing Material Contract for the purchase of materials,
assets, equipment, fuel, spare parts and other supplies or services;
(b) any employment or consulting Material Contract, Material Contracts
with owner-operators, or any other written Material Contract with any
officer, employee or consultant other than oral Contracts of
indefinite hire terminable by the employer without cause on reasonable
notice (subject to applicable employment and other Laws);
(c) any profit sharing, bonus, stock option, pension, 401(k) 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;
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(d) any trust indenture, mortgage, promissory note, loan agreement,
guarantee or other Material Contract for the borrowing of money or a
leasing transaction of the type required to be capitalized in
accordance with generally accepted accounting principles;
(e) any Material Contract for the disposal or trade-in of any assets;
(f) any Material Contract pursuant to which the Corporation is a lessor of
any machinery, equipment, motor vehicles, office furniture, fixtures
or other personal property;
(g) except for the Real Property Leases, any Contract pursuant to which
the Corporation is a lessee, whether in respect of real or personal
property, including all capital leases;
(h) 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 confidentiality agreements related to the
transactions contemplated by this Agreement);
(i) any joint venture, profit or revenue sharing agreement, partnership
agreement or other business combination;
(j) 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 checks
endorsed for collection and loan guaranties in favour of National City
Bank given by the Corporation with respect to loan obligations of
Woodhurst Realty, LLC);
(k) any other Contract not described above which expires, or may expire if
the same is not renewed or extended at the option of any person other
than the Corporation, more than one (1) year after the date of this
Agreement;
(l) any Contract entered into by the Corporation other than in the
ordinary course of business; or
(m) any other Material Contract.
To the knowledge of the Vendors, the Corporation has performed all of the
material obligations required to be performed by it and is entitled to all
material benefits under and is not in material default or alleged to be in
material default in respect of, any Material Contract relating to the
Business to which it is a party or by which it is bound; all such Material
Contracts are in good standing and in full force and effect, to the
knowledge of the Vendors, and no event, condition or occurrence exists
which, after notice or lapse of time or both, would constitute a default
under any of the foregoing.
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The Purchaser acknowledges having received a true and correct copy of each
Material Contract listed or described on all of the Schedules to this
Agreement.
3.13 COMPLIANCE WITH LAWS.
None of the Vendors nor the Corporation have received any notice nor have
any knowledge that the Corporation is not conducting the Business in
compliance with all applicable Laws of each jurisdiction in which the
Business is carried including, without limitation, the Americans with
Disabilities Act and the Occupational Health and Safety Act of 1970.
3.14 PERMITS AND LICENSES.
None of the Vendors nor the Corporation have received any notice nor have
any knowledge that the Corporation does not hold all Permits, and of all
licenses, permits, approvals, consents, certificates, registrations and
authorizations (each, a "LICENSE") necessary to carry on the Business or to
own or lease any of the property or assets utilized by the Corporation
except where the failure to hold same would result in Material Adverse
Consequenses. To the knowledge of the Vendors the Corporation is not in
default or breach of any Permit or License and, to the knowledge of the
Vendors, no proceeding is pending or threatened to revoke or limit any such
Permit or License.
3.15 CONSENTS AND APPROVALS.
Except for the consents and approvals set out in Schedule 3.15, no
authorization, consent or approval of, or filing with or notice to:
(a) any governmental agency, regulatory body or court; or
(b) any party to a Contract to which the Corporation or the Vendors (in
respect of the Corporation or the Business) is a party or by which it
is bound,
is required in connection with the execution, delivery and performance of
this Agreement by the Vendors or the sale of the Purchased Shares
hereunder.
3.16 FINANCIAL STATEMENTS.
The Financial Statements have been prepared in accordance with generally
accepted accounting principles on a basis consistent with prior periods,
and accurately and fairly set out the assets, liabilities (whether accrued,
absolute, contingent or otherwise) and financial condition of the
Corporation as at the respective dates of the Financial Statements and the
sales, earnings and results of operations of the Corporation for the
respective periods covered by the Financial Statements. To the knowledge of
the Vendors, there are no material liabilities of the Corporation of any
kind whatsoever arising before the date hereof, whether or not accrued and
whether or not determined or determinable, in respect of which the
Corporation may become liable on or after the consummation of the
transactions contemplated by this Agreement other than Closing
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Adjustments or as disclosed on the Financial Statements or current
liabilities incurred by the Corporation since December 31, 2005, in the
ordinary course of the Business none of which will individually, and all of
which in the aggregate will not, produce a Material Adverse Consequence to
the operations of the Business, the results of its operations or its
financial condition or prospects thereof. The financial position and
condition of the Corporation on the date hereof is no worse than as
reflected in the Financial Statements. All accruals on the Financial
Statements and books and records of the Corporation are bona fide and have
been made in good faith based on the knowledge available to the Vendors as
at the Closing Date. Should events subsequent to the Closing Date require
an increase in any such accruals the Vendors, subject to the preceding
sentence of this Section 3.16, will not be responsible for or have any
liability with respect to such increase.
3.17 FINANCIAL BOOKS AND RECORDS.
The books and records of the Corporation have been maintained in accordance
with good bookkeeping practice and generally accepted accounting
principles, and fairly and correctly set out and disclose the financial
position of the Corporation as at the date hereof. All material financial
transactions of the Corporation have been accurately recorded in such books
and records. The Corporation does not have any of its records, systems,
controls, data or information recorded, stored, maintained, operated or
wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or
not) which (including all means of access thereto and therefrom) are not
under its ownership and direct control.
3.18 ACCOUNTS RECEIVABLE.
All outstanding accounts receivable, book debts or other debts due and
accruing to the Corporation are good and collectible, subject to the
allowance for doubtful accounts reflected in the Financial Statements. All
accruals in the Financial Statements for bad debts or doubtful accounts are
reasonable based on historical experience.
3.19 FREIGHT DAMAGE CLAIMS.
The Corporation has made adequate accruals based on its historical
experience with respect to freight damage claims and has properly reflected
such accruals in its books and records.
3.20 CORPORATE RECORDS.
The corporate records and minute books of the Corporation contain accurate
minutes of all meetings of the directors and shareholders of the
Corporation.
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3.21 ABSENCE OF CHANGES.
Other than as disclosed in Schedule 3.21 or provided for under this
Agreement (including any Closing Adjustments), since December 31, 2005, the
Corporation has carried on the Business and conducted its operations and
affairs only in the ordinary course of business consistent with past
practices and there has not been:
(a) any Material Adverse Change to the condition (financial or otherwise),
assets, liabilities, operations, earnings, business or prospects of
the Corporation or the Business;
(b) any material damage, destruction or loss (whether or not covered by
insurance) 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 course of
business, or as disclosed in any Contract listed on any Schedule
hereto;
(d) any payment, discharge or satisfaction of any 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, repayment of indebtedness in accordance
with its terms and tax liabilities incurred in the ordinary course of
business;
(e) any issuance or sale by the Corporation or any Contract entered into
the Corporation for the issuance or sale by the Corporation of any
shares, or securities convertible into or exercisable for shares, in
the capital of the Corporation;
(f) any labour trouble having the potential to have a Material Adverse
Consequence to the Corporation;
(g) any license, sale, assignment, transfer or disposition of any property
or assets of the Corporation other than the replacement or retirement
of equipment in the ordinary course of business;
(h) any write-off as uncollectible of any accounts or notes receivable or
any portion thereof by the Corporation;
(i) any cancellation of any debts or claims or any amendment, termination
or waiver of any rights of value to the Corporation;
(j) any general increase in the compensation of employees of the
Corporation other than the Vendors (including, without limitation, any
increase pursuant to any Employee Plan or commitment);
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(k) other than to the Vendors the payment of any bonuses or other
withdrawals out of the ordinary course of business of the Corporation,
any increase in any compensation or bonus (including, without
limitation, any increase pursuant to any Employee Plan or commitment)
payable to any director, officer, salaried employee, consultant or
agent of the Corporation having an annual salary or remuneration in
excess of $50,000, or the execution of any employment contract with
any officer or employee having an annual salary or remuneration in
excess of $50,000, or the making of any loan to any employee, officer
or director of the Corporation;
(l) except as approved in writing by the Purchaser, any capital
expenditures or commitments of the Corporation out of the ordinary
course of the Business;
(m) any alteration of the capital expenditure or accounts payable policies
of the Corporation;
(n) 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;
(o) any forward sales commitments other than in the ordinary course of
business or any failure to satisfy any accepted order for goods or
services;
(p) any change in the accounting or tax practices followed by the
Corporation (other than Closing Adjustments);
(q) any change adopted by the Corporation in its depreciation or
amortization policies or rates;
(r) any change in the credit terms offered to customers of, or by
suppliers to, the Corporation or any change in the Corporation's
practice of collecting accounts receivable or managing accounts
payable; or
(s) any authorization, agreement or any commitment whatsoever to do any of
the foregoing.
3.22 TAXES.
(a) The Corporation has duly completed and filed on a timely basis all tax
returns, declarations, elections and filings required to be filed by
it and all such returns are true, correct and complete. The
Corporation has paid all Taxes which are due and payable including
with respect to the year ended December 31, 2005, and there are no
Encumbrances on the Purchased Shares that arose in connection with the
failure or alleged failure to pay any such Tax. The Corporation has
made adequate provision on its books and records for Taxes payable by
it for the current period and any previous period for which tax
returns are not yet required
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to be filed or for which tax payments are not yet due, including
periods for which an extension to file has been granted, and Purchaser
acknowledges that the Corporation, and not the Vendors, will be
responsible for taxes which have been fully accrued but which may
become due and payable after the Time of Closing. The Vendors have no
knowledge that the Corporation has any liabilities for any Taxes other
than as shown on the Financial Statements or fully accrued in the
books and records of the Corporation. There are no actions, suits,
Proceedings, investigations or claims pending or, to the knowledge of
the Vendors, threatened in writing against the Corporation in respect
of Taxes nor are any matters under discussion with any Governmental
Entity relating to Taxes asserted by any such authority nor any
outstanding audits by any taxing authority with respect to the
Corporation. The Corporation has withheld from each payment made to
any of its past or present employees, officers, directors, consultants
or other service providers, 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 Purchaser acknowledges that the
Vendors have provided to the Purchaser a true and correct copy of all
tax returns filed by the Corporation since January 1, 2000.
(b) The Corporation, and except for Pittsburg-Johnston-Altoona Express,
Inc., any predecessor of the Corporation, has been a validly electing
S Corporation within the meaning of the United States Internal Revenue
Code (the "CODE") sections 1361 and 1362 at all times during its
existence and the Corporation will be an S Corporation up to and
including the Closing Date.
(c) The Corporation and the Vendors shall not revoke the Corporation's
election to be taxed as an S Corporation within the meaning of the
Code section 1361 and 1362. The Corporation and the Vendors shall not
take all or any action (other than the sale of the Corporation's stock
pursuant to this agreement) that would result in the termination of
the Corporation's status as a validly electing S Corporation within
the meaning of the Code sections 1361 and 1362 prior to the Closing
Date.
(d) The Corporation shall not be liable for any Taxes under the Code
section 1374 in connection with the deemed sale of the Corporation's
assets caused by the Code section 338(h)(10) Election. Except for the
merger between Pittsburgh-Johnston-Altoona Express, Inc., and the
Corporation on January 1, 2000, the Corporation has not, in the past
10 years, acquired assets from another corporation in a transaction in
which the Corporation's tax basis for the acquired assets was
determined, in whole or in part, by reference to the tax basis of the
acquired assets in the hands of the transferor.
3.23 LITIGATION AND OTHER PROCEEDINGS.
Except as set out in Schedule 3.23 and in the Corporation's loss runs,
there is no court, administrative, regulatory or similar proceeding
(whether civil or criminal), arbitration or
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other dispute resolution procedure, investigation or inquiry by any
governmental, administrative, regulatory or similar body, or any similar
matter or proceeding (collectively, "PROCEEDINGS") pending which could
result in Losses to the Corporation against or involving the Corporation
(whether in progress or threatened in writing). To the knowledge of the
Vendors, except as set out in the Corporation's loss runs no event has
occurred which has a substantial likelihood of giving rise to any
Proceedings. Except as set out in Schedule 3.23, to the knowledge of the
Vendors there is no judgment, decree, injunction, rule, award or order of
any court, government department, board, commission, agency, arbitrator or
similar body outstanding against the Corporation. The Vendors have provided
the Purchaser with particulars of the Corporation's loss runs as at the
close of business on September 26, 2006 and will provide an update to the
Purchaser as to changes in the Corporation's loss runs up to the Time of
Closing.
3.24 ACCOUNTS AND POWERS OF ATTORNEYS.
Schedule 3.24 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 (b) the name of each person
holding a general or special power of attorney from the Corporation and a
summary of the terms thereof.
3.25 DIRECTORS AND OFFICERS.
Schedule 3.25 sets forth the names and titles of all the officers and
directors of the Corporation.
3.26 RELATED PARTY TRANSACTIONS.
Except for transactions that will be terminated on or before the Closing
Date without any further liability to the Corporation, since December 31,
2005 the Corporation has not made any payment or loan to, or borrowed any
monies from or is otherwise indebted to, any officer, director, employee,
shareholder or any other Related Party, except as disclosed in the
Financial Statements or except for usual employee reimbursements and
compensation paid in the ordinary course of business. Except for
transactions that will be terminated on or before the Closing Date without
any further liability to the Corporation, except for Contracts of
employment, the Corporation is not a party to any Contract with any
officer, director, employee, shareholder or any other Related Party. Except
as described in Schedule 3.26, no officer, director or shareholder of the
Corporation and no entity which is controlled by one or more of such
individuals:
(a) owns, directly or indirectly, any interest in (except for shares
representing less than one per cent (1%) 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
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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 Financial Statements and claims in
the ordinary course of business such as for accrued vacation pay and
accrued benefits under the Employee Plans referenced in Section 3.28.
3.27 ENVIRONMENTAL.
Except as described in Schedule 3.27:
(a) none of the Vendors nor the Corporation have received any notice of
non-compliance with or remediation obligation under Environmental Laws
that would have a Material Adverse Consequence to the Business;
(b) the Corporation has not received any written notice alleging that any
of the buildings on the Leased Real Property constitute a nuisance or
trespass;
(c) the Corporation has not received any written notice of any
non-compliance by the Business from any Governmental Entity issued
pursuant to any Environmental Laws which remain outstanding;
(d) none of the Northridge Assets and Woodhurst Assets nor any other real
or immovable property at any time owned the Corporation is listed on
the federal CERCLIS or National Priorities List;
(e) to the knowledge of the Vendors there are no underground tanks or
containers or piping connected thereto located on, buried in, or which
have been previously removed by the Corporation from the Leased Real
Property;
(f) Hazardous Materials used in the Business are used, documented, stored,
treated, transported and disposed of by the Corporation in compliance
with all Environmental Laws in all material respects;
(g) during the Corporation's possession of the Leased Real Property, none
of the Leased Real Property is or has been a hazardous treatment,
storage or disposal facility as such terms are defined for purposes of
RCRA or applicable state law;
(h) the Corporation has not received any written notice under Section
104(e) or order under Section 106 of CERCLA, or under similar
provisions of a federal, state or local law, with respect to potential
liability for off-site disposal of Hazardous Materials. The Purchaser
acknowledges that the Vendors have provided to the
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Purchaser a copy of all environmental audits or studies conducted by,
on behalf or at the request of the Corporation;
(i) to the knowledge of the Vendors all buildings and other structures
located on the Leased Real Property do not contain any Hazardous
Materials in violation of Environmental Laws;
(j) the Corporation has not received any written notice of any
non-compliance by the Business under the Americans with Disabilities
Act; and
(k) the Corporation has filed all reports and maintained all material
records required by the Occupational Safety and Health Act of 1970.
3.28 EMPLOYEE PLANS.
Schedule 3.28 provides a complete list of the Employee Plans of the
Corporation. Except as set forth in Schedule 3.28:
(a) each of the Employee Plans has been, if required by Law, registered
under and to the knowledge of the Vendors is in compliance with all
applicable legislation and has been maintained in compliance with its
terms;
(b) no individual shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any benefit plan,
including the right to receive any parachute payment, as defined in
Section 280G of the Code or any similar legislation, or become
entitled to severance, termination allowance or similar payments as a
direct result of the transactions contemplated by this Agreement;
(c) the Corporation has not had asserted against it any claim for taxes
under subtitle D, Chapter 43 of the Code, Section 5000 of the Code, or
for penalties under ERISA Section 502(c), (I), or (1), with respect to
any Employee Plan nor is there a basis for any such claim. To the
knowledge of the Vendors, no officer, director or employee of the
Corporation has committed a breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA with respect to any
Employee Plan;
(d) other than routine claims for benefits, there is no claim pending or
threatened in writing, involving any Employee Plan by any person
against such plan or the Corporation. There is no pending or
threatened in writing proceeding involving any Employee Plan before
the Internal Revenue Service, the U.S. Department of Labor or any
other governmental authority;
(e) to the knowledge of the Vendors, there is no violation of any
reporting or disclosure requirement imposed by ERISA or the Code with
respect to any Employee Plan;
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(f) to the knowledge of the Vendors, each Employee Plan has been
maintained in all respects, by its terms and in operation, in
accordance with ERISA and the Code. To the knowledge of the Vendors,
the Corporation has made full payment of all amounts required to be
contributed under the terms of each Employee Plan and applicable law
or required to be paid as expenses under such Employee Plan. Each
Employee Plan required to be qualified under Code Section 401(a) has
received a determination letter to that effect from the Internal
Revenue Service and to the knowledge of the Vendors no event has
occurred and no amendment has been made that would adversely affect
such qualified status except any operational or other defects which
may be corrected under applicable procedures;
(g) with respect to any group health plans maintained for the benefit of
employees of the Business, the Corporation has complied in all
respects with the provisions of the Part y of Title I of ERISA and
4980B of the Code. Neither the Corporation nor the Business is
obligated to provide health care benefits of any kind to its retired
employees pursuant to any Employee Plan, including without limitation
any group health plan, or pursuant to any agreement or understanding;
and
(h) the Purchaser acknowledges that the Vendors have provided to the
Purchaser a copy, if applicable, of the three (3) most recently filed
Federal Form 5500 series and accountant's opinion's, if applicable,
for each Employee Plan and all applicable Internal Revenue Service
determination letters.
3.29 COLLECTIVE AGREEMENTS.
The Corporation has not made any Contracts with any labor union or employee
association nor made commitments to or conducted negotiations with any
labor union or employee association with respect to any future agreements
and to the knowledge of the Vendors there are no current attempts to
organize or establish any labor 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.
3.30 EMPLOYEES.
The Vendors have delivered to the Purchaser a complete and accurate list of
the names of all employees of the Corporation, specifying the length of
hire, title or classification and rate of salary and commission or bonus
entitlements (if any) for each such employee. There are no complaints,
grievances, claims, work orders, human rights or equal opportunity claims,
investigations or charges outstanding or anticipated. There are no orders,
decisions, directions or convictions currently registered or outstanding by
any tribunal or agency against or in respect of the Corporation by or in
respect of any of its employees.
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3.31 EMPLOYEE ACCRUALS.
All accruals for unpaid vacation pay, premiums for unemployment insurance,
health premiums, social security taxes, accrued wages, salaries and
commissions and employee benefit plan payments have been reflected in the
books and records the Corporation. The Corporation is not in arrears in the
payment of any vacation pay, bonuses, commissions, benefits, social
security payments, sick leave benefits and other emoluments with respect to
its employees whether arising by operation of Law, by contract or by past
custom.
3.32 BONUS PAYMENTS.
No employee of or consultant to the Corporation, other than the Vendors,
has been paid a bonus or bonuses by the Corporation of more than $25,000 in
any calendar year since January 1, 2004.
3.33 WORKER'S COMPENSATION.
The Corporation is in good standing under and in compliance with the
provisions of applicable worker's compensation, applicable employee health
and safety, training or similar legislation in each jurisdiction where it
carries on business. All accruals with respect to any worker's compensation
claims and liabilities, including incurred but not reported worker's
compensation claims and liabilities and worker's compensation claims
development, have been made in good faith by the Corporation and are
reflected in the books and records of the Corporation.
3.34 CUSTOMERS.
Schedule 3.34A sets out the top one hundred (100) customers of the Business
of the Corporation by revenue for the six (6) month period ended June 30,
2006. Except as set out in Schedule 3.34A, to the knowledge of the Vendors,
the Corporation has a good working commercial relationship with its
respective customers as a whole and has not received any written notice
from a customer material to the Business as a whole or a definitive notice
from an individual of authority of a customer material to the Business as a
whole advising that it will cancel a substantial portion of its business
relationship with the Business. All incentives given to customers other
than discounts from published rates set out in Schedule 3.34B are disclosed
in Schedule 3.34B and have been fully paid or fully reserved for in the
Financial Statements. There has been no alteration of or relating to the
provision of incentives given to customers of the Corporation since
December 31, 2005.
3.35 OWNER-OPERATORS.
The Corporation has not entered into any Contract with any owner-operator.
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3.36 PRODUCT WARRANTIES.
The Corporation has not given any express, written warranties given to
purchasers of products supplied or services provided by the Corporation
other than such warranties as may be implied by law.
3.37 ILLEGAL PAYMENTS.
None of the directors, officers or employees of the Corporation has paid or
caused to be paid, directly or indirectly, in connection with the Business:
(a) to any government or agency thereof, any supplier or customer or any
agent of any supplier or customer, any bribe, kickback or other
similar payment; or
(b) any contribution to any political party or candidate (other than from
personal funds of the Vendors or directors, officers or employees of
the Corporation not reimbursed by the Corporation or as otherwise
permitted by applicable Law).
3.38 INDEBTEDNESS.
At the Time of Closing, and except for the indebtedness under the capital
leases and the term loan described in Schedule 3.38, the Corporation shall
not have any indebtedness to any person for borrowed money.
3.39 SECURITIES LAWS.
Each Vendor understands and confirms that such Vendor is an "accredited
investor" within the meaning of National Instrument 45-106 - Prospectus and
Registration Exemptions and applicable United States securities laws or is
able to acquire the Vitran Shares based on an exemption from the
requirement to prepare and file a prospectus or a registration statement
under applicable securities laws.
3.40 BINDING NATURE.
This Agreement is, and at the Time of Closing each of the agreements,
contracts and instruments required by this Agreement to be executed and
delivered by each of the Vendors will be, duly executed and delivered by
each of the Vendors and a legal, valid and binding obligation of each
Vendors, enforceable against such Vendor by the Purchaser in accordance
with its terms.
3.41 NO CONFLICT.
Such Vendor is not a party to, subject to or bound by any Order that would
prevent the execution or delivery of this Agreement or any Related
Agreements by such Vendor or the transfer, conveyance and sale of the
Purchased Shares to be sold by such Vendor to the Corporation pursuant to
the terms hereof.
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3.42 OWNERSHIP OF PURCHASED SHARES.
Each Vendor is the sole record and beneficial owner of all the Purchased
Shares that are to be acquired by the Purchaser from such Vendor, and upon
transfer of such Purchased Shares to the Corporation, the Corporation will
acquire all rights of such Vendor in such Purchased Shares, free and clear
of any and all Encumbrances. Schedule 2.1 sets forth a true and correct
description of all Purchased Shares owned by such Vendor as of the date
hereof, which are to be acquired by the Corporation.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the Vendors as follows and
acknowledges and confirms that each of the Vendors is relying on such
representations and warranties in connection with the sale by the Vendors
of the Purchased Shares:
4.1 ORGANIZATION.
The Purchaser is a corporation validly existing and in good standing under
the laws of the State of Nevada.
4.2 CORPORATE POWER AND AUTHORIZATION.
The Purchaser has the corporate power and capacity to enter into this
Agreement and to perform its obligations hereunder. This Agreement is, and
at the Time of Closing each of the agreements, contracts and instruments
required by this Agreement to be executed and delivered by the Purchaser
will be, duly authorized, executed and delivered by the Purchaser and a
legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser by the Vendors in accordance with its terms.
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
breach or violation of, or constitute a default under or conflict with or
cause the acceleration of any debt or other 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 articles of incorporation 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, Government Entity
or arbitrator having jurisdiction over the Purchaser; or
(d) any applicable Law.
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4.4 FINANCIAL ABILITY.
Buyer has the financial resources to discharge in a timely fashion all of
its obligations under this Agreement and under the Related Agreements.
4.5 CONSENTS AND APPROVALS.
Except as set out in Schedule 4.5, there is no requirement for the
Purchaser to make any filing with, give any notice to or obtain any
license, 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.
5. REPRESENTATIONS AND WARRANTIES OF VITRAN
Vitran represents and warrants to each of the Vendors as follows and
acknowledges and confirms that each of the Vendors is relying on such
representations and warranties in connection with the sale by the Vendors
of the Purchased Shares:
5.1 ORGANIZATION.
Vitran is a corporation validly existing under the laws of the Province of
Ontario.
5.2 CORPORATE POWER AND AUTHORIZATION.
Vitran has the corporate power and capacity to enter into this Agreement
and to perform its obligations hereunder. This Agreement is, and at the
Time of Closing each of the agreements, contract and instruments required
by this Agreement to be executed and delivered by Vitran will be, duly
authorized, executed and delivered by Vitran and a legal, valid and binding
obligation of Vitran, enforceable against Vitran by the Vendors in
accordance with its terms. Vitran hereby guarantees all obligations of the
Purchaser made pursuant to this Agreement.
5.3 NO VIOLATION.
The execution and delivery of this Agreement by Vitran and the consummation
of the transactions provided for herein will not result in the breach or
violation of, or constitute a default under or conflict with or cause the
acceleration of any debt or other obligation of Vitran under:
(a) any Contract to which Vitran is a party or by which it is bound;
(b) any provision of the articles of incorporation or by-laws or
resolutions of the board of directors (or any committee thereof) or
shareholders of Vitran;
(c) any judgment, decree, order or award of any court, Governmental Entity
or arbitrator having jurisdiction over Vitran; or
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(d) any applicable Law.
5.4 VITRAN'S FINANCIAL STATEMENTS.
Attached as Schedule 5.4 hereto are the annual audited financial statements
of Vitran for the fiscal year ended December 31, 2005 and the unaudited
financial statements of Vitran for the six month period ending June 30,
2006. Such 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 accurately and fairly
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and financial condition of Vitran as at the respective dates
thereof. There has been no Material Adverse Change to the business or
financial condition of Vitran since December 31, 2005.
5.5 REPORTING ISSUER.
Vitran is a reporting issuer under the Securities Act (Ontario) and is not
in default of any of the provisions of such act or the regulation
thereunder.
5.6 LISTINGS.
The Vitran Shares are listed and posted for trading on the Toronto Stock
Exchange and on NASDAQ and Vitran is not in default of any of the rules,
by-laws, or policies of either of the Toronto Stock Exchange or NASDAQ.
5.7 CONSENTS AND APPROVALS.
Except for the notice to be given to and accepted by each of NASDAQ and The
Toronto Stock Exchange in connection with the Vitran Shares to be issued to
the Vendors hereunder and except as set out in Schedule 5.7, there is no
requirement for Vitran to make any filing with, give any notice to or
obtain any license, 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.
5.8 VITRAN SHARES.
All necessary corporate action on the part of Vitran has been taken for the
due and valid allotment of the Vitran Shares to be issued to the Vendors in
accordance with Section 2.3 and, when issued, such shares shall be fully
paid and non-assessable shares in the capital stock of Vitran. The Vitran
Shares will have no Encumbrances or restrictions on sale except as provided
under Section 6.10 or under applicable securities legislation.
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6. COVENANTS
6.1 DELIVERY OF BOOKS AND RECORDS.
At the Time of Closing, there shall be delivered to the Purchaser, at the
premises of the Corporation, by the Vendors all of the books and records of
and relating the Corporation and the Business, including the minute books
of the Corporation. The Purchaser agrees that it will preserve the books
and records so delivered to it for a period of six (6) years from the
Closing Date, or for such longer period as is required by any applicable
law, and will permit the Vendors or their authorized representatives
reasonable access thereto in connection with the affairs of the Vendors
relating to his matters, but the Purchaser shall not be responsible or
liable to the Vendors for or as a result of any unintentional loss or
destruction of or damage to any such books or records. The confidentiality
provisions of Section 11.1 shall apply to such books and records as if such
provisions applied to the Vendors.
6.2 CONDUCT PRIOR TO CLOSING.
Without in any way limiting any other obligations of the Vendors, during
the period from August 11, 2006 to the Time of Closing, except for the
Closing Adjustments and unless otherwise provided under this Agreement:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE. Each of the Vendors shall
have caused the Corporation to conduct, and the Corporation shall have
conducted, the Business and the operations and affairs of the
Corporation in the ordinary course of business consistent with prior
practice;
(b) NO UNUSUAL TRANSACTIONS. Each of the Vendors shall have ensured that
the Corporation shall not have without the prior written consent of
the Purchaser entered 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;
(c) NO MATERIAL CONTRACTS. Except as provided in Schedule 6.2(c), each of
the Vendors shall have ensured that the Corporation shall not have
entered into any Material Contracts or incur any indebtedness without
the consent of the Purchaser, which consent shall not be unreasonably
withheld;
(d) CONTINUE INSURANCE. Each of the Vendors shall have caused the
Corporation to maintain in full force and effect all policies of
insurance or renewals thereof now in effect, and shall have taken out,
at the expense of the Purchaser, such additional insurance as may be
reasonably requested by the Purchaser and shall have given all notices
and present all claims under all policies of insurance in a due and
timely fashion;
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(e) CONTRACTUAL CONSENTS. Each of the Vendors shall have used his best
efforts to cause the Corporation to obtain, the consents and approvals
described in Schedule 3.15;
(f) DISCHARGE LIABILITIES. Each of the Vendors shall have caused the
Corporation to pay and discharge their liabilities in the ordinary
course of business, except those contested in good faith by the
Corporation;
(g) CORPORATE ACTION. Each of the Vendors shall have used his best efforts
to take and cause the Corporation to take all steps to complete the
transactions contemplated by this Agreement; and
(h) BEST EFFORTS. Each of the Vendors shall have used his best efforts to
satisfy the conditions contained in Section 8.1.
6.3 DELIVERY OF TRANSFER DOCUMENTS.
On the Closing Date 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
valid title, free and clear of all Encumbrances.
6.4 REGULATORY CONSENTS OF THE CORPORATION.
Each of the Vendors shall use his best efforts to cause the Corporation to
obtain, at or prior to the Time of Closing, from all appropriate federal,
state, municipal or other governmental or regulatory bodies, the licenses,
permits, consents, approvals, certificates, registrations and
authorizations described in Schedules 3.15. If the Purchaser completes the
transactions contemplated hereby on the Closing Date notwithstanding that
any of the consents and approvals referred to in Schedules 3.15 have not
been obtained, each of the Vendors shall continue after the Closing Date to
use his best efforts as requested by the Purchaser from time to time in
order to attempt to obtain any such consent or approval.
6.5 DELIVERY OF CLOSING DOCUMENTATION BY THE VENDORS.
The Vendors shall deliver to the Purchaser a certificate of good standing
or its equivalent and the articles of incorporation (including any
amendments thereto) and by-laws of the Corporation certified by a senior
officer of the Corporation, dated the Closing Date.
6.6 DELIVERY OF PURCHASER'S CLOSING DOCUMENTATION.
The Purchaser shall deliver to the Vendors a certificate of good standing
or its equivalent for the Purchaser and two copies, certified by a senior
officer of the Purchaser, dated as of the Closing Date, of the articles of
incorporation (including any amendments thereto) and by-laws of the
Purchaser 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
deliver to the Vendors a certificate of good standing or its equivalent for
Vitran and the articles of incorporation
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(including any amendments thereto) and by-laws of Vitran and of the
resolution authorizing the execution, delivery and performance by Vitran of
this Agreement and any documents to be provided by it pursuant to the
provisions hereof certified by a senior officer of Vitran, dated as of the
Closing Date.
6.7 REGULATORY CONSENTS OF THE PURCHASER.
The Purchaser and Vitran shall use their best efforts to obtain at or prior
to the Time of Closing, from all appropriate federal, state, municipal or
other governmental or regulatory bodies, the licenses, permits, consents,
approvals, certificates, registrations and authorizations described in
Schedules 4.5 and 5.7.
6.8 SECTION 338(H)(10) ELECTION.
(a) The Purchaser, each of the Vendors and Vitran agree that, at the
Purchaser's election, subject to the conditions of this Section 6.8,
the Purchaser and each of the Vendors shall jointly make, at the
option of the Purchaser, the election provided in subsection
338(h)(10) of the Code and applicable regulations of the Treasury
Department and shall also make or be deemed to make such election or
any similar election under and for purposes of the income tax laws of
all other states that recognize such election such that the purchase
and sale of the Purchased Shares, for purposes of all federal and
state income taxes governed by such elections ("APPLICABLE INCOME
TAXES"), shall be treated as a sale by the Corporation of its assets
and properties (the "ELECTION"). Assuming the conditions of this
Section 6.8 are met and the Purchaser elects to make the Election, the
Purchaser and each of the Vendors shall execute and file Internal
Revenue Service Form 8023 and all accompanying schedules and all other
forms, elections and statements required by the Internal Revenue
Service or any other authority or agency responsible for the
administration of any Applicable Income Taxes to which the Purchaser,
each of the Vendors, Vitran or the Corporation may be subject,
necessary or appropriate to effectuate, evidence and confirm the
Election, and, in such event, the Purchaser, each of the Vendors,
Vitran, and the Corporation shall file all tax returns in a manner
consistent with the foregoing. The Purchaser and each of the Vendors
agree that, for purposes of this Election, the purchase price for the
assets and properties of the Corporation shall be determined by the
Purchaser and the Vendors, jointly, in accordance with the provisions
of Section 338 of the Code and applicable regulations of the Treasury
Department and with reference to the fair market value of the assets
and properties of the Corporation as reasonably determined by the
Purchaser and the Vendors, jointly. If the Purchaser wishes to make
the Election, the Purchaser shall, as expeditiously as possible, and,
in any event, by November 30, 2006, disclose and describe to the
Vendors its proposals for all such determinations and allocations.
Prior to the making of the Election, Vitran shall have a reasonable
opportunity to review, and the right to approve (insofar as they
relate to the Election), each of the Vendors' tax returns as they
relate to the Election and the Vendors calculation of 338 Taxes
payable to be filed in connection with the
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Election and the Vendors' calculation of 338 Taxes payable, provided
that the contents thereof shall remain strictly confidential and may
be used by the Purchaser and its representatives only in and so far as
they may be relevant to the purposes of this Section 6.8 provided that
the Vendors acknowledge that Vitran will be required to disclose the
aggregate amount of the 338 Taxes payable by all of the Vendors in its
financial statements. The parties agree to attempt to resolve any
dispute between them in respect of such tax returns or calculations
within ten (10) days of the date the dispute first arises. If the
parties cannot resolve all matters in dispute within such ten (10) day
period, all unresolved matters shall be submitted to the Pittsburgh,
Pennsylvania office of Ernst & Young for resolution by arbitration,
and Ernst & Young shall be given access to all materials and
information reasonably requested by it for such purpose. Vitran and
the Vendors shall be entitled to make submissions to Ernst & Young
during its consideration of the matters in dispute. Ernst & Young's
determination of all such matters shall be final and binding on both
parties and shall not be subject to appeal by either party. The fees
and expenses of Ernst & Young shall be borne by Vitran unless the
dispute is the result of the bad faith (in the sole opinion of Ernst &
Young) of any of the Vendors in which case, it shall be borne by
Vendors, jointly. Each of the Vendors' tax returns shall be modified
to the extent required to give effect to Ernst & Young's
determination.
(b) Provided that the Election is made in accordance with this Section
6.8, the Purchaser will compensate, and Vitran shall cause the
Purchaser to compensate, each of the Vendors for, and the Purchase
Price will be increased by the amount of, any additional federal
and/or state income taxes or other Taxes payable by the Vendors which
would not have been payable by the Vendors if the Election had not
been made ("338 TAXES"), together with any additional federal and/or
state income taxes or other Taxes payable by the Vendors with respect
to the payments which the Purchaser has made or is obligated to make
to the Vendors in respect of 338 Taxes (i.e. on a gross up basis, the
"PURCHASER 338 PAYMENTS"). Any 338 Taxes or Purchaser 338 Payments
payable to the Vendors in accordance with this Section 6.8 will be due
and payable by the Purchaser promptly upon calculation and under no
circumstances later than a sufficient time prior to the date any of
the Vendors is required to pay the applicable tax so that such Vendor
has funds on hand within which to pay the tax.
(c) Notwithstanding any other provisions of this Agreement, the covenants
and agreements of subsections 6.8 (a) and (b) shall have no expiration
date.
(d) The Purchaser shall reimburse the Vendors for their reasonable costs
incurred in connection with the Election and calculation of the 338
Taxes payable.
(e) The Purchaser, the Corporation and the Vendors agree that the Purchase
Price and the liabilities of the Corporation will be allocated to the
assets of the Corporation for all purposes (including Tax and
financial accounting) in a manner consistent with the Code sections
338 and 1060 and the regulations thereunder. The
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Purchaser, the Corporation and the Vendors shall file all tax returns
(including amended returns and claims for refund) and information
reports in a manner consistent with such allocations.
6.9 REMOVAL OF PERSONAL ITEMS.
Each of the Vendors shall have removed from the Leased Real Property their
personal assets on or before the Closing Date.
6.10 RESTRICTION ON TRANSFER OF SHARES.
Each of the Vendors covenants and agrees that he will not, without the
prior written consent of Vitran, directly or indirectly, offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of, any
Vitran Shares issued to him pursuant to this Agreement, or any interest
therein or right, title or interest thereto, for one (1) year from the
Closing Date, except for transfers among the Vendors or Related Parties
provided that any Related Party becomes bound by this Section 6.10 by
executing an instrument in writing addressed to Vitran to such effect. Each
of the Vendors further covenants and agrees that, during the period
commencing one (1) year from the Closing Date and ending two (2) years from
the Closing Date, he shall notify Vitran in writing of his intention to
dispose of a block of 10,000 or more Vitran Shares owned by him at least
one (1) Business Day prior to any such disposition to enable Vitran to
assist in the orderly disposition of the Vitran Shares.
6.11 DELIVERY OF ACQUISITION AGREEMENT.
Immediately after the completion of the transactions herein provided for,
the Corporation, Northridge Enterprises, L.P., and Woodhurst Realty, LLC
shall have executed and delivered the Acquisition Agreement which shall be
consummated on the Closing Date. On the Closing Date Vitran shall cause the
Purchaser to pay to the Corporation an amount not less than the
consideration payable by the Corporation to Northridge Enterprises, L.P.
and Woodhurst Realty, LLC and the closing costs and other amounts required
by the Acquisition Agreement to be paid by the Corporation necessary for
the Corporation to consummate the transactions contemplated by the
Acquisition Agreement.
6.12 TAX COOPERATION.
Each party agrees to fully cooperate in good faith with the others in the
preparation of all tax returns and in the event of any tax audit; provided,
that the party seeking the cooperation of the others shall reimburse the
others for any out of pocket expenses incurred.
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6.13 DELIVERY OF EMPLOYMENT AGREEMENT.
The Purchaser has made an offer of employment to Mark L. Kosovec, who
agrees that on the Closing Date he shall execute and deliver to the
Purchaser an employment agreement in the form attached as Schedule 6.13
(the "EMPLOYMENT AGREEMENT").
7. CLOSING ARRANGEMENTS
7.1 PLACE OF CLOSING.
The closing shall take place at the Time of Closing at the offices of Vuono
& Gray, LLC, 2310 Grant Building, Pittsburgh, Pennsylvania.
7.2 TRANSFER.
At the Time of Closing, the Vendors shall deliver to the Purchaser
certificates representing all the Purchased Shares duly endorsed in blank
for transfer with any applicable security transfer taxes paid, will cause
transfers of the Purchased Shares to be duly and regularly recorded in the
name of the Purchaser or its nominee(s), will cause meetings 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.
7.3 FURTHER ASSURANCES.
Each of the parties covenants and agrees that, from time to time subsequent
to the Closing Date, he or 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.
8. CONDITIONS OF CLOSING
8.1 CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER.
The purchase and sale of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Purchaser, to be
fulfilled, performed, or waived at or prior to the Time of Closing:
(a) REGULATORY CONSENTS. The Vendors shall have obtained from all
appropriate federal, state, municipal or other governmental or
administrative bodies, such licenses, permits, consents, approvals,
certificates, registrations and authorizations as are required to be
obtained by the Vendors to permit the change
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of ownership of the Purchased Shares contemplated hereby including,
without limitation, those described in Schedule 3.15, in form and
substance satisfactory to the Purchaser, acting reasonably;
(b) CONTRACTUAL CONSENTS. The Vendors shall have obtained the notices,
consents and approvals described in Schedule 3.15, in each case in
form and substance satisfactory to the Purchaser, acting reasonably;
(c) MATERIAL ADVERSE CHANGE. There shall have been no Material Adverse
Change in the condition (financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the Corporation;
(d) NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding
shall be pending or threatened by any person which would, in the
opinion of the Purchaser, acting reasonably, enjoin, restrict or
prohibit:
(i) the purchase and sale of the Purchased Shares contemplated
hereby; or
(ii) the Purchaser from carrying on the Business in the manner in
which the Corporation is carrying on the Business at the date
hereof;
(e) NO ADVERSE LEGISLATION. No legislation (whether by statute,
regulation, order-in-council, notice of ways and means motion, by-law
or otherwise) shall have been enacted which causes a Material Adverse
Consequence to the Business;
(f) DISCHARGE OF ENCUMBRANCES. The Vendors shall have delivered to the
Purchaser evidence in form and substance satisfactory to the Purchaser
and its counsel that all Encumbrances affecting the Corporation, other
than Permitted Encumbrances, or the Purchased Shares have been
discharged in full at the Time of Closing;
(g) NON-COMPETITION AGREEMENT. Each of the Vendors shall have executed and
delivered to the Purchaser a non-competition agreement as agreed to by
the Purchaser and the Vendors;
(h) LEGAL OPINION. The Vendors shall have delivered to the Purchaser a
legal opinion of Vuono & Gray, LLC, counsel to the Vendors, in form
and content acceptable to the Purchaser;
(i) 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;
(j) RESIGNATION OF ACCOUNTANTS. The certified public accountants of the
Corporation shall have resigned effective as of the Time of Closing;
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(k) RELEASES BY VENDORS. The Vendors shall have executed and delivered, at
the Time of Closing, releases in favour of the Corporation, in form
and content acceptable to the Purchaser;
(l) SAFETY RATING. The Corporation shall have maintained a satisfactory
safety rating with the United States Department of Transportation; and
(m) BUSINESS ACQUISITION REPORT. The certified public accountants of the
Corporation shall have consented to the use by Vitran of the financial
statements of the Corporation for the fiscal years ended December 31,
2003, 2004 and 2005, and the auditor's report thereon, in order to
enable Vitran to prepare and file its business acquisition report in
accordance with National Instrument 51-102 - Continuous Disclosure
Obligations.
8.2 NON-PERFORMANCE BY THE VENDORS
If any of the conditions contained in Section 8.1 shall not be performed or
fulfilled at or prior to the Time of Closing in the opinion of the
Purchaser, acting reasonably, the Purchaser may, by notice to the Vendors
terminate this Agreement and the obligations of the Purchaser to complete
the transactions contemplated by this Agreement other than the obligations
contained in Section 11.1, shall be terminated. Any such condition may be
waived in whole or in part by the Purchaser and shall be deemed waived if
not required by Purchaser at Closing.
8.3 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:
(a) REGULATORY CONSENTS. There shall have been obtained, from all
appropriate federal, provincial, state, municipal or other
governmental or administrative bodies, such licenses, permits,
consents, approvals, certificates, registrations and authorizations as
are required to be obtained by the Purchaser to permit the change of
ownership of the Purchased Shares contemplated hereby including,
without limitation, those described in Schedules 3.15, 4.5, and 5.7;
(b) LEGAL OPINION. The Purchaser and Vitran shall have delivered to the
Vendors a legal opinion of Lang Michener LLP, counsel to Purchaser and
Vitran, in form and content acceptable to the Vendors; and
(c) RELEASE BY LENDERS. The Vendors shall have obtained from such lenders
of the Corporations as they deem necessary a written release of all
liability under any loans, guaranties or other obligations relating to
the Corporation.
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8.4 NON-PERFORMANCE BY THE PURCHASER.
If any of the conditions contained in Section 8.3 shall not be performed or
fulfilled at or prior to the Time of Closing to the satisfaction of the
Vendors, acting reasonably, the Vendors may, by notice to the Purchaser,
terminate this Agreement and the obligations of the Vendors and the
Purchaser under this Agreement other than the obligations contained in
Section 11.1, shall be terminated. Any such condition may be waived in
whole or in part by the Vendors.
9. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
9.1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
To the extent that the covenants have not been fully performed at or prior
to the Time of Closing, the covenants, representations and warranties
contained in this Agreement and in all certificates and documents delivered
pursuant to or contemplated by this Agreement shall survive the closing of
the transactions contemplated hereby and shall terminate at the expiration
of eighteen (18) months following the Closing Date and, notwithstanding
such closing nor any investigation made by or on behalf of the party
entitled to the benefit thereof, shall continue in full force and effect
for the benefit of the party entitled to the benefit thereof for such
eighteen (18) months and further provided that:
(a) the representations and warranties set out in Sections 3.1 to 3.5
inclusive, Sections 3.41 and 3.42, Sections 4.1 to 4.3 (inclusive) and
Sections 5.1 to 5.3 (inclusive) and the covenants and agreements
contained in Sections 6.8 and 6.12 shall survive and continue in full
force and effect without limitation of time;
(b) the representations and warranties set out in Section 3.27 shall
survive until two (2) years after the Closing Date;
(c) a claim for indemnification for any breach or inaccuracy 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 intentional fraud or fraudulent
misrepresentation may be made at any time following the Closing Date,
subject only to applicable limitation periods imposed by law; and
(d) no claim for indemnification for any breach or inaccuracy of any other
representation, warranty or covenant shall be valid unless the party
against whom such the corresponding representations and warranties set
out in the certificates to claim is made has been given notice thereof
before the expiration of the applicable period.
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10. INDEMNIFICATION
10.1 INDEMNIFICATION BY THE VENDORS
Each of the Vendors agrees to indemnify, save harmless and hereby
indemnifies and holds harmless the Purchaser, its permitted assigns, and,
after the Time of Closing, the Corporation, and the directors, officers,
employees, agents and representatives of each of the foregoing (all such
persons other than the Purchaser, collectively, the "PURCHASER'S
REPRESENTATIVES"), from all Losses suffered or incurred by the Purchaser or
the Purchaser's Representatives as a result of or arising directly or
indirectly out of or in connection with (and in the case of indemnification
for matters described in subsections 10.1(b), notwithstanding any
disclosure in this Agreement or in any agreement, certificate or other
document delivered pursuant hereto):
(a) any breach by any of the Vendors of, or any inaccuracy of any
representation or warranty of the Vendors contained in this Agreement
or in any agreement, certificate or other document delivered pursuant
hereto;
(b) any breach or non-performance by the Vendors of any covenant to be
performed by him which is contained in this Agreement or in any
agreement, certificate or other document delivered pursuant hereto;
and
(c) all claims, demands, costs and expenses, including reasonable legal
fees, in respect of the foregoing.
The Purchaser holds the foregoing indemnity to the extent in favour of the
Purchaser's Representatives in trust and as agent for the Purchaser's
Representatives so that they may enjoy and be entitled to the benefit
thereof.
10.2 INDEMNIFICATION BY THE PURCHASER.
The Purchaser and Vitran agree to indemnify and save harmless and hereby
indemnify and hold harmless each of the Vendors from all Losses suffered or
incurred by the Vendors as a result of or arising directly or indirectly
out of or in connection with: (a) any breach by the Purchaser or Vitran 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; (b) any breach or non-performance by the
Purchaser of any covenant to be performed by it which is contained in this
Agreement or in any agreement, certificate or other document delivered
pursuant hereto; and (c) all claims, demands, costs and expenses, including
reasonable legal fees, in respect of the foregoing.
10.3 LIMITATION ON OBLIGATION TO INDEMNIFY.
(a) In the event that any of the Vendors are required to indemnify and
save harmless the Purchaser or the Purchaser's Representatives
pursuant to Section 10.1 in
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respect of any Loss suffered or incurred, the liability of such party
shall not arise until the Losses in respect thereof exceeds $100,000
and the maximum aggregate amount of such liability shall not exceed
$50,000,000.
(b) In the event that the Purchaser or Vitran are required to indemnify and
save harmless any of the Vendors pursuant to Section 10.2 in respect
of any Loss suffered or incurred, the liability of the Purchaser and
Vitran shall not arise until the losses in respect thereof exceeds
$100,000.
10.4 NOTICE OF CLAIM.
In the event that a party (the "INDEMNIFIED PARTY") shall become aware of
any claim, proceeding or other matter which may result in a Loss (a
"CLAIM") in respect of which another party (the "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.
10.5 DIRECT CLAIMS.
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have sixty
(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 sixty (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.
10.6 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 defense of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified
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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 defense 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 the 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 defenses). 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: (a)
the Indemnified Party is required by applicable law or the order of any
court, tribunal or regulatory body having jurisdiction; or (b) it is
necessary in the reasonable view of the Indemnified Party acting in good
faith and in a manner consistent with reasonable commercial practices in
respect of: (i) a Third Party Claim by a customer relating to products or
services supplied by the Business; or (ii) a Third Party Claim relating to
any Contract which is necessary to the ongoing operations of the Business
or any material part thereof by a reasonable and prudent operator in
substantially the same manner in which it has heretofore been operated by
the Corporation in order to avoid material damage to the relationship
between the Indemnified Party and any of its major customers or to preserve
the rights of the Indemnified Party under such an essential Contract, 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, as the case may be, 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.
10.7 SETTLEMENT OF THIRD PARTY CLAIMS.
If the Indemnifying Party fails to assume control of the defense 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 defense 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.
10.8 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
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thereto (including supplying copies of all relevant documentation promptly
as it becomes available).
10.9 EXCLUSIVITY.
The provisions of this Article 10 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 10.
11. MISCELLANEOUS
11.1 CONFIDENTIALITY OF INFORMATION.
(a) The Purchaser and Vitran each for itself and its employees, servants
and agents agrees to keep confidential and to refrain from using any
information concerning the business and affairs of any of the Vendors
and, if the transactions contemplated by this Agreement shall fail to
be consummated, of the Corporation, which it may have acquired in
connection with the transactions contemplated by this Agreement and in
addition, shall return all copies of records or documents received
therefrom and all notes or summaries thereof in any form whatsoever.
The Purchaser and Vitran's obligations in this respect shall not apply
to any information which:
(i) is in the public domain at the time of its disclosure to the
Purchaser or Vitran;
(ii) subsequently comes into the public domain without breach by the
Purchaser or Vitran of its obligations under this subsection
11.1(a);
(iii) the Purchaser or Vitran can show was in its possession prior to
its disclosure to the Purchaser or Vitran in connection with
these transactions; or
(iv) is or has been disclosed to the Purchaser or Vitran by any person
otherwise than at the request or occurrence of the Vendors and
not in violation of any obligation owed to the Vendors.
(b) If, for any reason, the transactions contemplated by this Agreement
shall fail to be completed, the Vendors for itself and its employees,
servants and agents agrees to keep confidential and to refrain from
using any information concerning the business and affairs of any of
the Purchaser and Vitran which it may have acquired in connection with
the transactions contemplated by this Agreement and in addition, shall
return all records or documents received from the Purchaser
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relating to Vitran. The obligations of the Vendors in this respect
shall not apply to any information which:
(i) is in the public domain at the time of its disclosure to the
Vendors;
(ii) subsequently comes into the public domain without breach by the
Vendors of its obligations under this subsection 11.1(b);
(iii) the Vendors can show was in their possession prior to its
disclosure in connection with these transactions; or
(iv) is or has been disclosed to the Vendors by any person the request
or occurrence of the Purchaser.
11.2 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:
if to the Vendors:
Donald C. Hammel
c/o PJAX Inc.
2850 Kramer Drive
Gibsonia, PA 15044
Copy to:
Vuono & Gray, LLC
2310 Grant Building
310 Grant Street
Pittsburgh, PA 15219-2383
Attention: Mark T. Vuono
Fax: 412-471-4477
if to the Purchaser or to Vitran:
c/o Vitran Corporation Inc.
185 The West Mall
Suite 701
Toronto, Ontario
M9C 5L5
Attention: Richard E. Gaetz
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President and Chief Executive Officer
Fax: (416) 596-8039
Copy to:
Lang Michener LLP
Barristers and Solicitors
Box 747, Suite 2500
BCE Place, 181 Bay Street
Toronto, Ontario
M5J 2T7
Attention: Geofrey Myers
Fax: (416) 365-1719
(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 which 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.
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 11.2.
11.3 COMMISSIONS, ETC.
It is understood and agreed that each of the parties hereto shall be
responsible for all fees payable to any broker, agent or other intermediary
retained by such party in connection with the sale or purchase of the
Purchased Shares.
11.4 EXPENSES.
Each of the parties hereto shall pay their own legal, accounting and other
expenses arising in respect of this Agreement, the completion of the
transactions contemplated hereby and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.5 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, none of the Vendors, the
Corporation, Vitran nor the Purchaser nor any of
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their respective officers, directors, employees, agents or representatives
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.
11.6 DISCLOSURE.
Prior to any public announcement of the transaction contemplated hereby
pursuant to Section 11.5, no 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.
11.7 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 heirs, legal personal representatives, successors and permitted
assigns and the Purchaser's Representatives. Except as provided in this
Section 11.7, no party may assign any of its rights or obligations
hereunder without the prior written consent of all other parties. The
Purchaser may, at any time prior to the Time of Closing:
(a) assign all of its rights and obligations under this Agreement to any
person if the Vendors' prior written consent is obtained and the
assignee delivers to the Vendors an instrument in writing executed by
the assignee confirming that it is bound by and shall perform all of
the obligations of the Purchaser under this Agreement as if it were an
original signatory;
(b) assign all of its rights and obligations hereunder to a Subsidiary or
affiliate of the Purchaser who delivers an instrument in writing to
the Vendors as set out in subsection 11.7(a); or
(c) notwithstanding anything else contained in this Section 11.7. The
Purchaser may, at any time and from time to time, assign all of its
rights arising under this Agreement to its lenders in connection with
any credit facilities provided to the Purchaser;
provided that no such assignment shall relieve the Purchaser or Vitran of
its obligations under this Agreement. In the event of an assignment as set
out above, any reference in this Agreement to the Purchaser shall be deemed
to include the assignee.
11.8 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 of any
provision of this
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Agreement shall constitute a waiver of any other provision, nor shall any
waiver constitute a continuing waiver unless otherwise expressly provided.
11.9 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.
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IN WITNESS WHEREOF this Agreement has been executed by the parties.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
/s/ Mark T. Vuono ) /s/ Donald C. Hammel
- ------------------------------------) ----------------------------------------
Witness ) Donald C. Hammel
)
)
/s/ Mark T. Vuono ) /s/ Donald J. Hammel
- ------------------------------------) ----------------------------------------
Witness ) Donald J. Hammel
)
)
/s/ Mark T. Vuono ) s/ Jeffrey A. Hammel
- ------------------------------------) ----------------------------------------
Witness ) Jeffrey A. Hammel
)
)
/s/ Mark T. Vuono ) /s/ James T. Hammel
- ------------------------------------) ----------------------------------------
Witness ) James T. Hammel
)
)
/s/ Mark T. Vuono ) s/ Mark L. Kosovec
- ------------------------------------) ----------------------------------------
Witness ) Mark L. Kosovec
PJAX, INC.
by: /s/ Donald C. Hammel
------------------------------------
Name: Donald C. Hammel
Title: President
VITRAN CORPORATION
by: /s/ Richard E. Gaetz
------------------------------------
Name: Richard E. Gaetz
Title: Chief Executive Officer
VITRAN CORPORATION INC.
by: /s/ Richard E. Gaetz
------------------------------------
Name: Richard E. Gaetz
Title: President and Chief
Executive Officer
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