Exhibit 10.1

 

 

SHARE PURCHASE AGREEMENT

Among:

FRANÇOIS ANGERS

KAMILIA MEKHAIL-ISHAK

FIDUCIE AGEMO

FIDUCIE FAMILIALE MEKHAIL-ISHAK

JEAN E. CLERK, Q.C.

CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC

PIERRE BLEAU

OLIVIER LAURENDEAU

MARGUERITE DORION

RICHARD VALLÉE

JEAN FLEURY

7685939 CANADA INC.

As Vendors

And:

SAGENT ACQUISITION CORP.

As Purchaser

SAGENT PHARMACEUTICALS, INC.

As Guarantor

To Which Intervene

OMEGA LABORATORIES LIMITED

And:

7685947 CANADA INC.

October 1st, 2014

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Acquisition by Sagent Acquisition Corp.    Share Purchase Agreement

of all the shares of Oméga Laboratories Limited and 7685947 Canada Inc.

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TABLE OF CONTENTS

 

Article 1 INTERPRETATION

     3   

1.1

  Definitions      3   

1.2

  Articles, Sections and Headings      3   

1.3

  Extended Meanings      4   

1.4

  Accounting Principles      4   

1.5

  Currency      4   

1.6

  Calculation of Time      4   

1.7

  Knowledge      4   

1.8

  Materiality      5   

1.9

  Commercially Reasonable Efforts      5   

1.10

  Non-Institutional Vendor Representative      5   

1.11

  Schedules      6   

Article 2 PURCHASE AND SALE

     7   

2.1

  Purchase and Sale of Purchased Shares      7   

2.2

  Purchase Price      7   

2.3

  Payment of Purchase Price      7   

2.4

  Pre-Closing Purchase Price Adjustments      8   

2.5

  Post-Closing Purchase Price Adjustment      8   

2.6

  Payment of the Post-Closing Adjustment      11   

Article 3 REPRESENTATIONS AND WARRANTIES

     12   

3.1

  Representations and Warranties of the Vendors and the Non-Institutional
Vendors      12   

3.2

  Representations and Warranties of the Purchaser      12   

3.3

  Disclosure      12   

3.4

  Survival of Representations and Warranties      12   

Article 4 POST-CLOSING COVENANTS

     13   

4.1

  Insurance      13   

4.2

  Maintenance and Access to Records      14   

4.3

  Expansion Project      14   

4.4

  Continued Operations in Quebec      15   

4.5

  Post-Closing Tax Matters      15   

4.6

  Confidentiality      16   

Article 5 CLOSING ARRANGEMENTS

     16   

5.1

  Closing      16   

Article 6 INDEMNIFICATION

     16   

6.1

  Indemnification by the Vendors or the Non-Institutional Vendors      16   

6.2

  Indemnification by the Purchaser      18   

6.3

  Limitations on Indemnification      19   

6.4

  General Indemnification Rules      20   

6.5

  Direct Claims      21   

6.6

  Notice of Third Party Claims      21   

6.7

  Defence of Third Party Claims      21   

6.8

  Assistance for Third Party Claims      22   

6.9

  No Right to Set-Off      23   

6.10

  Duty to Mitigate      23   

6.11

  Exclusivity of Remedy      23   

6.12

  Purchase Price Adjustment      23   

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Article 7 GUARANTOR

     23   

7.1

  Scope of Guarantee      23   

7.2

  Survival of Guarantee      24   

7.3

  Costs and Expenses      24   

Article 8 GENERAL

     24   

8.1

  Further Assurances      24   

8.2

  No Waiver      24   

8.3

  Cost and Expenses      24   

8.4

  Brokers’ Fees      25   

8.5

  Public Announcements      25   

8.6

  Successors, Assigns and Assignments      25   

8.7

  Entire Agreement      25   

8.8

  Amendments and Waivers      25   

8.9

  Notices      26   

8.10

  Governing Law and Forum      27   

8.11

  Severability      27   

8.12

  Third Party Beneficiaries      28   

8.13

  Counterparts      28   

8.14

  Employee Information      28   

1.1

  Definitions      32   

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THIS SHARE PURCHASE AGREEMENT is made as of the effective date of October 1st,
2014;

 

AMONG:    FRANÇOIS ANGERS, residing at 615, Cardinal Street, Montréal
(Saint-Laurent) (Québec) H4L 3C8;    (“F. Angers”) AND:    FIDUCIE AGEMO, a
family trust duly constituted pursuant to the Québec Civil Code, having its
establishment at 615, Cardinal Street, Montréal (Saint-Laurent) (Québec) H4L
3C8, herein acting and represented by its two authorized trustees, François
Angers and Patrice Vachon;    (“Fiducie Agemo”) AND:    KAMILIA MEKHAIL-ISHAK,
residing at 106, Marie-Curie Street, Dollard-Des-Ormeaux (Québec) H9A 3C6;   
(“K. Mekhail”) AND:    FIDUCIE FAMILIALE KAMILIA MEKHAIL-ISHAK, a family trust
duly constituted pursuant to the Québec Civil Code, having its establishment at
106, Marie-Curie Street, Dollard-Des-Ormeaux (Québec) H9A 3C6, herein acting and
represented by its two authorized trustees, Kamilia Mekhail-Ishak and François
Angers;    (“Fiducie Mekhail”) AND:    JEAN E. CLERK, Q.C., residing at 1743,
Bord-du-Lac street, l’Île Bizard (Québec) H9E 1A2;    (“J. Clerk”) AND:   
CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC, a legal person duly constituted, having
its principal place of business at 1000, Place Jean-Paul-Riopelle, Montréal,
(Québec), H2Z 2B3, herein acting and represented by its two authorized officers;
   (“CDPQ”) AND:    PIERRE BLEAU, residing at 4191, rue D’Autray, Terrebonne
(Québec) J6X 1L3, Canada, by the intermediary of his registered retirement
savings plan at LA FINANCIÈRE BANQUE NATIONALE, trustee for Pierre Bleau;   
(“P. Bleau”) AND:    OLIVIER LAURENDEAU, residing at 769, rue Antonine-Maillet,
Outremont (Québec) H2V 2Y4, Canada, acting and represented by the intermediary
of his registered retirement savings plan at LA FINANCIÈRE BANQUE NATIONALE
INC., trustee for Olivier Laurendeau;

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Acquisition by Sagent Acquisition Corp.    Share Purchase Agreement

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(“O. Laurendeau”)

AND:    MARGUERITE DORION, residing at 727, rue Rockland, Outremont (Quebec) H2V
2Z7, Canada, acting and represented by the intermediary of her registered
retirement savings plan at CIBC WOOD GUNDY, trustee for Marguerite Dorion;   
(“M. Dorion”) AND:    RICHARD VALLÉE, residing at 3434, rue Camilien, Laval
(Quebec) H7J 4A4, Canada, acting and represented by the intermediary of his
registered retirement savings plan at LA FINANCIÈRE BANQUE NATIONALE, trustee
for Richard Vallée;    (“R. Vallée”) AND:    JEAN FLEURY, residing at 6776, rue
Boyer, apt. 6, Montréal (Quebec) H2S 2J6, Canada; AND:    7685939 CANADA INC., a
corporation duly constituted under the laws of Canada, having a place of
business at 11177 rue Hamon, Montréal (Quebec) H3M 3E4, Canada, herein acting
and represented by its authorized officer;    (“7685939”)    (“J. Fleury” and
collectively with F. Angers, Fiducie Agemo, K. McKhail, F. McKhail, J. Clerc,
CDPQ, P. Bleau, O. Laurendeau, M. Dorion, R. Vallée and 7685939, the “Vendors”)
AND:    SAGENT ACQUISITION CORP., a corporation duly constituted under the
Business Corporations Act (British Columbia), having a registered address at
Suite 1700, Park Place, 666 Burrard Street, Vancouver (British Columbia) V6C
2X8, Canada;    (the “Purchaser”) AND:    SAGENT PHARMACEUTICALS, INC., a
corporation duly organized under the laws of Delaware, having a place of
business at 1901 N. Roselle Road, Suite 700, Schaumburg, IL 60195, USA;    (the
“Guarantor”)

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Acquisition by Sagent Acquisition Corp.    Share Purchase Agreement

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AND TO WHICH INTERVENE:    OMEGA LABORATORIES LIMITED, a corporation duly
constituted under the laws of Canada, having a place of business at 11177 rue
Hamon, Montréal (Quebec) H3M 3E4, Canada, herein acting and represented by its
authorized officer;    (the “Corporation” or “Oméga”) AND:    7685947 CANADA
INC., a corporation duly constituted under the laws of Canada, having a place of
business at 11177 rue Hamon, Montréal (Quebec) H3M 3E4, Canada, herein acting
and represented by its authorized officer;    (the “Holding” or “7685947”)

WHEREAS the Corporation is a market leading privately-held company that
develops, manufactures and markets generic pharmaceutical drugs, including
sterile non-cytotoxic (regular) and sterile cytotoxic (oncology) injectable
drugs, non-injectable pharmaceuticals and antiseptics (the “Business”);

WHEREAS 7685947 is a holding corporation the sole purpose of which being to hold
shares in the capital of Oméga;

WHEREAS 176441 Canada Inc. (“176441”) is also a holding corporation duly
constituted under the laws of Canada, and a wholly owned subsidiary of 7685947,
with no other activities than to hold shares in the capital of Oméga;

WHEREAS the Vendors are the owners, beneficially and of record, of all the
issued and outstanding shares in the capital stock of the Corporation and of the
Holding; and

WHEREAS the Purchaser desires to purchase, and the Vendors desire to sell, all
of the issued and outstanding shares in the capital stock of the Corporation and
of the Holding, upon and subject to the terms and conditions hereinafter set
forth;

NOW THEREFORE, in consideration of the premises and mutual agreements 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:

ARTICLE 1

INTERPRETATION

 

1.1 Definitions

The capitalized words and expressions used in this Agreement or in its Schedules
shall have the meaning ascribed to them in Schedule1.1, unless otherwise
expressly stated herein.

 

1.2 Articles, Sections and Headings

The division of this Agreement into articles, sections and schedules and the
insertion of headings are for convenience of reference only and will not affect
the construction or interpretation of this Agreement. The terms “hereof”,
“hereunder”, “herein” and similar expressions refer to this Agreement and not to
any particular article, section, schedule or other portion hereof. References
herein to articles, sections or schedules are to articles, sections and
schedules of this Agreement or of the schedules hereto unless otherwise
expressly stated herein.

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Acquisition by Sagent Acquisition Corp.    Share Purchase Agreement

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1.3 Extended Meanings

In this Agreement, words importing the singular number also include the plural
and vice versa and words importing any gender include all genders. The term
“including” means “including, without limiting the generality of the foregoing”.
Where reference is made to “the Holding”, such reference shall be deemed to
include “176441”.

 

1.4 Accounting Principles

Wherever in this Agreement reference is made to a calculation to be made or an
action to be taken in accordance with generally accepted accounting principles,
such reference will be deemed to be made to ASPE, applicable as at the date on
which such calculation or action is made or taken or required to be made or
taken in accordance with ASPE, consistently applied.

 

1.5 Currency

Except as expressly provided herein, all references to currency contained herein
are to lawful money of Canada.

 

1.6 Calculation of Time

 

  1.6.1 Time. Time is of the essence of this Agreement.

 

  1.6.2 Calculation of Time. Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and including the
day on which the period ends. Where the last day of any such time period is not
a Business Day, such time period shall be extended to the next Business Day
following the day on which it would otherwise end.

 

  1.6.3 Business Days. Whenever any action to be taken or payment to be made
pursuant to this Agreement would otherwise be required to be made on a day that
is not a Business Day, such action shall be taken or such payment shall be made
on the first Business Day following such day.

 

  1.6.4 Time of Day. All references to times of the day are to the times of the
day in Montreal, Québec.

 

1.7 Knowledge

Where any representation or warranty contained in this Agreement is expressly
qualified by reference to the knowledge of the Non-Institutional Vendors, it
shall be deemed to refer to the actual knowledge, information and belief of
Mr. François Angers and Mrs. Kamilia Mekhail-Ishak, in their capacity as
officers of the Corporation and of the Holding, and not in their personal
capacity, after having made due and diligent inquiry of such appropriate
directors, officers or senior employees of the Corporation and of the Holding as
each considers, in his or her reasonable judgment, necessary as to the matters
that are the subject of the representations and warranties.

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1.8 Materiality

Whenever a representation and warranty of the Vendors set forth in Schedule 3.1
herein is qualified by the terms “in all material respect” or “material”, it
shall mean an event or matter that would cause a Loss to the Corporation of more
than $250,000. Notwithstanding the foregoing, this Section 1.8 shall not apply
to the definition of “Material Adverse Change” and shall not be used to
determine if a Material Adverse Change has occurred.

 

1.9 Commercially Reasonable Efforts

Whenever a representation and warranty or covenant is qualified by the terms
“commercially reasonable efforts”, it shall mean the efforts that a prudent
person who desires to achieve a result would use in similar circumstances,
without payment or incurrence of commercially unreasonable expense or the
requirement to engage in litigation.

 

1.10 Non-Institutional Vendor Representative

 

  1.10.1 In order to administer efficiently the determination of certain matters
under this Agreement, each of the Non-Institutional Vendors hereby designates
and appoints “François Angers” (the “Non-Institutional Vendor Representative”)
as its, his or her, as the case may be mandatary, such designation and
appointment being coupled with an interest, with full power of substitution for
him, to:

 

  (a) give and receive all notices and communications on behalf of each of the
Non-Institutional Vendors hereunder or under any Closing Document;

 

  (b) receive, or direct the payment of, all amounts payable by the Purchaser to
the Non-Institutional Vendors under this Agreement on behalf of the
Non-Institutional Vendors and pay to each Non-Institutional Vendor such
Non-Institutional Vendor’s entitlement to such amounts;

 

  (c) subject to Section 1.10.1(b), make all decisions and take all actions
relating to the Non-Institutional Vendors’ respective rights, obligations and
remedies under this Agreement including to receive and make payments, to receive
and send notices, to receive and deliver documents, to exercise, enforce or
waive rights or conditions, to give releases and discharges, to seek
indemnification on behalf of the Non-Institutional Vendors and to defend against
indemnification claims of the Purchaser; and

 

  (d) take all actions as are necessary or appropriate in the judgement of the
Non-Institutional Vendor Representative in connection with any of the foregoing,
including retaining such counsel, accountants and other professional advisors as
the Non-Institutional Vendor Representative reasonably deems necessary to assist
him in the performance of his duties hereunder,

and the Purchaser is entitled to deal only with the Non-Institutional Vendor
Representative in respect of all matters arising under this Agreement, including
the foregoing.

 

  1.10.2 The Non-Institutional Vendor Representative hereby accepts the present
mandate in accordance with Article 2144 of the Civil Code of Quebec.

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  1.10.3 The Non-Institutional Vendor Representative shall receive no
compensation for services rendered other than reimbursement of out-of-pocket
expenses incurred in connection with the performance of its duties, to be paid
by the Non-Institutional Vendors. Notices or communications to or from the
Non-Institutional Vendor Representative shall constitute notice to or from any
applicable Non-Institutional Vendor.

 

  1.10.4 Subject to Section 1.10.1(b), the Purchaser may rely upon any decision,
act, consent or instruction of the Non-Institutional Vendor Representative as
being the decision, act, consent or instruction of each Non-Institutional
Vendor. The Purchaser is hereby relieved from any liability to any
Non-Institutional Vendor for any acts taken by it in accordance with such
decision, act, consent or instruction of the Non-Institutional Vendor
Representative.

 

  1.10.5 The Non-Institutional Vendors shall jointly indemnify and hold harmless
the Non-Institutional Vendor Representative against all Claims and Losses which,
without fraud, negligence, recklessness, wilful misconduct or bad faith on the
part of the Non-Institutional Vendor Representative, may be paid, incurred or
suffered by the Non-Institutional Vendor Representative by reason or as a result
of the performance by the Non-Institutional Vendor Representative of his
obligations set out in this Agreement. This mandate is to ensure the performance
of a special obligation, in accordance with the provisions of Article 2179 of
the Civil Code of Quebec.

 

  1.10.6 The Non-Institutional Vendor Representative shall be protected in
acting upon any written notice, request, waiver, consent, certificate, receipt,
statutory declaration or other paper or document furnished to him hereunder, not
only as to its due execution and the validity and the effectiveness of its
provisions but also as to the truth and acceptability of any information therein
contained which he, in good faith, believes to be genuine and what it purports
to be.

 

  1.10.7 Upon receiving notice of the resignation of a Non-Institutional Vendor
Representative, the Non-Institutional Vendors shall appoint a successor to fill
the vacancy and send notice thereof to the Purchaser (such notice to be signed
by all Non-Institutional Vendors). The Non-Institutional Vendors may remove the
Non-Institutional Vendor Representative with or without cause and appoint a
successor by written notice requesting the change that has been executed and
delivered by all of the Non-Institutional Vendors to the Purchaser.

 

1.11 Schedules

The following are the Schedules attached hereto and incorporated by reference
and deemed to be part hereof:

Schedules

 

  1.1 Definitions

  2.2 Allocation of Purchase Price

  2.3.1 Bank Accounts of the Vendors

  2.4.1 Calculation of Working Capital and Cash Outlay

  3.1 Representations and warranties of Vendors

  3.1.1 Capacity and no violation of Vendors

  3.1.6 Capitalization

  3.1.13 Approvals and consents

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  3.1.14 Compliance with Laws

  3.1.15 Permits

  3.1.16 Absence of certain changes or events

  3.1.17 Material Contracts

  3.1.18 Financial Statements

  3.1.20 Indebtedness

  3.1.22 Title to Assets

  3.1.27 Related Party Transaction

  3.1.28 Litigation

  3.1.29 Environmental matters

  3.1.31 Employee matters

  3.1.32 Employee Plans

  3.1.33 Real property

  3.1.34 Intellectual Property Rights

  3.1.36 Warranties

  3.1.38 Insurances

  3.2 Representations and warranties of Purchaser

ARTICLE 2

PURCHASE AND SALE

 

2.1 Purchase and Sale of Purchased Shares

Upon and subject to the terms and conditions hereof, each Vendor sells to the
Purchaser and the Purchaser purchases from each Vendor, at the Closing Time, the
Purchased Shares owned by each such Vendor.

 

2.2 Purchase Price

Subject to the adjustments provided in Sections 2.4 and 2.5, the aggregate
purchase price of the Purchased Shares shall be equal to $95,000,000 (the
“Purchase Price”) and shall be allocated amongst the Vendors in accordance with
Schedule 2.2.

 

2.3 Payment of Purchase Price

The Purchase Price shall be paid and satisfied, at the Closing, as follows:

 

  2.3.1 Initial Consideration. The Purchaser shall pay to the Vendors at Closing
the aggregate amount of $86,709,394, being an amount equal to the Purchase
Price, minus the aggregate total of the Adjustment Holdback, the Indemnity
Holdback and the Holding Holdback, minus the Closing Date Adjustment Amount (the
“Initial Consideration”), allocated amongst the Vendors in accordance with their
respective Designated Percentages, by wire transfer of immediately available
funds to: (a) in respect of the Non-Institutional Vendors, the Non-Institutional
Vendors’ counsel at the bank account referred to in Schedule 2.3.1(a) and (b) in
respect of CDPQ, CDPQ’s bank account referred to in Schedule 2.3.1(b).

 

  2.3.2 Adjustment Holdback. The Purchaser shall pay to the Escrow Agent at
Closing, by wire transfer of immediately available funds to the account having
been specified by the Escrow Agent to the Purchaser at least two (2) days prior
to the Closing, an amount equal to $1,000,000 (such amount, together with all
interest earned thereon, is hereinafter referred to as the “Adjustment
Holdback”). The Adjustment Holdback shall be held, invested, released and
disbursed as specified in the Escrow Agreement, forming an integral part herein.

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  2.3.3 Indemnity Holdback. The Purchaser shall pay to the Escrow Agent at the
Closing, by wire transfer of immediately available funds to the account having
been specified by the Escrow Agent to the Purchaser at least two (2) days prior
to Closing, an amount equal to $5,000,000 (such amount, together with all
interest earned thereon, is hereinafter referred to as the “Indemnity
Holdback”). The Indemnity Holdback shall be held, invested, released and
disbursed as specified in the Escrow Agreement.

 

  2.3.4 Holding Holdback. The Purchaser shall pay to the Escrow Agent at the
Closing, by wire transfer of immediately available funds to the account having
been specified by the Escrow Agent to the Purchaser at least two (2) days prior
to Closing, an amount equal to $250,000 (such amount, together with all interest
earned thereon, is hereinafter referred to as the “Holding Holdback”). The
Holding Holdback shall be held, invested, released and disbursed as specified in
the Escrow Agreement.

 

2.4 Pre-Closing Purchase Price Adjustments

 

  2.4.1 Estimated Closing Indebtedness, Estimated Closing Working Capital and
Estimated Cash Outlays. The Parties recognize that the Vendors, the Corporation
and the Holding have, between the fifth (5th) and the third (3rd) Business Days
prior to the Closing Date:

 

  (a) delivered to the Purchaser a written good faith estimate of the Closing
Indebtedness of $7,473,535 (the “Estimated Closing Indebtedness”), together with
the detailed calculations and backup information supporting such estimate;

 

  (b) delivered to the Purchaser a written good faith estimate of the Closing
Working Capital of $11,963,226 (the “Estimated Closing Working Capital”),
together with the detailed calculations and backup information supporting such
estimate; and

 

  (c) delivered to the Purchaser a written good faith estimate of the Closing
Cash Outlays of $4,669,703 (the “Estimated Closing Cash Outlays”), together with
the detailed calculations and backup information supporting such estimate;

and the Purchase Price shall be decreased by $2,040,606 (the “Closing Date
Adjustment Amount”) on account of the fact that the Estimated Closing
Indebtedness exceeds the Estimated Closing Cash Outlays by $2,803,832 and the
Estimated Closing Working Capital is greater than the Target Working Capital by
$763,226.

 

2.5 Post-Closing Purchase Price Adjustment

 

  2.5.1 Post-Closing Adjustments. The Purchase Price shall be adjusted as
follows after the Closing Date:

 

  (a) if the Closing Indebtedness is less than the Estimated Closing
Indebtedness, the Purchase Price shall be increased by an amount equal to the
amount by which the Estimated Closing Indebtedness exceeds the Closing
Indebtedness. If the Closing Indebtedness exceeds the Estimated Closing
Indebtedness, the Purchase Price shall be decreased by an amount equal to the
amount by which the Closing Indebtedness exceeds the Estimated Closing
Indebtedness;

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  (b) if the Closing Working Capital exceeds the Estimated Closing Working
Capital, the Purchase Price shall be increased by an amount equal to the amount
by which the Closing Working Capital exceeds the Estimated Closing Working
Capital. If the Closing Working Capital is less than the Estimated Closing
Working Capital, the Purchase Price shall be decreased by an amount equal to the
amount by which the Estimated Closing Working Capital exceeds the Closing
Working Capital; and

 

  (c) if the Closing Cash Outlays exceeds the Estimated Closing Cash Outlays,
the Purchase Price shall be increased by an amount equal to the amount by which
the Closing Cash Outlays exceeds the Estimated Closing Cash Outlays. If the
Closing Cash Outlays is less than the Estimated Closing Cash Outlays, the
Purchase Price shall be decreased by an amount equal to the amount by which the
Estimated Closing Cash Outlays exceeds the Closing Cash Outlays.

 

  2.5.2 Closing Date Financial Statements

 

  (a) No later than ninety (90) days after the Closing Date, the Purchaser shall
deliver to the Vendors (i) the Closing Date Financial Statements prepared in
accordance with ASPE, and (ii) the calculation of the Closing Indebtedness, the
Closing Working Capital and the Closing Cash Outlays based on such Closing Date
Financial Statements (collectively, the “Closing Calculation”). The
Non-Institutional Vendor Representative and CDPQ shall be permitted access to
the working papers of the Purchaser’s auditors or accountants and the key
employees of the Corporation involved in the preparation of such working papers
and the Closing Date Financial Statements in accordance with customary protocols
regarding such access.

 

  (b) The Non-Institutional Vendor Representative and/or CDPQ may object to the
Closing Date Financial Statements or Closing Calculation by written notice to
the Purchaser within thirty (30) days following receipt thereof, which notice
shall specify in reasonable detail those items or amounts as to which the
Vendors object (the “Objection Notice”) and the Parties shall be deemed to have
agreed with all other items and amounts contained in such Closing Date Financial
Statements and Closing Calculation which are not impacted by items or amounts
objected to in the Objection Notice. If no Objection Notice is made within the
period and in the manner specified in the preceding sentence, or if the
Purchaser, Non-Institutional Vendor Representative and CDPQ confirm in writing
that they accept the Closing Date Financial Statements and the Closing
Calculation prior to the end of such thirty (30) day period, then the Closing
Date Financial Statements and Closing Calculation shall be conclusive, final and
binding on all the Parties without possibility of amendment or appeal and shall
constitute the final “Closing Date Financial Statements” and “Closing
Calculation”.

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  (c) If an Objection Notice is delivered in the manner and within the thirty
(30) days period specified in the preceding paragraph, the Parties shall in good
faith attempt to resolve any matters in dispute with respect to the Closing Date
Financial Statements and/or Closing Calculation as promptly as practicable. If
the Purchaser and the Vendors are unable to resolve all such items in dispute
within thirty (30) days after the receipt of the Objection Notice giving rise to
such dispute, then those items or calculations in dispute shall be submitted for
resolution within five (5) Business Days following such thirty (30) day period
to Deloitte LLP (Montreal office) or, if they are unwilling or unable to accept
the mandate to resolve the dispute, to such other independent firm of chartered
accountants as the Purchaser and the Vendors may agree in writing or, failing
agreement, as appointed by the court (each being the “Independent Firm”). The
Independent Firm will limit its review only to the specific items in dispute
(except to the extent that ASPE requires adjustments to other items as a result
thereof). The Parties shall use commercially reasonable efforts to cause the
Independent Firm to submit its determination or opinion in a written statement
delivered to the Purchaser and the Vendors as promptly as practicable, but in no
event later than thirty (30) Business Days of the appointment of such
Independent Firm, and such determination or opinion, together with those items
accepted by the Purchaser and the Vendors in respect of the Closing Date
Financial Statements and the Closing Calculation or otherwise resolved between
the Purchaser and the Vendors in accordance with the first sentence of this
Section 2.5.2(c), shall be conclusive, final and binding on all the Parties
without possibility of amendment or appeal and shall constitute the final
“Closing Date Financial Statements” and “Closing Calculation”.

 

  (d) The Parties shall cooperate fully in the preparation of the Closing Date
Financial Statements and Closing Calculation. While the Independent Firm is
making its determination hereunder, the Parties shall be allowed to present
their respective positions regarding the Closing Date Financial Statements and
Closing Calculation to the Independent Firm, and each Party shall have the right
to present additional documents, materials and other information, and make an
oral presentation to the Independent Firm regarding the dispute. Any such other
documents, materials or other information shall be copied to each Party and each
Party shall be entitled to attend any such oral presentation, and to reply
thereto.

 

  (e) Each of the Vendors, on the one hand, and the Purchaser, on the other
hand, will bear its own fees and expenses in preparing, auditing or reviewing,
as the case may be, the Closing Date Financial Statements and Closing
Calculation. In the case of the Vendors, any Vendor that engages its own advisor
shall bear the costs of such advisor and any Vendors who jointly engage their
own advisor shall bear the cost of such advisor proportionately based on their
Designated Percentage. In the case of a dispute and the hiring of an Independent
Firm in accordance with Section 2.5.2(c), the fees and expenses of the
Independent Firm shall be borne by the Vendors (according to their Designated
Percentage), on the one hand, and the Purchaser, on the other hand, based on the
percentage which the portion of the contested amounts not awarded to the
Vendors, on the one hand, or the Purchaser, on the other hand, bears to the
total amount actually contested by such Party.

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  (f) The accounting and audit procedures provided for by this Section 2.5 shall
be the exclusive and conclusive methodology for determination of the matters
covered thereby and shall be binding upon the Parties and shall not be contested
by any of them other than as provided for in this Section 2.5.

 

2.6 Payment of the Post-Closing Adjustment

Payment of the Post Closing Adjustment—Within five (5) Business Days of the
Closing Date Financial Statements and the Closing Calculation becoming final as
per the provisions of Section 2.5.2(b) or Section 2.5.2(c), as the case may be,
the Purchaser and/or the Escrow Agent shall pay the Vendors or, as the case may
be, the Escrow Agent and/or the Vendors shall pay the Purchaser:

 

  2.6.1 Positive Adjustment Amount—if the aggregate sum of the adjustments set
forth in Section 2.5 results in an increase in the Purchase Price (the “Positive
Adjustment Amount”), (i) the Escrow Agent shall remit to each Vendor a portion
of the Adjustment Holdback equal to the Designated Percentage of such Vendor;
and (ii) the Purchaser shall pay an amount equal to such Vendor’s Designated
Percentage of the Positive Adjustment Amount, allocated amongst the Vendors in
accordance with their respective Designated Percentages, by wire transfer of
immediately available funds to: (a) in respect of the Non-Institutional Vendors,
the Non-Institutional Vendors’ counsel at the bank account referred to in
Schedule 2.3.1(a) and (b) in respect of CDPQ, CDPQ’s bank account referred to in
Schedule 2.3.1(b).

 

  2.6.2 Negative Adjustment Amount—if the aggregate sum of the adjustments set
forth in Section 2.5 results in a reduction in the Purchase Price (the “Negative
Adjustment Amount”), the Negative Adjustment Amount shall be paid to the
Purchaser by wire transfer, as follows:

 

  (a) if the Negative Adjustment Amount is less than or equal to the amount of
the Adjustment Holdback, the Escrow Agent shall (i) deliver to the Purchaser,
out of the Adjustment Holdback, an amount which is equal to the Negative
Adjustment Amount, and (ii) remit to each Vendor that portion of the amount
remaining in the Adjustment Holdback, following the payment made pursuant to
Section 2.6.2(a)(i), which is equal to the Designated Percentage of such Vendor;
or

 

  (b) if the Negative Adjustment Amount is greater than the Adjustment Holdback,
(i) the Escrow Agent shall deliver to the Purchaser an amount which is equal to
the Adjustment Holdback, and (ii) the amount by which the Negative Adjustment
Amount exceeds the Adjustment Holdback shall be paid to the Purchaser directly
by the Vendors in accordance with the Designated Percentage of each of the
Vendors.

 

  2.6.3 No Adjustment—if the aggregate sum of the adjustments set forth in
Section 2.5 results in no adjustment in the Purchase Price, (i) the Escrow Agent
shall remit to each Vendor a portion of the Adjustment Holdback equal to the
Designated Percentage of such Vendor.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Vendors and the Non-Institutional
Vendors

 

  3.1.1 Representations and warranties

Each Vendor individually (and not solidarily) represents and warrants to the
Purchaser as set forth in Sections 3.1.1 to 3.1.4 of Schedule 3.1 hereof only in
respect of itself and the Purchased Shares that it holds, and acknowledges that
the Purchaser is relying upon such representations and warranties to enter into
this Agreement. The Non-Institutional Vendors jointly (and not solidarily)
represent and warrant to the Purchaser as set forth in Sections 3.1.5 to 3.1.43
of Schedule 3.1 hereof and acknowledge that the Purchaser is relying upon such
representations and warranties to enter into this Agreement.

 

  3.1.2 No Other Representations and Warranties

Except for the representations and warranties set forth in Schedule 3.1, the
Vendors and the Non-Institutional Vendors, as the case may be, make no further
representations or warranties to the Purchaser, whether express or implied,
statutory or otherwise, with respect to the Corporation or the Holding, their
assets and/or liabilities.

 

3.2 Representations and Warranties of the Purchaser

The Purchaser represents and warrants to and in favour of the Vendors as set
forth in Schedule 3.2 hereof and acknowledges that the Vendors are relying upon
such representations and warranties to enter into this Agreement. Except for the
representations and warranties set forth in Schedule 3.2, the Purchaser makes no
further representations or warranties to the Vendors, whether express or
implied, statutory or otherwise, with respect to the Purchaser, the Purchaser’s
assets and/or liabilities.

 

3.3 Disclosure

Disclosure of any fact or item in any Schedule hereto referenced by or to a
particular Article or Section in this Agreement shall be deemed to have been
disclosed with respect to every other Article or Section in this Agreement to
which its relevance is readily apparent on its face.

 

3.4 Survival of Representations and Warranties

 

  3.4.1 Vendors and Non-Institutional Vendors. All representations and
warranties made by the Vendors or the Non-Institutional Vendors, as the case may
be, in this Agreement shall survive the Closing Date as follows:

 

  (a) the representations and warranties set forth in Sections 3.1.1 and 3.1.3
of Schedule 3.1 (collectively, the “Vendors Fundamental Representations”) shall
survive the Closing without time limit;

 

  (b) the representations and warranties set forth in Sections 3.1.5, 3.1.6,
3.1.11 and 3.1.22 of Schedule 3.1 (collectively, the “Non-Institutional Vendors
Fundamental Representations”) shall survive the Closing without time limit;

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  (c) the representations and warranties set forth in Section 3.1.29 of
Schedule 3.1 shall survive the Closing and continue for a period of five
(5) years from the Closing Date;

 

  (d) the representations and warranties set forth in Section 3.1.30 of
Schedule 3.1 shall survive the Closing and continue in full force and effect
until the 60th day after the end of the period, if any, during which an
assessment, reassessment or other form of recognized document assessing
liability for Tax, interest or penalties under applicable Tax legislation in
respect of any taxation year to which such representations and warranties extend
could be issued under such Tax legislation to the Corporation provided it did
not file prior to the Closing Date any waiver or other document extending such
period, but if it did, then the 60th day after the end of such extended period;
and

 

  (e) all of the other representations and warranties of the Vendors or the
Non-Institutional Vendors, as the case may be, in this Agreement shall survive
the Closing and continue for a period of eighteen (18) months from the Closing
Date.

After such periods, the Vendors or the Non-Institutional Vendors, as the case
may be, shall have no further liability hereunder with respect to such
representations and warranties except with respect to Claims properly made
within such periods. Notwithstanding the foregoing, there shall be no limitation
on the right of Purchaser to bring any Claim based on any fraudulent
misrepresentation of (i) CDPQ with regard to the representations and warranties
with respect to itself set forth in Section 3.1.1 to 3.1.4 of Schedule 3.1 to
this Agreement and (ii) the Non-Institutional Vendors.

 

  3.4.2 Purchaser. All representations and warranties made by the Purchaser in
this Agreement shall survive the Closing as follows:

 

  (a) the representations and warranties set forth in Sections 3.2.1 and 3.2.2
of Schedule 3.2 shall survive the Closing without time limit; and

 

  (b) all of the other representations and warranties of the Purchaser in this
Agreement shall survive the Closing and continue for a period of eighteen
(18) months from the Closing Date.

After such periods, the Purchaser shall have no further liability hereunder with
respect to such representations and warranties except with respect to Claims
properly made within such periods. Notwithstanding the foregoing, there shall be
no limitation on the right of the Vendors to bring any Claim based on any
fraudulent misrepresentation of the Purchaser.

ARTICLE 4

POST-CLOSING COVENANTS

 

4.1 Insurance

 

  4.1.1

Directors Liability. The Purchaser agrees that it shall not permit or acquiesce
to the Corporation or the Holding amending, repealing or terminating any rights
to indemnification or exculpation now existing in favour of any Person who was,
at

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  any time prior to Closing, a director or officer of the Corporation or of the
Holding, as provided in its articles or by-laws (or other constating documents)
or any indemnification agreements currently in effect, notwithstanding that such
articles, by-laws or other constating documents, or indemnification agreements
may be modified after the Closing Date (provided that such modifications will
not adversely affect the indemnification rights existing in favour of any such
Person). The Purchaser will also cause the Corporation to secure from its
insurers, directors’ and officers’ (“D&O”) insurance coverage for the current
and former directors and officers of the Corporation on a six year “trailing”
(or “run-off”) basis on terms and conditions no less advantageous to them than
those contained in the relevant policy in effect on the date hereof. The
Purchaser shall not terminate and shall not permit or acquiesce to the
Corporation terminating any such policy for a period of six (6) years from the
Closing Date. The provisions of this Section 4.1.1 are for the benefit of, and
shall be enforceable by, each director and officer referred to above, his or her
heirs and his or her representatives, and are in addition to, and not in
substitution for, any rights to indemnification or contribution that any such
Person may have by contract or otherwise.

 

  4.1.2 Liability Insurance. During the survival period of the representations
and warranties, as set forth in Section 3.4, the Purchaser agrees to maintain
liability insurance in amounts and insuring risks, in each case, at least
comparable to those described in Schedule 3.1.38.

 

4.2 Maintenance and Access to Records

The Purchaser agrees that it will retain all Books and Records and any other
documents, information and files relating to the Corporation and to the Holding
delivered to it by the Non-Institutional Vendors or the Corporation or the
Holding and relating to any period ending on or prior to the Closing Date for a
period of six (6) years following the Closing Date. So long as such Books and
Records and such other documents information and files are retained by the
Purchaser, the Vendors or their authorized representatives shall have reasonable
access thereto during business hours and upon reasonable advance notice.

 

4.3 Expansion Project

 

  4.3.1 The Purchaser agrees that it will cause the Corporation to perform its
obligations pursuant to those contractual commitments set out in Schedule 4.3
concerning the Expansion Project in accordance with their respective terms, and
to perform the Expansion Project as described on Schedule 1.1.38, as may be
modified in the reasonable discretion of the Purchaser or the Corporation,
subject to receipt of any required permits, certificates, certificates of
authorization, certificates of compliance, authorizations, licenses, approvals
of and registrations with any Governmental Authority or pursuant to any Laws
(including in respect of zoning).

 

  4.3.2 Each of the parties hereto acknowledges that no Party is making any
representation relating to whether the budget and timetable described in
Schedule 1.1.38 will be achieved.

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4.4 Continued Operations in Quebec

The Purchaser intends to maintain the Corporation’s management and employees and
continue to operate its Business as currently constituted, including supporting
its capacity expansion initiatives described in Schedule 4.3.

 

4.5 Post-Closing Tax Matters

 

  4.5.1 The Purchaser shall prepare or cause to be prepared all federal, state,
provincial, municipal, local and foreign returns, information statements,
elections, designations, reports and any other filings related to Taxes with
respect to the Corporation and the Holding and for all Tax periods ending on or
prior to the date hereof which are required to be filed after the date hereof
(“Post-Closing Tax Returns”) on a consistent basis with past practice, including
the taking of any deductions, provided that such past practice and deductions
are made in accordance with applicable Laws. Each of the Non-Institutional
Vendor Representative and, with regard to the Corporation only, CDPQ, has the
right to review, comment upon and suggest changes to any income tax returns to
be filed for such periods prepared in respect of the Corporation and the Holding
by the Corporation and the Holding (“Post-Closing Income Tax Returns”). The
Purchaser shall provide the Non-Institutional Vendor Representative and CDPQ
with such Post-Closing Income Tax Returns at least 15 Business Days prior to the
relevant filing due date. In the event of any dispute regarding the matters set
forth in this Section 4.5.1, the Non-Institutional Vendors’ Representative and,
with regard to the Corporation’s Post-Closing Income Tax Returns only, CDPQ,
shall provide the Purchaser with written notice thereof within 10 Business Days
of its access to such Post-Closing Income Tax Returns and the Independent Firm
shall be requested to make a determination resolving any such dispute and such
determination shall be final and binding. The Independent Firm shall allow the
Purchaser and the Non-Institutional Vendors’ Representative and, with regard to
the Corporation’s Post-Closing Income Tax Returns only, CDPQ, to present their
respective positions regarding the dispute (provided that, for greater
certainty, such presentations are limited to matters described in the
aforementioned written notice), and each of the Purchaser and the
Non-Institutional Vendors’ Representative and, with regard to the Corporation’s
Post-Closing Tax Returns only, CDPQ, shall have the right to present additional
documents, materials and other information and to make an oral presentation to
the Independent Firm regarding such dispute and the Independent Firm shall
consider such additional documents, materials and other information and such
oral presentation. Any such other documents, materials or other information
shall be copied to each party and each Party shall be entitled to attend any
such oral presentation. The Parties shall use commercially reasonable efforts to
cause the Independent Firm to complete its work within five Business Days of its
engagement. The fees and expenses of the Independent Firm shall be allocated
between the Purchaser, on the one hand, and the Vendors, on the other hand
(according to their Designated Percentage) in the same proportion that the
aggregate amount of the disputed items submitted to the Independent Firm that
are unsuccessfully disputed by each such party (as finally determined by the
Independent Firm) bears to the total amount of such dispute items so submitted.
Notwithstanding anything herein to the contrary, the Purchaser shall be
permitted to make elections under Section 338 of the United States Internal
Revenue Code of 1986 with respect of the transactions contemplated under this
Agreement and pursuant to subsection 256(9) of the Tax Act in respect of the
taxation years ending on the Closing Date.

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  4.5.2 Should it be determined that the Holding or the Corporation has made an
“excessive eligible dividend designation”, within the meaning of subsection
89(1) of the Tax Act and any equivalent provisions of applicable provincial
legislation, the Non-Institutional Vendors hereby consent to (or shall cause the
recipient of the relevant dividend to consent to) the making of an election
under subsection 185.1(2) of the Tax Act and any equivalent provisions of
applicable provincial legislation in respect of the full amount thereof, and
such election shall be made by the Holding or the Corporation, as they case may
be, in the manner and within the time prescribed by subsections 185.1(2) and
185.1(3) of the Tax Act.

 

4.6 Confidentiality

Except as required by Law (unless the Law permits non-disclosure of information
for confidentiality or other purposes and if such non-disclosure is not
permitted, the receiving Party seeking to disclose such information shall notify
the other Party and shall seek confidential treatment of such information), the
Parties and their respective Affiliates will receive and maintain all
information received from the others strictly in confidence and will not
disclose to any Person or make public or authorize the disclosure of any such
information and will not use such information for any purpose except for the
purpose contemplated herein unless: (a) the specific information is now or
hereafter publicly disclosed other than as a result of breach of this provision,
(b) the specific information is disclosed to the receiving Party by a third
Person having no obligation of confidentiality to the disclosing party with
regard to the information, or (c) the specific information is independently
generated by the receiving Party without the use and not as a consequence of the
disclosure by the other Party.

ARTICLE 5

CLOSING ARRANGEMENTS

 

5.1 Closing

The transactions contemplated herein shall be completed at the Time of Closing
at the Montreal offices of Stikeman Elliott LLP, located at 1155 René-Lévesque
West Blvd., 40th Floor, CIBC Building, Montreal (Québec) or any other location
agreed upon in writing by the Purchaser and the Vendors.

ARTICLE 6

INDEMNIFICATION

 

6.1 Indemnification by the Vendors or the Non-Institutional Vendors

Subject to Sections 3.4.1 and 6.3.1:

 

  6.1.1 Individual Liability (Non-Institutional Vendors). Each of the
Non-Institutional Vendors shall individually (not solidarily) indemnify and save
harmless the Purchaser from and against all Losses suffered or incurred by the
Purchaser, the Corporation and the Holding, and, to the extent named or involved
in any third party action or claim, their respective directors, officers and
employees (the “Purchaser Indemnified Parties”), as a result of:

 

  (a) any breach of any representation or warranty made or given by such
Non-Institutional Vendor in Sections 3.1.1 to 3.1.4 of Schedule 3.1 to this
Agreement; or

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  (b) any failure by such Non-Institutional Vendor to observe or perform any
covenant or obligation contained in this Agreement.

 

  6.1.2 Individual Liability (CDPQ). CDPQ shall individually (not solidarily)
indemnify and save harmless the Purchaser from and against all Losses suffered
or incurred by the Purchaser Indemnified Parties, as a result of

 

  (a) any breach of any representation or warranty made or given by CDPQ with
regard to itself in Sections 3.1.1 to 3.1.4 of Schedule 3.1 to this Agreement,
or

 

  (b) any failure by CDPQ to observe or perform any of its covenants or
obligations contained in this Agreement (the “CDPQ Covenants”).

 

  6.1.3 Collective Liability. Each of the Non-Institutional Vendors shall
jointly (and not solidarily) indemnify and save harmless the Purchaser from and
against all Losses suffered or incurred by the Purchaser Indemnified Parties as
a result of:

 

  (a) any breach of any representation or warranty set forth in Section 3.1.5 to
3.1.43 of Schedule 3.1 to this Agreement;

 

  (b) any Indebtedness of the Corporation or the Holding as at the Closing Date
that does not appear on the Financial Statements or Schedule 3.1.20;

 

  (c) any liabilities or obligations, as well as any investigation,
characterization, remediation, removal, disposal and equipment costs of, or any
Claims or Threatened Claims against, the Corporation or the Holding (including
the reasonable costs and expenses related thereto of technical and legal
advisors and consultants) relating to: (i) the environmental condition of the
Real Properties existing on or prior to the Closing Date, whether known or
unknown or set forth on any Schedules hereto, including any such environmental
condition relating to (A) the presence at the Real Properties of any current or
former underground storage tanks, and any equipment, piping and Hazardous
Materials related thereto; and (B) the presence at, on, in or under the Real
Properties of any Hazardous Materials contrary to Environmental Laws or in
excess of applicable limits under Environmental Laws; and (ii) obtaining after
the Closing Date any Permits required pursuant to applicable Environmental Laws
to operate the Business as currently conducted and as will be conducted upon
completion of the Expansion Project, including any Certificate of Authorization
required pursuant to section 22 of the Environment Quality Act (Québec) and any
municipal Permits required for air or wastewater emissions, and including the
capital cost and additional operating costs related to any equipment or
corrective action required by any Governmental Authority in order to obtain such
Permits or required to otherwise comply with such Permits and related
Environmental Laws;

 

  (d) any liabilities or obligations of the Holding whatsoever, whether accrued,
absolute, contingent or otherwise, relating to any period ending on or prior to
the Closing Date, and any breach of any representation or warranty relating to
the Holding set forth in Schedule 3.1 to this Agreement;

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  (e) any liabilities or obligations of the Corporation or the Holding for Taxes
in connection with any period ending on or prior to the Closing Date, other than
Taxes that are adequately and fully recorded in the Closing Date Financial
Statements and Closing Calculation, and for greater certainty, including any
Taxes arising from the Pre-Closing Reorganization; and

 

  (f) all liabilities or obligations of the Corporation in connection with Item
3 in Schedule 3.1.28.

All Losses suffered or incurred by the Purchaser Indemnified Parties resulting
from any such breach shall be indemnified by the Non-Institutional Vendors pro
rata with each Non-Institutional Vendor’s Adjusted Designated Percentage.

 

  6.1.4 For greater clarity, CDPQ shall not be liable for any and all Losses
suffered or incurred by the Purchaser Indemnified Parties other than as a result
of any breach of any representation or warranty made or given by CDPQ with
respect to itself in Sections 3.1.1 to 3.1.4 of Schedule 3.1 to this Agreement
or any failure by CDPQ to observe or perform any of the CDPQ Covenants.
Notwithstanding the foregoing, but subject to the other provisions of this
Article 6 including the right for CDPQ to challenge or dispute any Claim or Loss
suffered or incurred by the Purchaser Indemnified Party, CDPQ agrees that its
Designated Percentage of the Indemnity Holdback can be used to indemnify the
Purchaser pursuant to Sections 6.1.2 and 6.1.3, in connection with which the
Non-Institutional Vendors shall promptly provide CDPQ with any relevant
information, provided however, that CDPQ’s Designated Percentage of the
Indemnity Holdback shall not be used to indemnify the Purchaser against Losses
suffered or incurred by the Purchaser Indemnified Parties in respect of the
Holding (the “Holding Losses”). The CDPQ’s Designated Percentage of the
Indemnity Holdback shall be released in accordance with, and subject to, the
terms and conditions of the Escrow Agreement.

 

  6.1.5 The Holding Losses shall be satisfied (i) first, from the Holding
Holdback, and (ii) second, by F. Angers, Fiducie Agemo, K. Mekhail and Fiducie
Mekhail pursuant to Section 6.1.1 or 6.1.3, as applicable.

 

  6.1.6 For greater certainty, subject to Section 6.4.3, as applicable, the
right to indemnification under Sections 6.1.1(b), 6.1.3(b), 6.1.3(c), 6.1.3(d),
6.1.3(e) and 6.1.3(f) exists notwithstanding the right to indemnification under
Sections 6.1.1(a) and 6.1.3(a) and notwithstanding any representation and
warranty in Schedule 3.1. Subject to Section 6.4.3, the time limitations set
forth in Section 3.4 and the limitations on Losses set forth in Section 6.3, the
right to indemnification under Section 6.1.1(a) and 6.1.3(a) is a right that is
separate and independent from any other right or remedy under this Agreement.

 

  6.1.7 For purposes of calculating Losses resulting from a breach of any
representation or warranty made or given by the Vendors or the Non-Institutional
Vendors, as the case may be, the representations and warranties given by the
Vendors or the Non-Institutional Vendors, as the case may be, will be deemed to
have been made without the inclusion of limitations or qualifications as to
materiality, such as the words “material”, “immaterial” and “in all material
respects” or words of similar import.

 

6.2 Indemnification by the Purchaser

 

  6.2.1 Liability. Subject to Section 3.4.2, the Purchaser shall indemnify and
save harmless the Vendors from and against all Losses suffered or incurred by
them, as a result of:

 

  (a) any breach of any representation or warranty made or given by the
Purchaser in Schedule 3.2, in this Agreement; or

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  (b) any failure by the Purchaser to observe or perform any covenant or
obligation contained in this Agreement.

 

  6.2.2 For greater certainty, subject to Section 6.4.3, as applicable, the
right to indemnification under Section 6.2.1(b) exists notwithstanding the right
to indemnification under Section 6.2.1(a) and notwithstanding any representation
and warranty in Schedule 3.2. Subject to Section 6.4.3 and the time limitations
set forth in Section 3.4, the right to indemnification under Section 6.2.1(a) is
a right that is separate and independent from any other right or remedy under
this Agreement.

 

  6.2.3 For purposes of calculating Losses resulting from a breach of any
representation or warranty made or given by the Purchaser, the representations
and warranties given by Purchasers will be deemed to have been made without the
inclusion of limitations or qualifications as to materiality, such as the words
“material”, “immaterial” and “in all material respects” or words of similar
import.

 

6.3 Limitations on Indemnification

 

  6.3.1 Limitations on Indemnification of the Purchaser. Except in connection
with (i) the Vendors Fundamental Representations, (ii) any representation or
warranty set forth in Section 3.1.30 of Schedule 3.1 of this Agreement,
(iii) the Non-Institutional Vendors Fundamental Representations, (iv) any
representation or warranty made or given by the Non-Institutional Vendors
related to the Holding, or (v) Claims against (A) CDPQ based on fraud of CDPQ
with regard to the representations and warranties with respect to itself set
forth in Section 3.1.1 to 3.1.4 of Schedule 3.1 to this Agreement and (B) the
Non-Institutional Vendors based on fraud of the Non-Institutional Vendors (in
each case, for which there shall be no limitations or thresholds):

 

  (a) no Claim for indemnification may be made by the Purchaser against the
applicable Vendors or Non-Institutional Vendors, as the case may be, in
accordance with Section 6.1 in respect of any Loss resulting from any matter
referred to in Section 6.1.1(a), 6.1.2(a) and 6.1.3(a), unless and until the
aggregate amount of the Losses suffered or incurred by the Purchaser Indemnified
Parties, taken as a whole, collectively exceed $475,000 (the “Global
Threshold”), in which event the amount of Losses, in excess of the Global
Threshold, may be recovered by the Purchaser; and

 

  (b) the maximum aggregate liability of each of CDPQ and each Vendor in
accordance with Section 6.1 with respect to indemnification by the Vendors or
Non-Institutional Vendors, as the case may be, pursuant to Sections 6.1.1(a),
6.1.2(a) and 6.1.3(a) shall not exceed an amount equal to the product of: (i) in
the case of a Non-Institutional Vendor (A) 15% of the Purchase Price, multiplied
by (B) such Non-Institutional Vendor’s Adjusted Designated Percentage, and
(ii) in the case of CDPQ (A) 15% of the Purchase Price, multiplied by (B) CDPQ’s
Designated Percentage.

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6.4 General Indemnification Rules

The obligations of the Indemnifier to indemnify the Indemnified Party in respect
of any Loss shall also be subject to the principles set forth in this
Section 6.4.

 

  6.4.1 Appeal. In addition to the right provided to the Indemnifier to
participate in or assume control of the defence of a Third Party Claim as
provided in Article 6, the Indemnified Party shall not permit any right of
appeal in respect of any Third Party Claim to terminate without giving the
Indemnifier notice thereof and an opportunity to contest such Third Party Claim.

 

  6.4.2 Loss. The Indemnified Party shall not be entitled to Claim for any
indirect Loss (including loss of profit or loss of value) or punitive damages,
except to the extent awarded in a Third Party Claim.

 

  6.4.3 Recovery Once. With respect to any Loss suffered by the Indemnified
Party, no liability shall attach to the Indemnifier to the extent that the same
Loss has been recovered by the Indemnified Party under any other representation
or warranty contained in this Agreement or any other Closing Document and,
accordingly, the Indemnified Party may only recover once in respect of the same
Loss.

 

  6.4.4 Insurance. The obligation of indemnification in respect of any Loss
claimed shall not apply to the extent of any insurance proceeds (net of the
costs of collection, including increased premiums) actually reimbursed through
insurance to the Indemnified Party in respect of such Loss.

 

  6.4.5 Provisions. The amount of Losses shall be reduced by any allowance,
provision or reserve in respect of the matter giving rise to such Claim included
in the Closing Date Financial Statements, if any.

 

  6.4.6 Remedy. To the extent that any breach of representation or warranty
contained in this Agreement is capable of remedy, the Indemnified Party shall
afford the Indemnifier 10 Business Days to remedy the matter complained of,
provided that the Indemnified Party shall not be obligated to offer the
Indemnifier such opportunity where the breach is continuing and the Corporation
suffers continuing material harm or prejudice as a result of such breach and
they make prompt commercially reasonable efforts to mitigate such harm or
prejudice.

 

  6.4.7 Fault of Party. The obligation of indemnification shall not apply to the
extent that any Loss results from the intentional or gross fault of the Party
seeking indemnification or from fraud committed by such Party.

 

  6.4.8 Tax Benefits. The obligation of indemnification shall not apply or, as
the case may be, shall be reduced by the amount of the Tax benefits or reduction
of income Tax actually realized by the Indemnified Party in the taxation year in
which the Losses are claimed, to the extent the Indemnified Party (and, if the
Indemnified Party is the Purchaser, if the Corporation or Holding) is entitled
to any Tax benefits, including the reduction of any income Tax by reason of the
Losses being claimed as a deduction or reduction of the income Tax payable.

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  6.4.9 Changes in Tax. The Non-Institutional Vendors (being understood that
CDPQ is making no representation or warranty in that regard) shall not be liable
for any Claim for Tax if and to the extent it is attributable to, or the amount
of the Claim is increased as a result of, any (i) legislation not in force as at
the Closing Date, or (ii) change of Law (or any change in interpretation on the
basis of case law), regulation, directive, requirement or administrative
practice.

 

  6.4.10 Loss Decrease. For purposes of clarification, to the extent any Loss
has been reduced in accordance with the provisions of this Section 6.4 (the
“Loss Decrease”), the amount of such Loss Decrease shall be excluded for the
purposes of calculating if the Global Threshold and the cap set forth in
Section 6.3.1(b) has been reached.

 

6.5 Direct Claims

Any Direct Claim shall be asserted by giving the Indemnifier reasonably prompt
written notice thereof, but in any event not later than thirty (30) days after
the Indemnified Party becomes aware of acts, omissions or facts that may give
rise to such Direct Claim; provided that no delay on the part of any Indemnified
Party in giving any such notice shall relieve the Indemnifier of any
indemnification obligation pursuant to this Article 6 except to the extent the
Indemnifier is actually prejudiced thereby. Such notice to the Indemnifier shall
describe the Direct Claim in reasonable detail and shall indicate, if reasonably
practicable, the estimated amount of the Loss that has been or may be sustained
by the Indemnified Party. The Indemnifier shall then have a period of thirty
(30) days within which to respond in writing to such Direct Claim. If the
Indemnifier does not so respond within such thirty (30)-day period, the
Indemnifier shall be deemed to have rejected such Claim, and in such event the
Indemnified Party shall be free to pursue such remedies as may be available to
the Indemnified Party. If the Indemnifier agrees prior to the expiration of the
thirty (30)-day period as to the validity of the Direct Claim after the
Indemnifier has provided a written response, the Indemnifier shall pay, or the
Parties shall direct the Escrow Agent to pay, to the Indemnified Party the
amount of such Direct Claim forthwith upon such amount being quantified. If the
Parties fail to agree as to the validity of the Direct Claim or its amount, any
Party may exercise all remedies as may be available to such Party.

 

6.6 Notice of Third Party Claims

If an Indemnified Party receives notice of the commencement or assertion of any
Third Party Claim, the Indemnified Party shall give the Indemnifier reasonably
prompt notice thereof, but in any event no later than thirty (30) days after
receipt of such notice of such Third Party Claim; provided that no delay on the
part of any Indemnified Party in giving any such notice shall relieve the
Indemnifier of any indemnification obligation pursuant to this Article 6 except
to the extent the Indemnifier is actually prejudiced thereby. Such notice to the
Indemnifier shall describe the Third Party Claim in reasonable detail and shall
indicate, if reasonably practicable, the estimated amount of the Loss that has
been or may be sustained by the Indemnified Party.

 

6.7 Defence of Third Party Claims

 

  6.7.1 Assumption of Defence. The Indemnifier may participate in or assume the
defence of any Third Party Claim by giving notice to that effect to the
Indemnified Party not later than thirty (30) days after receiving notice of that
Third Party Claim (or sooner if the nature of the Third Party Claim so requires
and if so specified in the Notice) (the “Notice Period”), to defend the Third
Party Claim at its own cost and expense with counsel of its own selection,
provided that:

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  (a) the Third Party Claim seeks only monetary damages and does not seek any
injunctive or other relief against the Indemnified Party; and

 

  (b) legal counsel chosen by the Indemnifier is satisfactory to the Indemnified
Party, acting reasonably.

The Indemnifier’s right to do so shall be subject to the rights of any insurer
or other party who has potential liability in respect of that Third Party Claim.
The Indemnifier agrees to pay all of its own expenses of participating in or
assuming such defence. The Indemnified Party shall cooperate in good faith in
the defence of each Third Party Claim, even if the defence has been assumed by
the Indemnifier, and may participate in such defence assisted by counsel of its
own choice at its cost and expense, provided that the Indemnifier and its legal
counsel shall lead the defence and provided, further, that reasonable defence
costs and expenses of the Indemnified Party prior to the date the Indemnifier
validly exercises its right to defend the Third Party Claim is reimbursed by the
Indemnifier to the Indemnified Party. If the Indemnified Party has not received
the notice within the Notice Period that the Indemnifier has elected to assume
the defence of such Third Party Claim, the Indemnified Party may, at its option,
elect to settle or compromise the Third Party Claim or assume such defence,
assisted by counsel of its own choosing and the Indemnifier shall be liable for
all reasonable costs and expenses paid or incurred in connection therewith and
any Loss suffered or incurred by the Indemnified Party with respect to such
Third Party Claim.

 

  6.7.2 Settlement. The Indemnifier shall not settle any Third Party Claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, unless:

 

  (a) the terms of the compromise and settlement require only the payment of
money and do not require the Indemnified Party to admit any wrongdoing or take
or refrain from taking any action; and

 

  (b) the Indemnified Party receives, as part of the compromise and settlement,
an unconditional release, which is in form and substance satisfactory to the
Indemnified Party, acting reasonably, from any and all obligations or
liabilities it may have with respect to the Third Party Claim.

 

  6.7.3 Notwithstanding Section 6.7.2, the Indemnifier will not be permitted to
compromise and settle or to cause a compromise and settlement of any Third Party
Claim relating to Taxes without the prior written consent of the Indemnified
Party.

 

6.8 Assistance for Third Party Claims

The Indemnifier and the Indemnified Party shall use all reasonable efforts to
make available to the Party which is undertaking and controlling the defence of
any Third Party Claim (the “Defending Party”):

 

  6.8.1 those employees whose assistance, testimony or presence is necessary to
assist the Defending Party in evaluating and in defending any Third Party Claim;
and

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  6.8.2 all documents, records and other materials in the possession of such
Party reasonably required by the Defending Party for its use in defending any
Third Party Claim.

Each of them shall otherwise cooperate with the Defending Party. The Indemnifier
shall be responsible for all expenses associated with making such documents,
records and materials available and for all reasonable out of pocket expenses of
any employees made available by the Indemnified Party to the Indemnifier
hereunder but not for salaries.

 

6.9 No Right to Set-Off

The Parties expressly agree that the Purchaser may not set off against any
amount to which it may be entitled under Section 6.1 any amount to which it may
be obliged to pay pursuant to any other agreement or relationship with the
Vendors.

 

6.10 Duty to Mitigate

Nothing in this Agreement shall in any way restrict or limit the general
obligation at law of an Indemnified Party to take commercially reasonable steps
to mitigate any Loss which it may suffer or incur by reason of the breach by an
Indemnifier of any representation or warranty or the breach of any covenant of
the Indemnifier hereunder, provided that all commercially reasonable costs of
mitigation (which in no event may exceed the costs of the Losses incurred) shall
be included in the computation of Losses to which the Indemnified Party is
entitled to indemnification hereunder, and that no such Indemnified Party shall
be required to take any action or refrain from taking any action that is
contrary to any applicable contract, Order or applicable Laws.

 

6.11 Exclusivity of Remedy

Except for injunctive or equitable relief (including specific performance), the
matters covered by Section 2.5, or Claims based on fraud, and without limiting
the rights of the Parties set forth in 6.5, the sole and exclusive remedy of the
Purchaser and the Vendors (in Law, under applicable Law or otherwise) for any
breach by the other of its representations, warranties or covenants in this
Agreement or arising from the transactions contemplated hereby shall be a Claim
for indemnification pursuant to this Article 6.

 

6.12 Purchase Price Adjustment

Any indemnification payment made under this Article 6 shall be treated by the
Purchaser and the Non-Institutional Vendors or CDPQ, as the case may be, as an
adjustment to the Purchase Price. Such adjustment shall be allocated to the
Class A shares in the capital of the Corporation.

ARTICLE 7

GUARANTOR

 

7.1 Scope of Guarantee

The Guarantor hereby unconditionally and irrevocably guarantees to the Vendors,
solidarily with the Purchaser, the timely and complete performance and payment
of all obligations of the Purchaser under this Agreement (the “Purchaser
Obligations”). The guarantee under this Article 7 may be enforced by the Vendors
without the necessity at any time of resorting to or exhausting any other remedy
or without the necessity at any time of having recourse to this Agreement. The
Guarantor hereby waives the benefit of discussion and of division. The

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Guarantor agrees that nothing contained herein shall prevent the Vendors from
exercising any and all rights or remedies under this Agreement or any Closing
Document if any of the Purchaser or the Guarantor fail to timely perform the
Purchaser Obligations, and the exercise of any of the aforesaid rights and the
completion of any actions or proceedings related thereto shall not constitute a
discharge of any of the obligations of the Guarantor hereunder, it being the
express purpose and intent of the Guarantor that the Guarantor’s obligations
hereunder shall be absolute, independent and unconditional under any and all
circumstances. Notwithstanding the foregoing, the Guarantor shall have the right
to raise any defense to the Purchaser Obligations that could have been raised by
the Purchaser.

 

7.2 Survival of Guarantee

The guarantee under this Article 7 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment or performance, or any
part thereof, of any of the Purchaser Obligations is rescinded or must otherwise
be restored or returned by the Vendors upon insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Purchaser, or upon or as a result of the
appointment of any receiver, intervenor or conservator of, or trustee or similar
officer for the Purchaser, or any substantial part of the property of the
Purchaser; or otherwise, as if such payments or performances had not been made.

 

7.3 Costs and Expenses

If at any time hereafter any of the Vendors employ counsel to pursue collection,
to intervene, to sue for enforcement of the terms hereof, or to file a petition,
complaint, answer, motion or other pleading in any suit or proceeding related to
the guarantee set forth in this Article 7, then each such event where the
Vendors prevail, all of the reasonable attorneys’ fees, including extra-judicial
fees and costs, related thereto shall be an additional liability of the
Guarantor to the Vendors, payable on demand.

ARTICLE 8

GENERAL

 

8.1 Further Assurances

Each of the Parties hereto shall from time to time execute and deliver all such
further documents and instruments and do all acts and things as another Party
may, after the Closing Date, reasonably require to effectively carry out or
better evidence or perfect the full intent and meaning of this Agreement.

 

8.2 No Waiver

Failure of a Party to insist upon the strict performance of any term or
condition of this Agreement or to exercise any right, remedy or recourse
hereunder shall not be construed as a waiver or relinquishment of any such term
and condition.

 

8.3 Cost and Expenses

Each of the Parties shall be responsible for and pay their respective legal,
financial advisory and accounting costs and expenses incurred in connection with
the consummation of the transactions provided herein, including the preparation,
execution and delivery of this Agreement and the Closing Documents, and any
other costs and expenses whatsoever and howsoever incurred in

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connection herewith and/or therewith. For greater certainty, the Vendors shall
assume all costs and expenses incurred by the Corporation and the
Non-Institutional Vendors shall assume all costs and expenses incurred by the
Holding in connection with this Agreement and the consummation of the
transactions provided herein.

 

8.4 Brokers’ Fees

None of the Parties have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement or any of the Closing
Documents, other than fees to PricewaterhouseCoopers Corporate Finance Inc.
(“PWC”) which fees of PWC shall be the responsibility of the Vendors, and not
the Corporation nor the Purchaser or the Holding.

 

8.5 Public Announcements

No Party shall issue any press release or otherwise make public statements or
filings with any Governmental Authority with respect to this Agreement or the
Closing Documents, or the transactions contemplated herein or therein, without
the consent of the other Parties which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, each Party shall have the
right to override such obligation in order to make any disclosure or filing
required under applicable Laws or by applicable rules of any stock or listing
exchange on which a Party or any of its Affiliates lists securities. The Parties
expressly acknowledge and agree that following the Closing, the Guarantor shall
be permitted to publicly file this Agreement (and any description and summary of
the transactions contemplated hereby) pursuant to any reports required to be
filed by it under the United States Securities Exchange Act of 1934, as amended.

 

8.6 Successors, Assigns and Assignments

This Agreement will enure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties. This Agreement may not be
assigned by any Party without the prior written consent of the other Parties.
Notwithstanding the foregoing, the Purchaser may assign its rights under this
Agreement in whole or in part to any Affiliate of the Purchaser or any Person
that acquires all or substantially all of the assets of the Purchaser or a
majority of the Purchaser’s issued and outstanding voting securities, whether
any such transaction is structured as a sale of shares, a sale of assets, an
amalgamation or otherwise; provided, however, that any such assignment shall not
relieve the Purchaser or the Guarantor from any of its obligations hereunder.

 

8.7 Entire Agreement

This Agreement and the Closing Documents constitute the entire agreement between
the Parties with respect to the subject matters hereof and thereof and cancels
and supersedes any prior understandings and agreements between the Parties with
respect thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the Parties other than as expressly set forth in this Agreement and the Closing
Documents.

 

8.8 Amendments and Waivers

No amendment to this Agreement shall be valid or binding unless set forth in
writing and duly executed by all Parties. No waiver of any breach of any
provision of this Agreement shall be effective or binding unless made in writing
and signed by the Party purporting to give the same and, unless otherwise
provided, will be limited to the specific breach waived.

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8.9 Notices

Any demand, notice or other communication to be given in connection with this
Agreement shall be given in writing and will be given by personal delivery, by
registered mail, by courier services or by facsimile or e-mail (followed by
receipt by registered mail or courier services within three (3) Business Days)
addressed: (i) in the case of the Vendors, either (a) to the respective address
of each Vendor set forth in Schedule 2.2 or (b) to the Non-Institutional Vendor
Representative whose address is set forth in Schedule 2.2, in the case of (a) or
(b), with a copy to Fasken Martineau DuMoulin LLP, to the address set forth
below; (ii) in the case of the Purchaser, to the address set forth below,
(iii) in the case of the Guarantor, to the address set forth below, (iv) and in
the case of (ii) or (iii), with a copy to Stikeman Elliott LLP and Kirkland &
Ellis LLP, to the addresses set forth below; and (v) if another address,
individual or electronic communication number has been designated by notice by
any recipient Party to the others, to such other address, individual or
electronic communication number (followed by receipt by registered mail or
courier services within three (3) Business Days).

FASKEN MARTINEAU DUMOULIN LLP

800 Square Victoria

Suite 3700

Montreal, Québec

H4Z 1E9

Attention:   Patrice Vachon

Facsimile:  514-397-7600

E-mail:   pvachon@fasken.com

Notice to the Purchaser:

SAGENT ACQUISITION CORP.

c/o Sagent Pharmaceuticals Inc.

1900 N. Roselle Road, Suite 700

Schaumburg, IL 60195, USA

U.S.A.

Attention:   Michael Logerfo, Executive Vice President, Chief Legal Officer

Facsimile: (847) 908-1641

E-mail:   mlogerfo@SagentPharma.com

Notice to the Guarantor:

SAGENT PHARMACEUTICALS, INC.

1901 N. Roselle Road, Suite 700

Schaumburg, IL 60195, USA

Attention:   Michael Logerfo, Executive Vice President, Chief Legal Officer

Facsimile: (847) 908-1641

E-mail:   mlogerfo@SagentPharma.com

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In each later case (Purchaser and Guarantor) with copies to:

STIKEMAN ELLIOTT LLP

1155 René-Lévesque West Blvd.

40th Floor

Montreal (Québec)

H3B 3V2

Attention:   Brian M. Pukier

Facsimile: (416) 947 0866

E-mail:   bpukier@stikeman.com

and to:

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.

Washington, D.C. 20005-5793, USA

Attention:   Alexander D. Fine

Facsimile: (202) 879 5200

E-mail:   alexander.fine@kirkland.com

Any demand, notice or other communication given by personal delivery or courier
services shall be conclusively deemed to have been given on the day of actual
delivery thereof and, if given by registered mail, on the third (3rd) Business
Day following the deposit thereof in the mail and, if given by facsimile or
e-mail (followed by receipt by registered mail or courier services within
two (2) Business Days), on the day of transmittal thereof if given during the
normal business hours of the recipient on a Business Day and on the next
Business Day if not given during such hours. If the Party giving any demand,
notice or other communication knows or ought reasonably to know of any
difficulties with the postal system that might affect the delivery of mail, any
such demand, notice or other communication may not be mailed but must be given
by personal delivery or by electronic communication (followed by receipt by
registered mail or courier services within three (3) Business Days).

 

8.10 Governing Law and Forum

This Agreement shall be governed by and construed in accordance with the Laws of
the Province of Québec and the Laws of Canada applicable therein (excluding any
conflict of laws rule or principle, foreign or domestic, which might refer such
interpretation to the laws of another jurisdiction). The Parties hereby
irrevocably and unconditionally submit to the exclusive jurisdiction of the
courts of the Province of Québec and elect domicile in the City of Montreal with
respect to any matter relating to the execution or construction of this
Agreement or the exercise of any right or the enforcement of any obligation
arising hereunder (excluding any conflict of forum rule or principle, foreign or
domestic, which might refer such matter to the courts of another jurisdiction).

 

8.11 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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8.12 Third Party Beneficiaries

Except as otherwise provided in Sections 4.1 and 6.1, the Parties intend that
this Agreement will not benefit or create any right, stipulation for the benefit
of, delegation open for acceptance by, or cause of action in favour of, any
Person, other than the Parties and their respective successors and permitted
assigns. No Person, other than the Parties, is entitled to rely on the
provisions of this Agreement in any action, suit, proceeding, hearing or other
forum except for the Persons who may rely on the provisions of this Agreement
solely for the purposes of Section 4.1 and the Purchaser Indemnified Parties who
may rely on the provisions of this Agreement solely for the purposes of
Section 6.1.

 

8.13 Counterparts

This Agreement may be executed in one or more counterparts, each of which shall
conclusively be deemed to be an original but all of which taken together shall
be deemed to constitute one and the same agreement. A facsimile or electronic
transmission of the Agreement bearing a signature on behalf of a Party shall be
legal and binding on such Party.

 

8.14 Employee Information

The Non-Institutional Vendors and the Purchaser hereto agree that (i) the
information disclosed to Purchaser pursuant to Schedule 3.1.31 was necessary for
the Purchaser and the Guarantor’s determination to enter into this Agreement and
proceed with the transactions contemplated hereby and for the Parties to proceed
with the Closing, and (ii) such information relates solely to the carrying of
the Business of the Corporation and will only be used for those purposes for
which it was initially collected from or in respect of the Corporation’s
employees.

(remainder of this page left blank intentionally)

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   Signature page

 

IN WITNESS WHEREOF the Parties have executed this Agreement in Montreal (Québec)
as of the effective date of October 1st, 2014.

 

   /s/ François Angers          /s/ Kamilia Mekhail-Ishak    FRANÇOIS ANGERS   
      KAMILIA MEKHAIL-ISHAK FIDUCIE AGEMO       FIDUCIE FAMILIALE KAMILIA
MEKHAIL-ISHAK Per:    /s/ François Angers       Per:    /s/ Kamilia
Mekhail-Ishak    François Angers, Trustee          Kamilia Mekhail-Ishak,
Trustee Per:    /s/ Patrice Vachon       Per:    /s/ François Angers    Patrice
Vachon, Trustee          François Angers, Trustee       7685947 CANADA INC.,   
/s/ Pierre Bleau       Per:    /s/ François Angers    PIERRE BLEAU, Owner of the
shares          Name: François Angers    (Shares registered in the name of LA
FINANCIÈRE BANQUE NATIONALE INC., trustee for Pierre Bleau          Title:
President       CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC    /s/ Olivier Laurendeau
      Per:    /s/ Richard Babineau    OLIVIER LAURENDEAU          Name: Richard
Babineau    (Shares registered in the name of LA FINANCIÈRE BANQUE NATIONALE
INC., trustee for Olivier Laurendeau         

Title: Directeur

Investissements moyenne entreprise

   /s/ Marguerite Dorion       And per:    /s/ Claude Lafond    MARGUERITE
DORION          Name: Claude Lafond :    (Shares registered in the name of CIBC
WOOD GUNDY, trustee for Marguerite Dorion          

Title: Directeur

Investissements moyenne entreprise

Placements privés

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   Signature page

 

          SAGENT ACQUISITION CORP.    /s/ Richard Vallee       Per:    /s/
Michael Logerfo   

 

        

 

   RICHARD VALLÉE          Name: Michael Logerfo By:    (Shares registered in
the name of LA FINANCIÈRE BANQUE NATIONALE INC., trustee for Richard Vallée   
      Title: Executive Vice President and Chief Legal Officer OMEGA LABORATORIES
LIMITED       SAGENT PHARMACEUTICALS, INC. Per:    /s/ François Angers      
Per:    /s/ Michael Logerfo   

 

        

 

   Name: François Angers          Name: Michael Logerfo    Title: President   
      Title: Executive Vice President, Chief Legal Officer and Corporate
Secretary    /s/ Jean Clerk          /s/ Jean Fleury   

 

        

 

   JEAN E. CLERK, Q.C.          JEAN FLEURY 7685939 CANADA INC.       Per:   
/s/ François Angers            

 

            Name: François Angers             Title: President         

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LIST OF SCHEDULES

 

1.1 Definitions

2.2 Allocation of Purchase Price

2.3.1 Bank Accounts of the Vendors

2.4.1 Calculation of Working Capital and Cash Outlay

3.1 Representations and warranties of Vendors

3.1.1 Capacity and no violation of Vendors

3.1.6 Capitalization

3.1.13 Approvals and consents

3.1.14 Compliance with Laws

3.1.15 Permits

3.1.16 Absence of certain changes or events

3.1.17 Material Contracts

3.1.18 Financial Statements

3.1.20 Indebtedness

3.1.22 Title to Assets

3.1.27 Related Party Transaction

3.1.28 Litigation

3.1.29 Environmental matters

3.1.31 Employee matters

3.1.32 Employee Plans

3.1.33 Real property

3.1.34 Intellectual Property Rights

3.1.36 Warranties

3.1.38 Insurances

3.2 Representations and warranties of Purchaser

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SCHEDULE 1.1

DEFINITIONS

 

1.1 Definitions

 

  1.1.1 “Adjusted Designated Percentage” for each Non-Institutional Vendor means
the percentage specified below opposite the name of such Non-Institutional
Vendor:

 

(a)   7685939 (F. Angers):      78.9171 % 

(b)

  Fiducie Familiale Mekhail:      13.9265 % 

(c)

  J. Clerk:      5.7229 % 

(d)

  P. Bleau:      0.7123 % 

(e)

  O. Laurendeau:      0.2137 % 

(f)

  M. Dorion:      0.2137 % 

(g)

  R. Vallée:      0.2048 % 

(h)

  J. Fleury:      0.0891 %      

 

 

   

Total:

     100 % 

 

  1.1.2 “Adjustment Holdback” has the meaning ascribed thereto in Section 2.3.2;

 

  1.1.3 “Affiliate” has the meaning ascribed thereto in the CBCA;

 

  1.1.4 “Agreement” means this agreement, its recital, together with its
Schedules and all amendments made hereto by written agreement between the
Parties;

 

  1.1.5 “ASPE” means Accounting Standards for Private Enterprises, which are
included in Part II of the Manual of Canada CPA—Accounting at 1st November,
2013;

 

  1.1.6

“Books and Records” means any books, records and accounts of the Corporation
related to the Business and those of the Holding relating to its business,
including, without limitation, invoices, financial data and records and copies
of filed Tax Returns, sales and purchase records, customer and supplier lists,
historical sales and pricing information, referral sources, research and
development reports and records, production reports and records, equipment logs,
operating guides and manuals, business reports, marketing and advertising
materials and all other documents, files, correspondence and other information
(whether in written, printed, electronic or computer printout form, or stored on
computer discs or other data and software storage and media devices), and
(a) including (i) all regulatory filings and supporting documents pertaining to
the products and services of the Business, including all regulatory applications
and approvals, filings and correspondence, studies (clinical and pre-clinical),
testing, stability data, manufacturing know-how reduced to written form, batch
records, quality control and process validation documentation, (ii) all records
required to be maintained for the products and services of the Business and in
order to conduct the Business in accordance with all applicable Laws, including,
without limitation, in accordance with the Food and Drugs Act and its associated
regulations (including the Natural Health Products Regulations, the Natural
Health Products (Unprocessed Product Licence Applications) Regulations, the Food
and Drug Regulations and the Cosmetics Regulations), the Controlled Drugs and

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  Substances Act, including master files (drug and natural health products),
warning letters, audit and inspection reports (including responses to such
reports) and any correspondence with Health Canada or other Governmental
Authorities, and (iii) the complete complaint, customer complaints, adverse
event and medical inquiry records and filings with respect to the products and
services of the Business, and (b) excluding the estimates, projections and other
forecasts contained in the confidential information memorandum delivered by the
Non-Institutional Vendors to the Purchaser;

 

  1.1.7 “Business” has the meaning ascribed thereto in the preamble hereof;

 

  1.1.8 “Business Day” means any day on which commercial deposit-taking banks
are generally open for business in Montreal (Québec) and Chicago (Illinois), and
other than a Saturday, a Sunday or a day observed as a holiday in such location
under applicable Laws;

 

  1.1.9 “Cash Outlays” means all payments already incurred and made from the
cash of the Corporation and from the use of proceeds of all debts already
disbursed up until the Closing, in each such cases, related to the Expansion
Project, as set out in Schedule 2.4.1;

 

  1.1.10 “CBCA” means the Canada Business Corporation Act, as now in effect and
as may be amended from time to time prior to the Closing Date;

 

  1.1.11 “Claims” includes claims, notices, demands, complaints, proceedings,
actions, arbitrations, suits, causes of action, audits, hearings,
investigations, assessments or reassessments (including claims, assessments and
reassessments for Tax), charges, judgments, grievances and hearings;

 

  1.1.12 “Closing” means the completion on the Closing Date of the sale to, and
purchase by, the Purchaser of the Purchased Shares and the completion of all
other transactions contemplated by this Agreement which are to occur
concurrently with the purchase and sale of the Purchased Shares;

 

  1.1.13 “Closing Calculation” has the meaning ascribed thereto in
Section 2.5.2(a);

 

  1.1.14 “Closing Cash Outlays” means the Cash Outlays at Closing based on the
Closing Date Financial Statements;

 

  1.1.15 “Closing Date” means October 1st, 2014;

 

  1.1.16 “Closing Date Adjustment” has the meaning ascribed thereto in
Section 2.4.1;

 

  1.1.17 “Closing Date Financial Statements” means the internal financial
statements of the Corporation for the period ending on the Closing Date;

 

  1.1.18 “Closing Document” means any agreement or document delivered in
relation to the Closing;

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  1.1.19 “Closing Indebtedness” means the Indebtedness at the Closing based on
the Closing Date Financial Statements but disregarding any unamortized
transaction cost or other similar account which reduces the value of the long
term debt on the balance sheet;

 

  1.1.20 “Closing Working Capital” means the Working Capital at Closing based on
the Closing Date Financial Statements;

 

  1.1.21 “Collective Agreement” means any collective agreement, labour
agreement, letters of understanding, letters of intent or other written
communications with any trade union or employee association which may qualify as
a trade union, which would govern the terms and conditions of employment of any
Employee;

 

  1.1.22 “Corporation” has the meaning ascribed thereto in the preamble;

 

  1.1.23 “Credit Agreement” means those facilities extended to the Corporation
by (A) the National Bank of Canada pursuant to (i) an offer to finance issued on
December 10, 2013 and (ii) an offer to finance issued on June 5, 2014 and (B)
the Business Development Bank of Canada pursuant to (i) an offer to finance
issued on September 10, 2003, (ii) an offer to finance issued on September 8,
2008, (iii) an offer to finance issued on June 7, 2010, (iv) an offer to finance
issued on March 13, 2012 and (v) an offer to finance issued on March 2, 2004;

 

  1.1.24 “Defending Party” has the meaning ascribed thereto in Section 6.8;

 

  1.1.25 “Designated Percentage” for each Vendor means the percentage specified
below opposite the name of such Vendor [NTD: The total equals 100%]:

 

(a)

  7685939 (F. Angers):      53.1807 % 

(b)

  Fiducie Familiale Mekhail:      9.3848 % 

(c)

  J. Clerk:      3.8566 % 

(d)

  P. Bleau:      0.4800 % 

(e)

  O. Laurendeau:      0.1440 % 

(f)

  M. Dorion:      0.1440 % 

(g)

  R. Vallée:      0.1380 % 

(h)

  J. Fleury:      0.0600 % 

(i)

  CDPQ:      32.6119 %      

 

 

   

Total:

     100 % 

 

  1.1.26 “Direct Claim” means any Claim by an Indemnified Party against an
Indemnifier which does not result from a Third Party Claim;

 

  1.1.27 “Employees” means all of the employees of the Corporation, a complete
list of which is attached as Schedule 3.1.31;

 

  1.1.28 “Employee Plans” means each and every retirement, pension, retirement
savings, bonus, profit sharing, deferred compensation, life insurance, medical,
hospital, dental care, vision care, drug, sick leave, short term or long term
disability, unemployment benefits, stock purchase, stock option, phantom stock,
share appreciation rights or fringe benefit plan, program, arrangement or policy
that is maintained or otherwise funded or contributed to, or required to be
funded or contributed to, by or on behalf of the Corporation, for the benefit of
the Employees, former employees, officers or directors of the Corporation, under
which the Corporation may have any liability contingent or otherwise, except
that the term “Employee Plans” shall not include any public statutory plans with
which the Corporation is required to comply, including, without limitation, the
Canada and Québec pension plans or plans administered pursuant to applicable
provincial health tax, workers’ compensation and employment insurance
legislation;

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  1.1.29 “Employee Policies and Procedures” has the meaning ascribed thereto in
Section 3.1.31(g);

 

  1.1.30 “Encumbrances” means pledges, liens or encumbrances (statutory or
otherwise), charges, security interests, leases, offers to lease, pledges,
privileges, mortgages, hypothecs, trust deeds, trust or deemed trust (whether
contractual, statutory or otherwise arising), assignments by way of security,
conditional sales contracts or other title retention agreements, or other
similar interests or instruments charging, or creating a hypothec or a security
interest in, or against title, restrictions, development or similar agreements,
easements, servitudes, rights-of-way (registered or unregistered), restrictive
covenants, title defects, restrictions, executions, tax arrears, permissions,
options or adverse Claims, encroachments or burden or any other right or claim
or encumbrances of any kind or character whatsoever or however arising, or any
agreement to enter into or create any of the foregoing, on or affecting all or
any part of any of the assets of a Person or any of its Affiliates or any
interest therein;

 

  1.1.31 “Environment” means the environment as defined pursuant to the
Environmental Laws; and “Environmental” shall have the correlative meaning;

 

  1.1.32 “Environmental Laws” means all applicable Laws relating in whole or in
part to public or worker health and safety and pollution or protection of the
Environment;

 

  1.1.33 “Escrow Agent” means Computershare Trust Company of Canada;

 

  1.1.34 “Escrow Agreement” means the escrow agreement between the Purchaser,
Vendors and the Escrow Agent;

 

  1.1.35 “Estimated Closing Cash Outlays” has the meaning ascribed thereto in
Section 2.4.1(c);

 

  1.1.36 “Estimated Closing Indebtedness” has the meaning ascribed thereto in
Section 2.4.1(a);

 

  1.1.37 “Estimated Closing Working Capital” has the meaning ascribed thereto to
Section 2.4.1(b);

 

  1.1.38 “Expansion Project” means the construction of a new manufacturing
facility of about 14,000 sq. ft. located at 10,900 Hamon Street, Montréal and
new office, laboratory and warehousing spaces or about 24,851 sq. ft. located at
11,150 Hamon Street, Montréal as more fully described in Schedule 1.1.38;

 

  1.1.39 “Financial Statements” means the audited financial statements of the
Corporation and notices to reader of the Holding and 176441 for the years ended
December 31, 2011, December 31, 2012 and December 31, 2013, and the unaudited
financial statements of the Corporation and notices to reader of the Holding and
176441 for the 6-month period ending on June 30, 2014, consisting in each case,
in the case of the Corporation, of a balance sheet and accompanying statements
of earnings, retained earnings, and profit and loss and cash flows for the
period then ended, a copies of which are attached hereto as Schedule 3.1.18;

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  1.1.40 “Global Threshold” has the meaning ascribed thereto in Section 6.3.1;

 

  1.1.41 “Governmental Authority” means any (a) multinational, federal,
provincial, state, regional, municipal, local, governmental or public
department, ministry, minister, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
quasi-governmental body exercising any regulatory, administrative, expropriation
or Tax Authority under or for the account of any of the foregoing, and (c) any
judiciary or quasi-judiciary tribunal, court or body;

 

  1.1.42 “Guarantor” has the meaning ascribed thereto in the preamble hereof;

 

  1.1.43 “Hazardous Materials” means any waste, special waste or other substance
that is prohibited, listed, defined, designated or classified as, or otherwise
determined to be, dangerous, hazardous, radioactive, explosive or toxic or a
pollutant or a contaminant under or pursuant to any Environmental Laws,
including any mixture or solution thereof, and specifically including petroleum
and all derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials;

 

  1.1.44 “Health Canada” means the Department of Health of the federal
government of Canada for which the Minister of Health is responsible and include
the Health Products and Food Branch, Therapeutic Products Directorate, Biologics
and Generic Therapies Directorate, the Natural Health Products Directorate, or
any replacement or successor authority over the sale of the Products in Canada;

 

  1.1.45 “Holding” has the meaning ascribed thereto in the preamble and shall be
deemed to include 176441;

 

  1.1.46 “Holding Holdback” has the meaning ascribed thereto in Section 2.3.4;

 

  1.1.47 “Indebtedness” means, in relation to the Corporation, (a) any
liability, debt or other obligation of whatsoever nature and kind of the
Corporation for borrowed money, including any related prepayment fees or
expenses (including overdraft facilities) (whether short term or long term) or
any loans from shareholders, (b) all obligations of the Corporation or the
Holding for the deferred purchase price of property, (c) all obligations of the
Corporation or the Holding evidenced by notes, bonds, debentures or other
similar instruments, (d) any indebtedness arising under capitalized leases,
conditional sales contracts and other similar title retention instruments listed
as such on the Financial Statements, (e) any obligation in respect of letters of
credit and bankers’ acceptances, other than instruments supporting or
guaranteeing any obligations of the Corporation or the Holding, (f) all
liabilities less all assets arising under any interest rate swap or other
interest rate protection agreement or other similar interest rate agreement,
(g) all loans due to any related party (within the meaning of the Tax Act),
including any shareholder, (h) all indebtedness of others referred to in
paragraphs (a) through (f) above guaranteed by the Corporation or the Holding,
(i) any bonus that was declared, accrued or otherwise payable by the Corporation
or the Holding prior to Closing but not paid as at the date hereof, (j) any
declared dividend not paid by the Corporation or the Holding as at the date
hereof, and (k) all accrued interest, fees, prepayment, penalties or other
similar obligations with respect to any of the foregoing; notwithstanding the
foregoing, Indebtedness shall not include any amount included in the calculation
of the Closing Working Capital;

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  1.1.48 “Indemnifier” means any Party obligated to provide indemnification
under this Agreement;

 

  1.1.49 “Indemnified Party” means any Person entitled to indemnification under
this Agreement;

 

  1.1.50 “Indemnity Holdback” has the meaning ascribed thereto in Section 2.3.3;

 

  1.1.51 “Independent Firm” has the meaning ascribed thereto in
Section 2.5.2(c);

 

  1.1.52 “Initial Consideration” has the meaning ascribed thereto in
Section 2.3.1;

 

  1.1.53 “Inventories” or “Inventory” means all inventories of the Corporation
on the date hereof related to the Business including all finished goods, work in
progress, raw materials, ingredients, promotional materials, packaging materials
and production and shipping supplies, spare parts, maintenance items and
advertising materials, in each case on hand, in transit, ordered but not
delivered, warehoused or wherever situated;

 

  1.1.54 “Intellectual Property” means domestic and foreign: (a) patents,
applications for patents and reissues, divisionals, continuations,
continuations-in-part, renewals, extensions, re-examinations and reissues of
patents or patent applications; (b) proprietary and non-public business
information, including inventions (whether patentable or not), invention
disclosures, improvements, discoveries, trade secrets, confidential information,
know-how, methods, processes, designs, technology, technical data, schematics,
formulae, formulations, chemical compositions, product specifications, recipes,
and customer lists, and documentation relating to any of the foregoing;
(c) copyrights, copyright registrations and applications for copyright
registration; (d) designs, design registrations, design registration
applications, industrial designs, industrial design registrations, industrial
design registration applications; (e) trade names, common law trade-marks,
trade-mark registrations, trade-mark applications, trade dress, logo, domain
name, website name and worldwide web address, and the goodwill associated with
any of the foregoing; (f) computer software and programs (both source code and
object code form), all proprietary rights in the computer software and programs
and all documentation and other materials related to the computer software and
programs; and (g) any other intellectual property and industrial property;

 

  1.1.55 “Laws” means all Canadian or foreign federal, provincial, state or
municipal statutes, laws (including the common law), subordinate legislation or
treaty, ordinances, regulations or by-laws, all Orders of any Governmental
Authority, and policies, practices and guidelines of any Governmental Authority
which, although not actually having the force of law, are considered by such
Governmental Authority as requiring compliance as if having the force of law or
which establish the interpretative position of the Law by such Governmental
Authority, in each case binding on or affecting the Person referred to in the
context in which such word is used;

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  1.1.56 “Leased Real Properties” means the immovable property, lands, buildings
and premises which are leased or subleased by, or with respect to which a right
to use or occupy has been granted to, the Corporation, a list of which is
attached hereto as Schedule 3.1.33;

 

  1.1.57 “Loss” means any loss, liability, damage, cost, expense, fine or
penalty, actually suffered by an Indemnified Party resulting from any Claim,
including the costs and expenses of any action, suit, proceeding, demand,
judgment or settlement relating thereto (and including the reasonable fees of
attorneys and experts);

 

  1.1.58 “Loss Decrease” has the meaning ascribed thereto in Section 6.4.10;

 

  1.1.59 “Material Adverse Change” means any change, event or occurrence that,
individually or in the aggregate with all other changes, events or occurrences:
is or could be reasonably likely to have a material and adverse effect upon the
Business, operations results of operations, the condition (financial or
otherwise), assets, liabilities, value, cash flow or net worth of the
Corporation, taken as a whole, other than any change, event or occurrence
relating to or arising from (i) the consummation of the transaction contemplated
herein or the performance of any obligation hereunder, (ii) changes in the
Canadian or foreign economies or securities or currency markets in general,
(iii) general political, economic or financial conditions, (iv) changes
generally affecting the finance leasing industry in Canada or abroad, (v) the
commencement, occurrence or continuation of any war (whether or not declared),
armed hostilities or acts of terrorism, (vi) any change or proposed change in
applicable Laws, regulatory conditions, policies or government programs or the
interpretation, application or non-application of applicable Laws, conditions,
policies or programs by any Governmental Authority, (vii) any change in ASPE,
(viii) any action taken at the request of the Purchaser, and (ix) any natural
disaster, provided, that the change, event or occurrence described in the
foregoing clauses (ii), (iii), (iv), (v), (vi), (vii) and (ix) shall not be
disregarded if any such change, event or occurrence impacts the Business or the
Corporation in a disproportionately adverse manner relative to other businesses
operating in the Business in which the Corporation operates;

 

  1.1.60 “Material Contract” means any contract, agreement, licence,
undertaking, engagement or commitment of any nature, written or oral, to which
the Corporation is a party:

 

  (a) with any shareholder, any current officer, director, stockholder of the
Corporation or any other Person with whom the Corporation, the Holding or any
Vendor does not deal at arm’s length within the meaning of the Tax Act, other
than employment contracts;

 

  (b) providing for payments by or to the Corporation in excess of $250,000 in
the aggregate of a contract during the term thereof that are not cancelable
without penalty or further payment and without more than thirty (30) days’
notice;

 

  (c) containing confidentiality, secrecy, or non-disclosure covenants or
covenants of the Corporation limiting its freedom to engage or compete in any
line of business or with any Person or solicit any employees or clients in any
geographical area or operate its assets at maximum capacity or otherwise conduct
its business (excluding provisions set forth in confidentiality agreements
executed in connection with the sale of the Purchased Shares);

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  (d) that expires, or that may be renewed at the option of any Person other
than the Corporation so as to expire, more than one year after the date of this
Agreement;

 

  (e) that is a trust indenture, mortgage, promissory note, loan agreement or
other contract for the borrowing of money, any currency exchange, swaps,
commodities or other hedging or derivative arrangement, or any leasing
transaction of the type required to be capitalized in accordance with ASPE;

 

  (f) for capital expenditures in excess of $50,000 in the aggregate;

 

  (g) with any Governmental Authority;

 

  (h) involving any continuing representation, warranty or indemnification
obligation of the Corporation to any other Person, other than in the Ordinary
Course;

 

  (i) that is a guarantee, support, indemnification, assumption or endorsement
of, or any similar commitment with respect to, the obligations, liabilities
(whether accrued, absolute, contingent or otherwise) or indebtedness of any
other Person; or

 

  (j) which is outside the Ordinary Course.

 

  1.1.61 “Negative Adjustment Amount” has the meaning ascribed thereto in
Section 2.6.2;

 

  1.1.62 “Non-Institutional Vendors” means all Vendors except for CDPQ;

 

  1.1.63 “Non-Institutional Vendors Fundamental Representations” has the meaning
ascribed thereto in Section 3.4.1(b);

 

  1.1.64 “Non-Institutional Vendor Representative” has the meaning ascribed
thereto in Section 1.10.1 hereof;

 

  1.1.65 “Notice Period” has the meaning ascribed thereto in Section 6.7.1
hereof;

 

  1.1.66 “Objection Notice” has the meaning ascribed thereto in
Section 2.5.2(b);

 

  1.1.67 “OHSA” has the meaning ascribed thereto in Section 3.1.31(f);

 

  1.1.68 “Order” means any final and enforceable order or any judgment,
injunction, decree, ruling, stipulation, award or writ of any court, tribunal,
arbitrator or other Governmental Authority;

 

  1.1.69 “Ordinary Course” means, when used in relation to the conduct of the
Business, any action which is taken in the ordinary course of the normal
day-to-day operations of the Business in a commercially reasonable and
businesslike manner consistent with the Corporation’s past practices;

 

  1.1.70 “Owned Properties” means the real or immovable property, lands, plants,
buildings, structures, appurtenances and fixtures situated or forming part
thereon of which the Corporation is the registered or beneficial owner, a list
of which is attached hereto as Schedule 3.1.33;

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  1.1.71 “Parties” means the Vendors, the Purchaser, the Guarantor, the
Corporation and the Holding and “Party” means any one of them;

 

  1.1.72 “Permits” means all permits, certificates, certificates of
authorization, certificates of compliance, authorizations, licenses, approvals
of and registrations with any Governmental Authority or pursuant to any Laws
used or held in connection with the Business;

 

  1.1.73 “Permitted Encumbrances” means (a) Encumbrances of mechanics,
labourers, workmen, builders, contractors, sub-contractors, suppliers of
material or architects or other similar encumbrances incidental to construction,
maintenance or repair operations which have either been registered or filed
pursuant to Laws against the Corporation or not yet registered or filed and
which, in any such case, relate to obligations not due and payable and the
Corporation has provided security satisfactory to the Purchaser, acting
reasonably, sufficient to discharge or ensure the payment of such Encumbrances,
together with all related fees, interest and other costs; (b) statutory
Encumbrances relating to obligations not due and payable; (c) Encumbrances for
Taxes, assessments, Governmental Authority charges or levies not due and payable
as at the Closing Date; (c) Encumbrances for public utilities not due and
payable as at the Closing Date; (d) rights of equipment lessors under equipment
contracts listed in Schedule 1.1.75 provided the terms of such equipment
contracts have been complied with up to and on the Closing Date; (e) financing
statements evidencing the rights of equipment lessors under equipment contracts
listed in Schedule 1.1.75 in and to the equipment and vehicles which are subject
to such contracts provided the terms of such equipment contracts have been
complied with up to and on the Closing Date; (f) Encumbrances that secure
obligations pursuant to the Credit Agreement; (g) any Encumbrance in favour of
any lessor, licensor or permitter for rent to become due or for other
obligations or acts, the performance of which is required under contracts so
long as the payment of or the performance of such other obligation or act is not
delinquent and provided that such Encumbrance does not affect the use or value
of the assets affected thereby, and (h) all Encumbrances listed in
Schedule 1.1.75;

 

  1.1.74 “Person” includes any individual, trust, trustee, executor,
administrator, legal personal representative, estate, firm, partnership, joint
venture, venture capital fund, joint stock company, association, body corporate,
corporation, unincorporated association or organization, Governmental Authority,
syndicate or other entity, whether or not having legal status;

 

  1.1.75 “Positive Adjustment Amount” has the meaning ascribed thereto in
Section 2.6.1;

 

  1.1.76 “Pre-Closing Reorganization” means the transactions, actions or events
described in Schedule 1.1.78, which occurred prior to the Closing;

 

  1.1.77 “Property” means all property or assets of whatsoever nature including
but not limited to personal property, whether tangible or intangible, and
claims, rights and choses in action;

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  1.1.78 “Purchase Price” has the meaning ascribed thereto in Section 2.2
hereof;

 

  1.1.79 “Purchased Shares” means the issued and outstanding shares of the
Corporation and of the Holding set forth in Schedule 2.2 hereof;

 

  1.1.80 “Purchaser” has the meaning ascribed thereto in the preamble hereof;

 

  1.1.81 “Purchaser Indemnified Party” has the meaning ascribed thereto in
Section 6.1.1 hereof;

 

  1.1.82 “Purchaser Obligations” has the meaning ascribed thereto in Section 7.1
hereof;

 

  1.1.83 “PWC” has the meaning ascribed thereto in Section 8.4;

 

  1.1.84 “Real Properties” means the Owned Properties and the Leased Real
Properties;

 

  1.1.85 “Real Property Leases” means the leases, offers to lease, subleases and
other agreements under which the Leased Real Properties are leased or subleased
by the Corporation as lessee or sublessee, a list of which is attached as
Schedule 3.1.33;

 

  1.1.86 “Related Party” means a Person not at arm’s length within the meaning
of the Tax Act with any of the Corporation, the Holding or any of the Vendors;

 

  1.1.87 “Shareholders’ Agreement” means the Unanimous Shareholders’ Agreement
among the shareholders of the Corporation dated July 29, 2004, as amended from
time to time and which has just been terminated immediately prior to Closing;

 

  1.1.88 “SR&ED” has the meaning ascribed thereto in Section 3.1.30(k);

 

  1.1.89 “Subsidiary” has the meaning ascribed thereto in the CBCA;

 

  1.1.90 “Target Working Capital” means $11,200,000;

 

  1.1.91 “Tax” and “Taxes” includes any taxes, duties, fees, premiums,
assessments, imposts, levies and other charges of any kind whatsoever and
wheresoever imposed by any Governmental Authority, including all interest,
penalties, fines, additions to tax or other additional amounts imposed by any
Governmental Authority in respect thereof, and including those levied on, or
measured by, or referred to as, income, gross receipts, profits, capital,
transfer, land transfer, sales, goods and services, harmonized sales, use,
local, value-added, excise, stamp, withholding, business, franchising, property,
development, occupancy, employer health, payroll, employment, health, social
services, education and social security taxes, all surtaxes, all customs duties
and import and export taxes, countervail and anti-dumping, all license
agreements, franchise and registration fees and all employment insurance, health
insurance and Canada, Québec and other Governmental Authority pension plan
premiums or contributions and for greater certainty, all contributions payable
under any tax Laws;

 

  1.1.92 “Tax Act” means the Income Tax Act (Canada);

 

  1.1.93 “Tax Authority” means the Canada Revenue Agency, and any other
national, state, local, provincial, territorial or other Governmental Authority
responsible for the administration, implementation, assessment, determination,
enforcement, compliance, collection or other imposition of any Taxes;

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  1.1.94 “Tax Returns” means any and all returns, reports, declarations,
statements, information, estimates, rebates or credits, elections, designations,
schedules, filings or other documents (including any related or supporting
information) relating to Taxes filed or required to be filed by any Tax
Authority or pursuant to any Law relating to Taxes or in fact filed with any Tax
Authority, including all information returns, Claims for refund, amended
returns, declarations of estimated Taxes, and requests for extensions of time to
file any of the preceding items;

 

  1.1.95 “Third Party Claim” means any Claim asserted against an Indemnified
Party or the Corporation, that is paid or payable to, or claimed by, any Person
who is not a Party or an Affiliate of a Party;

 

  1.1.96 “Third Party Consents” means all consents, approvals, notices, Orders,
rulings, authorizations, acknowledgements, registrations, declarations, filings,
submissions of information, waivers, sanctions, licenses, exemptions or permits
necessary or otherwise required from any Governmental Authority or Person or
pursuant to any Law in order to consummate the transactions contemplated by this
Agreement or any Closing Document; a complete list of the Third Party Consents
is set forth in Schedule 3.1.13;

 

  1.1.97 “Threatened” a Claim or other matter will be deemed to have been
“Threatened” if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead to a prudent Person
to conclude that such a Claim or matter is likely to be asserted, commenced,
taken or otherwise pursued in the future;

 

  1.1.98 “Time of Closing” means 10:00AM (Montreal time) on the date hereof;

 

  1.1.99 “Vendors” has the meaning ascribed thereto in the preamble hereof;

 

  1.1.100 “Vendors Fundamental Representations” has the meaning ascribed thereto
in Section 3.4.1(a); and

 

  1.1.101 “Working Capital” means the current assets of the Corporation,
including accounts receivable, research and development refundable tax credits,
inventory, Deposits and prepaid expenses minus the current liabilities of the
Corporation, including the accounts payable, accrued liabilities, income Taxes
payable, deferred revenue, and future income Taxes. “Working Capital”
specifically excludes cash and cash equivalents, interest bearing debts, and
accounts payable and other amounts related to the Expansion Project.