Execution Version

 

 

 

 
STOCK PURCHASE AGREEMENT
 
 
BY AND AMONG
 
 
NORTHSTAR CANADIAN OPERATIONS CORP.,
 
THE WILLIAM CARTER COMPANY,
 
993520 ONTARIO LIMITED,
 
1054451 ONTARIO INC.,
 

 
THE HOLDERS OF SECURITIES OF 993520 ONTARIO LIMITED AND
1054451 ONTARIO INC.
LISTED ON ANNEX I HERETO
 
AND
 
THE SELLERS’ REPRESENTATIVE NAMED HEREIN
 

DATED AS OF JUNE 20, 2011
 

 

 

 

 

 

 
 
 

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TABLE OF CONTENTS
 

 
 
 

 
Page
ARTICLE I. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.
1
Section 1.01.
Definitions.
1
Section 1.02.
Incorporation of Disclosure Schedules.
17
ARTICLE II. PURCHASE AND SALE; CLOSING.
18
Section 2.01.
Purchase and Sale of Target Shares.
18
Section 2.02.
Closing Purchase Price.
18
Section 2.03.
The Closing.
18
Section 2.04.
Estimated Closing Purchase Price; Closing Deliveries and Payments.
19
Section 2.05.
Closing Purchase Price Adjustment.
19
Section 2.06.
Escrow.
22
Section 2.07.
Earnout Payment.
22
ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE ACQUIRED COMPANIES.
26
Section 3.01.
Organization.
26
Section 3.02.
Power and Authorization.
27
Section 3.03.
Authorization of Governmental Authorities.
27
Section 3.04.
Noncontravention.
27
Section 3.05.
Capitalization of the Acquired Companies.
28
Section 3.06.
Financial Matters.
29
Section 3.07.
Absence of Certain Developments.
30
Section 3.08.
Debt; Guarantees.
32
Section 3.09.
Assets.
32
Section 3.10.
Real Property.
33
Section 3.11.
Intellectual Property.
34
Section 3.12.
Legal Compliance; Permits.
36
Section 3.13.
Financial Controls.
37
Section 3.14.
Tax Matters.
37
Section 3.15.
Employee Benefit Plans.
39
Section 3.16.
Environmental Matters.
41
Section 3.17.
Contracts.
41
Section 3.18.
Related Party Transactions.
43
Section 3.19.
Customers and Suppliers.
43
Section 3.20.
Change of Control Payments.
44
Section 3.21.
Labor Matters.
44
Section 3.22.
Litigation; Governmental Orders.
46
Section 3.23.
Insurance.
46
Section 3.24.
No Brokers.
47
Section 3.25.
Competition Act.
47
Section 3.26.
Pre-Closing Transactions.
47
Section 3.27.
Disclosure.
47
ARTICLE IV. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
47
Section 4.01.
Organization.
47
Section 4.02.
Power and Authorization.
47
Section 4.03.
Authorization of Governmental Authorities.
48
Section 4.04.
Noncontravention.
48
Section 4.05.
Title.
48
Section 4.06.
No Brokers.
49
Section 4.07.
Residence.
49
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
49
Section 5.01.
Organization.
49
Section 5.02.
Power and Authorization.
49
Section 5.03.
Authorization of Governmental Authorities.
49
Section 5.04.
Noncontravention.
49
Section 5.05.
No Brokers.
50
Section 5.06.
Tax Status.
50
Section 5.07.
Buyer Financing.
50
Section 5.08.
Investment Canada Act.
50
Section 5.09.
Litigation.
50
Section 5.10.
Competition Act.
50
Section 5.11.
Disclosure.
50
ARTICLE VI. COVENANTS OF THE PARTIES
50
Section 6.01.
Commercially Reasonable Efforts; Notices and Consents.
50
Section 6.02.
Operation of the Business.
51
Section 6.03.
Access to Premises and Information.
52
Section 6.04.
Notice of Developments.
52
Section 6.05.
Exclusivity.
52
Section 6.06.
Expenses.
52
Section 6.07.
Confidentiality.
53
Section 6.08.
Publicity.
53
Section 6.09.
Noncompetition and Nonsolicitation.
54
Section 6.10.
Repayment of Related Party Debt.
55
Section 6.11.
Further Assurances.
55
Section 6.12.
Access.
55
Section 6.13.
Directors and Officers Indemnification.
55
Section 6.14.
Equity Grants.
56
ARTICLE VII. CONDITIONS TO THE OBLIGATIONS OF BUYER AT THE CLOSING.
56
Section 7.01.
Representations and Warranties.
56
Section 7.02.
Performance.
56
Section 7.03.
Delivery of Securities; Instruments of Transfer; Acknowledgments.
56
Section 7.04.
Delivery of Closing Certificates.
56
Section 7.05.
Qualifications.
57
Section 7.06.
Absence of Litigation.
57
Section 7.07.
Consents, etc.
57
Section 7.08.
Cancellation of Certain Agreements; Releases.
57
Section 7.09.
Ancillary Agreements.
57
Section 7.10.
Resignations.
57
Section 7.11.
Payoff Letters and Lien Releases, etc.
58
Section 7.12.
Closing Payment Certificate.
58
Section 7.13.
No Material Adverse Change.
58
Section 7.14.
Modification of Employment Terms.
58
Section 7.15.
Pre-Closing Transactions Documentation.
58
ARTICLE VIII. CONDITIONS TO THE SELLERS’ OBLIGATIONS AT THE CLOSING.
58
Section 8.01.
Representations and Warranties.
58
Section 8.02.
Performance.
59
Section 8.03.
Delivery of Closing Certificates.
59
Section 8.04.
Qualifications.
59
Section 8.05.
Absence of Litigation.
59
Section 8.06.
Ancillary Agreements.
59
Section 8.07.
Pre-Closing Transactions.
59
ARTICLE IX. TERMINATION
59
Section 9.01.
Termination of Agreement.
59
Section 9.02.
Effect of Termination.
60
ARTICLE X. INDEMNIFICATION.
61
Section 10.01.
Indemnification by the Sellers.
61
Section 10.02.
Indemnification by Buyer.
63
Section 10.03.
Time for Claims; Notice of Claims.
63
Section 10.04.
Third Party Claims.
64
Section 10.05.
No Circular Recovery.
66
Section 10.06.
Indemnity Escrow.
66
Section 10.07.
Right to Setoff.
66
Section 10.08.
Knowledge and Investigation.
67
Section 10.09.
Remedies Cumulative.
67
Section 10.10.
Exclusive Remedy.
67
Section 10.11.
One Recovery.
67
Section 10.12.
Duty to Mitigate.
67
Section 10.13.
Adjustment to Purchase Price to Account for Indemnity Payments.
67
ARTICLE XI. TAX MATTERS
68
Section 11.01.
Tax Indemnification.
68
Section 11.02.
Straddle Period.
68
Section 11.03.
Special Procedure; Tax Matters.
68
Section 11.04.
Tax Sharing Agreements.
70
Section 11.05.
Certain Taxes and Fees.
71
Section 11.06.
Excessive Elections.
71
ARTICLE XII. MISCELLANEOUS
71
Section 12.01.
Guarantee.
71
Section 12.02.
Notices.
71
Section 12.03.
Succession and Assignment; No Third-Party Beneficiaries.
74
Section 12.04.
Amendments and Waivers.
74
Section 12.05.
Provisions Concerning the Sellers’ Representative.
74
Section 12.06.
Entire Agreement.
76
Section 12.07.
Certain Matters of Construction.
76
Section 12.08.
Counterparts; Facsimile Signature.
77
Section 12.09.
Severability.
77
Section 12.10.
Governing Law.
77
Section 12.11.
Jurisdiction; Venue; Service of Process.
77
Section 12.12.
Waiver of Jury Trial.
78

 

 

 
 
 

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EXHIBITS
EXHIBIT
     
A
Form of Escrow Agreement
B
Form of Lease Agreement
C
Sample Net Working Capital Calculation
D
Pre-Closing Transactions
E
Form of Ruth Rubinstein Agreement
F
Acquired Companies’ Financial Statements
G
Form of Purchase Order
H
Form of Release
   
ANNEXES
ANNEX
 
I
Holders of Securities
   
SCHEDULES
SCHEDULE
 
Schedule 1.01(a)
Currency Forward Contracts
Schedule 1.01(b)
Letters of Credit
Schedule 1.01(c)
Capital Expenditures Associated with Store Openings
Schedule 6.14
Equity Grants
Schedule 7.07
Consents, etc.
Schedule 7.08
Cancellation of Certain Agreements; Releases
Schedule 7.11
Surviving Encumbrances
Schedule 7.14
Modification to Employment Terms
Schedule 10.01(a)(ix)
Indemnification by the Sellers

 
 
 

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STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (as amended, modified or supplemented from time to
time, this “Agreement”) is made and entered into as of June 20, 2011 by and
among Northstar Canadian Operations Corp., a Canadian corporation (“Buyer”), The
William Carter Company (the “Guarantor”), 993520 Ontario Limited, a Canadian
corporation (“Holdings Limited”), 1054451 Ontario Inc., a Canadian corporation
(“Holdings Incorporated”, and, together with Holdings Limited, the “Target
Companies”), each of the holders of outstanding shares of capital stock of
Holdings Limited listed on Annex I hereto (the “Holdings Limited Shareholders”),
each of the holders of outstanding shares of capital stock of Holdings
Incorporated listed on Annex I hereto (the “Holdings Incorporated Shareholders”,
and, together with the Holdings Limited Shareholders, the “Sellers”)  and Paul
Rubinstein, in his capacity as the Sellers’ Representative.
 
RECITALS
 
WHEREAS, the Holdings Limited Shareholders own all of the outstanding shares of
common stock of Holdings Limited (such common stock being referred to herein as
the “Holdings Limited Common Stock”);
 
WHEREAS, the Holdings Incorporated Shareholders own all of the outstanding
shares of common stock of Holdings Incorporated (such common stock being
referred to herein as the “Holdings Incorporated Common Stock”, and, together
with the Holdings Limited Common Stock, the “Target Shares”);
 
WHEREAS, the Target Shares constitute all of the outstanding Equity Interests
(as defined below) in the Target Companies; and
 
WHEREAS, Buyer desires to purchase from the Sellers and the Sellers desire to
sell to Buyer, at the Closing (as defined below) all of the Target Shares upon
the terms and subject to the conditions set forth in this Agreement.
 
AGREEMENT
 
NOW THEREFORE, in consideration of the premises and mutual promises herein made,
and in consideration of the representations, warranties and covenants herein
contained, the parties to this Agreement hereby agree as follows:
 
ARTICLE I.
 
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.
 
Section 1.01. Definitions.  In addition to the other terms defined throughout
this Agreement, the following terms shall have the following meanings when used
in this Agreement:
 
“2013 Target Earnings Statement” shall have the meaning set forth in Section
2.07(a).
 
“2013 Milestone Payment” shall have the meaning set forth in Section 2.07(e)(i).
 
 
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“2014 Target Earnings Statement” shall have the meaning set forth in Section
2.07(a).
 
“2014 Milestone Payment” shall have the meaning set forth in Section
2.07(e)(ii).
 
“Accounting Firm” shall have the meaning set forth in Section 2.05(d).
 
“Accounting Principles” means Canadian GAAP as in effect on the Most Recent
Balance Sheet Date.
 
“Acquired Companies” means, collectively, the Target Companies and each of their
Subsidiaries.
 
“Action” means any claim, action, cause of action, suit, litigation,
arbitration, investigation, examinations, opposition, interference, audit,
assessment, hearing, complaint, demand, grievance, work order, investigation or
other legal proceeding (whether sounding in contract, tort, applicable Legal
Requirement or otherwise, whether civil or criminal and whether brought at law
or in equity) that is commenced, brought, conducted, tried or heard by or
before, or otherwise involving, any Governmental Authority.
 
“Adjusted Purchase Price” shall have the meaning set forth in Section 2.02.
 
“Adjustment Escrow Account” means the account designated by the Escrow Agent
into which the payment required by Section 2.06 shall be made and any succeeding
account in which the Escrow Amount shall be held by the Escrow Agent.
 
“Adjustment Escrow Amount” shall mean CAD$3,000,000.
 
“Affiliate” means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person.  For purposes of the foregoing, a
Person shall be deemed to control a specified Person if (a) such Person (or a
Family Member of such Person) possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such specified
Person or (b) such other Person is at such time a direct or indirect beneficial
holder of at least 50% of any class of the Equity Interests of such specified
Person.
 
“Agreement” shall have the meaning set forth in the Preamble.
 
“Allocable Interest Expenses” means, with respect to any period, an amount equal
to the interest charges that would accrue during such period on all Allocable
Loans at the then-effective Parent Rate.
 
“Allocable Loan” means any loan made by Parent or its United States Subsidiaries
to the Canadian Operations that (a) is reasonably appropriate to fund working
capital, capital expenditures or other expenses of the Canadian Operations, and
(b) remains outstanding for five (5) days or longer; provided, that solely for
purposes of calculating Allocable Interest Charges, the aggregate outstanding
balance of all Allocable Loans shall be reduced (but not below zero) by (i) the
amount of any cash distributed by Buyer or the Acquired Companies to Parent or
its United States Subsidiaries (for the avoidance of doubt, such reduction shall
be calculated without duplication of the portion of any such amount used to make
payments of principal or interest in respect of such Allocable Loans) and (ii)
any cash of the Canadian Operations that is used by the Canadian Operations to
fund any portion of the Earnout Payment or any Milestone Payment.
 
 
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“Allocable Overhead Expenses” means, with respect to any period, the net
corporate expenses of Parent and its Subsidiaries directly attributable to the
Canadian Operations including (i) a proportionate share of the salaries of, and
stock compensation expenses with respect to, employees of Parent or its
Subsidiaries who dedicate 50% or more of their working time to the Canadian
Operations, (ii) a proportionate share of external audit fees borne by Parent,
(iii) a proportionate share of any joint insurance policy expenses borne by
Parent, in each case with proportionate share being based upon the sales of the
Canadian Operation as compared to the sales of the Parent and its Subsidiaries
(including the Canadian Operations).
 
“Assets” shall have the meaning set forth in Section 3.09(a).
 
“Ancillary Agreements” means, collectively, the Escrow Agreement, the Lease
Agreement and the Ruth Rubinstein Agreement.
 
“Audited Balance Sheet” shall have the meaning set forth in Section 3.06(a)(i).
 
“Audited Balance Sheet Date” shall have the meaning set forth in Section
3.06(a)(i).
 
“Audited Financials” shall have the meaning set forth in Section 3.06(a)(i).
 
“BTCL” means Bonnie Togs Children’s Limited.
 
“Basket Amount” shall have the meaning set forth in Section 10.01(b).
 
“Business” means the businesses conducted by the Acquired Companies and proposed
to be conducted by the Acquired Companies as of the date hereof.
 
“Business Day” means any day other than a Saturday, Sunday or any day on which
the Federal Reserve Bank of New York is closed or banks in Toronto, Ontario are
closed.
 
“Buyer” is defined in the Preamble.
 
“Buyer Fundamental Representations” shall have the meaning set forth in Section
10.02(b).
 
“Buyer Indemnified Person” shall have the meaning set forth in Section 10.01(a).
 
“Buyer Disclosure Schedules” shall have the meaning set forth in Section 1.02.
 
“BT Subsidiaries” means, collectively, BTCL, TGCC and Bonnie Togs Limited.
 
“Canadian GAAP” means generally accepted accounting principles for private
companies as defined by the Accounting Standards Board of the Canadian Institute
of Chartered Accountants (CICA) in the Handbook of the CICA, at the relevant
time applied on a consistent basis.
 
 
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“Cash Adjustment Amount” means the amount of cash on the close of business on
the Closing Date, but not more than CAD$450,000.
 
“Canadian Operations” means, following the Closing, the consolidated Canadian
operations of Parent consisting of the designing, sourcing, and marketing of
branded childrenswear and the sale of branded childrenswear to wholesale
customers in Canada and through retail stores in Canada; provided, that Canadian
Operations shall exclude (i) the sale of merchandise to “mass channel” customers
(other than Costco) including Walmart and Target and (ii) any online merchandise
sales through e-commerce portals owned or operated by Parent or its
Subsidiaries.
 
“Change of Control Payment” means (a) any bonus, severance or other payment or
other form of Compensation that is created, accelerated, accrues or becomes
payable by any Acquired Company to any present or former director, stockholder,
employee, licensor, or consultant of the Acquired Companies, including pursuant
to any employment agreement, benefit plan or any other Contractual Obligation,
including any Taxes payable on or triggered by any such payment (other than
payments in respect of the Securities under or as described in ARTICLE II of
this Agreement) but specifically excluding any severance that becomes payable as
a result of a claim for constructive dismissal arising solely out of conduct on
the part of the Acquired Companies occurring after Closing; and (b) without
duplication of any other amounts included within the definition of Seller
Transaction Expenses, any other payment, expense or fee that accrues or becomes
payable by any Acquired Company to any Governmental Authority or other Person
under any applicable Legal Requirement or Contractual Obligation, including in
connection with the making of any filings, the giving of any notices or the
obtaining of any consents, authorizations or approvals, in the case of each of
(a) and (b) as a result of the execution and delivery of this Agreement or any
Ancillary Agreement or the consummation of the Contemplated Transactions whether
alone or in combination with any other event.
 
“Closing” shall have the meaning set forth in Section 2.03.
 
“Closing Date” means the date on which the Closing actually occurs.
 
“Closing Debt Amount” means the amount of Debt of the Acquired Companies
immediately prior to the Closing.
 
“Closing Payment Certificate” shall have the meaning set forth in Section 7.12.
 
“Closing Purchase Price” shall have the meaning set forth in Section 2.02.
 
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
 
“Company Plans” shall have the meaning set forth in Section 3.15(a).
 
“Company Intellectual Property Rights” means all Intellectual Property Rights
used by the Acquired Companies in connection with the Business, including all
Intellectual Property Rights in and to Company Technology.
 
 “Company Registrations” shall have the meaning set forth in Section 3.11(c).
 
 
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“Company Technology” means any and all Technology used by the Acquired Companies
in connection with the Business.
 
“Compensation” means, with respect to any Person, all salaries, compensation,
remuneration, bonuses or benefits of any kind or character whatsoever (including
issuances or grants of Equity Interests), paid or granted directly or indirectly
by an Acquired Company to or for the benefit of such Person or any Family Member
of such Person.
 
    “Competitive Business” means any Person carrying on a business where 20% or
more of its annual consolidated revenues is generated from the retail and
wholesale sale of children’s clothing and children’s accessories.
 
“Contemplated Transactions” means the transactions contemplated by this
Agreement, including (a) the purchase and sale of the Target Shares and the
other transactions described in the recitals to this Agreement and (b) the
execution, delivery and performance of the Ancillary Agreements.
 
“Contractual Obligation” means, with respect to any Person, any contract,
agreement, deed, mortgage, lease, sublease, license, sublicense or other legally
enforceable commitment, promise, undertaking, obligation, arrangement,
instrument or understanding, whether written or oral, to which or by which such
Person is a party or otherwise subject or bound or to which or by which any
property, business, operation, proprietary interest, or other right of such
Person is subject or bound.
 
“Credit Facility” means the Combined Canadian &/or U.S. Dollar Operating
Agreement dated February 8, 2011 between Bank of Montreal as Lender and BTCL as
Borrower.
 
“Cumulative Target” shall have the meaning set forth in Section 2.07(d).
 
“Current Liability Policies” shall have the meaning set forth in Section 3.23.
 
“Currency Forward Contracts” shall mean those arrangements listed in Schedule
1.01(a).
 
“Debt” means, with respect to any Person, and without duplication, all
Liabilities, including all obligations in respect of principal, accrued
interest, penalties, fees and premiums, of such Person (a) for borrowed money
(including amounts outstanding under overdraft facilities), (b) evidenced by
notes, bonds, debentures or other similar Contractual Obligations, (c) in
respect of “earn-out” obligations (for greater certainty, other than under this
Agreement) and other obligations for the deferred purchase price of property,
goods or services (other than trade payables or accruals incurred in the
Ordinary Course of Business), (d) for the capitalized liability under all
capital leases of such Person (determined in accordance with Canadian GAAP), (e)
in respect of Letters of Credit and bankers’ acceptances, (f) for Contractual
Obligations relating to interest rate protection, swap agreements, currency
forward contracts (including the Currency Forward Contracts) and collar
agreements, in each case, to the extent payable if such Contractual Obligations
were terminated immediately prior to the Closing, and (g) in the nature of
Guarantees of the obligations described in clauses (a) through (e) above of any
other Person.
 
“Dispute Notice” shall have the meaning set forth in Section 2.05(c).
 
 
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“Dispute Submission Notice” shall have the meaning set forth in Section 2.05(d).
 
“E-Commerce Margin” means, with respect to any period, a fraction expressed as a
percentage, the numerator of which is the pre-tax operating income and the
denominator of which is the consolidated revenues (each as determined in
accordance with the historical practices of Parent) of Parent e-commerce
business for such period, which is comprised of online merchandise sales through
e-commerce portals owned or operated by Parent or its Subsidiaries.
 
“Earnout Commencement Date” shall mean the later of (i) the Business Day
immediately following the Closing Date or (ii) July 1, 2011.
 
“Earnout Payment” shall have the meaning set forth in Section 2.07.
 
“Earnout Period” means the period commencing on the Earnout Commencement Date
and ending on the Measurement Period End Date for the 2015 calendar year.
 
“Employee Material Contractual Obligations” shall have the meaning set forth in
Section 3.21.
 
“Encumbrance” means any charge, claim, community or other marital property
interest, equitable or ownership interest, lien, license, option, pledge,
security interest, mortgage, deed of trust, right of way, easement,
encroachment, servitude, right of first offer or first refusal, buy/sell
agreement and any other restriction or covenant with respect to, or condition
governing the use, construction, voting (in the case of any security or Equity
Interest), transfer, receipt of income or exercise of any other attribute of
ownership (other than, in the case of a security, any restriction on the
transfer of such security arising solely under Canadian securities laws).
 
“Enforceable” means, with respect to any Contractual Obligation stated to be
Enforceable by or against any Person, that such Contractual Obligation is a
legal, valid and binding obligation of such Person enforceable by or against
such Person in accordance with its terms, except to the extent that enforcement
of the rights and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
 
“Environmental Laws” means any applicable Legal Requirement relating to
(a) releases or threatened releases of Hazardous Substances, (b) pollution or
protection of public health or the environment or worker safety or health or
(c) the manufacture, handling, transport, use, treatment, storage, or disposal
of Hazardous Substances.
 
“Equity Interest” means, with respect to any Person, (a) any share, partnership
or membership interest, unit of participation or other similar interest (however
designated) in such Person and (b) any warrant, purchase right, conversion
right, exchange right or other Contractual Obligation which would entitle any
other Person to acquire any such interest in such Person or otherwise entitle
any other Person to share in the equity, profits, earnings, losses or gains of
such Person (including share appreciation, phantom share, profit participation
or other similar rights).
 
“ERISA” shall have the meaning set forth in Section 3.15(k).
 
 
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“Escrow Agent” has the meaning provided in the Escrow Agreement.
 
“Escrow Agreement” means the Escrow Agreement among Buyer, the Sellers’
Representative and the Escrow Agent substantially in the form of Exhibit A and
with such changes as may be reasonably requested by the Escrow Agent and
accepted and agreed to by Buyer and the Sellers’ Representative.
 
“Escrow Amounts” means, collectively, the Indemnification Escrow Amount and the
Adjustment Escrow Amount.
 
“Estimated Cash Adjustment Amount” shall have the meaning set forth in Section
2.05(a).
 
“Estimated Closing Balance Sheet” shall have the meaning set forth in Section
2.05(a).
 
“Estimated Closing Statement” shall have the meaning set forth in Section
2.05(a).
 
“Estimated Closing Purchase Price” shall have the meaning set forth in Section
2.04(a).
 
“Estimated Net Working Capital” shall have the meaning set forth in Section
2.05(a).
 
“Facilities” means any buildings, plants, improvements or structures located on
the Real Property.
 
“Family Member” means, with respect to any individual, (a) such Person’s spouse,
(b) each parent, brother, sister or child of such Person or such Person’s
spouse, (c) the spouse of any Person described in clause (b) above, (d) each
child of any Person described in clauses (a), (b) or (c) above, (e) each trust
created for the benefit of one or more of the Persons described in clauses (a)
through (d) above and (f) each custodian or guardian of any property of one or
more of the Persons described in clauses (a) through (e) above in his or her
capacity as such custodian or guardian.
 
“Final Closing Balance Sheet” shall have the meaning set forth in Section
2.05(d).
 
“Final Closing Statement” shall have the meaning set forth in Section 2.05(d).
 
“Final Outcome”, shall mean, with respect to a Tax Proceeding, the earlier of
(i) the expiry of the delay to object to an assessment; (ii) the entering into
of an agreement between the relevant Buyer Indemnified Person and the relevant
Governmental Authority; (iii) an administrative decision or a decision of a
court of competent jurisdiction in respect of which the delay to object or
appeal has expired without any appeal or objection having being taken; or (iv)
the decision of a court of competent jurisdiction from which no further right of
appeal lies.
 
“Financials” shall have the meaning set forth in Section 3.06(a)(iii).
 
“Form 8-K” means a public filing with the Securities and Exchange Commission on
Form 8-K.
 
 
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“Fundamental Representations” shall have the meaning set forth in Section
10.02(b).
 
“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, ruling, decision, verdict, determination or award made, issued or
entered by or with any Governmental Authority.
 
“Governmental Authority” means any United States federal, state or local, or
Canadian federal, provincial or local, or any foreign government, or political
subdivision thereof, or any multinational organization or authority, or any
other authority, agency, commission or self-regulatory organization entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power, any court or tribunal (or any
department, bureau or division thereof), or any arbitrator or arbitral body.
 
“Guarantee” means, with respect to any Person, (a) any guarantee of the payment
or performance of, or any contingent obligation in respect of, any Debt or other
Liability of any other Person, (b) any other arrangement whereby credit is
extended to any obligor (other than such Person) on the basis of any promise or
undertaking of such Person (i) to pay the Debt or other Liability of such
obligor, (ii) to purchase any obligation owed by such obligor, (iii) to purchase
or lease assets under circumstances that are designed to enable such obligor to
discharge one or more of its obligations or (iv) to maintain the capital,
working capital, solvency or general financial condition of such obligor and (c)
any liability as a general partner of a partnership or as a venturer in a joint
venture in respect of Debt or other Liabilities of such partnership or venture.
 
“Guarantor” shall have the meaning set forth in the Preamble.
 
“Hazardous Substance” means any pollutant, petroleum, or any fraction thereof,
contaminant or toxic or hazardous material (including toxic mold), substance or
waste or other deleterious substance the release of which is governed by
Environmental Laws.
 
“Holdings Incorporated Common Stock” shall have the meaning set forth in the
Recitals.
 
“Holdings Incorporated Shareholders” shall have the meaning set forth in the
Preamble.
 
“Holdings Limited Common Stock” shall have the meaning set forth in the
Recitals.
 
“Holdings Limited Shareholders” shall have the meaning set forth in the
Preamble.
 
“Inbound IP Contracts” shall have the meaning set forth in Section 3.11(d).
 
“Indemnity Escrow Account” means the account designated by the Escrow Agent into
which the payment required by Section 2.06 shall be made and any succeeding
account in which the Indemnity Escrow Amount shall be held by the Escrow Agent.
 
“Indemnification Escrow Amount” means Six Million Dollars (CAD$6,000,000).
 
“Indemnified Person” means, with respect to any Indemnity Claim, each Buyer
Indemnified Person or Seller Indemnified Person asserting the Indemnity Claim
(or on whose behalf the Indemnity Claim is asserted) under Section 10.01 or
Section 10.02, as the case may be (it being understood that, as contemplated by
Section 12.05, the Sellers’ Representative will be the sole and exclusive agent,
representative and attorney-in-fact for each of the Sellers for all purposes of
asserting Indemnity Claims, receiving and giving notices and service of process
in respect thereof, making filings with any court or other Governmental
Authority in respect thereof and controlling and otherwise making all decisions
in connection with each Indemnity Claim brought on behalf of any Sellers under
Section 10.02, and the term “Indemnified Person” shall mean the Sellers’
Representative to the extent that it is acting in such capacity on behalf of any
Sellers).
 
 
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“Indemnifying Party” means, with respect to any Indemnity Claim, the party or
parties against whom such Indemnity Claim may be or has been asserted (it being
understood that, without in any way limiting the Sellers’ payment and other
obligations under any Contractual Obligation or Governmental Order arising out
of, relating to, or resulting from any Indemnity Claim, as contemplated by
Section 12.05, the Sellers’ Representative will be the sole and exclusive agent,
representative and attorney-in-fact for each of the Sellers for all purposes of
responding to and defending Indemnity Claims, receiving and giving notices and
service of process in respect thereof, making filings with any court or other
Governmental Authority in respect thereof, controlling and otherwise making all
decisions on behalf of each of the Sellers in connection with each Indemnity
Claim brought against any of the Sellers under Section 10.01, and the term
“Indemnifying Party” shall mean the Sellers’ Representative when it is acting in
such capacity on behalf of any or all of the Sellers).
 
“Indemnity Claim” means a claim for indemnity under Section 10.01 or Section
10.02, as the case may be.
 
“Intellectual Property Rights” means all rights, title, and interests in and to
all proprietary rights of every kind and nature however denominated, throughout
the world, including:
 
(a)           patents, copyrights, mask work rights, proprietary confidential
information, trade secrets, database rights, and all other proprietary rights in
Technology;
 
(b)           trademarks, trade names, service marks, service names, brands,
trade dress and proprietary logos, and the goodwill and activities associated
therewith;
 
(c)           domain names, rights of privacy and publicity, and moral rights;
 
(d)           any and all registrations, applications, recordings, licenses,
common-law rights, statutory rights, and contractual rights relating to any of
the foregoing; and
 
(e)           all Actions and rights to sue at law or in equity for any past or
future infringement or other impairment of any of the foregoing, including the
right to receive all proceeds and damages therefrom, and all rights to obtain
renewals, continuations, divisions, or other extensions of legal protections
pertaining thereto.
 
“Intercompany Loans” means the intercompany loans disclosed as items #1 and #2
in Section 3.17(a)(xiv) in the Sellers’ Disclosure Schedules and item #4 in
Section 3.18(b) in the Sellers’ Disclosure Schedules.
 
 
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“Interim Financials” shall have the meaning set forth in Section 3.06(a)(ii).
 
“Interim Financials of the BT Subsidiaries” shall have the meaning set forth in
Section 3.06(a)(iii).
 
“IP Contracts” shall have the meaning set forth in Section 3.11(d).
 
“Lease Agreement” means the Lease Agreement between Buyer (or an Affiliate of
Buyer) and BT Developments Inc. substantially in the form attached hereto as
Exhibit B and with such changes as may be reasonably agreed to by Buyer and the
Sellers’ Representative.
 
“Leased Real Property” shall have the meaning set forth in Section 3.10(a).
 
“Legal Requirement” means any United States federal, state or local, Canadian
federal, provincial, territorial, municipal or local or any foreign law,
statute, standard, ordinance, code, rule, regulation, common law doctrine,
resolution or promulgation, or any Governmental Order, or any Permit granted
under any of the foregoing, or any similar provision or duty or obligation
having the force of law.
 
“Letters of Credit” shall mean those arrangements listed in Schedule 1.01(b).
 
“Liability” means, with respect to any Person, any liability or obligation of
such Person whether known or unknown, whether asserted or unasserted, whether
determined, determinable or otherwise, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, whether directly
incurred or consequential, whether due or to become due and whether or not
required under Canadian GAAP to be accrued on the financial statements of such
Person.
 
“Liability Policies” shall have the meaning set forth in Section 3.23.
 
“Losses” shall have the meaning set forth in Section 10.01(a).
 
“Material Adverse Effect”  means any event, change, fact, condition,
circumstance or occurrence that, when considered either individually or in the
aggregate together with all other adverse events, changes, facts, conditions,
circumstances or occurrences with respect to which such phrase is used in this
Agreement, has had or would reasonably be expected to have a material adverse
effect on (A) the business, operations, results of operations, properties,
assets, prospects or condition (financial or otherwise) of the Acquired
Companies, taken as a whole or (B) the ability of the Target Companies and the
Sellers to consummate the Contemplated Transactions; provided, however, that in
determining whether there has been a Material Adverse Effect, in no event shall
any of the following constitute a Material Adverse Effect nor shall any of the
following be taken into account:  (i) general economic, business or financial
market conditions, including changes in the markets or industry in which the
Acquired Companies operate but only to the extent such conditions do not have a
disproportionate effect on the Acquired Companies as compared to other
participants in the same industry; (ii) an outbreak or escalation of war, armed
hostilities, acts of terrorism, political instability or other national
calamity, crisis or emergency, or any governmental response to any of the
foregoing, in each case, whether occurring within or outside of Canada; (iii)
the announcement or pendency of this Agreement; (iv) the breach by the Buyer of
this Agreement; (v) any change in Legal Requirements applicable to the Acquired
Companies, but only to the extent such conditions do not have a disproportionate
effect on the Acquired Companies as compared to other participants in the same
industry; or (vi) any change in Canadian GAAP, United States GAAP or
interpretations thereof that apply to the Acquired Companies, in whole or in
part.
 
 
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“Material Company Contract” shall have the meaning set forth in Section 3.17(b).
 
“Material Real Property” means the Real Property that will be subject to the
Lease Agreement.
 
“Maximum Earnout Amount” means Thirty Five Million Dollars (CAD$35,000,000).
 
“Measurement Period End Date” shall mean, with respect to the 2013 calendar
year, June 29, 2013; with respect to the 2014 calendar year, June 28, 2014 and
with respect to the 2015 calendar year, June 27, 2015.
 
“Milestone Payments” shall have the meaning set forth in Section 2.07(e)(ii).
 
“Most Recent Balance Sheet” shall have the meaning set forth in Section
3.06(a)(ii).
 
“Most Recent Balance Sheet Date” shall have the meaning set forth in Section
3.06(a)(ii).
 
“Net Working Capital” means the remainder of (a) the combined current assets of
the Acquired Companies other than cash and including deferred assets such as
prepaid amounts for recent acquisitions the benefit of which will accrue after
Closing minus (b) the combined current liabilities of the Acquired Companies
(including, for the avoidance of doubt, any dividends payable or bonuses
payable), in each case, calculated as of the close of business on the Closing
Date in accordance the Accounting Principles (and without giving effect to the
Contemplated Transactions); provided, that Net Working Capital shall not take
into account (i) any amounts in respect of deferred Tax assets or deferred Tax
liabilities, (ii) the current portions of any amounts reflected in the Closing
Debt Amount, (iii) the amount of any losses in respect of the Currency Forward
Contracts to the extent such losses were taken into account in determining the
Closing Purchase Price pursuant to Section 2.02(b), (iv) any accrued liabilities
that constitute Seller Transaction Expenses and (v) the capital expenditures
described in Schedule 1.01(c), a sample calculation of which is attached as
Exhibit C.
 
“Net Working Capital Target” mean Eighteen Million Two Hundred Sixty Five
Thousand Dollars (CAD$18,265,000).
 
“Net Working Capital Adjustment Amount” means (i) the amount, if any, by which
the Net Working Capital Target exceeds the Net Working Capital or (ii) the
amount, if any, by which the Net Working Capital exceeds the Net Working Capital
Target.
 
“Notifiable Transactions Regulations” means the Regulations Respecting
Notifiable Transactions Pursuant to Part VIII of the Competition Act,
SOR/87-348.
 
 
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“Ordinary Course of Business” means an action taken by any Person in the
ordinary course of such Person’s business that is consistent with the past
customs and practices of such Person (including past practice with respect to
quantity, amount, magnitude and frequency, standard employment and payroll
policies and past practice with respect to management of working capital and the
making of capital expenditures) and that is taken in the ordinary course of the
normal day-to-day operations of such Person.
 
“Organizational Documents” means, with respect to any Person (other than an
individual), (a) the certificate or articles of incorporation or organization
and any joint venture, limited liability company, operating or partnership
agreement and other similar documents adopted or filed in connection with the
creation, formation or organization of such Person and (b) all by-laws, voting
agreements and similar documents, instruments or agreements relating to the
organization or governance of such Person, in each case, as amended or
supplemented.
 
“Outbound IP Contracts” shall have the meaning set forth in Section 3.11(d).
 
“Parent” shall mean Carter’s, Inc.
 
“Parent Rate” is the interest rate in effect from time to time under the Credit
Agreement dated as of October 15, 2010, among Parent, Bank of America, N.A.,
JPMorgan Chase Bank, N.A., Royal Bank of Canada, SunTrust Bank, U.S. Bank
National Association, Banc of America Securities LLC and each lender party
thereto from time to time, as amended or restated from time to time and
including any successor or replacement credit facility.
 
“Permits” means, with respect to any Person, any license, franchise, permit,
consent, approval, right, privilege, certificate or other similar authorization
issued by, or otherwise granted by, any Governmental Authority to which or by
which such Person is subject or bound or to which or by which any property,
business, operation or right of such Person is subject or bound.
 
“Permitted Encumbrance” means (a) statutory liens for current Taxes not yet due
and payable and for which adequate reserves have been set aside, (b) mechanics’,
materialmen’s, carriers’, workers’, repairers’ and similar statutory liens
arising or incurred in the Ordinary Course of Business the existence of which
would not constitute an event of default under, or breach of, a Real Property
Lease and the Liabilities of the Acquired Companies in respect of which are not
overdue or otherwise in default, (c) zoning, entitlement, building and other
land use regulations imposed by Governmental Authorities having jurisdiction
over any Real Property which are not violated in any material respect by the
current use and operation of the Real Property, (d) covenants, conditions,
restrictions, easements, encumbrances and other similar matters of record
affecting title to but not adversely affecting the value of, or the current
occupancy or use of the Real Property in any material respect and (e) liens that
arise by operation of law in the Ordinary Course of Business and are not
material individually or in the aggregate.
 
“Person” means any individual or any corporation, association, partnership,
limited liability company, joint venture, joint stock or other company, business
trust, trust, organization, Governmental Authority or other entity of any kind.
 
“Personal Information” means any information that is protected by Privacy Laws.
 
 
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“Pre-Closing Tax Period” shall have the meaning set forth in Section 11.01.
 
“Pre-Closing Transactions” means the transactions as set out in Exhibit D.
 
“Predecessor” means, with respect to any specified Person, (a) any other Person
that has ever merged or consolidated with or into such specified Person or (b)
any other Person all or substantially all of whose assets has ever been acquired
by such specified Person (whether by purchase, upon liquidation or otherwise).
 
“Privacy Laws” means the Personal Information Protection and Electronic
Documents Act (Canada) and any other laws, regulations, duties orders or
agreements governing the protection of personal information.
 
“Proposed Final Closing Balance Sheet” shall have the meaning set forth in
Section 2.05(b).
 
“Proposed Final Closing Statement” shall have the meaning set forth in Section
2.05(b).
 
“Pro Rata Percentage” means, with respect to each Seller, the percentage set
forth opposite the name of such Seller on Annex I hereto.  For purposes of
clarity, the aggregate Pro Rata Percentage of the Sellers shall total 100%.
 
“Real Property” shall have the meaning set forth in Section 3.10(a).
 
“Real Property Leases” shall have the meaning set forth in Section 3.10(a).
 
“Representative” means, with respect to any Person, any director, officer,
employee, agent, manager, consultant, advisor, associate or other representative
of such Person, including legal counsel, accountants, and financial advisors.
 
“Ruth Rubinstein Agreement” shall mean that Consulting Agreement between Newco
and Ruth Rubinstein substantially in the form attached hereto as Exhibit E.
 
“Scheduled Intellectual Property Rights” shall have the meaning set forth in
Section 3.11(c).
 
“Securities” shall have the meaning set forth in the Recitals.
 
“Seller Indemnified Person” shall have the meaning set forth in Section
10.02(a).
 
“Sellers” shall have the meaning set forth in the Preamble.
 
“Seller Fundamental Representations” shall have the meaning set forth in Section
10.01(b).
 
“Seller Newco” shall have the meaning set forth in Section 12.01.
 
 
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“Sellers’ Disclosure Schedules” shall have the meaning set forth in Section
1.02.
 
“Sellers’ Representative” shall have the meaning set forth in Section 12.05(a).
 
“Seller Transaction Expenses” means all costs, fees and expenses incurred by any
Seller or any Acquired Company in connection with or in anticipation of the
negotiation, execution and delivery of this Agreement and the Ancillary
Agreements or the consummation of the Contemplated Transactions or in connection
with or in anticipation of any alternative transactions considered by the
Acquired Companies to the extent such costs, fees and expenses are payable or
reimbursable by any Acquired Company, including (i) all fees and expenses
payable to Bank of Montreal and all other brokerage fees, commissions, finders’
fees or financial advisory fees so incurred, (ii) all fees and expenses of legal
counsel, accountants, consultants and other experts and advisors so incurred,
(iii) all Change of Control Payments and (iv) all fees and expenses incurred in
connection with the Pre-Closing Transactions (for the avoidance of doubt,
“Sellers Transaction Expenses” shall not include any costs, fees and expenses to
the extent incurred by the Acquired Companies in the Ordinary Course of Business
and not in connection with or in anticipation of the Contemplated Transactions).
 
“Straddle Period” shall have the meaning set forth in Section 11.02.
 
“Subsidiary” means, with respect to any specified Person, any other Person of
which such specified Person, directly or indirectly through one or more
Subsidiaries, (a) owns at least 50% of the outstanding Equity Interests entitled
to vote generally in the election of the Board of Directors or similar governing
body of such other Person, or (b) has the power to generally direct the business
and policies of that other Person, whether by contract or as a general partner,
managing member, manager, joint venturer, agent or otherwise.
 
“Survival Period Expiration Date” shall have the meaning set forth in Section
10.03(a)(iv).
 
“TGCC” means The Genuine Canadian Corp.
 
“Target Companies” shall have the meaning set forth in the Preamble.
 
“Target Companies’ Knowledge”, “Knowledge of the Target Companies” and similar
formulations mean that where any representation or warranty contained in this
Agreement is expressly qualified by reference to the knowledge of the Target
Companies, it shall mean that one or more of Paul Rubinstein, David Nufer, Paul
Kristensen and Ruth Rubinstein or any other senior management personnel of the
Acquired Companies (a) has actual knowledge of the fact or other matter at issue
or (b) should have had actual knowledge of such fact or other matter assuming
the diligent exercise of such individual’s duties as a shareholder, director,
officer or employee of one or more of the Acquired Companies and after
reasonable investigation and due inquiry.
 
 
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“Target Earnings” means, with respect to any period, the consolidated net income
or net loss, as applicable, of the Canadian Operations for such period
determined in accordance with United States GAAP, plus (a) to the extent (but
only to the extent) deducted in determining such net income or net loss, without
duplication, (i) Canadian federal income tax and provincial income tax expenses
of the Canadian Operations for such period, (ii) any non-recurring expenses
incurred during such period to the extent resulting from the integration of the
operations of the Acquired Companies with the operations of Parent and its
United States Subsidiaries, (iii) research and development expenses for new
store prototypes (for the avoidance of doubt, excluding research and development
costs relating to typical Parent stores) of the Canadian Operations for such
period, unless otherwise mutually agreed to by the parties and (iv) increased
expenses of the Canadian Operations for such period resulting solely from the
application of purchase accounting to the transactions contemplated by this
Agreement including increased cost of goods sold and increased depreciation of
fixed assets plus (b) the product of (i) the consolidated revenues for such
period of Parent derived from online merchandise sales through e-commerce
portals owned or operated by Parent or its Subsidiaries to consumers taking
delivery of such merchandise at delivery addresses in Canada, multiplied by (ii)
the E-Commerce Margin, plus (c) until such time as cumulative expenses for all
periods following the Closing Date in respect of non-recurring charges for
corporate office or distribution center closures (e.g. asset write-offs,
severance payments and relocation expenses) exceed CAD$5 million, the amount of
such expenses incurred by the Canadian Operations during such period, (d) plus
all royalty proceeds from licensees of trademarks owned by Parent or its
Subsidiaries selling licensed products to the extent that such products, to
Parent’s knowledge, were sold by such licensees to customers in Canada (other
than through sales to mass channel customers).  Notwithstanding the foregoing,
the calculation of “Target Earnings” for any period shall take into account (w)
any expense relating to Allocable Overhead Expenses (and no other corporate
overhead expenses allocated by Parent or its United States Subsidiaries to the
Canadian Operations) for such period, (x) any Allocable Interest Expenses (and
no other interest charges for such period on amounts borrowed by Buyer or the
Acquired Companies from Parent or its United States Subsidiaries) and (y) for
the avoidance of doubt, and without duplication, any gains or losses in respect
of Currency Forward Contracts, in each case determined by reference to the value
of the Currency Forward Contracts as of the Closing and shall exclude (z) any
losses in respect of Currency Forward Contracts to the extent such losses were
taken into account in determining the Closing Purchase Price pursuant to Section
2.02(b) (as adjusted pursuant to Section 2.05).
 
“Target Earnings Statements” shall have the meaning set forth in Section
2.07(a).
 
“Target Shares” shall have the meaning set forth in the Recitals.
 
“Tax” or “Taxes” means (a) any and all federal, provincial, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, unemployment, Canada, Québec,
United States and other government pension plan and other employer plan
premiums, contributions or withholdings, disability, real property, personal
property, sales, use, transfer, registration, escheat obligation, value added,
alternative or add-on minimum, estimated, or other tax of any kind or any charge
of any kind in the nature of (or similar to) taxes whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not and (b) any
liability for the payment of any amounts of the type described in clause (a) of
this definition as a result of being a member of an affiliated, consolidated,
combined or unitary group for any period, as a result of any tax sharing or tax
allocation agreement, arrangement or understanding, or as a result of being
liable for another person’s taxes as a transferee or successor, by Contractual
Obligation or otherwise.
 
 
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“Tax Act” means the Income Tax Act (Canada).
 
“Tax Assessment” shall have the meaning specified in Section 11.03(a).
 
“Tax Liabilities” means (i) a liability to make or suffer an actual payment of
Tax, (ii) the loss, use, or set-off against income earned, accrued or received
on or before the Closing Date, of any allowance, refund, credit, deduction,
exemption, set-off or loss carry-over in respect of any Tax or relevant to the
computation of any income, profits or gains for the purposes of any Tax, which
arises or, but for such loss, use or set off, would have arisen in respect of a
Transaction occurring or period ending on or before the Closing Date, (iii) the
use or set-off of any allowance, refund, credit, deduction, exemption, set-off
or loss carry-over in respect of any Tax or relevant to the computation of any
income, profits or gains for the purposes of any Tax, which arises in respect of
a Transaction occurring or period ending after the Closing Date in circumstances
where, but for such use or set-off, a Buyer Indemnified Person would have made
or suffered an actual payment of Tax in respect of which any Buyer Indemnified
Persons would have been able to make a claim against the Sellers under this
Agreement.
 
“Tax Proceeding” has the meaning specified in Section 11.03(b).
 
“Tax Return” means any return, declaration, report, claim for refund or
information return, statement, election, designation, notice, filing, form or
other document relating to Taxes, including any schedule, supplement, appendix,
exhibit or attachment thereto, and including any amendment thereof.
 
“Technology” means all inventions, works, discoveries, innovations, know-how,
information (including ideas, research and development, formulas, algorithms,
compositions, processes and techniques, data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, business and
marketing plans and proposals, graphics, illustrations, artwork, documentation,
and manuals), databases, computer software, firmware, computer hardware,
integrated circuits and integrated circuit masks, electronic, electrical, and
mechanical equipment, and all other forms of technology, including improvements,
modifications, works in process, derivatives, or changes, whether tangible or
intangible, embodied in any form, whether or not protectable or protected by
patent, copyright, mask work right, trade secret law, or otherwise, and all
documents and other materials recording any of the foregoing.
 
“Termination Date” shall have the meaning set forth in Section 9.01(c).
 
“Third Party Claim” shall have the meaning set forth in Section 10.04(a).
 
“Transaction” includes any transaction, circumstance, act, event or omission of
whatever nature.
 
“Transfer Taxes” shall have the meaning set forth in Section 11.05.
 
“Treasury Regulations” shall mean the regulations promulgated under the Code.
 
“United States GAAP” shall mean United States generally accepted accounting
principles, consistently applied.
 
 
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“Updated Financials” shall have the meaning set forth in Section 6.03(b).
 
Section 1.02. Incorporation of Disclosure Schedules.
 
(a) Each of the Sellers’ Disclosure Schedules and the Buyer Disclosure Schedules
attached to this Agreement form an integral part of it for all purposes of this
Agreement.
 
(b) Nothing in the Sellers’ Disclosure Schedules or the Buyer Disclosure
Schedules, respectively, is intended to broaden the scope of any representation
or warranty contained in the Agreement.  The Sellers’ Disclosure Schedules or
the Buyer Disclosure Schedules, respectively, and the information and
disclosures contained therein are intended only to qualify and limit the
representations and warranties of the Sellers and Buyer, respectively, contained
in the Agreement and shall not be deemed to expand in any way the scope or
effect of any of such representations and warranties.
 
(c) The Sellers’ Disclosure Schedules will be arranged in paragraphs
corresponding to the lettered and numbered Sections and subsections contained in
ARTICLE III and ARTICLE IV (the “Sellers’ Disclosure Schedules”).  The Buyer
Disclosure Schedules will be arranged in paragraphs corresponding to the
lettered and numbered Sections and subsections contained in ARTICLE V (the
“Buyer Disclosure Schedules”).  Capitalized terms used in the Sellers’
Disclosure Schedules and not otherwise defined shall have the meanings set forth
in this Agreement.  Information furnished in the Sellers’ Disclosure Schedules
and the Buyer Disclosure Schedules, respectively, shall provide information
regarding, and qualify only, the relevant Section or subsection of this
Agreement unless and only to the extent that (i) disclosure in a numbered or
lettered Section or subsection of the Sellers’ Disclosure Schedules or the Buyer
Disclosure Schedules, respectively, is specifically referred to by appropriate
cross-reference in another numbered or lettered Section or subsection of the
Sellers’ Disclosure Schedules or the Buyer Disclosure Schedules, respectively,
or (ii) with respect to disclosures made in a numbered and lettered Section or
subsection of the Sellers’ Disclosure Schedules or the Buyer Disclosure
Schedules, respectively, corresponding to a numbered and lettered Section or
subsection of ARTICLE III, ARTICLE IV or ARTICLE V of this Agreement, it is
reasonably apparent on the face of such disclosure that such disclosure
qualifies one or more of the other numbered or lettered Section or subsection of
ARTICLE III, ARTICLE IV or ARTICLE V of this Agreement; provided, however, that
with respect to disclosure intended to qualify Section 3.04 (Noncontravention),
Section 3.05 (Capitalization), Section 3.06 (Financial Matters), Section 3.22
(Litigation), Section 4.04 (Noncontravention), Section 4.05 (Title) or Section
5.04 (Noncontravention), such disclosure must be specifically set forth on the
corresponding numbered and lettered Section or subsection of the Sellers’
Disclosure Schedules or the Buyer Disclosure Schedules, respectively.
 
(d) No reference to or disclosure of any item or other matter in any Disclosure
Schedule (or any section thereof) shall be construed as an admission or
indication that such item is required to be referred to or disclosed in any
other Disclosure Schedule (or any section thereof).  Inclusion of any item in a
Disclosure Schedule (or any section thereof) does not constitute a determination
by the Sellers that such item is material and shall not be deemed to establish a
standard of materiality.
 
 
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ARTICLE II.   
 
PURCHASE AND SALE; CLOSING.
 
Section 2.01. Purchase and Sale of Target Shares.  Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, each of the Sellers
shall sell, transfer and deliver to Buyer, free and clear of all Encumbrances
other than the Permitted Encumbrances and Buyer shall purchase from each of such
Sellers, all of the outstanding Target Shares held by such Sellers.
 
Section 2.02. Closing Purchase Price.  The aggregate consideration for the
purchase and sale of the Target Shares and the cancellation of all other Equity
Interests in each of the Acquired Companies at Closing will be equal to an
amount in cash (such aggregate consideration, the “Closing Purchase Price”)
calculated as follows:
 
(a) CAD$60,000,000;
 
(b) less the Closing Debt Amount (but excluding from the Closing Debt Amount the
aggregate amount of (i) the Letters of Credit and (ii) the Intercompany Loans);
 
(c) less the amount of any Seller Transaction Expenses not otherwise paid by
Sellers prior to the Closing Date;
 
(d) less or plus (as applicable) the Net Working Capital Adjustment Amount, if
any;
 
(e) less the Escrow Amounts;
 
(f) plus the Cash Adjustment Amount, if any.
 
The Closing Purchase Price shall be subject to adjustment in accordance with
Section 2.05 and Section 2.07 (the Closing Purchase, as so adjusted, the
“Adjusted Purchase Price”.)  All Equity Interests (other than the Target
Shares), if any, shall be cancelled at Closing for no further consideration or
payment.
 
Section 2.03. The Closing.  The purchase and sale of the Target Shares (the
“Closing”) shall take place at 10:00 a.m. (New York City time) at the offices of
Ropes & Gray LLP, Prudential Tower, 800 Boylston St., Boston, Massachusetts, as
promptly as practicable following, but in no event later than, the third
Business Day following the satisfaction or waiver of each of the conditions set
forth in ARTICLE VII and ARTICLE VIII hereof (other than those conditions which
can be satisfied only at the Closing, but subject to the satisfaction or waiver
of such conditions at Closing), or at such other time and place as may be agreed
to by the parties hereto (with the Sellers’ Representative acting for all the
Sellers).  Subject to the provisions of ARTICLE IX of this Agreement, the
failure to consummate the Closing on the date and time determined pursuant to
this Section 2.03 shall not result in the termination of this Agreement and
shall not relieve any party to this Agreement of any obligation under this
Agreement.
 
 
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Section 2.04. Estimated Closing Purchase Price; Closing Deliveries and Payments.
 
(a) Estimated Closing Purchase Price.  The amounts payable at Closing in respect
of the Closing Purchase Price under Section 2.04(b)(i) shall be calculated using
the estimated Closing Debt Amount, estimated Seller Transaction Expenses,
Estimated Net Working Capital, and Estimated Cash Adjustment Amount set forth on
the Estimated Closing Statement (the “Estimated Closing Purchase Price”).
 
(b) Buyer Closing Deliveries and Payments.  Upon the terms and subject to the
conditions set forth in this Agreement, Buyer shall deliver or cause to be
delivered at the Closing the following:
 
(i) to each Seller, an amount in cash equal to the amount set forth opposite
such Seller’s name in the Closing Payment Certificate, payable to such Seller by
wire transfer of immediately available funds to the account or accounts of such
Seller designated in the Closing Payment Certificate; provided, however, that
the aggregate payments pursuant to this clause shall not exceed the Estimated
Closing Purchase Price;
 
(ii) to the Escrow Agent, by wire transfer of immediately available funds, the
Escrow Amounts;
 
(iii) to each Person specified in the Closing Payment Certificate as a recipient
of payments in respect of the Closing Debt Amount, the amount payable to such
Person as specified in the Closing Payment Certificate; and
 
(iv) to each Person specified in the Closing Payment Certificate as a recipient
of payments in respect of Seller Transaction Expenses, the amount payable to
such Person as specified in the Closing Payment Certificate.
 
The appropriate withholding agent will be entitled to deduct and withhold, or
cause to be deducted and withheld, from any amounts payable under this Agreement
or the Escrow Agreement any withholding Taxes or other amounts required under
the Code or any applicable Legal Requirement to be deducted and withheld.  To
the extent that any such amounts are so deducted or withheld, such amounts will
be treated for all purposes of this Agreement as having been paid to the Person
in respect of which such deduction and withholding was made.
 
(c) Sellers Closing Deliveries.  Upon the terms and subject to the conditions
set forth in this Agreement, each Seller shall deliver or cause to be delivered
at the Closing to Buyer, with respect to all Target Shares to be purchased and
sold by such Seller hereunder, certificates representing all of such Target
Shares, duly endorsed (or accompanied by duly executed transfer powers) and in
proper form for transfer to Buyer.
 
Section 2.05. Closing Purchase Price Adjustment.
 
(a) Estimated Closing Balance Sheet and Estimated Closing Statement.  The
Sellers shall cause the Acquired Companies to prepare in good faith and provide
to Buyer no later than three Business Days prior to the Closing Date an
estimated consolidated balance sheet of the Acquired Companies as of the close
of business on the Closing Date and without giving effect to the Contemplated
Transactions (as the same may be adjusted in response to any comments of Buyer
and its Representatives provided prior to the Closing, the “Estimated Closing
Balance Sheet”), together with a written statement setting forth in reasonable
detail their good faith estimates of the Closing Debt Amount, Net Working
Capital, and the Cash Adjustment Amount, each as derived from the Estimated
Closing Balance Sheet, and the Seller Transaction Expenses (as the same may be
adjusted in response to any comments of Buyer and its Representatives provided
prior to the Closing, the “Estimated Closing Statement”).  The Estimated Closing
Balance Sheet and the Acquired Companies’ good faith estimate of Net Working
Capital (the “Estimated Net Working Capital”) and the Cash Adjustment Amount
(the “Estimated Cash Adjustment Amount”) contained in the Estimated Closing
Statement will be prepared in accordance with the Accounting
Principles.  Following the delivery of the Estimated Closing Balance Sheet and
the Estimated Closing Statement, the Sellers shall cause the Acquired Companies
to provide Buyer and its Representatives access to the books, records and other
information (including work papers) of the Acquired Companies as any of the
foregoing may reasonably request in order to review the Estimated Closing
Balance Sheet and the Estimated Closing Statement.  Prior to Closing, the
parties shall cooperate in good faith to answer any questions and resolve any
issues raised by Buyer and its Representatives in connection with their review
of the Estimated Closing Balance Sheet and the Estimated Closing Statement.
 
 
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(b) Proposed Final Closing Balance Sheet and Proposed Final Closing
Statement.  After the Closing Date, Buyer shall prepare or cause to be prepared,
and will provide to the Sellers’ Representative, a consolidated balance sheet of
the Acquired Companies as of the close of business on the Closing Date and
without giving effect to the Contemplated Transactions (the “Proposed Final
Closing Balance Sheet”), together with a written statement setting forth in
reasonable detail its proposed final determination of the Closing Debt Amount,
the Seller Transaction Expenses, Net Working Capital and the Cash Adjustment
Amount (the “Proposed Final Closing Statement”).  The Proposed Final Closing
Balance Sheet and the determination of Net Working Capital reflected on the
Proposed Final Closing Statement will be prepared in accordance with the
Accounting Principles.  The Sellers’ Representative and its Representatives
shall have reasonable access to the work papers and other books and records of
the Acquired Companies for purposes of assisting the Sellers’ Representative and
its Representatives in their review of the Proposed Final Closing Balance Sheet
and the Proposed Final Closing Statement.
 
(c) Dispute Notice.  The Proposed Final Closing Balance Sheet and the Proposed
Final Closing Statement (and the proposed final determinations of the Closing
Debt Amount, the Seller Transaction Expenses, Net Working Capital and the Cash
Adjustment Amount reflected thereon) will be final, conclusive and binding on
the parties unless the Sellers’ Representative provides a written notice (a
“Dispute Notice”) to Buyer no later than the tenth (10th) Business Day after the
delivery to the Sellers’ Representative of the Proposed Final Closing Balance
Sheet and the Proposed Final Closing Statement.  Any Dispute Notice must set
forth in reasonable detail (i) any item on the Proposed Final Closing Balance
Sheet or the Proposed Final Closing Statement which the Sellers’ Representative
believes has not been prepared in accordance with this Agreement and the correct
amount of such item and (ii) the Sellers’ Representative’s alternative
calculation of the Net Working Capital.  Any item or amount to which no dispute
is raised in the Dispute Notice will be final, conclusive and binding on the
parties on the date on which Buyer receives the Dispute Notice.  Any Dispute
Notice must specify, with reasonable particularity, all facts that form the
basis of such disagreements and all statements by Persons (who shall be
identified by name) and documents relied upon by the Sellers’ Representative as
forming the basis of such disagreement.
 
 
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(d) Resolution of Disputes.  Buyer and the Sellers’ Representative will attempt
to promptly resolve the matters raised in any Dispute Notice in good
faith.  Beginning ten (10) Business Days after delivery of any Dispute Notice
pursuant to Section 2.05(c), either Buyer or the Sellers’ Representative may
provide written notice to the other (the “Dispute Submission Notice”) that it
elects to submit the disputed items to a nationally recognized independent
accounting firm chosen jointly by Buyer and the Sellers’ Representative (the
“Accounting Firm”).  In the event that an accounting firm has not been selected
by mutual agreement of Buyer and the Sellers’ Representative within ten (10)
Business Days following the giving of the Dispute Submission Notice, the
Accounting Firm shall be Deloitte & Touche LLP.  The Accounting Firm will
promptly, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, review only those unresolved items and amounts
specifically set forth and objected to in the Dispute Notice and resolve the
dispute with respect to each such specific unresolved item and amount in
accordance with this Agreement by determining whether the positions of Buyer or
the Sellers’ Representative are, on the whole, more accurate and, based on such
determination, adopting either all of the positions set forth by Buyer or all of
the positions set forth by the Sellers’ Representative.  In any such case, a
single partner of the Accounting Firm selected by such Accounting Firm in
accordance with its normal procedures and having expertise with respect to
settlement of such disputes shall act for the Accounting Firm in the
determination proceeding, and the Accounting Firm shall render a written
decision with respect to such disputed matter, including a statement in
reasonable detail of the basis for its decision.  All of the fees and expenses
of the Accounting Firm shall be borne by the Sellers (in the event that Buyer’s
positions are adopted by the Accounting Firm) or the Acquired Companies (in the
event that the Sellers’ Representative’s positions are adopted by the Accounting
Firm).  The decision of the Accounting Firm with respect to the disputed items
of the Proposed Final Closing Balance Sheet and the Proposed Final Closing
Statement submitted to it will be final, conclusive and binding on the
parties.  As used herein, the Proposed Final Closing Balance Sheet and the
Proposed Final Closing Statement, as adjusted to reflect any changes agreed to
by the parties and the decision of the Accounting Firm, in each case, pursuant
to this Section 2.05, are referred to herein as the “Final Closing Balance
Sheet” and the “Final Closing Statement,” respectively.  Each of the parties to
this Agreement agrees to use its commercially reasonable efforts to cooperate
with the Accounting Firm (including by executing a customary engagement letter
reasonably acceptable to it) and to cause the Accounting Firm to resolve any
such dispute as soon as practicable after the commencement of the Accounting
Firm’s engagement.
 
(e) Closing Purchase Price Adjustment.  If (A) the Net Working Capital (as
finally determined pursuant to this Section 2.05 and as set forth in the Final
Closing Balance Sheet and the Final Closing Statement) differs from the
Estimated Net Working Capital Adjustment by more than CAD$50,000 or (B) the
Closing Debt Amount, the Seller Transaction Expenses, or the Cash Adjustment
Amount (as finally determined pursuant to Section 2.05 and as set forth in the
Final Closing Statement) is different than the estimated amounts set forth in
the Estimated Closing Statement, then the Closing Purchase Price shall be
recalculated using such final figures in lieu of the estimated figures
thereafter set forth in the Estimated Closing Statement, and the amount, if any,
by which such estimated Closing Purchase Price paid at Closing in accordance
with Section 2.02 (i) exceeds such recalculated final Closing Purchase Price
shall be released to Buyer from the Adjustment Escrow Account in accordance with
the provisions of the Escrow Agreement or (ii) is less than such recalculated
final Closing Purchase Price shall be paid (or caused to be paid) by Buyer to
the Sellers’ Representative by wire transfer in immediately available funds.  To
the extent the amount of any payment required pursuant to clause (i) of the
preceding sentence exceeds the Adjustment Escrow Amount pursuant to this Section
2.05(e), each Seller will pay (or caused to be paid) to the Acquired Companies
an amount equal to such Seller’s Pro Rata Percentage of such excess amount by
wire transfer in immediately available funds.  To the extent that such
recalculated final Closing Purchase Price results from an excess of the Closing
Debt Amount as compared with the estimate thereof set forth in the Estimated
Closing Statement, Buyer shall pay to each Person entitled to receive a portion
of such excess as represented by the Sellers' Representative, in a written
certificate delivered by the Seller’s Representative to Buyer (which certificate
shall specify the amount payable to, and the payment instructions for, each such
Person), the amount payable to such Person; provided, that such  payments in
respect of such excess shall in the aggregate not exceed the additional amount
deducted from the final recalculated Closing Purchase Price resulting from the
recalculated Closing Debt Amount.  Any portion of the Accounting Firm’s fees and
any expenses payable hereunder by the Sellers shall also be released from the
Adjustment Escrow Account to the extent then available or, if such funds are
exhausted, directly from each Seller in accordance with their Pro Rata
Percentages.  Any payments pursuant to this Section 2.05(e) shall be treated by
all parties for tax purposes as adjustments to the purchase price.
 
 
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(f) Payments; Offset.  Any payment due pursuant to Section 2.05(e) shall be made
within fifteen (15) Business Days after the final amount thereof has been
determined in accordance with this Section 2.05.  In the event that any Seller
fails to pay any amounts due from such Seller pursuant to Section 2.05(e), Buyer
may, at its sole option and election, in addition to any other remedies
available to it at law or in equity, (i) setoff and apply any and all such
amounts payable by such Seller against the Earnout Payment and any Milestone
Payment in respect of the Earnout Payment that is or may become due and payable
to the Sellers pursuant to Section 2.07 and (ii) cause such amounts to be
released to Buyer from the Indemnity Escrow Account in accordance with the terms
of the Escrow Agreement.  Any payments pursuant to Section 2.05(e) or setoffs
pursuant to this Section 2.05(f) shall be treated by all parties for tax
purposes as adjustments to the purchase price.
 
Section 2.06. Escrow.     At Closing, Buyer will (in accordance with Section
2.04(b)(ii)) deliver a portion of the Closing Purchase Price equal to the
Indemnification Escrow Amount and the Adjustment Escrow Amount to the Escrow
Agent.  The Escrow Amounts shall be held by the Escrow Agent in accordance with
the terms of the Escrow Agreement and any amount released to Sellers pursuant to
the terms of the Escrow Agreement shall be returned to each Seller in accordance
with such Seller’s Pro Rata Percentage of such amounts.  
 
Section 2.07. Earnout Payment.  In addition to the Closing Purchase Price and
subject to the terms and conditions set forth herein, each Seller shall be
eligible to receive such Seller’s Pro Rata Percentage of an earnout payment not
to exceed the Maximum Earnout Amount from Buyer (the “Earnout Payment”).
 
(a) Target Earnings Statements.  Within forty-five (45) days following the
Measurement Period End Date of each of 2013, 2014 and 2015, Buyer will provide
to the Sellers a statement calculating the Target Earnings for the period
commencing on the Earnout Commencement Date and ending on the Measurement Period
End Date of such calendar year in accordance with the terms and conditions in
this Agreement (respectively, the “2013 Target Earnings Statement”, “2014 Target
Earnings Statement”, “2015 Target Earnings Statement” and, collectively, the
“Target Earnings Statements”).
 
 
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(b) Earnout Payment Dispute Resolution Notice.  Each Target Earnings Statement
will be final, conclusive and binding upon the parties upon confirmation in
writing from the Sellers’ Representative or, if no such confirmation is
received, unless the Sellers’ Representative provides a written notice (the
“Earnout Payment Statement Dispute Notice”) to Buyer no later than the twentieth
(20th) Business Day after the delivery to the Sellers’ Representative of the
relevant Target Earnings Statement.  Any Earnout Payment Statement Dispute
Notice must set forth in reasonable detail (i) any item on the relevant Target
Earnings Statement that the Sellers’ Representative believes has not been
prepared in accordance with this Agreement and the correct amount of such item
and (ii) the Sellers’ Representative’s alternative calculation of the relevant
Target Earnings Statement.  Any Earnout Payment Statement Dispute Notice must
specify, with reasonable particularity, all facts that form the basis of such
disagreements and all statements by Persons (who shall be identified by name)
and documents relied upon by the Sellers’ Representative as forming the basis of
such disagreement.
 
(c) Resolution of Disputes.  Buyer and the Sellers’ Representative will attempt
to promptly resolve the matters raised in any Earnout Payment Statement Dispute
Notice in good faith.  Beginning ten (10) Business Days after delivery of any
Earnout Payment Statement Dispute Notice pursuant to Section 2.06(b), either
Buyer or the Sellers’ Representative may provide written notice to the other
(the “Earnout Payment Statement Dispute Submission Notice”) that it elects to
submit the disputed items to the Accounting Firm.  In the event that an
Accounting Firm has not been selected by mutual agreement of Buyer and the
Sellers’ Representative within ten (10) Business Days following the giving of
the Earnout Payment Statement Dispute Submission Notice, each of Buyer and the
Sellers’ Representative shall promptly select an accounting firm within twenty
(20) Business Days of the giving of the Earnout Payment Statement Dispute
Submission Notice, failing which the Accounting Firm shall be Deloitte & Touche
LLP.  The Accounting Firm will promptly, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, review only those
unresolved items and amounts specifically set forth and objected to in the
Earnout Payment Statement Dispute Notice and resolve the dispute with respect to
each such specific unresolved item and amount in accordance with this Agreement
by determining whether the positions of Buyer or the Sellers’ Representative
are, on the whole, more accurate and, based on such determination, adopting
either all of the positions set forth by Buyer or all of the positions set forth
by the Sellers’ Representative.  In any such case, a single partner of the
Accounting Firm selected by such Accounting Firm in accordance with its normal
procedures and having expertise with respect to settlement of such disputes
shall act for the Accounting Firm in the determination proceeding, and the
Accounting Firm shall render a written decision with respect to such disputed
matter, including a statement in reasonable detail of the basis for its
decision.  All of the fees and expenses of the Accounting Firm shall be borne by
the Sellers (in the event that Buyer’s positions are adopted by the Accounting
Firm) or the Acquired Companies (in the event that the Sellers’ Representative’s
positions are adopted by the Accounting Firm).  The decision of the Accounting
Firm with respect to the disputed items of the Target Earnings Statements
submitted to it will be final, conclusive and binding on the parties.  Each of
the parties to this Agreement agrees to use its commercially reasonable efforts
to cooperate with the Accounting Firm (including by executing a customary
engagement letter reasonably acceptable to it) and to cause the Accounting Firm
to resolve any such dispute as soon as practicable after the commencement of the
Accounting Firm’s engagement.
 
 
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(d) Payment of Earnout Payment.  Upon completion of the Earnout Period, within
ten (10) Business Days following the determination that the Target Earnings
Statements are final, conclusive and binding pursuant to either Section 2.06(b)
or Section 2.06(c), Buyer shall pay (or cause to be paid) to each Seller by wire
transfer of immediately available funds to such accounts as may be designated in
writing by the Sellers Representative to Buyer (or if not so designated, then by
certified or official bank check payable in immediately available funds to the
order of such Sellers) such Seller’s Pro Rata Percentage of an Earnout Amount
that shall be equal to:
 
(A) CAD$35,000,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to the Cumulative Target;
 
(B) CAD$32,400,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 95%, but less than the Cumulative Target;
 
(C) CAD$29,800,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 90%, but less than 95%, of the Cumulative Target;
 
(D) CAD$27,100,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 85%, but less than 90%, of the Cumulative Target;
 
(E) CAD$24,500,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 80%, but less than 85%, of the Cumulative Target;
 
(F) CAD$21,900,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 75%, but less than 80%, of the Cumulative Target;
 
(G) CAD$19,300,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 70%, but less than 75%, of the Cumulative Target;
 
(H) CAD$16,600,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 65%, but less than 70%, of the Cumulative Target;
 
(I) CAD$14,000,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 60%, but less than 65%, of the Cumulative Target;
 
 
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(J) CAD$11,400,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 55%, but less than 60%, of the Cumulative Target;
and
 
(K) CAD$8,800,000 if Target Earnings reported in the Target Earnings Statements
are greater than or equal to 50%, but less than 55%, of the Cumulative Target.
 
If the Target Earnings reported in the Target Earnings Statements are less than
50% of the Cumulative Target, the Sellers shall not be entitled to an Earnout
Payment.  As used herein, the term “Cumulative Target” shall mean Ninety-Four
Million Two Hundred Thousand Dollars (CAD$94,200,000).  Notwithstanding anything
to the contrary contained in this Agreement, the Earnout Payment payable
pursuant to this Section 2.07(d) shall be reduced by the amount of any Milestone
Payments made pursuant to Section 2.07(e).  Any payments pursuant to this
Section 2.07(d) shall be treated by all parties for tax purposes as adjustments
to the purchase price.
 
(e) Milestone Payments.  Prior to the end of the Earnout Period, each of the
Sellers shall be entitled to receive and shall be paid its Pro Rata Percentage
of one or more interim payments in respect of an Earnout Payment subject to the
following terms and in an amount that shall be equal to:
 
(i) CAD$15,000,000 if the Target Earnings for the period commencing on the
Earnout Commencement Date and ending on the Measurement Period End Date for the
2013 calendar year equal or exceed CAD$34,600,000 (the “2013 Milestone
Payment”); and
 
(ii) (x) CAD$25,000,000 minus (y) the 2013 Milestone Payment made pursuant to
clause (i) above, if any, if the Target Earnings for the period commencing on
the Earnout Commencement Date and ending on the Measurement Period End Date for
the 2014 calendar year equal or exceed CAD$61,300,000 (the “2014 Milestone
Payment” and together with the 2013 Milestone Payment, the “Milestone
Payments”).
 
(iii) Any Milestone Payment due to the Sellers pursuant to this Section 2.07(e)
shall be paid within 10 Business Days following the date upon which the Target
Earnings Statement for the applicable period is final, binding and conclusive
pursuant to either Section 2.07(b) or Section 2.07(c).  For the avoidance of
doubt, any such Milestone Payments paid to the Sellers shall represent payment
of a portion of the Maximum Earnout Amount.  Any payments pursuant to Section
2.07(d) and Section 2.07(e) shall be treated by all parties for tax purposes as
adjustments to the purchase price.
 
(f) Obligations of Parties During Earnout Period.  During the Earnout Period
Buyer shall have absolute discretion with respect to decisions relating to the
Business and the conduct thereof; provided, that all such decisions shall be
made in good faith and not for the principle purpose of avoiding any payment
obligation under this Section 2.07.  Notwithstanding the foregoing, during the
Earnout Period:
 
(i) Buyer shall cause the Canadian Operations to maintain existence as a
distinct business with separate accounts and such other safeguards to the extent
necessary to allow for the calculation of Target Earnings;
 
 
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(ii) There shall be no upcharge in FOB cost of products to the Canadian
Operations;
 
(iii) The Canadian Operations shall have no obligations to service any “mass
channel” customers (other than Costco) in Canada including Walmart and Target;
provided, however, that the Sellers and other employees of the Canadian
Operations shall make themselves available to Buyer or Parent and their
respective Affiliates for purposes of providing consulting services or other
advice with respect to servicing such customers.
 
(iv) The Canadian Operations will not make expenditures for charitable
contributions.
 
(g) Recovery of Losses under Currency Forward Contracts.  In addition to any
amounts otherwise payable under this Section 2.07, if upon completion of the
Earnout Period the Target Earnings reported in the final Target Earnings
Statements exceed the Cumulative Target by at least $2 million, then within ten
(10) Business Days following the determination that the Target Earnings
Statements are final, conclusive and binding pursuant to either Section 2.06(b)
or Section 2.06(c), Buyer shall pay (or cause to be paid) to each Seller by wire
transfer of immediately available funds to such accounts as may be designated in
writing by the Sellers’ Representative to Buyer (or if not so designated, then
by certified or official bank check payable in immediately available funds to
the order of such Sellers) such Seller’s Pro Rata Percentage of an amount equal
to the amount of the losses incurred by the Acquired Companies in respect of the
Currency Forward Contracts that was taken into account in determining the
Closing Purchase Price pursuant to Section 2.02(b) (as adjusted pursuant to
Section 2.05) plus interest on such amount, compounded annually and accruing
immediately following the Closing until termination of the Earnout Period, at a
rate equal to the average Parent Rate during the Earnout Period (provided,
however, that for purposes of this Section 2.07(g) the Parent Rate shall not
exceed 5% (five percent)).
 
ARTICLE III.       
 
REPRESENTATIONS AND WARRANTIES REGARDING
 
THE ACQUIRED COMPANIES.
 
The Sellers hereby severally and not jointly and severally represent and warrant
to Buyer and acknowledge and confirm that the Buyer is relying upon the
representations and warranties in connection with the purchase by the Buyer of
the Target Shares that the statements contained in this ARTICLE III are true,
correct and complete as of the date hereof, and will be true, correct and
complete as of the Closing Date, except as specified to the contrary in the
Sellers’ Disclosure Schedules.
 
Section 3.01. Organization.  Section 3.01 of the Sellers’ Disclosure Schedules
sets forth for each Acquired Company its name and jurisdiction of
organization.  Each Acquired Company is duly organized, validly incorporated and
existing and in good standing under the laws of its jurisdiction of
organization.  Each Acquired Company is duly qualified or registered to do
business and in good standing in each jurisdiction in which it leases Real
Property or conducts business and is required to so qualify or register except
where the failure to so qualify or register has not had, and would not
reasonably be expected to have, a Material Adverse Effect.  The Acquired
Companies have delivered to Buyer (a) accurate and complete copies of the
Organizational Documents of each Acquired Company and (b) the minute books of
each Acquired Company, which contain records of all meetings held of, and other
actions taken by, the shareholders, partners, members or other holders of Equity
Interests in such Acquired Company, the Boards of Directors (or equivalent) of
each such Acquired Company and each committee thereof.  Section 3.01 of the
Sellers’ Disclosure Schedules sets forth an accurate and complete list of all
Predecessors of the Acquired Companies.
 
 
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Section 3.02. Power and Authorization.
 
(a) Contemplated Transactions.  Each of the Acquired Companies that is, or will
be at Closing, a party to this Agreement or any Ancillary Agreement, has all
requisite power and authority necessary for the execution, delivery and
performance by it of this Agreement and each such Ancillary Agreement.  Each of
the Acquired Companies that is, or will be at Closing, a party to this Agreement
or any Ancillary Agreement, has duly authorized by all necessary action on the
part of the Board of Directors (or equivalent) or the shareholders (or other
holders of Equity Interests) of such Acquired Company, the execution, delivery
and performance of this Agreement and each such Ancillary Agreement by such
Acquired Company.  This Agreement and each Ancillary Agreement to which any
Acquired Company is, or will be at Closing, a party (i) have been (or, in the
case of Ancillary Agreements to be entered into at Closing, will be when
executed and delivered) duly executed and delivered by each Acquired Company
that is, or will be at Closing, a party thereto and (ii) is (or in the case of
Ancillary Agreements to be entered into at the Closing, will be when executed
and delivered) a legal, valid and binding obligation of each such Acquired
Company, Enforceable against each such Acquired Company in accordance with its
terms.
 
(b) Conduct of Business.  Each Acquired Company has all requisite power and
authority necessary to own, lease, operate, use and otherwise commercially
exploit its Assets and carry on the Business as is now being conducted by it.
 
Section 3.03. Authorization of Governmental Authorities.  Except as disclosed in
Section 3.03 of the Sellers’ Disclosure Schedules, no action by (including any
authorization by or consent or approval of), or in respect of, or filing with,
any Governmental Authority is required by or on behalf of any Acquired Company
or in respect of any Acquired Company, the Business or any Assets of any
Acquired Company for, or in connection with, (a) the valid and lawful
authorization, execution, delivery and performance by any Acquired Company of
this Agreement or any Ancillary Agreement to which it is, or will be at Closing,
a party or (b) the consummation of the Contemplated Transactions by the Sellers
or the Acquired Companies.
 
Section 3.04. Noncontravention.  Except as disclosed in Section 3.04 of the
Sellers’ Disclosure Schedules, none of the authorization, execution, delivery or
performance by any Acquired Company of this Agreement or any Ancillary Agreement
to which it is, or will be at Closing, a party, nor the consummation of the
Contemplated Transactions, will:
 
(a) assuming the taking of each action by (including the obtaining of each
necessary authorization, consent or approval), or in respect of, and the making
of all necessary filings with, Governmental Authorities, in each case, as
disclosed in Section 3.03 of the Sellers’ Disclosure Schedules, conflict with or
result in a breach or violation of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, any
Legal Requirement applicable to an Acquired Company, the Business or any Assets
of any Acquired Company; or
 
 
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(b) conflict with or result in a breach or violation of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
require any action by (including any authorization, consent or approval) or
notice to any Person, or require any offer to purchase or prepayment of any Debt
or Liability under, or result in the creation of any Encumbrance upon or
forfeiture of any of the rights, interests, duties, properties or assets of any
Acquired Company under, any of the terms, conditions or provisions of (i) any
Permit applicable to or otherwise affecting any Acquired Company, the Business
or any Assets of any Acquired Company, except where such conflict, breach,
violation, default, termination, acceleration or other event has not had and
would not reasonably be expected to have, a Material Adverse Effect, or (ii) any
Contractual Obligation or IP Contract, except where such conflict, breach,
violation, default, termination, acceleration or other event has not had and
would not reasonably be expected to have, a Material Adverse Effect, or (iii)
the Organizational Documents of any Acquired Company.
 
Section 3.05. Capitalization of the Acquired Companies.
 
(a) Authorized and Outstanding Equity Interests.  The entire authorized capital
stock (or, where applicable, other Equity Interests) of each Acquired Company is
as set forth in Section 3.05 of the Sellers’ Disclosure Schedules.  All of the
outstanding Equity Interests of the Acquired Companies are held of record and
beneficially owned by the Persons in the respective amounts set forth in Section
3.05 of the Sellers’ Disclosure Schedules.  Except as set forth in Section 3.05
of the Sellers’ Disclosure Schedules, none of the Acquired Companies has any
issued or outstanding Equity Interests or holds shares of its capital stock (or
other Equity Interests).  The Acquired Companies have delivered to Buyer
accurate and complete copies of the share register (or equivalent records) of
each Acquired Company, which records reflect all issuances, transfers,
repurchases and cancellations of shares of capital stock (or other Equity
Interests) of each Acquired Company.  All of the outstanding shares of capital
stock (or, where applicable, other Equity Interests) of each Acquired Company
have been duly authorized, validly issued and are fully paid and non-assessable.
 
(b) Encumbrances on Equity Interests, etc.  The Target Companies are the record
owner of all of the Equity Interests of each of the Subsidiaries reflected as
being owned by the Target Company or such Subsidiary in Section 3.05 of the
Sellers’ Disclosure Schedules and holds such Equity Interests free and clear of
all Encumbrances except as disclosed in Section 3.05 of the Sellers’ Disclosure
Schedules.  Except as disclosed in Section 3.05 of the Sellers’ Disclosure
Schedules:  (i) there are no preemptive rights or other similar rights in
respect of any Equity Interests in any Acquired Company, (ii) there are no
Encumbrances on, or other Contractual Obligations relating to, the ownership,
transfer or voting of any Equity Interests in any Acquired Company, or otherwise
affecting the rights of any holder of the Equity Interests in any Acquired
Company, (iii) except for the Contemplated Transactions, there is no Contractual
Obligation, or provision in the Organizational Documents of any Acquired Company
which obligates an Acquired Company to purchase, redeem or otherwise acquire, or
make any payment (including any dividend or distribution) in respect of, any
Equity Interest in any Acquired Company and (iv) there are no existing rights
with respect to registration of any Equity Interests in any Acquired Company on
a public securities exchange.
 
 
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Section 3.06. Financial Matters.
 
(a) Financial Statements.  Attached as Exhibit F are copies of each of the
following:
 
(i) the audited combined balance sheets of the BT Subsidiaries as of June 30,
2010 (the “Audited Balance Sheet” and the date thereof, the “Audited Balance
Sheet Date”), and June 30, 2009, and the related audited combined statements of
income, cash flow and changes in stockholders’ equity of the BT Subsidiaries for
the fiscal years then ended, accompanied by any notes thereto and the reports of
the BT Subsidiaries’ independent accountants with respect thereto (collectively,
the “Audited Financials”); and
 
(ii) the unaudited combined balance sheet of the BT Subsidiaries as of March 31,
2011 (the “Most Recent Balance Sheet” and the date thereof, the “Most Recent
Balance Sheet Date”), and the related unaudited combined statement of income,
cash flow and changes in stockholders’ equity of the BT Subsidiaries for the
twelve (12)  months then ended (the “Interim Financials”);
 
(iii) the unaudited balance sheet of the BT Subsidiaries as of March 31, 2011
(the “Interim Financials of the BT Subsidiaries”) and together with the Interim
Financials, the Audited Financials and the Updated Financials delivered pursuant
to Section 6.03(b), the “Financials”).
 
(b) Compliance with Canadian GAAP, etc.  Except as disclosed in Section 3.06(b)
of the Sellers’ Disclosure Schedules, the Financials (including any notes
thereto) (i) were, or will be in the case of the Updated Financials, prepared in
accordance with the books and records of the BT Subsidiaries, (ii) have been, or
will be in the case of the Updated Financials, prepared in accordance with
Canadian GAAP, consistently applied (subject to the fact that the statements are
combined and not consolidated, and as such, are not in accordance with Canadian
GAAP and also subject, in the case of the unaudited Financials, to normal
year-end audit adjustments, the effect of which will not, individually or in the
aggregate, be materially adverse, and the absence of footnote disclosure that if
presented, would not differ materially from those included in the Audited
Financials) and (iii) fairly present the combined financial position of the BT
Subsidiaries as of the respective dates thereof and the combined results of the
operations of the BT Subsidiaries and changes in financial position for the
respective periods covered thereby.
 
(c) Absence of Undisclosed Liabilities.  Except as disclosed in Section 3.06(c)
of the Sellers’ Disclosure Schedules, no Acquired Company has any material
Liabilities except for (i) Liabilities set forth on the face of the Audited
Balance Sheet or specifically described in the notes thereto and (ii)
Liabilities incurred in the Ordinary Course of Business since the Audited
Balance Sheet Date, (iii) any obligation under any Contractual Obligation that
is not required by Canadian GAAP to be set forth on the face of a consolidated
balance sheet of the Acquired Companies and (iv) Liabilities that are less than
CAD$100,000 in aggregate amount.
 
 
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(d) Banking Facilities.  Section 3.06(d) of the Sellers’ Disclosure Schedules
sets forth an accurate and complete list of (i) each bank, savings and loan or
similar financial institution with which an Acquired Company has an account or
safety deposit box or other similar arrangement, and any numbers or other
identifying codes of such accounts, safety deposit boxes or such other
arrangements maintained by an Acquired Company thereat, and (ii) the names of
all Persons authorized to draw on any such account or to have access to any such
safety deposit box facility or such other arrangement.
 
(e) No Assets or Liabilities of Target Companies.  The Target Companies conduct
no operations or activities other than their ownership of the shares of the BT
Subsidiaries and have no assets other than the BT Subsidiaries and have no
Liabilities.
 
Section 3.07. Absence of Certain Developments.  Since the Audited Balance Sheet
Date through the date hereof, the Business has been conducted in the Ordinary
Course of Business and, except for the matters disclosed in Section 3.07 of the
Sellers’ Disclosure Schedules (which are arranged in subsections lettered (a) to
(v) to correspond to the subsections of this Section 3.07):
 
(a) none of the Acquired Companies has (i) amended its Organizational Documents,
(ii) amended any term of its outstanding Equity Interests or other securities or
(iii) issued, sold, granted, or otherwise disposed of, its Equity Interests or
other securities;
 
(b) none of the Acquired Companies has entered into, terminated or amended any
Material Company Contract other than in the Ordinary Course of Business;
 
(c) none of the Acquired Companies has become liable in respect of any Guarantee
or has incurred, assumed or otherwise become liable in respect of any Debt;
 
(d) none of the Acquired Companies has permitted any of its Assets to become
subject to an Encumbrance other than a Permitted Encumbrance;
 
(e) none of the Acquired Companies has (i) made any declaration, setting aside
or payment of any dividend or other distribution with respect to, or any
repurchase, redemption or other acquisition of, any of its Equity Interests or
(ii) entered into, or performed, any transaction with, or for the benefit of,
any Seller or any Affiliate of such Seller (other than payments made to
officers, managers and employees in the Ordinary Course of Business);
 
(f) there has been no material loss, destruction, damage, abandonment,
forfeiture, or eminent domain taking (in each case, whether or not insured)
affecting the Business or any material Asset;
 
(g) none of the Acquired Companies has increased the Compensation or benefits
payable or paid, whether conditionally or otherwise, to (i) any current or
former employee, director, independent contractor or agent other than in the
Ordinary Course of Business, (ii) any manager, officer or employee with
annualized Compensation in excess of CAD$100,000 or (iii) any Seller or any
Affiliate of any such Seller;
 
 
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(h) none of the Acquired Companies has entered into any Contractual Obligation
providing for the employment or engagement of any Person on a full-time,
part-time, consulting, independent contractor or other basis or otherwise
providing Compensation or other benefits to any officer, manager, employee,
independent contractor or other agent or service provider, or hired or engaged
any (A) officer or (B) employee, consultant or independent contractor with
annualized base salary or base compensation in excess of CAD$100,000;
 
(i) none of the Acquired Companies has adopted or amended any collective
agreement or other agreement with a labor union;
 
(j) none of the Acquired Companies has instituted any new, or modified any
existing, severance or termination pay or benefits practices or entered into any
Contractual Obligation with any current or former employee, director,
independent contractor or agent entitling such person to a Change of Control
Payment;
 
(k) none of the Acquired Companies has made any change in its methods of
accounting or accounting practices (including with respect to reserves);
 
(l) none of the Acquired Companies has made, changed or revoked any Tax
election, elected or changed any method of accounting for Tax purposes, amended
any Tax Return, settled or compromised any Action in respect of Taxes, entered
into any Contractual Obligation in respect of Taxes with any Governmental
Authority, consented to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Acquired Companies or
taken any action that would have the effect of increasing the Tax Liability of
any Acquired Company after the Closing Date;
 
(m) none of the Acquired Companies has terminated or closed any facility,
business or operation, terminated a Real Property Lease (or any material
agreement that relates to any Leased Real Property), entered into a new lease
for real property or any material agreement that relates to any Leased Real
Property or acquired (or executed a binding agreement to acquire) any real
property;
 
(n) none of the Acquired Companies has adopted, modified, suspended or
terminated any Company Plan, other than modifying Company Plans as required by
an applicable Legal Requirement, or, except in accordance with terms thereof as
in effect on the Most Recent Balance Sheet Date, increased any benefits under
any Company Plan;
 
(o) none of the Acquired Companies has written up or written down any of its
material Assets;
 
(p) there has not been any transfer, waiver or release (by way of a license,
Contractual Obligation, assignment or otherwise) to or Encumbrance by any Person
of Company Intellectual Property Rights other than grants of non-exclusive
licenses to customers of the Acquired Companies in the Ordinary Course of
Business consistent with past practices with respect to Intellectual Property
Rights and Company Technology;
 
(q) there has not been any amendment or other modification (or agreement to do
so) or violation of the terms of, any of the IP Contracts;
 
 
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(r) none of the Acquired Companies has made or agreed or determined to make any
write-off, write-down or revaluation of any of the Intellectual Property Rights
of the Acquired Companies or any change in any reserves or Liabilities
associated therewith;
 
(s) none of the Acquired Companies has mortgaged, pledged or subjected to a lien
any of their Intellectual Property Rights or Company Technology;
 
(t) none of the Acquired Companies has transferred, abandoned, forfeited, or
otherwise disposed of or lost the use of any material Company Intellectual
Property Right or Company Technology, other than in the Ordinary Course of
Business;
 
(u) the Acquired Companies have not entered into any Contractual Obligation to
do any of the things referred to elsewhere in this Section 3.07; and
 
(v) no Material Adverse Effect has occurred.
 
Section 3.08. Debt; Guarantees.  The Acquired Companies have no Liabilities in
respect of Debt except as set forth in Section 3.08 of the Sellers’ Disclosure
Schedules.  For each item of Debt, Section 3.08 of the Sellers’ Disclosure
Schedules correctly sets forth the debtor, the Contractual Obligations governing
the Debt, the principal amount of the Debt as the date of this Agreement, the
creditor, the maturity date, and the collateral, if any, securing the Debt (and
all Contractual Obligations governing all related Encumbrances).  Except as set
forth in Section 3.08 of the Sellers’ Disclosure Schedules, no Acquired Company
has any Liability in respect of a Guarantee of any Debt or other Liability of
any other Person (other than another Acquired Company).
 
Section 3.09. Assets.
 
(a) Ownership of Assets and Permitted Encumbrances.  One or more of the Acquired
Companies has sole and exclusive, good and marketable title to, or, in the case
of property held under a lease, license, or other Contractual Obligation, a sole
and exclusive, Enforceable leasehold interest in, or adequate rights to use and
otherwise commercially exploit, all of its properties, rights and assets,
whether real or personal and whether tangible or intangible, that are owned or
purported to be owned by an Acquired Company or that are used or exploited in
the Business, including all Assets reflected in the Audited Balance Sheet or
acquired after the Audited Balance Sheet Date, except for such Assets that have
been sold or otherwise disposed of since the Audited Balance Sheet Date in the
Ordinary Course of Business (collectively, the “Assets”).  Except as disclosed
in Section 3.09(a) of the Sellers’ Disclosure Schedules, none of the Assets is
subject to any Encumbrance other than a Permitted Encumbrance.
 
(b) Condition of Tangible Assets.  All of the material fixtures and other
material improvements to the Real Property included in the Assets (including any
Facilities) and all of the material tangible personal property other than
inventory included in the Assets (i) are in all material respects adequate and
suitable for their present uses, (ii) are in good working order, operating
condition and state of repair (ordinary wear and tear excepted), and (iii) have
been maintained in all material respects in accordance with normal industry
practice.
 
 
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(c) Investments.  Except as set forth in Section 3.09(c) of the Sellers’
Disclosure Schedules, no Acquired Company (i) controls, directly or indirectly,
or owns any direct or indirect Equity Interest in any Person that is not a
Subsidiary of the Acquired Companies or (ii) is subject to any obligation to
make any investment (in the form of a loan, capital contribution or otherwise)
in any Person.
 
Section 3.10. Real Property.
 
(a) Section 3.10(a) of the Sellers’ Disclosure Schedules sets forth a list of
the addresses of all real property leased, subleased or licensed by, or for
which a right to use or occupy has been granted to, any of the Acquired
Companies (the “Leased Real Property,” and, as the context may require, the
“Real Property”).  Section 3.10(a) of the Sellers’ Disclosure Schedules also
identifies with respect to each Leased Real Property, each lease, sublease,
license or other Contractual Obligation under which such Leased Real Property is
occupied or used including the street address or partial legal description (as
available), date of and legal name of each of the parties to such lease,
sublease, license or other Contractual Obligation and each amendment,
modification or supplement thereto (the “Real Property Leases”).  None of the
Acquired Companies owns (or has ever owned) a fee interest in any real property.
 
(b) Except as set forth in Section 3.10(b) of the Sellers’ Disclosure Schedules,
there are no written or oral leases, subleases, licenses, concessions, occupancy
agreements or other Contractual Obligations granting to any other Person the
right of use or occupancy of any of the Real Property and there is no Person
(other than any Acquired Company) in possession of any of the Real
Property.  Complete and correct copies of the Real Property Leases have been
provided to Buyer.  The Acquired Companies have not waived, or to the Target
Companies’ Knowledge, omitted to take any action in respect of any rights under
the Real Property Leases where the loss of such right would have a Material
Adverse Effect on the Business.
 
(c) No eminent domain or condemnation Action is pending or, to the Target
Companies’ Knowledge, threatened, that would preclude or materially impair the
use of the Material Real Property.  To the Target Companies’ Knowledge, none of
the Acquired Companies’ current use of the Material Real Property violates in
any material respect any restrictive covenant of record that affects the
Material Real Property.
 
(d) To the Target Companies’ Knowledge, each Acquired Company has a valid
leasehold estate in its respective Leased Real Property, in all cases free and
clear of all Encumbrances except for Permitted Encumbrances.  None of the
applicable Acquired Companies and to the Knowledge of the Target Companies, no
other party, is in material breach of or default under the terms of any Real
Property Lease (or has taken or failed to take any action which, with notice,
lapse of time, or both, would constitute a default) or has received any notice
of default, termination or non-renewal under any Real Property Lease.  Each Real
Property Lease is a valid and binding obligation of the Acquired Company or one
of its Subsidiaries, Enforceable in accordance with its terms.
 
(e) A true and correct copy of each Real Property Lease and any related (i)
notices or memoranda of lease, (ii) subordination, non-disturbance and
attornment agreements, (iii) estoppel certificates and (iv) material
correspondence and agreements (including any reciprocal easement agreements)
related thereto has been made available to Buyer as of the date of this
Agreement.
 
 
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(f) To the Target Companies’ Knowledge, no Leased Real Property is subject to a
leasehold mortgage or a construction mortgage and none of the fixtures or
equipment owned by an Acquired Company and located at any Leased Real Property
is subject to a Lien under the Construction Lien Act (Ontario).
 
(g) To the Target Companies’ Knowledge, there are no restrictive covenants,
municipal by-laws or other laws which in any way prohibit or restrict the use of
the Real Properties for the purposes for which they are presently being used,
and the Acquired Companies have received no notice and are not aware of any
proposed changes to the official plan or zoning by-laws affecting the Real
Properties which will materially and adversely affect or prohibit such uses.
 
Section 3.11. Intellectual Property.
 
(a) Company IP.  Except as disclosed in Section 3.11(a) of the Sellers’
Disclosure Schedules, the Acquired Companies own all rights, title and interest
in and to, or are licensed or otherwise possesses a valid and Enforceable right
to use under an Inbound IP Contract, all Technology and all Intellectual
Property Rights used in the business of the Acquired Companies, free and clear
of any Encumbrances other than licenses granted in Outbound IP Contracts
identified in Section 3.11(d) of the Sellers’ Disclosure Schedules and other
than restrictions imposed by Inbound IP Contracts.  Except with respect to the
Technology and Intellectual Property Rights licensed under the Outbound IP
Contracts identified in Section 3.11(d) of the Sellers’ Disclosure Schedules,
the Acquired Companies have not granted any exclusive licenses of Intellectual
Property Rights owned or controlled by an Acquired Company to third parties.
 
(b) Infringement.  Except as disclosed in Section 3.11(b) of the Sellers’
Disclosure Schedules, none of the Acquired Companies (i) has received any
material charge, complaint, claim, demand, or notice alleging interference,
infringement, depreciation, dilution (to the extent applicable and as such term
is understood in the United States), misappropriation, or violation of the
Intellectual Property Rights of any Person (including any invitation to license
or request or demand to refrain from using any Intellectual Property Rights of
any Person in connection with the conduct of the Business or the use of the
Company Technology), or (ii) has agreed to or has a Contractual Obligation to
indemnify any Person for or against any interference, infringement,
depreciation, dilution (to the extent applicable and as such term is understood
in the United States), misappropriation or violation with respect to any
Intellectual Property Rights.  To the Knowledge of the Target Companies, the
operation of the Business does not conflict with or infringe the Intellectual
Property Rights of others.  Except as disclosed in Section 3.11(b) of the
Sellers’ Disclosure Schedules, to the Target Companies’ Knowledge, no Person is
currently interfering with, infringing upon, diluting, misappropriating or
violating any Company Intellectual Property Rights owned by the Acquired
Companies.
 
(c) Scheduled Intellectual Property Rights.  Section 3.11(c) of the Sellers’
Disclosure Schedules identifies all patents, patent applications, registered
marks and copyrights, applications for mark and copyright registrations, domain
names, registered design rights, and other forms of registered Intellectual
Property Rights and applications therefor, owned by or exclusively licensed to
an Acquired Company (collectively, the “Company Registrations”).  For purposes
of this Agreement, all items listed in Section 3.11(c) of the Sellers’
Disclosure Schedules shall be called “Scheduled Intellectual Property
Rights”.  Section 3.11(c) of the Sellers’ Disclosure Schedules specifically
identifies those items of Company Registrations that are exclusively licensed to
an Acquired Company, including the identification of the Contractual Obligation
pursuant to which each such Intellectual Property Right is licensed.  Section
3.11(c) of the Sellers’ Disclosure Schedules includes particulars for each of
the Company Registrations.  The Acquired Company identified in Section 3.11(c)
of the Sellers’ Disclosure Schedules is the sole and exclusive owner or licensee
of each Scheduled Intellectual Property Right, free and clear of Encumbrances,
other than Permitted Encumbrances.  For each of the Company Registrations owned
by an Acquired Company: (i) all fees required to maintain the Company
Registration in full force and effect have been paid; (ii) except as set forth
in Section 3.11(c)(ii) of the Sellers’ Disclosure Schedules, all applications
are being diligently prosecuted; and (iii) to the Knowledge of the Target
Companies, there is no objection or opposition to the Company Registration.
 
 
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(d) IP Contracts.  Section 3.11(d) of the Sellers’ Disclosure Schedules
identifies under separate headings each Contractual Obligation, whether written
or oral, (i) under which an Acquired Company uses or licenses any Company
Technology or any Company Intellectual Property Rights that any Person besides
an Acquired Company owns, excluding licenses for any off-the-shelf software
licensed on standard terms used by the Acquired Company (the “Inbound IP
Contracts”), (ii) under which an Acquired Company has granted any Person any
right or interest in any Intellectual Property Rights or Company Technology
owned or controlled by an Acquired Company including any right to use any item
of Company Technology (the “Outbound IP Contracts”), or (iii) that otherwise
affects the Acquired Companies’ use of or rights in any Company Technology or
Intellectual Property Rights of the Acquired Companies (including settlement
agreements and covenants not to sue) (such Contractual Obligations, together
with the Inbound IP Contracts and Outbound IP Contracts, the “IP
Contracts”).  Except as is otherwise disclosed in Section 3.11(d) of the
Sellers’ Disclosure Schedules, none of the Acquired Companies owes any royalties
or other payments to any Person for the use of any Intellectual Property Rights
or Company Technology.  The Acquired Companies have delivered to Buyer accurate
and complete copies of each of the IP Contracts as amended or otherwise modified
and in effect.  Except as provided in Section 3.11(d) of the Sellers’ Disclosure
Schedules, each material Inbound IP Contract is in effect, and the Acquired
Companies have not taken or failed to take any action and, to the Knowledge of
the Target Companies, no other event has occurred that could subject any such
agreement to termination or otherwise cause any such license agreement not to be
in effect in the foreseeable future.  Except as provided in Section 3.11(d) of
the Sellers’ Disclosure Schedules, the Acquired Companies have paid all
royalties due to date under all IP Contracts.  Except as provided in Section
3.11(d) of the Sellers’ Disclosure Schedules, the Acquired Companies are not
presently in default and have received no notice of default under any IP
Contract.
 
(e) Protection of Company Intellectual Property Rights and Confidential
Information.  The Acquired Companies have taken commercially reasonable steps
and precautions (i) to protect the Company Intellectual Property Rights and
Company Technology and (ii) to maintain the confidentiality of its trade
secrets, know-how and other Company Technology and Company Intellectual Property
Rights that, at the relevant time, Company management considered
confidential.  To the Knowledge of the Target Companies, there has been no
unauthorized disclosure of such confidential information.  Except as set forth
in Section 3.11(e) of the Sellers’ Disclosure Schedules, all consultants,
independent contractors, joint inventors, joint authors and other Persons who
have been retained or engaged directly or indirectly (e.g., through a
third-party personnel services agency) by the Acquired Companies to develop,
create, or contribute to the development or creation of material Technology or
material Intellectual Property Rights that have been used in the Business, have
executed Enforceable Contractual Obligations that assign to one of the Acquired
Companies all of such Person’s respective rights, including Intellectual
Property Rights, relating to their work product and to any implementation or use
of such work product in the Business.
 
 
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(f) Effect of Contemplated Transactions on IP Contracts.  Neither the execution
and delivery of this Agreement and the Ancillary Agreements nor the consummation
of the Contemplated Transactions hereby and thereby will trigger a grant of any
rights or licenses with respect to the Company Intellectual Property Rights to
any Person under any IP Contract.
 
(g) Privacy and Data Security. The Acquired Companies’ use and dissemination of
any personally-identifiable information concerning individuals is and has been
in compliance in all material respects with all applicable privacy policies,
terms of use, Legal Requirements, and Contractual Obligations applicable to any
Acquired Company or to which any Acquired Company is or has been bound.  The
Acquired Companies maintain and have maintained policies and procedures
regarding data security and privacy and maintain administrative, technical, and
physical safeguards that are commercially reasonable and, in any event, in
compliance with Privacy Laws and all other applicable Legal Requirements and
Contractual Obligations applicable to any Acquired Company or to which any
Acquired Company is bound. To the Knowledge of the Target Companies, there has
been no: (i) unauthorized disclosure of any third party proprietary or
confidential information in the possession, custody or control of the Acquired
Companies, (ii) breach of any Acquired Companies’ security procedures wherein
confidential information has been disclosed to an unauthorized Person or (iii)
disclosure of a trade secret belonging to any Acquired Company to the detriment
of any Acquired Company.
 
(h) Validity and Enforceability.  Except as disclosed in Section 3.11(h) of the
Sellers’ Disclosure Schedules, each of the Company Intellectual Property Rights
and each item of Company Technology owned by the Acquired Companies is valid and
Enforceable and is not subject to any outstanding Governmental Order, and no
Action or proceeding (including any opposition, interference or re-examination)
is pending or threatened against the Acquired Companies, which challenges the
legality, validity, enforceability, use or ownership of such item; and to the
Knowledge of the Target Companies, there is no such Governmental Order or Action
or proceeding pending or threatened against third-party owners of Company
Technology or Company Intellectual Property Rights of which the Acquired
Companies are licensees.
 
Section 3.12. Legal Compliance; Permits.
 
(a) Legal Compliance.  Except as otherwise disclosed in Section 3.12(a) of the
Sellers’ Disclosure Schedules, no Acquired Company is, in any material respect,
in breach or violation of, or default under, and no Acquired Company has been
since January 1, 2008, in any material respect, in breach or violation of, or
default under, its Organizational Documents or any Legal Requirement applicable
to the Acquired Companies.
 
 
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(b) Permits.  Each Acquired Company has been duly granted all material Permits
necessary for the operation of the Business as it is presently conducted and the
ownership, use and operation of its Assets.  Section 3.12(b) in the Sellers’
Disclosure Schedules describes each material Permit affecting, or relating to,
the Assets or the Business together with the Governmental Authority responsible
for issuing such Permit.  Except as disclosed in Section 3.12(b) of the Sellers’
Disclosure Schedules, (i) the Permits listed or required to be listed thereon
are valid and in full force and effect, (ii) no Acquired Company is, in any
material respect, in breach or violation of, or default under, any such material
Permit and (iii) to the Target Companies’ Knowledge, no fact, situation,
circumstance, condition or other basis exists which, with notice or lapse of
time or both, would constitute a material breach, violation or default under
such Permit or give any Governmental Authority grounds to suspend, revoke or
terminate any such Permit.
 
Section 3.13. Financial Controls.   The Acquired Companies have disclosed, based
on the most recent evaluation prior to the date of this Agreement, to their
auditors and in Section 3.13 of the Sellers’ Disclosure Schedules (i) any
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting that are reasonably likely to
adversely affect in any material respect the Acquired Companies’ ability to
record, process, summarize and report financial information and (ii) any fraud,
whether or not material, that involves any Persons who have a significant role
in the Acquired Companies’ internal controls over financial reporting. As of the
date of this Agreement, no Acquired Company has identified any material
weaknesses in the design or operation of internal controls over financial
reporting.
 
Section 3.14. Tax Matters.
 
(a) Each Acquired Company has timely filed, or has caused to be timely filed on
its behalf, all Tax Returns required to be filed by it in accordance with all
applicable Legal Requirements.  All such Tax Returns were true, correct and
complete in all material respects.  All Taxes owed by each Acquired Company
(whether or not shown on any Tax Return) have been timely paid in full.  No
Acquired Company has ever been required to file any Tax Return with, and has
never been liable to pay any Taxes to, any Governmental Authority outside Canada
and no claim has ever been made by a Governmental Authority in a jurisdiction
where an Acquired Company does not file Tax Returns that such Acquired Company
is or may be subject to taxation by that jurisdiction, and, to the Target
Companies’ Knowledge, there is no basis for any such claim to be made.  There
are no Encumbrances with respect to Taxes upon any Asset other than Permitted
Encumbrances.
 
(b) Each Acquired Company has duly and timely collected, deducted, or withheld
all Taxes required by any applicable Legal Requirement to be collected, deducted
or withheld by it and has duly and timely remitted to the appropriate
Governmental Authority all such Taxes, and each Acquired Company has complied
with all reporting and recordkeeping requirements.
 
(c) There is no pending, or to the Target Companies’ Knowledge threatened, claim
or Action concerning any Acquired Company in respect of Taxes.  No event has
occurred or circumstance exists which may give rise to or serve as a valid basis
for the commencement of any such claim or Action.  There are no matters under
discussion, audit or appeal with any Governmental Authority relating to
Taxes.  All Tax Returns of the Acquired Companies for taxation years ending on
or before July 1, 2010 have been assessed by the relevant Governmental
Authority. The Acquired Companies have delivered to Buyer accurate and complete
copies of all Tax Returns, examination reports, and statements of deficiencies
filed, assessed against, or agreed to by an Acquired Company since January 1,
2007.
 
 
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(d) No Acquired Company has requested, entered into any agreement or other
arrangement, or executed any waiver providing for, any extension of time within
which: (i) to file any Tax Return; (ii) to file any elections, designations or
similar filings relating to Taxes; (iii) it is required to pay or remit any
Taxes or amounts on account of Taxes; or (iv) any Governmental Authority may
assess or collect Taxes.  No Acquired Company has executed any power of attorney
with respect to any Tax, other than powers of attorney that are no longer in
force.  No closing agreements, private letter rulings, technical advice
memoranda or similar agreements or rulings relating to Taxes have been entered
into or issued by any Governmental Authority with or in respect of any Acquired
Company.  No Acquired Company is a party to, or otherwise bound by or subject
to, any tax sharing, allocation or indemnification or similar agreement,
provision or arrangement (whether or not written).
 
(e) The unpaid Taxes of the Acquired Companies (i) did not as of the Most Recent
Balance Sheet Date exceed the reserve for Taxes (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) and (ii) will not exceed that reserve as adjusted (including
on the Interim Financials and the Updated Financials) for the passage of time
through the Closing Date and taken into account in the Final Closing Date
Balance Sheet used for purposes of the Net Working Capital adjustment under
Section 2.05 in accordance with the past custom and practice of the Acquired
Companies in filing their Tax Returns.
 
(f) No Acquired Company has made any payments, or has been or is a party to any
Contractual Obligation that could result in it making payments, that have
resulted or would result, separately or in combination with any other payments,
in the payment of any “excess parachute payment” within the meaning of Code
Section 280G or in the imposition of an excise Tax under Code Section 4999 (or
any corresponding provisions of state, local or foreign Tax law) or that were or
would not be deductible under Code Sections 162 or 404 or that may be required
to be included in the gross income of any service provider to any of the
Acquired Companies or the BT Subsidiaries under Code Section 409(A)(1)(A) or
409A(b).
 
(g) No Acquired Company has ever been a member of an “affiliated group” within
the meaning of Code Section 1504(a) filing a consolidated federal income Tax
Return. No Acquired Company has any liability for the Taxes of any person under
Treas. Reg. Section 1.1502-6 (or any other provision of federal, provincial,
state, local or foreign law), as a transferee or successor, by contract or
otherwise.
 
 
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(h) No Acquired Company is a non-resident of Canada for purposes of the Tax
Act.  Each Acquired Company has, at all relevant times, been and is a taxable
Canadian corporation within the meaning of subsection 89(1) of the Tax Act.   
 
(i) Since June 30, 2010, no Acquired Company has made, amended or revoked any
elections in respect of Taxes except as described in Section 3.14(i) of the
Sellers’ Disclosure Schedule.  No Acquired Company has entered into agreements
contemplated by section 191.3 of the Tax Act.”
 
(j) No Person (other than Buyer) has ever acquired or had the right to acquire
control of any of the Acquired Companies for purposes of the Tax Act.
 
(k) No Acquired Company owns any property of a character, the indirect transfer
of which, pursuant to this Agreement, would give rise to any documentary, stamp,
or other Transfer Tax.
 
(l) None of sections 78, 80, 80.01, 80.02, 80.03 and 80.04 of the Tax Act, or
any equivalent provision of the Laws of any other jurisdiction, has applied or
will apply to the Acquired Companies at any time on or before the Closing.
 
(m) The Acquired Companies have not received any requirement pursuant to section
224 of the Tax Act which remains unsatisfied in any respect.
 
(n) No circumstances exist and no transaction or event or series of transactions
or events has occurred which has resulted or could result in the application,
either before, on or after Closing, of section 17 of the Tax Act to the Acquired
Companies.  Paragraph 214(3)(a) of the Tax Act has not applied as a result of
any transaction or event involving any of the Acquired Companies.  For all
transactions between any of the Acquired Companies and any non-resident Person
with whom it was not dealing at arm’s length during a taxation year commencing
after 1998 and ending on or before the Closing, the Acquired Companies have made
or obtained records or documents that meet the requirements of paragraphs
247(4)(a) to (c) of the Tax Act.
 
(o) The Acquired Companies are duly registered under Part IX of the Excise Tax
Act (Canada) with respect to the goods and services tax and harmonized sales tax
and under Division I of Chapter VIII of Title I of the Act respecting the Quebec
Sales Tax and the registration numbers are: 10057 9697 for Bonnie Togs Limited,
89679 4062 for BTCL and 84375 4391 for TGCC.
 
(p) No Acquired Company has paid a capital dividend prior to the Closing.
 
Section 3.15. Employee Benefit Plans.
 
(a) Section 3.15(a) of the Sellers’ Disclosure Schedules sets out a true,
correct and complete list and, where appropriate, a description, of all
retirement, pension, supplemental pension, savings, retirement savings, retiring
allowance, bonus, profit sharing, stock purchase, stock option, phantom stock,
share appreciation rights, equity, deferred compensation, severance or
termination pay, change of control, life insurance, medical, hospital, dental
care, vision care, welfare-benefit, drug, sick leave, short-term or long-term
disability, salary continuation, unemployment benefit, fringe, dependent care,
legal services, accident, change of control, employment, vacation, incentive,
compensation or other employee benefit plan, program, arrangement, agreement,
policy or practice, whether written or oral, formal or informal, funded or
unfunded, registered or unregistered, insured or self-insured that is maintained
or otherwise contributed to, or required to be contributed to, by or on behalf
of an Acquired Company or to which any Acquired Company is a party for the
benefit of any current, former or retired employee, director, officer,
shareholder, independent contractor or agent of an Acquired Company, other than
government-sponsored pension, employment insurance, workers compensation and
health insurance plans (collectively, the “Company Plans”).
 
 
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(b) Each Company Plan (i) has been maintained in material compliance with its
terms and with the requirements of all applicable Legal Requirements, and (ii)
is in good standing in all material respects with respect of such requirements
and applicable Legal Requirements.  Each Company Plan that is required to be
registered under applicable Legal Requirements is duly registered with the
appropriate Governmental Authorities.
 
(c) All contributions or premiums required to be paid, deducted or remitted and
all obligations required to be performed by an Acquired Company pursuant to the
terms of any Company Plan or by applicable Legal Requirements, have been paid,
deducted, remitted or performed, as the case may be, in all material respects in
a timely fashion and there are no outstanding defaults or material violations
with respect to same.
 
(d) There are no Actions pending or, to the Knowledge of the Target Companies,
threatened with respect to any Company Plans (other than routine claims for
benefits) and no event has occurred or circumstances exist that could reasonably
be expected to result in such a proceeding.
 
(e) No Company Plan is, nor does any Acquired Company contribute to or have any
liability in respect of, a registered pension plan within the meaning of the Tax
Act.
 
(f) The Company has made available to Buyer true, correct and complete copies of
the text of all material Company Plans and any related trust agreements,
insurance contracts or other documents (including all amendments, restatements
or replacements since their establishment) governing those plans, all as amended
to the date of this Agreement, and no fact, condition or circumstances exists or
has occurred since the date of those documents which would materially affect or
change the information contained in them.
 
(g) No promises or commitments have been made by any Acquired Company to amend
any Company Plan, to provide increased benefits or to establish any new benefit
plan, except as required by applicable Legal Requirements or as set out in
Section 3.15(g) of the Sellers’ Disclosure Schedules.
 
(h) Except as set forth in Section 3.15(h) of the Sellers’ Disclosure Schedules,
the transactions contemplated in this Agreement and in any Ancillary Agreement
will not, alone or together with any additional or subsequent event, result in
or require any payment or severance, or the funding acceleration, vesting or
increase in benefits under any Company Plan or any Change of Control Payment to
any current or former employee, director or consultant of an Acquired Company.
 
 
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(i) No Company Plan provides, nor does any Acquired Company have any obligation
to provide, any post-retirement benefits to any current, former or retired
employees of any Acquired Company, other than as required by an applicable Legal
Requirement.
 
(j) Except as set forth in Section 3.15(j) of the Sellers’ Disclosure Schedules,
each of the Company Plans can be amended or terminated without restrictions.
 
(k) No Company Plan is subject to the U.S. Employee Retirement Income Security
Act of 1974 (“ERISA”), including Title IV of ERISA, nor does any Acquired
Company have, or could it reasonably expect to have, any liability under ERISA.
 
Section 3.16. Environmental Matters.  Except as set forth in Section 3.16 of the
Sellers’ Disclosure Schedules, (a) the Acquired Companies and their Predecessors
are, and have been, in compliance in all material respects with all
Environmental Laws, (b) to the Knowledge of the Target Companies there has been
no release or threatened release of any material amount of any Hazardous
Substance on, upon, into or from any site currently or heretofore leased or
otherwise operated or used by an Acquired Company or a Predecessor thereof, (c)
to the Knowledge of the Target Companies, the Acquired Companies have complied
in all material respects with the provisions of the Transportation of Dangerous
Goods Act (Canada) in handling, offering for transport, transporting or
importing any Hazardous Substances which are “dangerous goods” under that Act,
(d) to the Knowledge of the Target Companies there are no underground storage
tanks located on, no PCBs (polychlorinated biphenyls) or PCB-containing
equipment used or stored on, and no hazardous waste as defined by the Resource
Conservation and Recovery Act stored on, any site currently or previously owned,
occupied or operated by an Acquired Company or a Predecessor thereof, except for
the storage of hazardous waste in compliance with Environmental Laws and (e) the
Acquired Companies have delivered to Buyer accurate and complete copies of all
material environmental records, reports, notifications, certificates of need,
permits, pending permit applications, correspondence, engineering studies,
environmental studies or assessments, Certificates of Approval and pending
Certificates of Approval of each Acquired Company, in each case as amended and
in effect.
 
Section 3.17. Contracts.
 
(a) Contracts.  Except as disclosed in Section 3.17 of the Sellers’ Disclosure
Schedules (which is arranged in subsections numbered (i) to (xiv) to correspond
to the subsections of this Section 3.17), no Acquired Company is bound by or a
party to:
 
(i) any Contractual Obligation (or group of related Contractual Obligations) for
the purchase, sale, construction, repair or maintenance of inventory, raw
materials, commodities, supplies, goods, products, equipment or other property,
or for the furnishing or receipt of services other than inventory purchase
orders (not subject to other terms and conditions except as set forth in such
purchase order) in the Ordinary Course of Business substantially in the form
attached hereto as Exhibit G, in each case, the performance of which will extend
over a period of more than one year or which provides for (or would be
reasonably expected to involve) annual payments to or by an Acquired Company in
excess of CAD$100,000 or aggregate payments to or by an Acquired Company in
excess of CAD$100,000;
 
 
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(ii) except for the Contemplated Transactions, any Contractual Obligation
relating to the acquisition or disposition by any Acquired Company of (A) any
business (whether by merger, consolidation or other business combination, sale
of securities, sale of assets or otherwise) or (B) any material Asset (other
than in the Ordinary Course of Business);
 
(iii) any Contractual Obligation concerning or consisting of a partnership,
limited liability company, joint venture or similar agreement;
 
(iv) any Contractual Obligation under which an Acquired Company has permitted
any Asset to become Encumbered (other than by a Permitted Encumbrance);
 
(v) any Contractual Obligation (A) under which an Acquired Company has created,
incurred, assumed or guaranteed any Debt or (B) under which any other Person has
guaranteed any Debt of an Acquired Company;
 
(vi) any Contractual Obligation containing covenants that in any way purport to
(A) restrict any business activity (including the solicitation, hiring or
engagement of any Person or the solicitation of any customer) of any Acquired
Company or any Affiliate thereof or (B) limit the freedom of any Acquired
Company or any Affiliate thereof to engage in any line of business or compete
with any Person;
 
(vii) any Contractual Obligation under which an Acquired Company is, or may
become, obligated to incur any severance pay or Compensation obligations that
would become payable by reason of this Agreement or the Contemplated
Transactions;
 
(viii) any Contractual Obligation under which an Acquired Company is, or may,
have any Liability to any investment bank, broker, financial advisor, finder or
other similar Person (including an obligation to pay any legal, accounting,
brokerage, finder’s, or similar fees or expenses) in connection with this
Agreement or the Contemplated Transactions;
 
(ix) any Employee Material Contractual Obligations with annualized Compensation
in excess of CAD$100,000;
 
(x) any material or exclusive agency, dealer, distributor, sales representative,
marketing or other similar Contractual Obligation;
 
(xi) any outstanding general or special powers of attorney executed by or on
behalf of an Acquired Company;
 
(xii) any Contractual Obligation, other than Real Property Leases relating to
the lease or license of any Asset, including any Technology and Intellectual
Property Rights (and including all customer license and maintenance agreements)
that is not included in Section 3.11(d) of the Sellers’ Disclosure Schedules;
 
 
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(xiii) any Contractual Obligation under which an Acquired Company has advanced
or loaned money to any of its Affiliates or employees other than in the Ordinary
Course of Business; and
 
(xiv) any other Contractual Obligation between an Acquired Company, on the one
hand, and any Seller (or Affiliate or Family Member thereof), on the other hand,
that will continue in effect after the Closing.
 
The Acquired Companies have delivered to Buyer accurate and complete copies of
each written Contractual Obligation listed in Section 3.17 of the Sellers’
Disclosure Schedules, in each case, as amended or otherwise modified and in
effect.  The Acquired Companies have delivered to Buyer a written summary
setting forth all of the material terms and conditions of each oral Contractual
Obligation listed in Section 3.17 of the Sellers’ Disclosure Schedules.
 
(b) Enforceability, etc.  Each Contractual Obligation required to be disclosed
in Sections 3.10(a), 3.11(d), 3.15, 3.17, 3.19, Section 3.21 or Section 3.23 of
the Sellers’ Disclosure Schedules (each, a “Material Company Contract”) is
Enforceable against the applicable Acquired Company and, to the Target
Companies’ Knowledge, each other party to such Contractual Obligation, and is in
full force and effect, and, subject to obtaining any necessary consents
disclosed in Sections 3.03 and 3.04 of the Sellers’ Disclosure Schedules, will
continue to be so Enforceable and in full force and effect on identical terms
following the consummation of the Contemplated Transactions.
 
(c) Breach, etc.  No Acquired Company or, to the Target Companies’ Knowledge,
any other party to any Material Company Contract is in material breach or
violation of, or default under, or has repudiated any material provision of, any
Material Company Contract.
 
Section 3.18. Related Party Transactions.  Except for the matters disclosed in
Section 3.18 of the Sellers’ Disclosure Schedules, no Seller or Affiliate of any
Seller and no officer or director (or equivalent) of any Acquired Company (or,
to the Target Companies’ Knowledge, any Family Member of any such Person who is
an individual or any entity in which any such Person or any such Family Member
thereof owns a material interest): (a) has any material interest in any material
Asset owned or leased by any Acquired Company or used in connection with the
Business or (b) has engaged in any material transaction, arrangement or
understanding with any Acquired Company since the Audited Balance Sheet Date
(other than payments made to, and other Compensation provided to, officers and
directors (or equivalent) in the Ordinary Course of Business).
 
Section 3.19. Customers and Suppliers.  Section 3.19 of the Sellers’ Disclosure
Schedules sets forth a complete and accurate list of (a) the wholesale customers
of the Acquired Companies during the fiscal year 12 month period ended on the
Audited Balance Sheet Date, indicating the Contractual Obligations with each
such customer by product or service provided and (b) the ten largest suppliers
of materials, products or services to the Acquired Companies (measured by the
aggregate amount purchased by the Acquired Companies) during the fiscal year 12
month period ended on the Audited Balance Sheet Date, indicating the Contractual
Obligations for continued supply from each such supplier.  Since the Audited
Balance Sheet Date, except as disclosed in Section 3.19 of the Sellers’
Disclosure Schedules, none of such customers or suppliers has cancelled,
terminated or otherwise materially altered (including any material reduction in
the rate or amount of sales or purchases or material increase in the prices
charged or paid, as the case may be) or, to the Target Companies’ Knowledge,
notified an Acquired Company of any intention to do any of the foregoing or
otherwise threatened in writing to cancel, terminate or materially alter
(including any material reduction in the rate or amount of sales or purchases or
material increase in the prices changed or paid as the case may be) its
relationship with an Acquired Company.
 
 
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Section 3.20. Change of Control Payments.  Except as disclosed in Section 3.20
of the Sellers’ Disclosure Schedules, there are no Change of Control Payments.
 
Section 3.21. Labor Matters.
 
(a) Except for the Contractual Obligations set forth in Section 3.21 of the
Sellers’ Disclosure Schedules with annualized Compensation in excess of
CAD$100,000 (the “Employee Material Contractual Obligations”), no Acquired
Company is a party to, subject to, or affected by:
 
(i) any written employment Contractual Obligations;
 
(ii) any verbal employment Contractual Obligations (for the avoidance of doubt,
not including any statutorily required obligation or any obligation that exists
solely at common law generally applicable to all employees);
 
(iii) any written Contractual Obligations with an individual acting as an
independent or dependant contractor providing services to the Sellers;
 
(iv) any certification orders; or
 
(v) any collective agreements.
 
True, correct and complete copies of the Employee Material Contractual
Obligations have been provided to Buyer, and where such Employee Material
Contractual Obligation are verbal in nature, true, correct and complete
summaries have been provided to Buyer.
 
(b) No Acquired Company has been subject to a certification order and, to the
Knowledge of the Target Companies, no Acquired Company has an employee
association.  To the Knowledge of the Target Companies, there are no ongoing
union certification drives or pending proceedings for certifying a union for any
Acquired Company.
 
(c) Each Acquired Company has performed all of the obligations required to be
performed by it and is entitled to all benefits under, and, to the Knowledge of
the Target Companies, is not alleged to be in default of, any Employee Material
Contractual Obligations. Each of the Employee Material Contractual Obligations
is unamended.  No Acquired Company is in breach of any of its obligations
thereunder and there exists no default or event of default or event, occurrence,
condition or act (including the purchase of the Target Shares) which, with the
giving of notice, the lapse of time or the happening of any other event or
circumstance, would become a breach of, or a default or event of default under,
any Employee Material Contractual Obligation.
 
 
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(d) There has been no Action filed, made or commenced against any Acquired
Company in respect of, concerning or affecting its employees.
 
(e) Each Acquired Company has observed and complied in all material respects
with the provisions of all applicable Legal Requirements respecting employment,
including, but not limited to, applicable Legal Requirements concerning
employment standards, human rights, occupational health and safety, workers’
compensation, labor relations and pay equity.
 
(f) Except as set out in Section 3.21 of the Sellers’ Disclosure Schedules,
there are no Actions, at law or in equity, by any Person (including the Acquired
Companies), nor any Actions by or before (or to the Knowledge of the Target
Companies any investigation by) any Governmental Authority, pending, or, to the
Knowledge of the Target Companies, threatened against or affecting any Acquired
Company, the Business or any of the Assets in respect of employment matters.  No
event has occurred or circumstance exists that may give rise to or serve as a
valid basis for the commencement of any such Action by or against any Acquired
Company in respect of employment matters.  No Acquired Company is subject to any
judgment, order or decree entered in any lawsuit or proceeding nor has any
Acquired Company settled any material claim prior to being sued or prosecuted in
respect of it in respect of employment matters.
 
(g) There are no outstanding or pending decisions, awards or settlements under
any applicable employee or employment Legal Requirement that place any
obligation upon any Acquired Company to do or refrain from doing any act, or
which place a financial obligation upon any Acquired Company.
 
(h) No Acquired Company has received any written remedial order, notice of
offence or conviction under occupational health and safety, pay equity or
employment standard applicable Legal Requirement, except in respect of matters
that have been settled or remedied since the issuance of such order or
notice.  There are no charges or complaints pending, or to the Knowledge of the
Target Companies, threatened with respect to or relating to any Acquired Company
before any Governmental Authority in relation to unlawful employment or unfair
labor practices.  No Acquired Company has received any written notice from any
such Governmental Authority responsible for the enforcement of labor or
employment Legal Requirements of an intention to conduct an investigation of any
Acquired Company or any of its business concerning its employment practices,
wages, hours and terms and conditions of employment and no such investigation
is, to the Knowledge of the Target Companies, threatened.
 
(i) Each Acquired Company has satisfied all of its financial obligations under
any applicable employment-related Legal Requirements that are owed to the
employees and the Governmental Authority having jurisdiction over such matters.
 
(j) Except as set out in Section 3.21 of the Disclosure Schedule, there is no
labor strike, picketing, slow down, work stoppage or lock out, existing, pending
or to the Knowledge of the Target Companies, threatened against or directly or
indirectly affecting the Business, any Acquired Company or any of the operations
of an Acquired Company.  No Acquired Company has experienced any labor strike,
picketing, slowdown, work stoppage, lock out or other collective labor action by
or with respect to its employees in the last five (5) years.
 
 
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Section 3.22. Litigation; Governmental Orders.
 
(a) Litigation.  Except as disclosed in Section 3.22(a) of the Sellers’
Disclosure Schedules, there is no Action to which an Acquired Company is a party
(either as plaintiff or defendant) or to which its Assets are or may be subject
that is pending, or to the Target Companies’ Knowledge, threatened, nor, to the
Target Companies’ Knowledge, is there any reasonable basis for any of the
foregoing.  Except as disclosed in Section 3.22(a) of the Sellers’ Disclosure
Schedules, there is no Action which an Acquired Company presently intends to
initiate.
 
(b) Governmental Orders.  Except as disclosed in Section 3.22(b) of the Sellers’
Disclosure Schedules, no material Governmental Order has been issued that is
applicable to an Acquired Company or its Assets or the Business.
 
(c) Compliance with Securities Laws.  Since September 14, 2005, the Acquired
Companies have been “private issuers” within the meaning of National Instrument
45-106 respecting Prospectus and Registration Exemptions.  All previous
issuance, transfer, redemption, or purchase of shares of the Acquired Companies
were done in accordance with the then applicable securities legislation and the
sale of the Target Shares by Sellers to Buyer will be made in compliance with
all applicable securities legislation.
 
Section 3.23. Insurance.  Section 3.23 of the Sellers’ Disclosure Schedules sets
forth an accurate and complete list of all insurance policies by which the
Acquired Companies, or any of their Assets, employees, officers or directors (or
equivalent) or the Business have been insured since January 1, 2008 (the
“Liability Policies”) and, with respect to such Liability Policies under which
the Acquired Companies, or any of their Assets, employees, officers or directors
(or equivalent) or the Business are currently insured (the “Current Liability
Policies”), their respective expiration dates.  The list includes for each
Liability Policy the type of policy, form of coverage, policy number and name of
insurer.  The Acquired Companies have delivered to Buyer accurate and complete
copies of all Liability Policies, in each case, as amended or otherwise modified
and in effect.  Section 3.23 of the Sellers’ Disclosure Schedules describes any
self-insurance arrangements affecting the Acquired Companies.  The Acquired
Companies maintain and have since January 1, 2008 maintained with nationally
recognized insurers insurance with respect to their Assets, employees, officers
and directors (or equivalent) and the Business, in such amounts and against such
losses and risks as is customarily carried by Persons engaged in the same or
similar business and as is required under the terms of any applicable Real
Property Leases or other Contractual Obligations.  Except as disclosed in
Section 3.23 of the Sellers’ Disclosure Schedules, no insurer (a) has denied or
disputed coverage of any claim pending under any Liability Policy or (b) has
threatened to cancel any Liability Policy.  Except as disclosed in Section 3.23
of the Sellers’ Disclosure Schedules, to the Target Companies’ Knowledge, no
insurer plans to materially increase the premiums for, or materially alter the
coverage under, any Current Liability Policy.  Except as disclosed in Section
3.23 of the Sellers’ Disclosure Schedules, immediately after the Closing, the
Acquired Companies will continue to have coverage under all of the Liability
Policies with respect to events occurring prior to the Closing.
 
 
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Section 3.24. No Brokers.  No Acquired Company has any Liability of any kind to,
or is subject to any claim of, any broker, finder or agent in connection with
the Contemplated Transactions other than those which will be borne by the
Sellers.
 
Section 3.25. Competition Act.  The Acquired Companies do not have (i) assets
located in Canada or (ii) gross revenues from sales in, from or into Canada
that, in the case of either (i) or (ii), in the aggregate exceed CAD$300
million, as determined in accordance with part IX of the Competition Act
(Canada) and the Notifiable Transactions Regulations thereunder.
 
Section 3.26. Pre-Closing Transactions.  The consummation of the Pre-Closing
Transactions has not and will not result in any Liability for Buyer or any of
its Affiliates or the Acquired Companies.
 
Section 3.27. Disclosure.  No representation, warranty or statement contained in
this ARTICLE III or any disclosure schedule furnished by the Acquired Companies
pursuant to this Agreement contains or will contain at Closing any untrue
statement of material fact or omits or will omit at Closing to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
 
ARTICLE IV.
 
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
 
Each individual and corporate Seller severally and not jointly and severally, as
to himself, herself or itself only, hereby represents and warrants to Buyer and
acknowledges and confirms that the Buyer is relying upon the representations and
warranties in connection with the purchase by the Buyer of the Target Shares
that the statements contained in this ARTICLE IV are true, correct and complete
as of the date hereof, and will be true, correct and complete as of the Closing
Date, except as specified to the contrary in the corresponding paragraph of the
Sellers’ Sellers’ Disclosure Schedules.
 
Section 4.01. Organization.  In the case of each Seller that is not an
individual, such Seller is duly organized, validly incorporated and existing in
good standing under the laws of the jurisdiction of its organization.
 
Section 4.02. Power and Authorization.  In the case of each Seller that is not
an individual, the execution, delivery and performance by such Seller of this
Agreement and each Ancillary Agreement to which such Seller is, or will be at
Closing, a party and the consummation of the Contemplated Transactions by such
Seller are within the power and authority of such Seller and, if applicable,
have been duly authorized by such Seller by all necessary action on the part of
such Seller (and its Board of Directors (or equivalent) and holders of its
Equity Interests).  This Agreement and each Ancillary Agreement to which such
Seller is, or will be at Closing, a party (a) have been (or, in the case of
Ancillary Agreements to be entered into at the Closing, will be when executed
and delivered) duly executed and delivered by such Seller and (b) is (or, in the
case of Ancillary Agreements to be entered into at the Closing, will be when
executed and delivered) a legal, valid and binding obligation of such Seller,
Enforceable against such Seller in accordance with its terms.
 
 
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Section 4.03. Authorization of Governmental Authorities.  Except as disclosed in
Section 4.03 of the Sellers’ Disclosure Schedules, no action by (including any
authorization, consent or approval), or in respect of, or filing with, any
Governmental Authority is required for, or in connection with, the valid and
lawful (a) authorization, execution, delivery and performance by such Seller of
this Agreement and each Ancillary Agreement to which such Seller is, or will be
at Closing, a party or (b) consummation of the Contemplated Transactions by such
Seller.
 
Section 4.04. Noncontravention.  Except as disclosed in Section 4.04 of the
Sellers’ Disclosure Schedules, neither the execution, delivery and performance
by such Seller of this Agreement or any Ancillary Agreement to which such Seller
is, or will be at Closing, a party nor the consummation of the Contemplated
Transactions by such Seller will:
 
(a) assuming the taking of all necessary action by (including the obtaining of
each necessary authorization, consent or approval) or in respect of, and the
making of all filings with, Governmental Authorities, in each case, as disclosed
in Section 4.03 of the Sellers’ Disclosure Schedules, violate any provision of
any Legal Requirement applicable to such Seller; or
 
(b) conflict with or result in a breach or violation of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
require any action by (including any authorization, consent or approval) or
notice to any Person, or result in the creation of any Encumbrance upon any
Target Shares of such Seller under, any of the terms, conditions or provisions
of (i) any Governmental Order applicable to or otherwise affecting such Seller
or its assets or properties, (ii) any material Contractual Obligation of such
Seller, or (iii) the Organizational Documents of such Seller (if such Seller is
not an individual) that could affect the consummation of the Contemplated
Transactions or result in any Liability to Buyer or any of its Affiliates or the
Acquired Companies.
 
Section 4.05. Title.  Such Seller is the record and beneficial owner of the
outstanding Equity Interests in the Target Companies set forth opposite such
Seller’s name in Section 4.05 of the Sellers’ Disclosure Schedules, and such
Seller has good and marketable title to such Equity Interests, free and clear of
all Encumbrances.  Such Seller has full right, power and authority to transfer
and deliver to Buyer valid title to the Target Shares held by such Seller, free
and clear of all Encumbrances.  Immediately following the Closing, Buyer will be
the record and beneficial owner of such Target Shares and have good and
marketable title to such Target Shares, free and clear of all Encumbrances
except as are imposed by Buyer.  Except pursuant to this Agreement, there is no
Contractual Obligation pursuant to which such Seller has, directly or
indirectly, granted any option, warrant or other right to any Person to acquire
any Equity Interests in an Acquired Company.  Except as disclosed in Section
4.05 of the Sellers’ Disclosure Schedules, such Seller is not a party to, and
the Equity Interests in the Target Companies set forth opposite such Seller’s
name in Section 4.05 of the Sellers’ Disclosure Schedules are not subject to,
any shareholders agreement, voting agreement, voting trust, proxy or other
Contractual Obligation relating to the transfer or voting of such Equity
Interests.
 
 
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Section 4.06. No Brokers.  No Seller has any Liability of any kind to, or is
subject to any claim of, any broker, finder or agent with respect to the
Contemplated Transactions.
 
Section 4.07. Residence.  Such Seller is not a non-resident of Canada within the
meaning of the Tax Act.
 
ARTICLE V.
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
The Buyer hereby represents and warrants to the Sellers and the Acquired
Companies and acknowledges and confirms that the Sellers and the Acquired
Companies are relying upon the representations and warranties in connection with
the sale by the Sellers of the Target Shares that the statements contained in
this ARTICLE V are true, correct and complete as of the date hereof, and will be
true, correct and complete as of the Closing Date, except as specified to the
contrary in the corresponding paragraph of the attached Buyer Disclosure
Schedules.
 
Section 5.01. Organization.  Each of Buyer and Guarantor duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
 
Section 5.02. Power and Authorization.  The execution, delivery and performance
by Buyer and Guarantor of this Agreement and each Ancillary Agreement to which
Buyer and Guarantor is, or will be at Closing, a party and the consummation of
the Contemplated Transactions by Buyer are within the power and authority of
Buyer and Guarantor and have been duly authorized by all necessary action on the
part of Buyer and Guarantor.  This Agreement and each Ancillary Agreement to
which each of Buyer and Guarantor is, or will be at Closing, a party (a) have
been (or, in the case of Ancillary Agreements to be entered into at the Closing,
will be when executed and delivered) duly executed and delivered by Buyer and
Guarantor and (b) is (or in the case of Ancillary Agreements to be entered into
at the Closing, will be when executed and delivered) a legal, valid and binding
obligation of Buyer and Guarantor, Enforceable against Buyer and Guarantor, as
the case may be, in accordance with its terms.
 
Section 5.03. Authorization of Governmental Authorities.  Except as disclosed in
Section 5.03 of the Buyer Disclosure Schedules, no action by (including any
authorization, consent or approval), or in respect of, or filing with, any
Governmental Authority is required for, or in connection with, the valid and
lawful (a) authorization, execution, delivery and performance by Buyer and
Guarantor of this Agreement and each Ancillary Agreement to which it is, or will
be at Closing, a party or (b) consummation of the Contemplated Transactions by
Buyer.
 
Section 5.04. Noncontravention.  Except as disclosed in Section 5.04 of the
Buyer Disclosure Schedules, neither the execution, delivery and performance by
Buyer and Guarantor of this Agreement or any Ancillary Agreement to which it is,
or will be at Closing, a party nor the consummation of the Contemplated
Transactions will:
 
(a) assuming the taking of any action by (including the obtaining of each
necessary authorization, consent or approval) or in respect of, and the making
of all filings with, Governmental Authorities, in each case, as disclosed in
Section 5.03 of the Buyer Disclosure Schedules, violate any provision of any
Legal Requirement applicable to Buyer; or
 
 
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(b) conflict with or result in a breach or violation of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
require any action by (including any authorization, consent or approval) or
notice to any Person under, any of the terms, conditions or provisions of (i)
any Governmental Order applicable to or otherwise affecting any of Buyer,
Guarantor or their assets or properties, (ii) any material Contractual
Obligation of either Buyer or Guarantor, or (iii) the Organizational Documents
of Buyer or Guarantor.
 
Section 5.05. No Brokers.  None of Buyer, Guarantor or any of their Affiliates
has any Liability of any kind to any broker, finder or agent with respect to the
Contemplated Transactions for which the Sellers could be liable.
 
Section 5.06. Tax Status.  Buyer is a “taxable Canadian corporation” as defined
in section 89(1) of the Tax Act, and is not a non-resident of Canada for the
purposes of the Tax Act.
 
Section 5.07. Buyer Financing.  Buyer has arranged financing, and will have at
Closing sufficient funds to pay the Closing Purchase Price in full in cash in
accordance with the terms of this Agreement.
 
Section 5.08. Investment Canada Act.  The Buyer is a WTO investor within the
meaning of the Investment Canada Act.
 
Section 5.09. Litigation.  There is no Action in progress, pending, or to the
Buyer’s knowledge, threatened against Buyer or Guarantor, which prohibits,
restricts or seeks to enjoin the transactions contemplated by this Agreement.
 
Section 5.10. Competition Act.  The Buyer and its Affiliates do not have (i)
assets located in Canada or (ii) gross revenues from sales in, from or into
Canada that, in the case of either (i) or (ii), in the aggregate exceed CAD$100
million, as determined in accordance with part IX of the Competition Act
(Canada) and the Notifiable Transactions Regulations thereunder.
 
Section 5.11. Disclosure.  No representation, warranty or statement contained in
this ARTICLE V or any disclosure schedule furnished by Buyer pursuant to this
Agreement contains or will contain at Closing any untrue statement of material
fact or omits or will omit at Closing to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
 
ARTICLE VI.
 
COVENANTS OF THE PARTIES
 
Section 6.01. Commercially Reasonable Efforts; Notices and Consents.  Subject to
the terms and conditions of this Agreement, from the date of this Agreement to
the Closing, or the earlier termination of this Agreement pursuant to ARTICLE
IX, each of the parties hereto shall use its commercially reasonable efforts to
take or cause to be taken all actions, to file or cause to be filed all
documents, to give or cause to be given all notices to Governmental Authorities
or other Persons, to obtain or cause to be obtained all authorizations,
consents, waivers, approvals, permits or orders from Governmental Authorities or
other Persons, and to do or cause to be done all other things necessary, proper
or advisable, in order to consummate and make effective the Contemplated
Transactions promptly following the date of this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in ARTICLE VII
and ARTICLE VIII) and to allow the Business to be operated following the Closing
in the same manner as it is operated prior to the Closing.
 
 
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Section 6.02. Operation of the Business.
 
(a) Conduct of the Business Generally.  From the date of this Agreement until
the Closing, or the earlier termination of this Agreement in accordance with
ARTICLE IX, without the prior written consent of Buyer, and with the exception
of the items explicitly provided for in this Agreement, the Target Companies
shall, and the Target Companies shall cause the other Acquired Companies to:
 
(i) conduct the Business only in the Ordinary Course of Business and in all
material respects in accordance with all applicable Legal Requirements;
 
(ii) use commercially reasonable efforts to maintain the value of the Business
as a going concern;
 
(iii) maintain in effect the insurance coverage described in Section 3.23 of the
Sellers’ Disclosure Schedules (or equivalent replacement coverage);
 
(iv) use commercially reasonable efforts to preserve intact its business
organization and relationships with third parties (including lessors, licensors,
suppliers, distributors and customers) and employees;
 
(v) consult with Buyer prior to taking any action or entering into any
transaction that may be of strategic importance to an Acquired Company; and
 
(vi) to take all actions, make all filings and pay all fees necessary to
maintain all material Intellectual Property Rights owned by an Acquired Company.
 
(b) Buyer’s Consent.  Without limiting the generality or effect of Section
6.02(a), from the date of this Agreement until the Closing, or the earlier
termination of this Agreement in accordance with ARTICLE IX, without the prior
written consent of Buyer, the Target Companies shall not, and the Target
Companies shall cause the other Acquired Companies to not, take any of the
following actions:
 
(i) take or omit to take any action that would cause the representations and
warranties in ARTICLE III to be untrue at, or as of any time prior to, the
Closing; and
 
(ii) take or omit to take any action which, if taken or omitted to be taken
between the Audited Balance Sheet Date and the date of this Agreement, would
have been required to be disclosed in Section 3.07 of the Sellers’ Disclosure
Schedules.
 
 
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Section 6.03. Access to Premises and Information.
 
(a) Access.  From the date of this Agreement until the Closing, or the earlier
termination of this Agreement in accordance with ARTICLE IX, the Target
Companies shall, and shall cause the other Acquired Companies to, permit Buyer
and its Representatives to have full access (at reasonable times and upon
reasonable notice) to all Representatives of the Acquired Companies and to all
premises, properties (including for the purposes of environmental inspection),
books, records (including Tax records), contracts, financial and operating data
and other information and documents of, or pertaining to, the Acquired
Companies, the Assets or the Business, and to make copies of such books,
records, contracts, data, information and documents as Buyer or its
Representatives may reasonably request.
 
(b) Updated Financials.  The Target Companies shall prepare and furnish to
Buyer, promptly after becoming available and in any event within ten (10) days
of the end of each calendar month, the unaudited consolidated balance sheet of
the Acquired Companies, and the related unaudited consolidated statement of
income, cash flow and changes in stockholders’ equity of the Acquired Companies
(the “Updated Financials”) for each month following the Most Recent Balance
Sheet Date through the Closing Date.
 
Section 6.04. Notice of Developments.  From the date of this Agreement until the
Closing, the Target Companies and the Sellers will give Buyer prompt written
notice upon becoming aware of any development that constitutes a Material
Adverse Effect, or any event or circumstance that could reasonably be expected
to result in a breach of, or inaccuracy in, any of the Target Companies’ or the
Sellers’ representations and warranties; provided, however, that no such
disclosure will be deemed to prevent or cure any such breach of, or inaccuracy
in, amend or supplement any Schedule to, or otherwise disclose any exception to,
any of the representations and warranties set forth in this Agreement.
 
Section 6.05. Exclusivity.  From the date of this Agreement until the Closing,
or the earlier termination of this Agreement in accordance with ARTICLE IX,
neither the Target Companies nor any Seller shall (and the Target Companies and
Sellers shall not cause or permit their respective Affiliates or any of their or
their Affiliates’ Representatives to) directly or indirectly: (a) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to, or enter into or consummate any transaction relating to, the
acquisition of any Equity Interests in the Acquired Companies or any merger,
recapitalization, share exchange, sale of Assets (other than sales of inventory
in the Ordinary Course of Business) or any similar transaction or any other
alternative to the Contemplated Transactions or (b) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner, any effort or
attempt by any Person to do or seek any of the foregoing.  None of the Sellers
shall vote their Target Shares in favor of any such acquisition structured as a
merger, consolidation, share exchange or otherwise.  The Target Companies and
the Sellers shall notify Buyer immediately if any Person makes any proposal,
offer, inquiry or contact with respect to any of the foregoing (whether
solicited or unsolicited).
 
Section 6.06. Expenses.  Subject to Section 11.05 (relating to Transfer Taxes),
each party will pay its own respective financial advisory, legal, accounting and
other expenses by it or for its benefit in connection with the preparation and
execution of this Agreement and the Ancillary Agreements, the compliance
herewith and therewith and the Contemplated Transactions; provided, that all
Seller Transaction Expenses incurred by the Acquired Companies will be borne by
the Sellers and none of Buyer’s expenses incurred prior to the Closing shall be
borne by the Acquired Companies.
 
 
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Section 6.07. Confidentiality.  Each Seller acknowledges that the success of the
Acquired Companies after the Closing depends upon the continued preservation of
the confidentiality of certain information possessed by such Seller, that the
preservation of the confidentiality of such information by such Seller is an
essential premise of the bargain between the Sellers and Buyer, and that Buyer
would be unwilling to enter into this Agreement in the absence of this Section
6.07.  Accordingly, each Seller hereby severally agrees with Buyer that such
Seller, its Affiliates and its and its Affiliate’s Representatives shall not,
and that such Seller shall cause its Affiliates and such Representatives not to,
at any time on or after the Closing Date, directly or indirectly, without the
prior written consent of Buyer, disclose or use, any information involving or
relating to the Business or any Acquired Company (other than in the case of a
Seller that is a director, officer or employee of an Acquired Company, in the
course of fulfilling his or her duties to the Acquired Companies in such
capacity) including any information obtained pursuant to Section 6.12 hereunder;
provided, that the information subject to this Section 6.07 will not include any
information generally available to, or known by, the public (other than as a
result of disclosure in violation hereof); provided, further, that the
provisions of this Section 6.07 will not prohibit any disclosure or retention of
copies of records (A) required by any applicable Legal Requirement so long as
reasonable prior notice is given to Buyer and the Target Companies of such
disclosure and a reasonable opportunity is afforded Buyer and the Acquired
Companies to contest the same or (B) made in connection with the enforcement of
any right or remedy relating to this Agreement or the Contemplated
Transactions.  Each Seller agrees that it shall be responsible for any breach or
violation of the provisions of this Section 6.07 by any of its Affiliates or its
or its Affiliates’ Representatives.
 
Section 6.08. Publicity.  No public announcement or disclosure (including any
general announcement to employees, customers or suppliers) will be made by any
party with respect to the subject matter of this Agreement or the Contemplated
Transactions without the prior written consent of Buyer, the Target Companies
and the Sellers’ Representative; provided, that the provisions of this Section
6.08 shall not prohibit (a) any disclosure required by any applicable Legal
Requirements (in which case the disclosing party will provide the other parties
with the opportunity to review and comment in advance of such disclosure), (b)
any disclosure made in connection with the enforcement of any right or remedy
relating to this Agreement or any Ancillary Agreement or the Contemplated
Transactions, or (c) any disclosure of any information that is already in the
public domain.  Notwithstanding the foregoing, without the prior written consent
of the Sellers, Buyer (w) may issue a press release announcing the signing of
this Agreement, (x) may file a Form 8-K or make any other filing with any
regulatory authority required to comply with applicable Legal Requirements, (y)
may communicate information that is not confidential to any Seller with
financial analysts, investors and media representatives in a manner consistent
with its past practice in compliance with applicable Legal Requirements and each
of Buyer and Sellers (z) may disseminate material substantially similar to
material included in any press release or other document previously approved for
external distribution by the Sellers’ Representative.
 
 
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Section 6.09. Noncompetition and Nonsolicitation.
 
(a) For a period commencing (i) on the Closing Date and continuing through the
fourth anniversary of the Closing Date, none of the Sellers shall, or shall
permit, cause or encourage any of their Affiliates to, engage directly or
indirectly, as an owner, employee, consultant or otherwise, in any business that
is competitive with all or any portion of the Business in Canada as it is
conducted, or proposed to be conducted by Buyer, on the Closing Date and (ii) on
the calendar day immediately following the fourth anniversary of the Closing
Date and continuing through the fifth anniversary of the Closing Date, none of
the Sellers shall, or shall permit, cause or encourage any of their Affiliates
to, engage directly or indirectly, as an owner, employee, consultant or
otherwise, in all or any portion of a Competitive Business in Canada; provided,
that in each of clauses (i) and (ii) no owner of less than 5% of the outstanding
stock of any publicly-traded corporation will be deemed to be so engaged solely
by reason thereof in the Business.  For a period commencing on the Closing Date
and continuing through the second anniversary of the Closing Date, the Sellers
shall not, and shall not permit, cause or encourage any of their Affiliates to,
recruit, offer employment, employ, engage as a consultant, lure or entice away,
or in any other manner persuade or attempt to persuade, any Person who is an
employee of any of the Acquired Companies to leave the employ of the Acquired
Companies, provided that this shall not prohibit any general solicitation of
employees in a newspaper or other publication of general circulation.  In the
event that any Seller violates any of the foregoing noncompetition or
nonsolicitation provisions, the applicable time limitations shall be deemed to
be extended by an amount equal to the duration of any such non-compliance.  Each
Seller acknowledges that such Seller has carefully read this Agreement,
including this Section 6.09(a), and has given careful consideration to the
restraints imposed upon such Seller by this Section 6.09(a) and is in full
accord as to the necessity of such restraints for the reasonable and proper
protection of the Business of Buyer, the Acquired Companies and their respective
Affiliates.  Each Seller further acknowledges and agrees that each and every
restraint imposed by this Section 6.09(a) is reasonable with respect to subject
matter, time period and geographical area, and that the Sellers’ agreement to be
bound by the provisions of this Section 6.09(a) is a material inducement to the
Buyer to enter into this Agreement.
 
(b) At the request of any of the Sellers, the Sellers and the Buyer shall
execute and deliver an election in the prescribed form (or if a prescribed form
is not available, in such other manner as is acceptable to the Canada Revenue
Agency) and on a timely basis to apply proposed paragraph 56.4(3)(c) (the
“Proposed Legislation”) of the Tax Act (and pursuant to any similar provincial
legislation) in respect of the transactions contemplated by this Agreement, to
the extent that the applicable Sellers and the Buyer determine that such
election is available pursuant to the Proposed Legislation or any final
legislation implementing, amending or replacing the Proposed Legislation.  The
Sellers shall deliver a draft of such election to the Buyer at least 30 days
prior to the date such election is required to be filed and the Buyer shall be
entitled to comment upon and to make reasonable changes to such election prior
to it being filed.  Notwithstanding the foregoing, the Buyer shall not be
required to execute or deliver any such election if as a result of making such
election the Buyer would incur any Tax Liability or if the cost to the Buyer of
the Target Shares acquired under this Agreement would, for purposes of the Tax
Act, be reduced in whole or in part. The Sellers and the Buyer agree that the
election shall be filed with the Canada Revenue Agency in the manner specified
under the Proposed Legislation or otherwise in accordance with the Tax Act. If
the Canada Revenue Agency determines that any additional amount is received or
receivable by the Sellers or by a person that does not deal with the Sellers at
arm’s length for purposes of the Tax Act in respect of a “restrictive covenant”
as that term is defined in the Proposed Legislation, and the Sellers accept such
determination, then such amount shall be subject to such election and the
Sellers and the Buyer will take all necessary actions to amend or revise such
election accordingly.
 
 
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Section 6.10. Repayment of Related Party Debt.  At or before the Closing, each
Seller shall, and shall cause each of its Affiliates, to satisfy all Liabilities
such Seller or its Affiliates have to any Acquired Company in respect of any
Debt.
 
Section 6.11. Further Assurances.  From and after the Closing Date, upon the
request of either the Sellers’ Representative, Buyer or any Acquired Company,
each of the parties hereto shall do, execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances and other
instruments and papers as may be reasonably required or appropriate to carry out
the Contemplated Transactions.  None of the Sellers shall take any action that
is designed or intended to have the effect of discouraging any lessor, licensor,
supplier, distributor or customer of an Acquired Company or other Person with
whom an Acquired Company has a relationship from maintaining the same
relationship with the Acquired Company after the Closing as it maintained prior
to the Closing.  Each Seller shall refer all customer inquiries arising out of
or relating to the Contemplated Transactions to Buyer from and after the
Closing.  
 
Section 6.12. Access.  During the Earnout Period, the Sellers’ Representative
shall have access to the Books and Records relating to the Canadian Operations
and the calculation of Target Earnings and shall be entitled to, or to appoint a
representative to, inspect and make copies (at their own expense) of such Books
and Records during normal business hours and upon reasonable notice for the
purposes of auditing the calculations of the Milestone Payments and Earnout
Payment.
 
Section 6.13. Directors and Officers Indemnification.  During the Earnout Period
and for a period of 2 years after the Earnout Period, Buyer shall not, and shall
not permit the Acquired Companies, or any successor or assign by amalgamation or
otherwise, to amend, repeal or modify any provision in their articles of
incorporation or by-laws relating to the exculpation or indemnification of any
current or former officer or director in any manner that would adversely affect
their rights thereunder (unless required by law).  It is the parties’ intent
that the officers and directors of the Acquired Companies continue to be
entitled to such exculpation and indemnification to the fullest extent of the
law with respect to any act or omission occurring prior to the Closing.  If the
Acquired Companies or any successor or assign (i) consolidates or amalgamates
with or merges into any other Person or (ii) transfers all or substantially all
of its properties and assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of the Acquired
Companies assume all of the obligations set forth in this Section 6.13.  This
Section 6.13 is intended for the benefit of, and is enforceable by, each current
and former officer and director of the Acquired Companies and his or her heirs,
executors and representatives, and are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such Person
may have had by contract or otherwise.
 
 
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Section 6.14. Equity Grants.  At the first Parent Board of Directors meeting
held after the Closing Date, Buyer will cause the equity grants described in
Schedule 6.14 to be presented to the Parent compensation committee for
approval.  Promptly following approval of such equity grants and execution of
all documents reasonably required by Parent in connection therewith, Buyer will
cause such equity grants to be delivered to the recipients set forth on Schedule
6.14.
 
ARTICLE VII.
 
CONDITIONS TO THE OBLIGATIONS
 
OF BUYER AT THE CLOSING.
 
The obligations of Buyer to consummate the Contemplated Transactions is subject
to the fulfillment, or, to the extent permitted by law, waiver by Buyer, of each
of the following conditions:
 
Section 7.01. Representations and Warranties.  The representations and
warranties of the Target Companies and the Sellers contained in (a) this
Agreement (other than those contained in Sections 3.01 (second sentence only),
3.02(a), 3.04(b)(iii), 3.05, Section 3.07(v), 4.01, 4.02 and 4.05) (i) that are
not qualified by materiality, Material Adverse Effect, substantial compliance or
a similar materiality qualifier will be true and correct in all material
respects both when made and at the Closing with the same force and effect as if
made as of the Closing Date, other than such representations and warranties that
expressly speak only as of a specific date or time, which will be true and
correct in all material respects as of such specified date or time and (ii) that
are qualified by materiality, Material Adverse Effect, substantial compliance or
a similar materiality qualifier will be true and correct in all respects both
when made and at the Closing with the same force and effect as if made as of the
Closing Date, other than such representations and warranties that expressly
speak only as of a specific date or time, which will be true and correct as of
such specified date or time and (b) Sections 3.01 (second sentence only),
3.02(a), 3.04(b)(iii), 3.05, Section 3.07(v), 4.01, 4.02 and 4.05) of this
Agreement will be true and correct in all respects both when made and at the
Closing with the same force and effect as if made as of the Closing Date, other
than such representations and warranties that speak only as of a specific date
or time, which will be true and correct in all respects as of such specified
date or time.
 
Section 7.02. Performance.  The Target Companies and each Seller will have
performed and complied with in all material respects, with all agreements,
obligations and covenants contained in this Agreement that are required to be
performed or complied with by them at or prior to the Closing.
 
Section 7.03. Delivery of Securities; Instruments of Transfer;
Acknowledgments.  Each of the Sellers will have delivered to Buyer a certificate
or certificates, duly endorsed (or accompanied by one or more duly executed
transfer powers) evidencing all of the Target Shares to be transferred to Buyer
hereunder by such Seller.
 
Section 7.04. Delivery of Closing Certificates.  The Target Companies and the
Sellers shall have delivered to Buyer the following:
 
(a) Secretary Certificate:  A certificate from each Target Company, in form
reasonably acceptable to Buyer, dated as of the Closing Date, signed by the
respective Secretaries of the Acquired Companies certifying as to (i) the names
and incumbency of each of the officers of such Target Company executing this
Agreement or any Ancillary Agreement, (ii) the Organizational Documents of such
Target Company and each of its Subsidiaries and (iii) all resolutions adopted by
the respective Boards of Directors of such Target Company in connection with
this Agreement and the Contemplated Transactions;
 
 
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(b) Bring-Down Certificate:  A certificate dated as of the Closing Date, in form
reasonably acceptable to Buyer, signed by each Seller certifying as to the
conditions set forth in Sections 7.01, 7.02, 7.05, 7.06 and Section 7.13; and
 
(c) Certificates of Status.  Certificates of status with respect to each of the
Acquired Companies issued by the relevant Governmental Authorities of the
Acquired Companies’ respective jurisdictions of organization, each as of a
recent date.
 
Section 7.05. Qualifications.  No provision of any applicable Legal Requirement
and no Governmental Order will prohibit the consummation of any of the
Contemplated Transactions.
 
Section 7.06. Absence of Litigation.  No Action will be pending or threatened
which seeks a Governmental Order, nor will there be any Governmental Order in
effect, (a) which would prevent consummation of any of the Contemplated
Transactions, (b) which would result in any of the Contemplated Transactions
being rescinded following consummation, (c) which would limit or otherwise
adversely affect the right of any Buyer (or any Affiliate thereof) to own the
Target Shares (including the right to vote the Target Shares), to control the
Acquired Companies, or to operate all or any portion of the Business or Assets
or any portion of the business or assets of Buyer or any of its Affiliates or
(d) would compel any Buyer or any of its Affiliates to dispose of all or any
portion of either the Business or Assets or the business or assets of any Buyer
or any of its Affiliates.
 
Section 7.07. Consents, etc.  All actions by (including any authorization,
consent, waiver or approval) or in respect of (including notice to), or filings
with, any Governmental Authority or other Person that are required to consummate
the Contemplated Transactions and the Pre-Closing Transactions, as disclosed in
Schedule 7.07, will have been obtained or made, in a manner reasonably
satisfactory in form and substance to Buyer, and no such authorization, consent,
waiver or approval will have been revoked.
 
Section 7.08. Cancellation of Certain Agreements; Releases.  Each of the
Contractual Obligations listed on Schedule 7.08 will have been terminated
effective upon Closing pursuant to documents in form and substance satisfactory
to Buyer and its counsel and each of the Sellers shall have delivered to Buyer a
release in the form attached here as Exhibit H.
 
Section 7.09. Ancillary Agreements.  Each of the Ancillary Agreements will have
been executed and delivered to Buyer by each of the other parties thereto.
 
Section 7.10. Resignations.  Buyer will have received the resignations,
effective as of the Closing, of each officer and director of the Acquired
Companies, other than any continuing officers and directors whom Buyer will have
specified to the Acquired Companies in writing at least two (2) Business Days
prior to the Closing.
 
 
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Section 7.11. Payoff Letters and Lien Releases, etc.  The Acquired Companies
will have obtained and delivered to Buyer customary payoff letters and lien
release documentation reasonably satisfactory to Buyer and its counsel and
lenders relating to the repayment of all Debt to be repaid at the Closing and
the termination of all Encumbrances, other than Permitted Encumbrances or those
Encumbrances scheduled on Schedule 7.11, on any Assets securing any such Debt.
 
Section 7.12. Closing Payment Certificate.  At least two Business Days prior to
the Closing, Sellers’ Representative will have furnished to Buyer a certificate
(the “Closing Payment Certificate”), signed by the Acquired Companies and each
of the Sellers, which sets forth, with reasonable specificity, the Estimated
Closing Purchase Price, each Person entitled to a payment in respect of the
Seller Transaction Expenses or the Closing Debt Amount, the amount due to such
Person and the applicable wire instructions for the account or accounts of such
Person designated to receive such payment.
 
Section 7.13. No Material Adverse Change.  Since the Audited Balance Sheet Date,
there will not have occurred or arisen any events, changes, facts, conditions or
circumstances, nor will there exist any events, changes, facts, conditions or
circumstances, which individually or in the aggregate have resulted in or would
reasonably be expected to result in a Material Adverse Effect.
 
Section 7.14. Modification of Employment Terms.  The Company Plans listed on
Schedule 7.14 shall have been modified in form and substance satisfactory to
Buyer.
 
Section 7.15. Pre-Closing Transactions Documentation.  The documentation to
effect the Pre-Closing Transactions shall have been provided to Buyer not less
than fifteen (15) calendar days prior to the Closing and shall, in its final
form, reflect all reasonable comments of and changes requested by the Buyer.
 
ARTICLE VIII. 
 
CONDITIONS TO THE SELLERS’ OBLIGATIONS AT THE CLOSING.
 
The obligations of the Sellers to consummate the Contemplated Transactions is
subject to the fulfillment, or, to the extent permitted by law, waiver by the
Sellers’ Representative (who shall act for all the Sellers for such purposes) of
each of the following conditions:
 
Section 8.01. Representations and Warranties.  The representations and
warranties of Buyer contained in (a) this Agreement (other than those contained
in Sections 5.01, 5.02 and 5.04(b)(iii)) (i) that are not qualified by
materiality will be true and correct in all material respects both when made and
at the Closing with the same force and effect as if made as of the Closing Date
and (ii) that are qualified by materiality will be true and correct in all
respects both when made and as at the Closing with the same force and effect as
if made as of the Closing Date, in each case, other than representations and
warranties that expressly speak only as of a specific date or time, which will
be true and correct (or true and correct in all material respects, as
applicable) as of such specified date or time and (b) Sections 5.01, 5.02 and
5.04(b)(iii)) of this Agreement will be true and correct in all respects both
when made and at the Closing with the same force and effect as if made as of the
Closing Date, other than such representations and warranties that speak only as
of a specific date or time, which will be true and correct in all respects as of
such specified date or time.
 
 
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Section 8.02. Performance.  Buyer will have performed and complied with, in all
material respects, all agreements, obligations and covenants contained in this
Agreement that are required to be performed or complied with by Buyer at or
prior to the Closing.
 
Section 8.03. Delivery of Closing Certificates.   Buyer shall have delivered the
Sellers’ Representative the following:
 
(a) Secretary Certificate:  A certificate from Buyer, in form reasonably
acceptable to the Sellers’ Representative, dated as of the Closing Date, signed
by a duly authorized representative of Buyer certifying as to (i) the names and
incumbency of each of the officers of Buyer executing this Agreement or any
Ancillary Agreement, (ii) the Organizational Documents of such Buyer and (iii)
all resolutions adopted by the Boards of Directors of Buyer in connection with
this Agreement and the Contemplated Transactions;
 
(b) Bring-Down Certificate:  A certificate addressed to the Sellers in form
reasonably acceptable to the Sellers’ Representative dated as of the Closing
Date and signed by a duly authorized representative of Buyer certifying as to
the conditions set forth in Sections 8.01, 8.02, 8.04 and 8.05; and
 
(c) Certificates of Status.  A certificate of status with respect to Buyer
issued by the relevant Governmental Authority of the jurisdiction of
organization as of a recent date.
 
Section 8.04. Qualifications.  No provision of any applicable Legal Requirement
and no Governmental Order will prohibit the consummation of any of the
Contemplated Transactions.
 
Section 8.05. Absence of Litigation.  No Action will be pending or threatened
which seeks a Governmental Order, nor will there be any Governmental Order in
effect, (a) which would prevent consummation of any of the Contemplated
Transactions or (b) which would result in any of the Contemplated Transactions
being rescinded following consummation.
 
Section 8.06. Ancillary Agreements.  Each of the Ancillary Agreements to which
the Sellers or the Sellers’ Representative are party will have been executed and
delivered to the Sellers’ Representative by each of the other parties thereto
(other than the Acquired Companies, the Sellers, and the Sellers’
Representative).
 
Section 8.07. Pre-Closing Transactions.  The Sellers will have completed the
Pre-Closing Transactions described in Exhibit D, provided this condition shall
be deemed satisfied upon the earlier to occur of (i) such completion of the
Pre-Closing Transactions or (ii) June 17, 2011.
 
ARTICLE IX.  
 
TERMINATION
 
Section 9.01. Termination of Agreement.  This Agreement may be terminated and
the Contemplated Transactions may be abandoned at any time prior to the Closing:
 
 
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(a) by mutual written consent of Buyer and the Sellers’ Representative;
 
(b) by either Buyer or the Sellers’ Representative if a final nonappealable
Governmental Order permanently enjoining or otherwise prohibiting the
Contemplated Transactions has been issued by a Governmental Authority of
competent jurisdiction;
 
(c) by either Buyer or the Sellers’ Representative if the Closing has not
occurred on or before 5:00 p.m., New York City time, on August 31, 2011 which
date may be extended from time to time by mutual written consent of Buyer and
the Sellers’ Representative (such date, as so extended from time to time, the
“Termination Date”); provided, that the right to terminate this Agreement under
this Section 9.01(c) shall not be available to Buyer if the failure of Buyer to
fulfill or breach by Buyer of any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date and shall not be available to the Sellers’ Representative if the failure of
the Target Companies or any Seller to fulfill or breach by the Target Companies
or any Seller of any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date and
time;
 
(d) by the Sellers’ Representative if (i) any of the representations and
warranties of Buyer contained in this Agreement fail to be true and correct such
that the condition set forth in Section 8.01 would not be satisfied, or (ii)
Buyer shall have breached or failed to comply with any of its obligations under
this Agreement such that the condition set forth in Section 8.02 would not be
satisfied (in either case, other than as a result of a material breach by the
Target Companies or any Seller of any of its obligations under this Agreement)
and such failure or breach with respect to any such representation, warranty or
obligation cannot be cured or, if curable, shall continue unremedied for a
period of twenty (20) days after Buyer has received written notice from the
Sellers’ Representative of the occurrence of such failure or breach (provided,
that in no event shall such twenty (20) day period extend beyond the Termination
Date); or
 
(e) by Buyer if (i) any of the representations and warranties of the Target
Companies or any Seller contained in this Agreement fail to be true and correct
such that the condition set forth in Section 7.01 would not be satisfied, or
(ii) the Target Companies or any Seller shall have breached or failed to comply
with any of its obligations under this Agreement such that the condition set
forth in Section 7.02 would not be satisfied (in either case, other than as a
result of a material breach by Buyer of any of its obligations under this
Agreement) and such failure or breach with respect to any such representation,
warranty or obligation cannot be cured or, if curable, shall continue unremedied
for a period of twenty (20) days after the Sellers’ Representative has received
written notice from Buyer of the occurrence of such failure or breach
(provided,  that in no event shall such twenty (20) day period extend beyond the
Termination Date).
 
Any party desiring to terminate this Agreement shall give written notice of such
termination to the other parties.
 
Section 9.02. Effect of Termination.  In the event of a termination of this
Agreement pursuant to Section 9.01, this Agreement (other than the provisions of
this ARTICLE IX and Section 6.06 (Expenses), Section 6.07 (Confidentiality),
Section 6.08 (Publicity), Section 12.10 (Governing Law), Section 12.11
(Jurisdiction; Venue; Service of Process) and Section 12.12 (Waiver of Jury
Trial) which shall survive such termination) shall then be null and void and
have no further force and effect and all other rights and liabilities of the
parties hereunder will terminate without any liability of any party to any other
party, except for liabilities arising in respect of material breaches under this
Agreement by any party prior to such termination.
 
 
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 ARTICLE X. 
 
INDEMNIFICATION.
 
Section 10.01. Indemnification by the Sellers.
 
(a) Indemnification.  Subject to the limitations set forth in this ARTICLE X,
from and after the Closing, each Seller shall severally and not jointly and
severally in accordance with their respective Pro Rata Percentages (or in the
case of clauses (iv) and (v) below, severally and solely as to itself) indemnify
and hold harmless Buyer, Guarantor and their Affiliates (including, following
the Closing, each Acquired Company), and the Representatives, Affiliates,
successors and assigns of each of the foregoing Persons (each, a “Buyer
Indemnified Person”), from, against and in respect of any and all Actions,
Liabilities, Governmental Orders, Encumbrances, losses, damages, bonds, dues,
assessments, fines, penalties, Taxes, fees, costs (including costs of
investigation, defense and enforcement of this Agreement), expenses or amounts
paid in settlement (in each case, including reasonable attorneys’ and experts’
fees and expenses), whether or not involving a Third Party Claim (collectively,
“Losses”), incurred, accrued or suffered by Buyer Indemnified Persons or any of
them as a result of, arising out of or relating to, directly or indirectly:
 
(i) any fraud or intentional misrepresentation on the part of any Acquired
Company (or any Affiliate or Representative thereof);
 
(ii) any breach of, or inaccuracy in, any representation, warranty or statement
made by or on behalf of any Acquired Company in this Agreement, any Ancillary
Agreement or in any Schedule or certificate delivered by or on behalf of any
Acquired Company pursuant to this Agreement (in each case, assuming that all
qualifications contained in this Agreement, each Ancillary Agreement and each
such Schedule or certificate as to materiality, including each qualifying
reference to the defined term “Material Adverse Effect”, the words “material”
and “materially” and all similar phrases and words were deleted therefrom);
 
(iii) any breach or violation of any covenant or agreement of any Acquired
Company to the extent required to be performed or complied with by such Acquired
Company at or prior to the Closing in or pursuant to this Agreement or any
Ancillary Agreement;
 
(iv) any fraud or intentional misrepresentation on the part of such Seller (or
any Affiliate (other than any Acquired Company) or Representative thereof);
 
(v) any breach of, or inaccuracy in, any representation, warranty or statement
made by or on behalf of such Seller in this Agreement, any Ancillary Agreement
or in any Schedule or certificate delivered by or on behalf of such Seller
pursuant to this Agreement (in each case, assuming that all qualifications
contained in this Agreement, each Ancillary Agreement and each such Schedule or
certificate as to materiality, including each qualifying reference to the
defined term “Material Adverse Effect”, the words “material” and “materially”
and all similar phrases and words were deleted therefrom);
 
 
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(vi) any breach or violation of any covenant or agreement of such Seller
(including under this ARTICLE X) in or pursuant to this Agreement or any
Ancillary Agreement; or
 
(vii) any unpaid Seller Transaction Expenses that (a) remain unpaid immediately
following the Closing and (b) are not taken into account in determining the
Closing Purchase Price pursuant to Section 2.05(e);
 
(viii) any portion of the Closing Debt Amount that (a) remains unpaid
immediately following the Closing and (b) is not taken into account in
determining the Closing Purchase Price pursuant to Section 2.05(e); or
 
(ix) any matters set forth on Schedule 10.01(a)(ix).
 
Notwithstanding anything to the contrary in this Agreement, Paul Rubinstein
shall be jointly and severally liable with Seller Newco in respect of all
obligations of Seller Newco under this Agreement and in connection with the
Contemplated Transactions.
 
(b) Monetary Limitations.  The Sellers will have no obligation to indemnify
Buyer Indemnified Persons pursuant to Section 10.01(a)(ii) and Section
10.01(a)(v) in respect of Losses arising from the breach of, or inaccuracy in,
any representation, warranty or statement described therein unless and until the
aggregate amount of all such Losses incurred or suffered by the Buyer
Indemnified Persons exceeds Four Hundred Fifty Thousand Dollars (CAD$450,000)
(the “Basket Amount”), in which case the Buyer Indemnified Persons shall be
entitled to indemnification for all such Losses in excess of the Basket Amount,
and the Sellers’ aggregate liability in respect of claims for indemnification
pursuant to Section 10.01(a)(ii) and Section 10.01(a)(v) will not exceed an
amount equal to twenty percent (20%) of the Adjusted Purchase Price and each
Sellers’ aggregate liability in respect of claims for indemnification pursuant
to Section 10.01(a)(ii) and Section 10.01(a)(v) will not exceed the lesser of
(i) such Seller’s Pro Rata Percentage of the Losses being claimed and (ii) such
Seller’s Pro Rata Percentage of an amount equal to twenty percent (20%) of the
Adjusted Purchase Price; provided, that the foregoing limitations will not apply
to claims for indemnification pursuant to Section 10.01(a)(ii) and Section
10.01(a)(v) in respect of breaches of, or inaccuracies in, the representations
and warranties set forth in Section 3.01 (Organization), Section 3.02 (Power and
Authorization), Section 3.04(b) (Breach of Organizational Documents), Section
3.05 (Capitalization), Section 3.07(l) (Absence of Certain Developments Related
to Taxes), Section 3.08 (Debt), Section 3.23 (No Brokers), Section 3.26
(Pre-Closing Transactions), Section 4.01 (Organization), Section 4.02 (Power and
Authorization), Section 4.04(b) (Breach of Organizational Documents), Section
4.05 (Title) and Section 4.06 (No Brokers) (or as such representations and
warranties are repeated or confirmed in the certificate delivered at Closing
pursuant to Section 7.04(b)) (collectively, the “Seller Fundamental
Representations”) and those set forth in Section 3.14 (Tax Matters).  Claims for
indemnification pursuant to any other provision of Section 10.01(a) are not
subject to the monetary limitations set forth in this Section 10.01(b).
 
 
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Section 10.02. Indemnification by Buyer.
 
(a) Indemnification.  Subject to the limitations set forth in this ARTICLE X,
from and after the Closing, Buyer shall indemnify and hold harmless each of the
Sellers and each of their respective Affiliates (including, prior to the Closing
only, each Acquired Company), and the Representatives, Affiliates, successors
and assigns of each of the foregoing Persons (each, a “Seller Indemnified
Person”), from, against and in respect of any and all Losses incurred or
suffered by the Seller Indemnified Persons or any of them as a result of,
arising out of or relating to, directly or indirectly:
 
(i) any fraud or intentional misrepresentation on the part of Buyer (or any
Affiliate or Representative thereof);
 
(ii)  any breach of, or inaccuracy in, any representation, warranty or statement
made by or on behalf of Buyer in this Agreement, any Ancillary Agreement or in
any Schedule delivered by or on behalf of Buyer pursuant to this Agreement (in
each case, assuming that all qualifications contained in this Agreement, any
Ancillary Agreement and each such Schedule as to materiality, including each
qualifying reference to the phrase “substantial compliance”, the words
“material” and “materially” and all similar phrases and words were deleted
therefrom); or
 
(iii) any breach or violation of any covenant or agreement of Buyer (including
under this ARTICLE X) or any covenant or agreement of the Target Companies to
the extent required to be performed or complied with by the Target Companies
after the Closing, in either case in or pursuant to this Agreement or any
Ancillary Agreement.
 
(b) Monetary Limitations.  Buyer will have no obligation to indemnify the Seller
Indemnified Persons pursuant to Section 10.02(a)(ii) in respect of Losses
arising from the breach of, or inaccuracy in, any representation, warranty or
statement described therein unless and until the aggregate amount of all such
Losses incurred or suffered by the Seller Indemnified Persons exceeds the Basket
Amount, in which case the Seller Indemnified Persons shall be entitled to
indemnification for all such Losses from the first dollar, and Buyer’s aggregate
liability in respect of claims for indemnification pursuant to Section
10.02(a)(ii) will not exceed an amount equal to twenty percent (20%) of the
Adjusted Purchase Price; provided, that the foregoing limitations will not apply
to claims for indemnification pursuant to Section 10.02(a)(ii) in respect of
breaches of, or inaccuracies in, the representations and warranties set forth in
Section 5.01 (Organization), Section 5.02 (Power and Authorization), Section
5.04(b) (Breach of Organizational Documents) and Section 5.05 (No Brokers) (or
as such representations and warranties are repeated or confirmed in the
certificate delivered at Closing pursuant to Section 8.03) (collectively, the
“Buyer Fundamental Representations” and, together with the Seller Fundamental
Representations, the “Fundamental Representations”).  Claims for indemnification
pursuant to any other provision of Section 10.02(a) are not subject to the
limitations set forth in this Section 10.02(b).
 
Section 10.03. Time for Claims; Notice of Claims.
 
(a) Time for Claims.  No claim may be made or suit instituted seeking
indemnification pursuant to Section 10.01(a)(ii), Section 10.01(a)(v) or Section
10.02(a)(ii) for any breach of, or inaccuracy in, any representation, warranty
or statement unless a written notice is provided to the Indemnifying Party:
 
 
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(i) at any time, in the case of any breach of, or inaccuracy in, the Fundamental
Representations;
 
(ii) at any time, in the case of any breach of, or inaccuracy in, the
representations and warranties set out in Section 3.14 (Tax Matters) until the
expiration of the last period during which a tax assessment in respect of such
Tax matter may be issued by a Governmental Authority plus any period of time
within which a taxpayer may object to or appeal an assessment issued within such
period (including any extensions of time or waivers).    A tax assessment
includes any assessment, reassessment or other form of recognized document
assessing liability for Taxes under applicable law; and
 
(iii) at any time, in the case of any claim or suit based upon or relating to
fraud or intentional misrepresentation; and
 
(iv) at any time prior to the date that is 15 (fifteen) months following the
Closing Date (the “Survival Period Expiration Date”), in the case of any breach
of, or inaccuracy in, any other representation, warranty or statement in this
Agreement or in any Schedule or certificate delivered pursuant to this
Agreement.
 
Claims for indemnification pursuant to any other provision of Section 10.01(a)
and Section 10.02(a) are not subject to the limitations set forth in this
Section 10.03.
 
(b) Written Notice of Indemnification Claims.  In the event that any Indemnified
Person wishes to make a claim for indemnification under this ARTICLE X, the
Indemnified Person shall give written notice of such claim to each Indemnifying
Party (with all notices to the Sellers being given to the Sellers’
Representative within the applicable time limitations contained in Section
10.03(a)).  Any such notice shall describe the breach or inaccuracy and other
material facts and circumstances upon which such claim is based and the
estimated amount of Losses involved, in each case, in reasonable detail in light
of the facts then known to the Indemnified Person; provided, that no defect in
the information contained in such notice from the Indemnified Person to any
Indemnifying Party will relieve such Indemnifying Party from any obligation
under this ARTICLE X, except to the extent such failure to include information
actually and materially prejudices such Indemnifying Party.
 
Section 10.04. Third Party Claims.
 
(a) Notice of Third Party Claims.  Promptly after receipt by an Indemnified
Person of written notice of the assertion of a claim by any Person who is not a
party to this Agreement (a “Third Party Claim”) that may give rise to an
Indemnity Claim against an Indemnifying Party under this ARTICLE X, the
Indemnified Person shall give written notice thereof to the Indemnifying Party;
provided, that no delay on the part of the Indemnified Person in notifying the
Indemnifying Party will relieve the Indemnifying Party from any obligation under
this ARTICLE X, except to the extent such delay actually and materially
prejudices the Indemnifying Party.
 
 
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(b) Assumption of Defense, etc.  The Indemnifying Party will be entitled to
participate in the defense of any Third Party Claim that is the subject of a
notice given by or on behalf of any Indemnified Person pursuant to Section
10.04(a).  In addition, the Indemnifying Party will have the right to defend the
Indemnified Person against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Person so long as (i) the
Indemnifying Party gives written notice to the Indemnified Person within fifteen
(15) days after the Indemnified Person has given notice of the Third Party Claim
under Section 10.04(a) stating that the Indemnifying Party will, and thereby
covenants to, indemnify, defend and hold harmless the Indemnified Person from
and against the entirety (without regard to any limitation herein) of any and
all Losses the Indemnified Person may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Person with evidence reasonably
acceptable to the Indemnified Person that the Indemnifying Party has and will
have, assuming the maximum potential exposure in the event of an adverse
outcome, adequate financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief against the Indemnified Person, (iv) the Indemnified Person has
not been advised by counsel that an actual or potential conflict exists between
the Indemnified Person and the Indemnifying Party in connection with the defense
of the Third Party Claim, (v) the Third Party Claim does not relate to or
otherwise arise in connection with Taxes or any criminal or regulatory
enforcement Action and (vi) Buyer does not in good faith determine that the
proceedings or outcome of such Third Party Claim could adversely affect its
reputation or the reputation of any of its brands.  The Indemnified Person may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim; provided, that the Indemnifying Party will pay
the fees and expenses of separate counsel retained by the Indemnified Person
that are incurred prior to the Indemnifying Party’s assumption of control of the
defense of the Third Party Claim.
 
(c) Limitations on Indemnifying Party Control.  The Indemnifying Party will not
consent to the entry of any judgment or enter into any compromise or settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Person unless such judgment, compromise or settlement (i) provides
for the payment by the Indemnifying Party of money as sole relief for the
claimant, (ii) results in the full and general release of all Indemnified Person
from all liabilities arising or relating to, or in connection with, the Third
Party Claim and (iii) involves no finding or admission of any violation of
applicable Legal Requirements or the rights of any Person and no effect on any
other claims that may be made against the Indemnified Person.
 
(d) Indemnified Person’s Control.  If the Indemnifying Party does not deliver
the notice contemplated by clause (i) of Section 10.04(b), or the evidence
contemplated by clause (ii) of Section 10.04(b), within fifteen (15) days after
the Indemnified Person has given notice of the Third Party Claim pursuant to
Section 10.04(a), or otherwise at any time fails to conduct the defense of the
Third Party Claim actively and diligently, the Indemnified Person may defend,
and may consent to the entry of any judgment or enter into any compromise or
settlement with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Person need not consult with, or obtain any
consent from, the Indemnifying Party in connection therewith).  If such notice
and evidence is given on a timely basis and the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently but any of the other
conditions in Section 10.04(b) is or becomes unsatisfied, the Indemnified Person
may defend, and may consent to the entry of any judgment or enter into any
compromise or settlement with respect to, the Third Party Claim; provided, that
the Indemnifying Party will not be bound by the entry of any such judgment
consented to, or any such compromise or settlement effected, without its prior
written consent (unless such consent is unreasonably withheld, conditioned or
delayed).  In the event that the Indemnified Person conducts the defense of the
Third Party Claim pursuant to this Section 10.04(d), the Indemnifying Party will
(i) advance the Indemnified Person promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys’ fees
and expenses) and (ii) remain responsible for any and all other Losses that the
Indemnified Person may incur or suffer resulting from, arising out of, relating
to, in the nature of or caused by the Third Party Claim to the fullest extent
provided in this ARTICLE X.
 
 
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(e) Consent to Jurisdiction Regarding Third Party Claim.  Buyer, each of the
Sellers and the Sellers’ Representative, each hereby consents to the
non-exclusive jurisdiction of any court in which any Third Party Claim may be
brought against any Indemnified Person for purposes of any claim which such
Indemnified Person may have against any such Indemnifying Party pursuant to this
Agreement in connection with such Third Party Claim, and in furtherance thereof,
the provisions of Section 12.10 are incorporated herein by reference, mutatis
mutandis.
 
Section 10.05. No Circular Recovery.  Each Seller hereby agrees that it will not
make any claim for indemnification against Buyer or any Acquired Company by
reason of the fact that such Seller was a controlling person, director, employee
or Representative of an Acquired Company or was serving as such for another
Person at the request of an Acquired Company (whether such claim is for Losses
of any kind or otherwise and whether such claim is pursuant to any applicable
Legal Requirement, Organizational Document, Contractual Obligation or otherwise)
with respect to any claim brought by a Buyer Indemnified Person against any
Seller under this Agreement or otherwise relating to this Agreement, any
Ancillary Agreement or any of the Contemplated Transactions.  With respect to
any claim brought by a Buyer Indemnified Person against any Seller under this
Agreement or otherwise relating to this Agreement, any Ancillary Agreement or
any of the Contemplated Transactions, each Seller expressly waives any right of
subrogation, contribution, advancement, indemnification or other claim against
any Acquired Company with respect to any amounts owed by such Seller pursuant to
this ARTICLE X or otherwise.
 
Section 10.06. Indemnity Escrow.  For as long as there are funds in the
Indemnity Escrow Account, any and all amounts payable by the Sellers as
Indemnifying Party to a Buyer Indemnified Person will be paid in cash first out
of such escrow account established pursuant to the Escrow Agreement, and
thereafter directly by the Sellers as herein provided in accordance with payment
instructions provided by Buyer.  The existence of the Indemnity Escrow Amount
will not be deemed to limit the amount of any allowable claims by any Buyer
Indemnified Person pursuant to this Agreement for Losses in excess of the amount
of such Indemnity Escrow Amount.
 
Section 10.07. Right to Setoff.  Provided that there are no funds in the
Indemnity Escrow Account, Buyer may, at its sole option and election, in
addition to any other remedies available to it at law or in equity, setoff and
apply any and all amounts payable by the Sellers as Indemnifying Parties to a
Buyer Indemnified Person against the Earnout Payment and any Milestone Payment
in respect of the Earnout Payment that is or may become due and payable to the
Sellers pursuant to Section 2.06 subject to, in the aggregate for all such
setoffs, the limitations under this ARTICLE X.
 
 
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Section 10.08. Knowledge and Investigation.  Notwithstanding anything to the
contrary contained in this Agreement, the right of any Buyer Indemnified Person
or Seller Indemnified Person to indemnification pursuant to this ARTICLE X will
not be affected by any investigation conducted or knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the Closing, with respect to the accuracy of any
representation or warranty, or performance of or compliance with any covenant or
agreement, referred to in Section 10.01 and Section 10.02.  The waiver of any
condition contained in this Agreement or in any Ancillary Agreement based on the
breach of any such representation or warranty, or on the performance of or
compliance with any such covenant or agreement, will not affect the right of any
Buyer Indemnified Person or Seller Indemnified Person to indemnification
pursuant to this ARTICLE X based on such representation, warranty, covenant or
agreement.
 
Section 10.09. Remedies Cumulative.  The rights of each Buyer Indemnified Person
and Seller Indemnified Person under this ARTICLE X are cumulative, and each
Buyer Indemnified Person and Seller Indemnified Person will have the right in
any particular circumstance, in its sole discretion, to enforce any provision of
this ARTICLE X without regard to the availability of a remedy under any other
provision of this ARTICLE X.
 
Section 10.10. Exclusive Remedy.  Except for remedies that cannot be waived as a
matter of law, after the Closing, the indemnities provided in ARTICLE X and
ARTICLE XI constitute the exclusive remedy of Buyer or the Sellers or their
Indemnified Persons, respectively, against a Party in the event of any breach of
a representation or warranty of such party contained in this Agreement, other
than in respect of claims based on conduct constituting fraud, fraud in the
inducement or intentional misrepresentation.
 
Section 10.11. One Recovery.   No Indemnified Party shall be entitled to double
recovery for any claims even though such claims may have resulted from the
breach of more than one of the representations, warranties, covenants and
obligations of the Indemnifying Party with respect to such claim.  No Party
shall have any liability or obligation with respect to any claim for
indemnification to the extent that such matter was taken into account in
determining any adjustment to the Closing Purchase Price in Section 2.05 and
Section 2.07.
 
Section 10.12. Duty to Mitigate.  Nothing in this Agreement in any way restricts
or limits the general obligation at law of an Indemnified Party to mitigate any
loss which it may suffer or incur by reason of the breach by an Indemnifying
Party of any representation, warranty, covenant or obligation of the
Indemnifying Party under this Agreement.  The amount of any Losses recoverable
by an Indemnified Party shall be reduced by the amount of insurance proceeds
actually recovered by the Indemnified Party.
 
Section 10.13. Adjustment to Purchase Price to Account for Indemnity
Payments.  For greater certainty, the parties agree that any payment made
pursuant to this ARTICLE X shall constitute and shall be treated by the parties
as an adjustment to the Purchase Price payable by the Buyer hereunder in respect
of the Target Shares.
 
 
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        ARTICLE XI.                                
 
TAX MATTERS
 
Section 11.01. Tax Indemnification.  From and after the Closing Date, the
Sellers shall severally and not jointly and severally indemnify in accordance
with their respective Pro Rata Percentages and hold harmless each Buyer
Indemnified Person from, against and in respect of any and all Losses that
constitute or that result from, arise out of or relate to, directly or
indirectly Taxes (or the non-payment thereof) or Tax Liabilities of the Acquired
Companies for all Taxable periods ending on or before the Closing Date and the
portion through the end of the Closing Date in respect of any Taxable period
that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”)
(including, for greater certainty, any and all such Tax Liabilities that become
liabilities or obligations of Buyer or any of its respective Affiliates or any
successor or transferee Person by one or more windings-ups, amalgamations or
other reorganizations), including any Tax Liability arising in respect of, by
reference to or in consequence of (but excluding any Tax Liability that has been
specifically included as a liability in the Final Closing Statement, other than
as part of a general and non-specific reserve for income taxes): (A) any
profits, income or gains earned, realized or received on or prior to the Closing
Date; or (B) any Transaction (including the Pre-Closing Transactions) that
occurred on or prior to the Closing Date.  For greater certainty, the right of
the Buyer Indemnified Persons to be indemnified under this Section 11.01 shall
not in any way require the Buyer Indemnified Person to prove that there has been
a breach by the Sellers of any representation or warranty hereunder.
 
Section 11.02. Straddle Period.  In the case of any Taxable period that includes
(but does not end on) the Closing Date (a “Straddle Period”), the amount of any
Taxes of the Acquired Companies, other than Transfer Taxes, based upon or
measured by net income or gain, activities events or the level of any item for
the Pre-Closing Tax Period will be determined based on an interim closing of the
books as of the close of business on the Closing Date (and for such purpose, the
Taxable period of any partnership or other pass-through entity in which any
Acquired Company holds a beneficial interest will be deemed to terminate at such
time); provided, however, that exemptions, allowances, or deductions that are
calculated on an annual basis (such as deductions for depreciation and real
estate taxes) will be apportioned to the Pre-Closing Tax Period and post-closing
Tax period on a daily basis.  The amount of Taxes other than Transfer Taxes and
Taxes of the Acquired Companies based upon or measured by net income or gain,
activities, events or the level of any item for a Straddle Period which relate
to the Pre-Closing Tax Period will be deemed to be the amount of such Tax for
the entire Taxable period multiplied by a fraction, the numerator of which is
the number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period.
 
Section 11.03. Special Procedure; Tax Matters.
 
(a) Notice.  Buyer shall give written notice to the Sellers promptly (and, in
any event, within 30 days) after receipt of any notice or inquiry, oral or
written, from any Governmental Authority in respect of a liability for Taxes for
which the Buyer Indemnified Person will be seeking indemnification pursuant to
Section 11.01 hereof, including any assessment or proposed assessment (a “Tax
Assessment”).  Such notice shall set out such information with respect to the
Tax Assessment as is then available to the Buyer Indemnified Person.  The
failure or delay to so notify the Sellers shall not relieve the Sellers from any
indemnification obligation which otherwise might exist with respect to such
matter, unless (and only to the extent that) the failure to so notify materially
prejudices the ability of the Sellers to exercise their rights under this
Section 11.03 or results in a material increase in the amount of the liability
for Taxes.
 
 
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(b) Buyer’s Control of Tax Proceeding.  Subject to Section 11.03(c), Buyer or
the Buyer Indemnified Person shall have the right to undertake and control any
proceedings, objection or other defense (a “Tax Proceeding”) of any Tax
Assessment and, in such case, Buyer or such Buyer Indemnified Person shall
pursue any such Tax Proceedings in a timely manner and in good faith.  The
Sellers shall provide Buyer or the Buyer Indemnified Person with such
information with respect to the Tax liability as may become available to the
Sellers and the Sellers shall cooperate with Buyer or the Buyer Indemnified
Person in the conduct of all Tax Proceedings relating to any such Tax Assessment
and related inquiries or investigations.  If, pursuant to this Section 11.03(b),
any Buyer Indemnified Person undertakes any Tax Proceedings of any such Tax
Assessment, such Buyer Indemnified Person may cease to defend, settle or
otherwise dispose of any such Tax Proceeding without the consent of the Sellers.
 
(c) Sellers’ Control of Tax Proceeding.  If within 30 days after any Buyer
Indemnified Person has provided notice to Sellers pursuant to Section 11.03(a),
Sellers provide notice to Buyer that Sellers propose to undertake any Tax
Proceedings of any kind in respect of such Tax Assessment, the Sellers shall
have the right to undertake and control the Tax Proceedings using counsel of
their own choice; provided, however that (i) the Sellers shall have complied
with their obligations under Section 11.03(d) below, (ii) the Sellers shall have
delivered to Buyer an unconditional acknowledgement in form and substance
satisfactory to Buyer, acting reasonably, wherein the Sellers agree to be bound
by the Final Outcome of such Tax Proceeding in determining the Sellers’
liability under this ARTICLE XI and agree not to contest their liability under
this Article XI or amounts arising out of the Tax Assessment, (iii) the Sellers
shall have provided Buyer evidence reasonably acceptable to the Buyer that
Sellers have and will have, assuming the maximum potential exposure in the event
of an adverse outcome, adequate financial resources to defend against the Tax
Assessment, (iv) the Tax Proceeding involves only money damages and does not
seek an injunction or other equitable relief against Buyer, (v) Buyer has not
been advised by counsel that an actual or potential conflict exists between the
Buyer and the Sellers in connection with the defense of the Tax Assessment and
(vi) Buyer does not in good faith determine that the proceedings or outcome of
such Tax Assessment could adversely affect its reputation or the reputation of
any of its brands.  At the Sellers’ cost, Buyer shall provide to the Sellers
information with respect to the liability for Taxes as may become available to
any Buyer Indemnified Person and Buyer shall cooperate with the Sellers to the
extent reasonably requested in the conduct of all Tax Proceedings relating to
any such Tax Assessment and related inquiries and investigations.  If, pursuant
to this Section 11.03(c), the Sellers undertake any Tax Proceedings in respect
of any such Tax Assessment, the Sellers shall not cease to defend, settle or
otherwise dispose of the Tax Proceeding without the consent of Buyer, which
consent is not to be unreasonably withheld.
 
 
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(d) Reimbursement of Buyer.  If a Buyer Indemnified Person is required to make a
payment of Taxes assessed under a Tax Assessment in respect of which
indemnification is or may be required to be made under this Agreement, the
Sellers shall promptly (and, in any event, within 30 days of the date that Buyer
notifies the Sellers of the requirement to make the payment) reimburse the Buyer
Indemnified Person in respect of such payment. In addition, in the event that
the amount of any Tax assessed under any Tax Assessment in respect of which
indemnification is or may be required to be made under this Agreement would bear
interest, the Buyer Indemnified Persons:
 
(i) have the right to pay the amount of the Taxes assessed under such Tax
Assessment and the Sellers shall promptly (and, in any event, within 30 days of
the date that Buyer notify the Sellers of its determination) reimburse the Buyer
Indemnified Persons in respect of such payment; and
 
(ii) to the extent the amount of the Taxes has not been paid pursuant to (i)
above and subject to the Purchaser Indemnified Parties’ right of reimbursement
for amounts paid pursuant to (i) above, shall pay to the relevant Governmental
Authority on account of the Taxes, any amount received by the Buyer Indemnified
Persons from the Sellers, which the Sellers instruct the Buyer Indemnified
Persons to so pay.
 
(e) Reimbursement of Sellers.  If the total of the amounts previously paid by
the Sellers in respect of such Taxes is less than the amount determined in a
Final Outcome to be the amount of the Taxes, the Sellers shall promptly (and, in
any event, within 30 days of the time that Buyer notifies the Sellers of the
amount of the Taxes) pay to the Buyer Indemnified Persons the amount of the
Taxes less the total of the amounts previously paid.  If the total of the
amounts previously paid by the Sellers in respect of such Taxes exceeds the
amount determined in a Final Outcome to be the amount of the Taxes, the Buyer
Indemnified Persons shall, upon receipt of any refund or credit of such Taxes,
promptly (and, in any event, within 30 days of the receipt of such refund or
credit) pay to the Sellers the amount of such refund or credit (including any
interest received by the Buyer Indemnified Persons after taking into account any
Taxes payable by the Buyer Indemnified Persons in respect of such refund, credit
or interest).
 
(f) Applicability to Article XI.  For greater certainty the provisions of this
Section 11.03 shall control and prevail over the provisions of ARTICLE X only
with respect to indemnification for Tax matters.
 
(g) No Amendments.  Except as required by applicable law or for the purpose of
correcting one or more errors, the Buyer shall not amend any Tax Return of any
Acquired Company for any taxation year ending on or before the Closing Date
without the prior written consent of the Sellers.
 
Section 11.04. Tax Sharing Agreements.  All Tax sharing agreements or similar
Contractual Obligations and all powers of attorney with respect to or involving
any Acquired Company will be terminated prior to the Closing and, after the
Closing, the Acquired Companies will not be bound thereby or have any Liability
thereunder.
 
 
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Section 11.05. Certain Taxes and Fees.  All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and any conveyance fees or recording
charges incurred in connection with the Contemplated Transactions (collectively,
such fees, charges and Taxes are “Transfer Taxes”), will be paid 50% by Buyer
and 50% by Seller when due.  Buyer will file all necessary Tax Returns and other
documentation with respect to all such Taxes, fees and charges and, if required
by applicable Legal Requirements, the Sellers will (and will cause their
Affiliates to) join in the execution of any such Tax Returns and other
documentation.
 
Section 11.06. Excessive Elections.
 
(a) Eligible Dividends.  If any Acquired Company has made an excessive eligible
dividend designation (as defined in the Tax Act) for any dividends paid or
payable on or prior to the Closing Date, the Sellers or Buyer shall, and shall
exercise commercially reasonable efforts to cause (i) any other shareholder who
has been paid such dividends to and (ii) any Acquired Company that has made an
excessive dividend designation to, comply with the provisions of subsection
185.1 (2) of the Tax Act and the equivalent provisions of any applicable
provincial tax statute to treat such excess as non-eligible taxable dividends
and not as eligible dividends and ensure that such election is made in the
prescribed manner and filed with the appropriate tax authorities together with
all the required supporting documents.  The Sellers or Buyer shall, and shall
exercise commercially reasonable efforts to cause such other shareholder or
Acquired Company to, execute and deliver, make or cause to be made all such
further acts, deeds, assurances and things as may be required or necessary to
implement and carry out the true intent and meaning of this Section 11.06(a).
 
(b) Use of Post-Closing Tax Attributes.  In determining Taxes for purposes of
Section 11.01 or Section 11.02, if an allowance, refund, credit, deduction,
set-off or loss carry-over of any of the Acquired Companies (or a successor
thereof) which arose other than in a Pre-Closing Tax Period is utilized to
reduce the amount of income, taxable income or tax otherwise calculated for any
Pre-Closing Tax Period in which a liability for Taxes indemnifiable under
Section 11.01 or Section 11.02 is realized or, but for the utilization of such
allowance, refund, credit, deduction, set-off or loss carry-over, would be
realized, the amount of the liability for Taxes shall be determined without
taking into account any reduction resulting from such allowance, refund, credit,
deduction, set-off or loss carry-over.
 
ARTICLE XII.   
 
MISCELLANEOUS
 
Section 12.01. Guarantee.   The Guarantor unconditionally and irrevocably
guarantees to and in favor of the Sellers the full and complete performance by
Buyer of all payment obligations of Buyer arising in connection with this
Agreement, including  payment of the Earnout Payment.  The Sellers shall be
obligated to exhaust their remedies against Buyer as a condition precedent to
being entitled to demand performance of this guarantee.
 
Section 12.02. Notices.  Any notice, request, demand, claim or other
communication required or permitted to be delivered, given or otherwise provided
under this Agreement must be in writing and must be delivered personally,
delivered by nationally recognized overnight courier service, sent by certified
or registered mail, postage prepaid, or (if a facsimile number is provided
below) sent by facsimile (subject to electronic confirmation of good facsimile
transmission).  Any such notice, request, demand, claim or other communication
shall be deemed to have been delivered and given (a) when delivered, if
delivered personally, (b) the Business Day after it is deposited with such
nationally recognized overnight courier service, if sent for overnight delivery
by a nationally recognized overnight courier service, (c) the day of sending, if
sent by facsimile prior to 5:00 p.m. (Eastern time) on any Business Day or the
next succeeding Business Day if sent by facsimile after 5:00 p.m. (Eastern time)
on any Business Day or on any day other than a Business Day or (d) five Business
Days after the date of mailing, if mailed by certified or registered mail,
postage prepaid, in each case, to the following address or, if applicable,
facsimile number, or to such other address or addresses or facsimile number or
numbers as such party may subsequently designate to the other parties by notice
given hereunder:
 
 
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If to the Target Companies (prior to the Closing), to:
 
Bonnie Togs
 
65 Struck Court
 
Cambridge, Ontario
 
N1R 8L2
 
Telephone number:                            (519) 624-6574
 
Facsimile number:                              (519) 624-5217
 
Attention:                           Paul Rubinstein
 
with a copy (which shall not constitute notice) to:
 
Stikeman Elliott LLP
 
Suite 5300, 199 Bay Street
 
Commerce Court West
 
Toronto, Ontario
 
M5L 1B9
 
 
Telephone number:                                (416) 869-5656 (Jeffrey Singer)
 
Telephone number:                                (416) 869-5636 (Samantha Horn)
 
Facsimile number:                                  (416) 947-0866
 
Attention:                            Jeffrey Singer and Samantha Horn
 
If to Buyer or Guarantor (or to the Target Companies after the Closing), to such
party at the address listed below:
 
c/o Carter, Inc.
 
The Proscenium
 
1170 Peachtree Street NE, Suite 900
 
Atlanta, Georgia 30309
 
Telephone number:                                (404) 745-2700
 
Facsimile number:                                   (404) 892-0968
 
Attention:                            General Counsel
 
 
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with a copy (which shall not constitute notice) to:
 
Ropes & Gray LLP
 
Prudential Tower
 
800 Boylston Street
 
Boston, MA 02199-3600
 
Telephone number: (617) 951-7309
 
Facsimile number: (617) 235-0375
 
Attention:  Joel Freedman
 
and:
 
Ogilvy Renault
 
Suite 2500
 
1 Place Ville Marie
 
Montreal, Quebec H3B 1R1
 
Canada
 
Telephone number: (514)-847-4479
 
Facsimile number: (514) 286-5474
 
Attention:  Paul Raymond
 
If to any of the Sellers, to such Seller in care of the Sellers’ Representative,
and if to the Sellers’ Representative, to:
 
Paul Rubinstein
 
16 Mariner’s Haven
 
Collingwood, Ontario L9Y 5B5
 
Telephone number: (519) 895-6170
 
with a copy (which shall not constitute notice) to:
 
Stikeman Elliott LLP
 
Suite 5300, 199 Bay Street
 
Commerce Court West
 
Toronto, Ontario
 
M5L 1B9
 
 
Telephone number:                              416-869-5636
 
Facsimile number:                                416-947-0866
 
Attention:                                              Samantha Horn
 
Each of the parties to this Agreement may specify a different address or
addresses or facsimile number or facsimile numbers by giving notice in
accordance with this Section 12.01 to each of the other parties hereto.
 
 
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Section 12.03. Succession and Assignment; No Third-Party Beneficiaries.  Subject
to the immediately following sentence, this Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, each of which such successors and permitted assigns will be
deemed to be a party hereto for all purposes hereof.  No party may assign,
delegate or otherwise transfer either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other parties (with the Sellers’ Representative acting for all of the Sellers),
and any attempt to do so will be null and void ab initio; provided, that (a)
Buyer or Guarantor may assign this Agreement and any or all of its rights and
interests hereunder to one or more of its Affiliates or designate one or more of
its Affiliates to perform its obligations hereunder, in each case, so long as
neither Buyer nor Guarantor is relieved of any liability or obligations
hereunder, (b) Buyer or Guarantor may assign this Agreement and any or all of
its rights and interest hereunder to any purchaser of all or substantially all
its assets or designate such purchaser to perform its obligations hereunder, so
long as neither Buyer nor Guarantor is relieved of any liability or obligations
hereunder without the prior written consent of Sellers’ Representative; and (c)
any of the Buyer Indemnified Persons may collaterally assign any or all of its
rights and obligations hereunder to any provider of debt financing to it or any
of its Affiliates.  Except as expressly provided herein, this Agreement is for
the sole benefit of the parties hereto and their successors and permitted
assignees and nothing herein expressed or implied will give or be construed to
give any Person, other than the parties hereto and such successors and permitted
assignees, any other right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.  For the avoidance of doubt, it is hereby
acknowledged and agreed by the parties hereto that an Indemnified Person that is
not party hereto is intended to be an express third party beneficiary of this
Agreement.
 
Section 12.04. Amendments and Waivers.  No amendment or waiver of any provision
of this Agreement will be valid and binding unless it is in writing and signed,
in the case of an amendment, by Buyer, Guarantor, the Target Companies and the
Sellers’ Representative (acting for all of the Sellers), or in the case of a
waiver, by the party (or in the case of any or all of the Sellers, by the
Sellers’ Representative) against whom the waiver is to be effective.  No waiver
by any party of any breach or violation of, default under or inaccuracy in any
representation, warranty or covenant hereunder, whether intentional or not, will
be deemed to extend to any prior or subsequent breach or violation of, default
under, or inaccuracy in, any such representation, warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.  No delay or omission on the part of any party in exercising
any right, power or remedy under this Agreement will operate as a waiver
thereof.
 
Section 12.05. Provisions Concerning the Sellers’ Representative.
 
(a) Appointment.  Each Seller hereby irrevocably appoints Paul Rubinstein as the
sole and exclusive agent, proxy and attorney-in-fact for such Seller for all
purposes of this Agreement, the Escrow Agreement and the Contemplated
Transactions, with full and exclusive power and authority to act on such
Seller’s behalf (the “Sellers’ Representative”).  The appointment of the
Sellers’ Representative hereunder is coupled with an interest, shall be
irrevocable and shall not be affected by the death, incapacity, insolvency,
bankruptcy, illness or other inability to act of any Seller.  Without limiting
the generality of the foregoing, the Sellers’ Representative is hereby
authorized, on behalf of the Sellers, to:
 
(i) in connection with the Closing, execute and receive all documents,
instruments, certificates, statements and agreements on behalf of and in the
name of each Seller necessary to effectuate the Closing and consummate the
Contemplated Transactions;
 
 
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(ii) receive and give all notices and service of process, make all filings,
enter into all Contractual Obligations, make all decisions, bring, prosecute,
defend, settle, compromise or otherwise resolve all claims, disputes and
Actions, authorize payments in respect of any such claims, disputes or Actions,
and take all other actions, in each case, with respect to the matters set forth
in Section 2.06, ARTICLE X or ARTICLE XI or any other Actions directly or
indirectly arising out of or relating to this Agreement, the Escrow Agreement or
the Contemplated Transactions;
 
(iii) receive and give all notices, make all decisions and take all other
actions on behalf of the Sellers in connection with the Indemnity Escrow Account
and the Adjustment Escrow Account established pursuant to the Escrow Agreement,
including giving any instructions or authorizations to the Escrow Agent to pay
from such Indemnity Escrow Account and the Adjustment Escrow Account any amounts
owed by the Sellers pursuant to this Agreement or the Escrow Agreement or
otherwise in connection with the Contemplated Transactions;
 
(iv) execute and deliver, should it elect to do so in its good faith discretion,
on behalf of the Sellers, any amendment to, or waiver of, any term or provision
of this Agreement or the Escrow Agreement, or any consent, acknowledgment or
release relating to this Agreement or the Escrow Agreement; and
 
(v) take all other actions permitted or required to be taken by or on behalf of
the Sellers under this Agreement or the Escrow Agreement and exercise any and
all rights that the Sellers or the Sellers’ Representative are permitted or
required to do or exercise under this Agreement or the Escrow Agreement.
 
(b) Liability.  The Sellers’ Representative shall not be held liable by any of
the Sellers for actions or omissions in exercising or failing to exercise all or
any of the power and authority of the Sellers’ Representative pursuant to this
Agreement, except in the case of the Sellers’ Representative’s gross negligence,
bad faith or willful misconduct.  The Sellers’ Representative shall be entitled
to rely on the advice of counsel, public accountants or other independent
experts that it reasonably determines to be experienced in the matter at issue,
and will not be liable to any Seller for any action taken or omitted to be taken
in good faith based on such advice.  The Sellers will severally and not jointly
and severally indemnify (in accordance with their Pro Rata Percentages) the
Sellers’ Representative from any Losses arising out of its serving as the
Sellers’ Representative hereunder, except for Losses arising out of or caused by
the Sellers’ Representative’s gross negligence, bad faith or willful
misconduct.  The Sellers’ Representative is serving in its capacity as such
solely for purposes of administrative convenience, and is not personally liable
in such capacity for any of the obligations of the Sellers hereunder, and Buyer
agrees that neither it nor any Buyer Indemnified Person will look to the
personal assets of the Sellers’ Representative, acting in such capacity, for the
satisfaction of any obligations to be performed by the Sellers hereunder.
 
(c) Reliance on Appointment; Successor Sellers’ Representative.  Buyer and the
other Buyer Indemnified Persons may rely on the appointment and authority of the
Sellers’ Representative granted pursuant to this Section 12.05 until receipt of
written notice of the appointment of a successor Sellers’ Representative made in
accordance with this Section 12.05.  In so doing, Buyer and the other Buyer
Indemnified Persons may rely on any and all actions taken by and decisions of
the Sellers’ Representative under this Agreement and the Escrow Agreement
notwithstanding any dispute or disagreement among any of the Sellers or the
Sellers’ Representative with respect to any such action or decision without any
Liability to, or obligation to inquire of, any Seller, the Sellers’
Representative or any other Person.  Any decision, act, consent or instruction
of the Sellers’ Representative shall constitute a decision of all the Sellers
and shall be final and binding upon each of the Sellers.  At any time after the
Closing, with or without cause, by a written instrument that is signed in
writing by holders of at least a majority-in-interest of the Sellers (determined
by reference to their respective Pro Rata Percentages) and delivered to Buyer,
the Sellers may remove and designate a successor Sellers’ Representative;
provided, that such successor Sellers’ Representative must be reasonably
acceptable to Buyer.  If the Sellers’ Representative shall at any time resign or
otherwise cease to function in its capacity as such for any reason whatsoever,
and no successor that is reasonably acceptable to Buyer is appointed by such
holders of a majority-in-interest of the Sellers (determined by reference to
each Seller’s respective Pro Rata Percentage) within ten (10) Business Days,
then Buyer shall have the right to appoint another Seller to act as the
replacement Sellers’ Representative who shall serve as described in this
Agreement and, under such circumstances, Buyer and the other Buyer Indemnified
Persons shall be entitled to rely on any and all actions taken and decisions
made by such replacement Sellers’ Representative.
 
 
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Section 12.06. Entire Agreement.  This Agreement, together with the other
Ancillary Agreements and any documents, instruments and certificates explicitly
referred to herein, constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
discussions, negotiations, proposals, undertakings, understandings and
agreements, whether written or oral, with respect thereto.  There are no
restrictions, promises, warranties, covenants, or undertakings, other than those
expressly provided for herein and therein.
 
Section 12.07. Certain Matters of Construction.
 
(a) The parties have participated jointly in the negotiation and drafting of
this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
 
(b) Section and subsection headings are not to be considered part of this
Agreement, are included solely for convenience, are not intended to be full or
accurate descriptions of the content of the Sections or subsections of this
Agreement and shall not affect the construction hereof.
 
(c) Except as otherwise explicitly specified to the contrary herein, (i) the
words “hereof,” “herein,” “hereunder” and words of similar import shall refer to
this Agreement as a whole and not to any particular Section or subsection of
this Agreement and reference to a particular Section of this Agreement shall
include all subsections thereof, (ii) references to a Section, Exhibit, Annex or
Schedule means a Section of, or Exhibit, Annex or Schedule to this Agreement,
unless another agreement is specified, (iii) definitions shall be equally
applicable to both the singular and plural forms of the terms defined, and
references to the masculine, feminine or neuter gender shall include each other
gender, (iv) the word “including” means including (v) any reference to “CAD$” or
“dollars” means Canadian dollars and (vi) references to a particular statute or
regulation include all rules and regulations thereunder and any successor
statute, rule or regulation, in each case as amended or otherwise modified from
time to time.
 
 
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(d) The parties intend that each representation, warranty and covenant contained
herein will have independent significance.  If any party has breached or
violated, or if there is an inaccuracy in, any representation, warranty or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached or violated, or in respect of which there is not an inaccuracy, will
not detract from or mitigate the fact that the party has breached or violated,
or there is an inaccuracy in, the first representation, warranty or covenant.
 
(e) Unless the context clearly requires otherwise, when used herein “or” shall
not be exclusive (i.e., “or” shall mean “and/or”).
 
Section 12.08. Counterparts; Facsimile Signature.  This Agreement may be
executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute but one and the same
instrument.  This Agreement will become effective when duly executed and
delivered by each party hereto.  Counterpart signature pages to this Agreement
may be delivered by facsimile or electronic delivery (i.e., by email of a PDF
signature page) and each such counterpart signature page will constitute an
original for all purposes.
 
Section 12.09. Severability.  Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.  In the event that any provision hereof
would, under applicable Legal Requirements, be invalid or unenforceable in any
respect, each party hereto intends that such provision will be construed by
modifying or limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable Legal Requirements.
 
Section 12.10. Governing Law.  This Agreement, the rights of the parties and all
Actions arising in whole or in part under or in connection herewith, will be
governed by and construed in accordance with the domestic substantive laws of
the State of New York, without giving effect to any choice or conflict of law
provision or rule that would cause the application of the laws of any other
jurisdiction.
 
Section 12.11. Jurisdiction; Venue; Service of Process.
 
(a) Jurisdiction.  Subject to the provisions of Section 2.05, Section 2.06,
Section 2.07 and Section 10.04, each party to this Agreement, by its execution
hereof, (a) hereby irrevocably submits to the jurisdiction of the state courts
of the State of New York and the United States District Court for the Southern
District of New York for the purpose of any Action between the parties arising
in whole or in part under or in connection with this Agreement, (b) hereby
waives to the extent not prohibited by applicable Legal Requirements, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such Action,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such Action brought in one of the above-named courts should
be dismissed on grounds of forum non conveniens, should be transferred or
removed to any court other than one of the above-named courts, or should be
stayed by reason of the pendency of some other proceeding in any other court
other than one of the above-named courts, or that this Agreement or the subject
matter hereof may not be enforced in or by such court and (c) hereby agrees not
to commence any such Action other than before one of the above-named
courts.  Notwithstanding the previous sentence a party may commence any Action
in a court other than the above-named courts solely for the purpose of enforcing
an order or judgment issued by one of the above-named courts.
 
 
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(b) Venue.  Each party agrees that for any Action between the parties arising in
whole or in part under or in connection with this Agreement, such party bring
Actions only in New York, New York.  Each party further waives any claim and
will not assert that venue should properly lie in any other location within the
selected jurisdiction.
 
(c) Service of Process.  Each of the parties to this Agreement hereby (i)
consents to service of process in any Action among any of the parties hereto
relating to or arising in whole or in part under or in connection with this
Agreement, any Ancillary Agreement or the Contemplated Transactions in any
manner permitted by New York law, (ii) agrees that service of process made in
accordance with clause (i) or made by registered or certified mail, return
receipt requested, at its address specified pursuant to Section 12.01, will
constitute good and valid service of process in any such Action and (iii) waives
and agrees not to assert (by way of motion, as a defense, or otherwise) in any
such Action any claim that service of process made in accordance with clause (i)
or (ii) does not constitute good and valid service of process.
 
Section 12.12.   Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT
THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE PARTIES AGREE THAT ANY OF
THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO
WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN
OR AMONG THEM RELATING TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS AND THAT SUCH ACTIONS WILL INSTEAD BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
 

 
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IN WITNESS WHEREOF, each of the undersigned has executed this Stock Purchase
Agreement as of the date first above written.
 
 
BUYER:
NORTHSTAR CANADIAN OPERATIONS CORP.

 
 
 
By: /s/ MICHAEL D. CASEY

 
 
Name: Michael D. Casey

 
 
Title: President

 

 
 
GUARANTOR:
THE WILLIAM CARTER COMPANY

 
 
 
By: /s/ MICHAEL D. CASEY

 
 
Name: Michael D. Casey

 
 
Title: Chief Executive Officer

 

 
[SIGNATURE LINES CONTINUE]

 

 

Stock Purchase Agreement Signature Page
 
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TARGET COMPANIES:
993520 ONTARIO LIMITED

 
 
 
By: /s/ PAUL RUBINSTEIN

 
 
Name: Paul Rubinstein

 
 
Title:  President

 
 
 
1054451 ONTARIO INC.

 
 
 
By: /s/ RUTH RUBINSTEIN

 
 
Name: Ruth Rubinstein

 
 
Title: President

 

 
SELLERS’ REPRESENTATIVE:

 

 
 
 By: /s/ PAUL RUBINSTEIN, AS SELLERS' REPRESENTATIVE

 
 
Paul Rubinstein, as Sellers’ Representative

 

 
 
THE SELLERS:
2288904 ONTARIO INC.

 
 
 
By: s/ PAUL RUBINSTEIN

 
 
Name: Paul Rubinstein

 
 
Title: Authorized Signing Officer

 

 
 
By: /s/DAVID NUFER

 
 
David Nufer

 
 
 
By: /s/PAUL KRISTENSEN

 
 
Paul Kristensen

 
 
 
By: /s/ RUTH RUBINSTEIN

 
 
Ruth Rubinstein

 
 
 
By: /s/ PAUL RUBINSTEIN

 
 
Paul Rubinstein

 
Stock Purchase Agreement Signature Page
 
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AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT

This AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this “Amendment”), dated and
effective as of June 30,  2011, made and entered into by and among Northstar
Canadian Operations Corp., a Canadian corporation (“Buyer”), The William Carter
Company (the “Guarantor”), 993520 Ontario Limited, a Canadian corporation
(“Holdings Limited”), 1054451 Ontario Inc., a Canadian corporation (“Holdings
Incorporated”, and, together with Holdings Limited, the “Target Companies”),
each of the holders of outstanding shares of capital stock of Holdings Limited
(the “Holdings Limited Shareholders”), each of the holders of outstanding shares
of capital stock of Holdings Incorporated (the “Holdings Incorporated
Shareholders”, and, together with the Holdings Limited Shareholders, the
“Sellers”)  and Paul Rubinstein, in his capacity as the Sellers’ Representative,
shall constitute the first amendment to the Stock Purchase Agreement, dated June
20, 2011, by and among the Buyer, the Guarantor, the Target Companies, the
Sellers and Paul Rubinstein as the Sellers’ Representative (as so amended, the
“Agreement”).  Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement.

For good and valuable consideration, receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

1.  
Schedules.  Schedule 10.01(a)(ix) of the Agreement is amended to add the
following:

“5. Failure to obtain the required consents in respect of the following
agreements:

a.  Lease Agreement dated April 17, 2007 between Roundhouse Centre Windsor Inc.
and Bonnie Togs Children’s Limited for property located at 3155 Howard Park
Avenue, Windsor, Ontario Unit No. 19. [Store #002]

b. Lease Agreement dated November 3, 1998 between Woodbine Centre Inc. and
Bonnie Togs Children’s Limited for property located at Woodbine Centre, Toronto,
Ontario (as extended by an informal month to month leasing arrangement).  [Store
#014]”

2.  
Definitions.  The following defined terms contained in Section 1.01 of the
Agreement shall be amended and restated as follows:

a)  
“Cash Adjustment Amount” means the amount of cash on the close of business on
the Closing Date, but not more than CAD$1,000,000.

b)  
“Adjusted Purchase Price” means CAD$60,000,000 plus any Earnout Payment made
pursuant to this Agreement.

3.  
Deletion.  The following sentence in Section 2.02 shall be deleted in its
entirety:

“The Closing Purchase Price shall be subject to adjustment in accordance with
Section 2.05 and Section 2.07 (the Closing Purchase, as so adjusted, the
“Adjusted Purchase Price”.)”

4.  
Each party hereto hereby acknowledges that all the terms and conditions of the
Agreement, as amended hereby, are and shall remain in full force and effect.

5.  
Any term or provision of this Amendment that is invalid or unenforceable in any
situation in any jurisdiction will not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.

6.  
This Amendment, the rights of the parties and all Actions arising in whole or in
part under or in connection herewith, will be governed by and construed in
accordance with the domestic substantive laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any other jurisdiction.

[The remainder of this page is intentionally left blank.]

 
 
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IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of
the date first above written.
 
 
BUYER:
NORTHSTAR CANADIAN OPERATIONS CORP.

 
 
 
By: /s/ MICHAEL D. CASEY

 
 
Name: Michael D. Casey

 
 
Title: President

 

 
 
GUARANTOR:
THE WILLIAM CARTER COMPANY

 
 
 
 
By: /s/ MICHAEL D. CASEY

 
 
Name: Michael D. Casey

 
 
Title: Chief Executive Officer

 

 
[SIGNATURE LINES CONTINUE]

 

 

 
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TARGET COMPANIES:
993520 ONTARIO LIMITED

 
 
 
By: /s/ PAUL RUBINSTEIN

 
 
Name: Paul Rubinstein

 
 
Title:  President

 
 
 
1054451 ONTARIO INC.

 
 
 
By: /s/ RUTH RUBINSTEIN

 
 
Name: Ruth Rubinstein

 
 
Title: President

 

 
SELLERS’ REPRESENTATIVE:

 

 
 
 By: /s/ PAUL RUBINSTEIN, AS SELLERS' REPRESENTATIVE

 
 
Paul Rubinstein, as Sellers’ Representative

 

 
 
THE SELLERS:
2288904 ONTARIO INC.

 
 
 
By: s/ PAUL RUBINSTEIN

 
 
Name: Paul Rubinstein

 
 
Title: Authorized Signing Officer

 

 
 
By: /s/DAVID NUFER

 
 
David Nufer

 
 
 
By: /s/PAUL KRISTENSEN

 
 
Paul Kristensen

 
 
 
By: /s/ RUTH RUBINSTEIN

 
 
Ruth Rubinstein

 
 
 
 
By: /s/ PAUL RUBINSTEIN

 
 
Paul Rubinstein

 
 
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