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profiremillstreamapa

                                                                                                                                                      PROFIRE COMBUSTION, INC.                    and   MILLSTREAM ENERGY PRODUCTS LTD.                    and        LUNDSTROM HOLDINGS LTD.                    and             ROB LUNDSTROM                            ASSET PURCHASE AGREEMENT                June 12, 2019                 

 

                                                                                                              TABLE OF CONTENTS                                                                             Page   ARTICLE 1. DEFINITIONS ........................................................................................................................ 2    1.1   Definitions ................................................................................................................................... 2    1.2   Certain Rules of Interpretation .................................................................................................. 11    1.3   Statutory References .................................................................................................................. 12    1.4   Accounting Principles................................................................................................................ 12  ARTICLE 2. PURCHASE AND SALE ..................................................................................................... 12    2.1   Purchase and Sale ...................................................................................................................... 12    2.2   Retained Assets ......................................................................................................................... 13    2.3   Assumption of Liabilities .......................................................................................................... 13    2.4   Retained Liabilities .................................................................................................................... 14    2.5   Purchase Price ........................................................................................................................... 14    2.6   Estimated Closing Statement ..................................................................................................... 15    2.7   Purchase Price Adjustment ........................................................................................................ 15    2.8   Allocation of Purchase Price ..................................................................................................... 17    2.9   Unassignable Rights .................................................................................................................. 17    2.10  Tax Matters ................................................................................................................................ 18  ARTICLE 3. EMPLOYMENT ................................................................................................................... 19    3.1   Employees ................................................................................................................................. 19  ARTICLE 4. Royalty .................................................................................................................................. 20    4.1   Royalty ...................................................................................................................................... 20  ARTICLE 5. REPRESENTATIONS AND WARRANTIES ..................................................................... 21    5.1   Representations and Warranties of the Guarantors ................................................................... 21    5.2   Representations and Warranties of the Vendor ......................................................................... 22    5.3   Representations and Warranties of the Purchaser ..................................................................... 32  ARTICLE 6. COVENANTS ...................................................................................................................... 33   6.1    Covenants of the Vendor ........................................................................................................... 33   6.2    Mutual Covenants ...................................................................................................................... 34   6.3    Information During Interim Period ............................................................................................ 35    6.4   Exclusivity ................................................................................................................................. 35    6.5   Tax Records ............................................................................................................................... 35    6.6   Name Change or Dissolution Covenant .................................................................................... 36    6.7   Amounts Received ..................................................................................................................... 36    6.8   Restrictive Covenants of the Vendor and the Guarantors ......................................................... 36  ARTICLE 7. CONDITIONS TO CLOSING .............................................................................................. 38    7.1   Conditions for the Benefit of the Purchaser .............................................................................. 38  

 

                                       2     7.2   Conditions for the Benefit of the Vendor .................................................................................. 39  ARTICLE 8. CLOSING ............................................................................................................................. 39     8.1   Place of Closing ......................................................................................................................... 39     8.2   Deliveries by the Vendor at Closing .......................................................................................... 39     8.3   Deliveries by Purchaser at Closing ............................................................................................ 40   ARTICLE 9. INDEMNITIES ..................................................................................................................... 41     9.1   Survival...................................................................................................................................... 41     9.2   Indemnification .......................................................................................................................... 41     9.3   Claims by Third Parties ............................................................................................................. 42     9.4   Right to Set-Off and Release of Holdback ................................................................................ 43     9.5   Exclusive Remedy ..................................................................................................................... 44     9.6   Tax Treatment ........................................................................................................................... 44     9.7   Reductions and Subrogation ...................................................................................................... 44     9.8   Limitations ................................................................................................................................. 44   ARTICLE 10. TERMINATION ................................................................................................................. 45     10.1  Termination ............................................................................................................................... 45     10.2  Effect of Termination ................................................................................................................ 45   ARTICLE 11. MISCELLANEOUS ........................................................................................................... 46     11.1  Notices ....................................................................................................................................... 46     11.2  Address for Service ................................................................................................................... 46     11.3  Retention of Records and Confidential Information ................................................................. 47     11.4  Privacy ....................................................................................................................................... 47     11.5  Guarantee of the Guarantors ...................................................................................................... 48     11.6  Further Assurances .................................................................................................................... 48     11.7  Time of the Essence ................................................................................................................... 48     11.8  Public Announcements .............................................................................................................. 48    11.9   Amendments and Waiver .......................................................................................................... 49     11.10 Entire Agreement ....................................................................................................................... 49     11.11 Applicable Law ......................................................................................................................... 49     11.12 Severability ................................................................................................................................ 49     11.13 Third Party Beneficiaries ........................................................................................................... 49     11.14 Execution in Counterpart ........................................................................................................... 50     11.15 Benefit of the Agreement .......................................................................................................... 50     11.16 Assignment ................................................................................................................................ 50     11.17 Costs .......................................................................................................................................... 50     11.18 No Partnership ........................................................................................................................... 50     11.19 Independent Legal Advice ......................................................................................................... 50  

 

                                                                                                           ASSET PURCHASE AGREEMENT   THIS ASSET PURCHASE AGREEMENT made as of the 12th day of June, 2019    AMONG:                PROFIRE  COMBUSTION, INC., a corporation formed under the laws of Alberta,               Canada                (the “Purchaser”)                - and -                MILLSTREAM ENERGY PRODUCTS LTD., a corporation formed under the laws of               the Province of British Columbia                (the “Vendor”)                - and -                LUNDSTROM HOLDINGS LTD., a corporation formed under the laws of the Province               of Alberta                (“Holdings”)                - and -                ROB LUNDSTROM, an individual resident in the Province of Alberta                (“Rob” and, together with Holdings, the “Guarantors”)    RECITALS:    A.    The Vendor carries on the Business (as defined herein).    B.    Holdings is the sole registered and beneficial shareholder of the Vendor and, by virtue thereof, will        receive a substantial economic benefit from the consummation of the transactions contemplated        hereby.    C.    Rob and Reana Lundstrom are the sole registered and beneficial shareholders of Holdings and, by        virtue thereof, will each receive a substantial economic benefit from the consummation of the        transactions contemplated hereby.   D.    All of the assets and rights used in the conduct, operation or maintenance of, or otherwise relating        to, the Business are legally and beneficially owned exclusively by the Vendor or are leased by the        Vendor under existing leases, all as more particularly set out in this Agreement.   E.    The Vendor wishes to sell, and the Purchaser wishes to purchase, the Purchased Assets (as defined        herein) and assume the Assumed Liabilities (as defined herein) associated therewith upon the terms        and subject to the conditions set out in this Agreement.  

 

                                       2   NOW THEREFORE, in consideration of the representations, warranties, covenants and agreements  herein and other good and valuable consideration (the receipt and sufficiency of which is hereby  acknowledged), the Parties covenant and agree as follows:                                     ARTICLE 1.                                   DEFINITIONS    1.1   Definitions    In this Agreement, including the preamble and the recitals hereto, unless the context otherwise requires, or   unless defined elsewhere in this Agreement:   (a)      “Accounting Firm” has the meaning ascribed thereto in Section 2.7(f);    (b)     “Affiliate” means, with respect to any specified Person, any other Person that directly or           indirectly, through one or more intermediaries, controls, is controlled by or is under common           control with such specified Person, including, in the case of any natural person, any members of           such natural person’s immediate family and any trust maintained for the benefit of such natural           person or such natural person’s immediate family. For purposes of this definition, the term           “control” (including, with correlative meanings, the terms “controlled by” and “under common           control with”) means the power to direct or cause the direction of the management and policies           of a Person, directly or indirectly, whether through the ownership of voting securities, by           contract or otherwise.      (c)     “Agreement” means this asset purchase agreement, including all Schedules, as such agreement           may be amended or supplemented from time to time, and references to “Article, “Section” or           “Schedule” mean the specified Article, Section or Schedule of this Agreement;    (d)     “Assumed Contracts” means all Contracts relating to the Business other than those listed in           Schedule 2.2(b), and including for avoidance of doubt the Production Contracts;    (e)     “Assumed Liabilities” has the meaning ascribed thereto in Section 2.3;    (f)     “Balance Sheet” means the balance sheet of the Vendor relating to the Business as at December           31, 2018, forming part of the Financial Statements;    (g)     “Books and Records” means, collectively, all books and records of the Vendor or relating to           the Business or any of the Purchased Assets, including financial, corporate, operation and sales           books, employee files, records, books of account, sales and purchase records, lists of present           and former suppliers, customers and any others having business dealings with the Vendor,           clients, sales leads, distributors, mailing lists, formulae, business reports, plans and projections,           operating materials, engineering standards and specifications, and all other documents, files,           records, correspondence, and other data and information, financial or otherwise, including all           data and information stored on computer-related or other electronic media maintained with           respect to the Business or any of the Purchased Assets;    (h)     “Business” means the business operations as maintained, operated and conducted as of the date           hereof and during the Interim Period by the Vendor, including the design, manufacture and sale           of burners and combustion equipment to be used in various applications throughout the oil and           gas industry;  

 

                                       3   (i)      “Business Day” means a day, other than a Saturday, Sunday or statutory holiday in the province           of British Columbia or the State of Utah and also excludes any day when banks are not generally           open for the transaction of commercial banking business in Vancouver, British Columbia or           Lindon, Utah during normal banking hours;    (j)     “Claims” includes claims, demands, complaints, grievances, actions, applications, suits, causes           of action, Orders, charges, indictments, prosecutions or other similar processes;    (k)     “Closing” means the completion of the transactions contemplated herein;    (l)     “Closing Date” means the later of (i) June 14, 2019 and (ii) the fifth Business Day following the           date on which the conditions in ARTICLE 7 have been satisfied or waived (other than those           conditions that by their terms are satisfied at Closing), or such other date agreed to in writing by           the Parties;    (m)     “Closing Indebtedness” means the Indebtedness of the Vendor as of the Closing Time under           the credit line provided by Royal Bank of Canada in the amount set forth in the Payoff Letter;    (n)     “Closing Statement” has the meaning ascribed thereto in Section 2.7(a);    (o)     “Closing Time” means 12:01 a.m. (Edmonton time) on the Closing Date, or such other time as           may be agreed upon by the Parties in writing;    (p)     “Closing Working Capital” means an amount (which may be positive or negative) equal to the           difference of (1) the Current Assets minus (2) the Current Liabilities as of the Closing Time.    (q)     “Confidential Information” means all trade secrets, know-how and other confidential or           proprietary information and data of or relating to the Vendor or the Business (whether or not           expressly identified as confidential or proprietary), including: (1) the Vendor’s business           information and materials, including financial information, business plans, business proposals,           contract terms and conditions, pricing and bidding methodologies and data, sales data, current           client lists, supplier lists, business partner lists, and similar information; (2) information and           materials relating to the Transferred Employees; (3) information and materials relating to future           plans, including marketing strategies, new materials research, pending projects and proposals,           proprietary production processes, research and development strategies, and similar items; (4)           the Vendor’s technical information and materials, including engineering drawings, CAD files,           computer programs, software, databases, methods, know-how, formulae, compositions,           technological data, technological prototypes, processes, discoveries, machines, inventions, and           similar items; and (5) any information or material that gives the Vendor an advantage with           respect to its competitors by virtue of not being known by those competitors.    (r)     “Contract” means each and every promissory note, contract, indenture, license, lease, deed,           agreement, obligation, promise, undertaking, understanding, option, instrument, arrangement,           document, entitlement, engagement or any other binding commitment, whether written or oral,           to which, prior to the Closing Date, the Vendor is a party or by which the Vendor is bound or           under which the Vendor has, or will have, any right, benefit or Liability, or any contingent right,           benefit or Liability (in each case, whether written or oral, express or implied) relating to the           Business or any of the Purchased Assets;    (s)     “Current Assets” means all accounts receivable and Inventory of the Vendor in each case           calculated in accordance with GAAP and only as and to the extent substantially similar in nature           to the line items reflected as “accounts receivable” and “inventory”, respectively, in the  

 

                                      4           Financial Statements;   (t)     “Current Liabilities” means the accounts payable of the Vendor, calculated in accordance with          GAAP and only as and to the extent substantially similar in nature to the line items reflected as          “accounts payable” in the Financial Statements, but for avoidance of doubt does not include any          Closing Indebtedness to the extent expressly set forth in the Payoff Letter;   (u)     “Disputed Item” has the meaning ascribed thereto in Section 2.7(d);    (v)     “Employee Plan” means any employee benefit plan, program or arrangement sponsored,          maintained or contributed to by the Vendor for the benefit of the Employees, including any          pension plan (whether defined benefit, defined contribution, funded or unfunded), supplemental          pension plan, deferred compensation plan, retirement income or group registered retirement          savings plan, retirement compensation arrangement, stock option, stock appreciation rights,          phantom stock or stock purchase plan, profit sharing plan, bonus plan or policy, commission or          other incentive compensation plan, change of control agreement, retention bonus plan or          agreement, severance or termination pay arrangement, employee life or other group insurance          plan, savings plan, employee loan, indemnity, education or hospitalization plan, medical or          dental plan, long-term or short-term disability plan or any other employee benefit plan,          program, policy or practice, whether formal or informal;   (w)     “Employees” means all individuals who are employees of the Vendor in connection with the          Business, including those employees on disability leave, parental leave or any other leave of          absence;   (x)     “Employment Offers” has the meaning ascribed thereto in Section 3.1(a);   (y)     “Encumbrance” means any encumbrance, mortgage, hypothec, pledge, assignment, charge,          lien, restriction, easement, right of occupation, security interest or other third party interest and          any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of          becoming any of the foregoing;   (z)     “Environmental Approvals” means all permits, certificates, licences, authorizations, consents,          registrations, or approvals issued or required by Governmental Authorities pursuant to          Environmental Laws with respect to the operation of the Business or related to any of the          Purchased Assets;   (aa)    “Environmental Laws” means all Laws and agreements with any Governmental Authority and          all other statutory requirements relating to public health and safety, noise control, pollution or          the protection of the environment or to the use, storage, generation, handling, manufacturing,          processing, labeling, advertising, sale, display, treatment, disposal, recycling, reuse,          transportation, Release, threatened Release or remediation of Hazardous Substances, including          civil responsibility for acts or omissions with respect to the environment, and all authorizations          issued pursuant to such Law, agreements or other statutory requirements;   (bb)    “Equipment” means all machinery, equipment, fixtures, accessories, supplies, tools, furniture,          personal computers, computer hardware, office equipment, office supplies, personal property          and other tangible property owned or leased by the Vendor and used in, held for use in or          relating to the conduct or operation of the Business;  

 

                                       5   (cc)     “Equipment Leases” means all equipment leases, conditional sales contracts, capital leases,           title retention agreements and other similar agreements relating to Equipment to which the           Vendor is a party and which is used by the Vendor in the Business;    (dd)    “Estimated Closing Statement” has the meaning ascribed thereto in Section 2.6;    (ee)    “Estimated Closing Working Capital” has the meaning ascribed thereto in Section 2.6;    (ff)    “ETA” means the Excise Tax Act (Canada);    (gg)    “Excluded Taxes” means (1) all Taxes owed by the Vendor or any of its Affiliates for any           period; (2) all Taxes relating to the Business, the Purchased Assets, the Assumed Liabilities or           the Transferred Employees for any Pre-Closing Period and for the period of any Straddle Period           ending immediately prior to the Closing Date; (3) all Taxes imposed on or payable by the           Vendor or for which the Vendor otherwise may be liable (a) pursuant to any Contract for any           Pre-Closing Period, (b) by reason of a Tax sharing, indemnity or similar Contract entered into           by the Vendor or any of its past or present Affiliates prior to the Closing Time, or (c) by reason           of transferee or successor liability arising in respect of a transaction undertaken by the Vendor           (or any of its present or past Affiliates) prior to the Closing Time; (4) all Taxes imposed on any           Purchaser Indemnified Party as a result of a breach by the Vendor of any representation or           warranty set forth in Section 5.2(z) or breach by the Vendor of any covenant set forth herein           relating to Taxes; and (5) all Liabilities apportioned to the Vendor under Section 2.10(a);    (hh)    “Final Closing Working Capital” means (1) if the Vendor does not duly and timely deliver a           Notice of Disagreement with respect to the Closing Statement pursuant to Section 2.7(d) or if           the Vendor delivers a notice of acceptance with respect thereto, the Closing Working Capital as           set forth in the Closing Statement; or (2) if the Vendor duly and timely delivers a Notice of           Disagreement, the Closing Working Capital (a) as agreed to in writing by the Purchaser and the           Vendor pursuant to Section 2.7(e) or (b) in the absence of such agreement, as finally determined           by the Accounting Firm pursuant to Section 2.7(f).    (ii)    “Final Royalty Revenue” means, in respect of a Royalty Period, (1) if the Vendor does not duly           and timely deliver a Notice of Disagreement with respect to a Royalty Statement pursuant to           Section 4.1(b), or if the Vendor delivers a notice of acceptance with respect thereto, the Royalty           Revenue in respect of such Royalty Period as set forth in such Royalty Statement; or (2) if the           Vendor duly and timely delivers a Notice of Disagreement with respect to a Royalty Statement,           the Royalty Revenue in respect of such Royalty Period (a) as agreed to in writing by the           Purchaser and the Vendor, or (b) in the absence of such agreement, as finally determined by the           Accounting Firm pursuant to Section 4.1.    (jj)    “Financial Statements” means, collectively, (a) the Balance Sheet, (b) the review engagement           comparative balance sheet, statement of income, statement of retained earnings and statement of           cash flows of the Vendor as at and for the fiscal year ended December 31, 2018, together with           the notes thereto.    (kk)    “Fundamental Representations” means the representations and warranties of the Guarantors           in Section 5.1 and the representations and warranties of the Vendor in Sections 5.2(a), 5.2(b),           5.2(c), 5.2(d), 5.2(e), 5.2(h) and 5.2(ee);    (ll)    “GAAP” has the meaning ascribed thereto in Section 1.4;  

 

                                       6   (mm)     “Governmental Authority” means any: (i) national, federal, provincial, state, regional,           municipal, local or other government, governmental or public department, officials, ministers,           Crown corporations, central bank, court, tribunal or dispute settlement panel, arbitral body,           commission, board, bureau or agency, domestic or foreign; (ii) subdivision, agency,           commission, board or authority of any of the foregoing; or (iii) quasi- governmental or private           body exercising any regulatory, expropriation or taxing authority under or for the account of any           of the foregoing;    (nn)    “Guarantors” has the meaning ascribed thereto in the Recitals;    (oo)    “GST” means all Taxes payable under Part IX of the ETA or under any provincial legislation           similar to the ETA, and any reference to a specific provision of the ETA shall refer to any           successor provision thereto of like or similar effect;    (pp)    “Hazardous Substance” means any element, waste or other substance, whether natural or           artificial and whether consisting of gas, liquid, solid or vapour that is prohibited, listed, defined,           judicially interpreted, designated or classified as dangerous, hazardous, radioactive, explosive           or toxic or a pollutant or a contaminant under or pursuant to any applicable Environmental           Laws, and specifically including petroleum and all derivatives thereof or synthetic substitutes           therefor and asbestos or asbestos-containing materials or any substance which is deemed under           Environmental Laws to be deleterious to natural resources or public health and safety;   (qq)     “Holdback Amount” means an amount equal to $330,000;   (rr)     “Holdings” has the meaning ascribed thereto in the Recitals;   (ss)     “Indebtedness” of any Person means and includes (a) indebtedness for borrowed money or           indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed           money, (b) amounts owing as deferred purchase price for property or services, including all           seller notes and “earn-out” payments, (c) indebtedness evidenced by any note, bond, debenture,           mortgage or other debt instrument or financial debt security, (d) commitments or obligations by           which such Person assures a creditor against loss (including contingent reimbursement           obligations with respect to letters of credit), (e) indebtedness secured by an Encumbrance on           assets or properties of such Person, (f) obligations or commitments to repay deposits or other           amounts advanced by and owing to third Persons, (g) obligations under any interest rate,           currency or other hedging agreement, (h) obligations or commitments under capitalized leases           (capital portion), (i) any change of control payments or prepayment premiums, penalties,           charges or equivalents thereof with respect to any indebtedness, obligation, or liability of the           type described in clauses (a) through (i) above, or (j) guarantees or other contingent liabilities           (including so called take-or-pay or keep-well agreements) with respect to any indebtedness,           obligation, claim or liability of any other Person of a type described in clauses (a) through (i)           above. Notwithstanding the foregoing, Indebtedness with respect to the Vendor shall not           include any Current Liabilities to the extent (and only to the extent) specifically included in the           calculation of Final Closing Working Capital.   (tt)     “Insurance Policies” has the meaning ascribed thereto in Section 5.2(gg);   (uu)     “Intellectual Property” means the intellectual property (whether foreign or domestic,           registered or unregistered) used in the operation, conduct or maintenance of the Business, as it is           currently being, and has been, operated, conducted or maintained, including: (i) all inventions,           patents, patent applications and patent disclosures, together with all reissuances, continuations,           continuations-in-part, revisions, extensions and re-examinations thereof; (ii) all trademarks,  

 

                                       7            trade-names, corporate names, domain names and all goodwill associated therewith; (iii) all           copyrightable works, copyrights and industrial designs; (iv) all confidential information,           including all lists of present and former suppliers, customers and any others having business           dealings with, the Business and the mailing lists, trade secrets, processes, procedures,           know-how, methods, data, compilations, databases and the information contained therein of the           Vendor; together with (A) all copies and tangible embodiments of the foregoing, in whatever           form or medium (including all computer software and related documentation), (B) all           improvements, modifications, translations, adaptations, refinements, derivations and           combinations thereof, (C) all applications, registrations and renewals in connection therewith           and (D) all Intellectual Property Rights related thereto;   (vv)     “Intellectual Property Rights” means any right or protection existing from time to time in a           specific jurisdiction, whether registered or not, under any patent law or other invention or           discovery law, copyright law, performance or moral rights law, trade-secret law, confidential           information law, integrated circuit topography law, semi-conductor chip protection law,           trade-mark law, industrial design law, unfair competition law or other similar Laws and           includes legislation by competent Governmental Authority and judicial decisions under           common law or equity;   (ww)     “Inventory” means all inventories of the Business owned by the Vendor and used in carrying           on the Business, including all finished goods, goods in transit, work in process, samples,           packaging materials, raw materials, containers, production and shipping supplies and all other           materials and supplies on hand to be used or consumed in the Business;   (xx)     “Interim Period” has the meaning ascribed thereto in Section 6.1;    (yy)    “IT Systems” means the computer systems (including computers, servers, workstations,           routers, hubs, switches, circuits, networks and data communication lines), information           technology systems, telecommunication systems and data processing systems that are owned by           or leased or licensed to the Vendor and used in the conduct of the Business.   (zz)     “Knowledge of the Vendor” means the knowledge of Rob and/or Foster Anderson after           reasonable inquiry;   (aaa)    “Laws” means all applicable laws, by-laws, statutes, rules, regulations, Orders, ordinances,           awards, rulings, determinations, decrees, codes, policies, instruments, notices, directions,           injunctions, judgments (including judicial decisions under common law or equity) and any other           requirements of any Governmental Authority having the force of law;    (bbb)   “Leased Real Property” means the real property subject to the Leases and all structures,           improvements, appurtenances and fixtures (including fixed machinery and fixed equipment)           situate thereon, therein, thereunder or forming a part thereof;    (ccc)   “Leases” means all leases, subleases, tenancy agreements, rights of occupation or occupancy           agreements to which the Vendor is a party, as tenant, in respect of real property from which the           Vendor (directly or indirectly) operates, conducts or maintains the Business and including, for           avoidance of doubt (i) the lease dated November 30, 2018 between the Vendor and Porter           Warehousing and Distributing Inc. in respect of the warehouse located at 15703 - 114th Avenue           NW, Edmonton, AB T5M 2Z3, (ii) the Merchandise Warehousemen Agreement dated           September 19, 2018 between the Vendor and Bradford Global Logistics, Ltd. in respect of the           warehouse located in Houston, Texas and (iii) the oral month-to-month lease in respect of the           storage yard in Stetler, Alberta;  

 

                                       8   (ddd)    “Liability” means, with respect to any Person, any liability, debt, duty, undertaking or           obligation of such Person of any kind, character or description, whether known or unknown,           absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or           unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested,           executory, determined, determinable or otherwise, and whether or not the same is required to be           accrued on the financial statements of such Person;   (eee)    “Losses” means, in respect of a Person and in relation to a matter, all losses, costs, debts,           expenses, diminution of value and damages (including all penalties, fines and interest thereon),           contingent or otherwise, liquidated or unliquidated which such Person suffers, sustains, pays or           incurs in connection with such matter, whether or not a Claim has been made, an Order issued or           a judgment obtained, and includes Taxes (other than refundable Taxes), costs and           disbursements of legal counsel and other experts and consultants and reasonable costs arising           from such matter;   (fff)    “Marketing Materials” means all marketing, advertising, sales support, sales collateral, and           promotional materials and productions, sales and marketing files (whether in print or electronic           format) including all past and present promotion copy and promotion copy data bases, web           images, web copy, and advertising and direct marketing materials of the Vendor used in           carrying on the Business;   (ggg)    “Material Adverse Change” means any change, event, development, occurrence,           circumstance or state of facts that, individually or in the aggregate, is, or would reasonably be           expected to be, material and adverse to the business, operations, earnings, condition (financial           or otherwise), property, assets (including the Purchased Assets) or Liabilities (contingent or           otherwise) of the Business taken as a whole, other than any change, effect, event, development,           occurrence, circumstance or state of facts arising directly from any action required by this           Agreement or the Transaction Documents;   (hhh)    “Material Contracts” means those Assumed Contracts as described in Section 5.2(t);   (iii)    “Notice of Disagreement” has the meaning ascribed thereto in Section 2.7(d);   (jjj)    “Orders” means orders, injunctions, judgments, administrative complaints, decrees, rulings,           awards, assessments, directions, instructions, penalties or sanctions issued, filed or imposed by           any Governmental Authority or arbitrator and includes remedial orders;   (kkk)    “Ordinary Course of Business” means the ordinary course of business consistent with prior           custom and practice of the entity to whom such term relates (including with respect to quantity,           frequency, terms, values, risks and obligations);   (lll)    “Parties” means the parties to this Agreement and their respective heirs, executors, legal           representatives, successors and permitted assigns and “Party” means any one of them;   (mmm)    “Payoff Letter” means a payoff letter, in form and substance reasonably satisfactory to the           Purchaser, from Royal Bank of Canada in respect of the Closing Indebtedness;   (nnn)    “Permitted Encumbrances” means (a) Encumbrances for current Taxes, assessments, charges           or levies not yet due and payable and securing only Assumed Liabilities, and (b) the           Encumbrances identified in Schedule 5.2(ee);  

 

                                       9   (ooo)    “Person” includes an individual, partnership, limited partnership, firm, joint venture, venture           capital fund, limited liability company, unlimited liability company, trust, trustee, executor,           administrator, legal personal representative, estate, group, body corporate, corporation,           Governmental Authority, agency or instrumentality, unincorporated organization or association           syndicate or other entity, whether or not having legal status;    (ppp)   “Pre-Closing Period” means any taxation period ending on or before the Closing.    (qqq)   “Production Contracts” means the Contracts between the Vendor and certain entities in China           relating to the production or manufacturing of the Vendor’s products;    (rrr)   “Purchase Price” has the meaning ascribed to it in Section 2.5;    (sss)   “Purchased Assets” has the meaning ascribed thereto in Section 2.1;    (ttt)   “Purchaser” has the meaning ascribed thereto in the Preamble;    (uuu)   “Purchaser Indemnified Party” has the meaning ascribed thereto in Section 9.2(a);    (vvv)   “Regulatory Authorizations” means, collectively, all licences, permits, registrations,           certificates, consents, Orders and similar rights and privileges in respect of, or required in           connection with, the Purchased Assets and/or the carrying on of the Business, including the           Environmental Approvals;     (www)   “Release” has the meaning prescribed in any Environmental Law and includes any sudden,           intermittent or gradual release, spill, leak, pumping, addition, pouring, emission, emptying,           discharge, injection, escape, leaching, disposal, dumping, deposit, spraying, burial,           abandonment, incineration, seepage, placement or introduction of a Hazardous Substance into           the environment;    (xxx)   “Release Date” has the meaning ascribed thereto in Section 9.4(b);    (yyy)   “Remedial Order” means any Order issued, filed or imposed by any Governmental Authority           pursuant to any Environmental Laws and includes, without limitation, any order requiring           remediation or clean-up of any Hazardous Substance, or requiring that any Release or any other           activity be reduced, modified or eliminated;    (zzz)   “Restricted Rights” has the meaning ascribed thereto in Section 2.9(a);     (aaaa)  “Retained Assets” has the meaning ascribed thereto in Section 2.2;    (bbbb)  “Retained Liabilities” has the meaning ascribed thereto in Section 2.4;    (cccc)  “Rob” has the meaning ascribed thereto in the Recitals;    (dddd)  “Royalty Margin” means the percentage obtained by dividing (i) the total Royalty Revenue in           respect of a Royalty Period by (ii) the total expenses, calculated in accordance with GAAP,           directly attributable to the sale of Royalty Products during the same Royalty Period;    (eeee)  “Royalty Payment” has the ascribed thereto in Section 4.1(c);    (ffff)  “Royalty Percentage” means 4.5%, as adjusted pursuant to Section 4.1(d);  

 

                                       10   (gggg)   “Royalty Period” means each of the five successive annual periods following the Closing Date;   (hhhh)   “Royalty Products” means the products listed on Schedule 4.1 as designed on the Closing           Date;   (iiii)   “Royalty Revenue” means the revenue, calculated in accordance with GAAP, directly           attributable to the sale of Royalty Products during a Royalty Period;   (jjjj)   “Royalty Statement” has the meaning ascribed thereto in Section 4.1(a);   (kkkk)   “Straddle Period” means a taxation year or fiscal period that includes but does not begin or end           on the Closing Date.    (llll)  “Successor Taxes” means any liability for Taxes required by law to be paid as an assessed           liability by the Vendor which, as a result of the transfers herein, become a liability for Taxes of           the Purchaser, except as provided in Section 2.10(a);    (mmmm)  “Target Working Capital” means $1,950,000;    (nnnn)  “Tax Act” means the Income Tax Act (Canada);    (oooo)  “Tax Records” has the meaning ascribed thereto in Section 2.2(a);    (pppp)  “Tax Returns” includes all returns, reports, notices, forms, declarations, elections, filings,           information returns and statements (including any amendments, schedules, attachments,           supplements, appendices and exhibits thereto) required to be filed with any Governmental           Authority in respect of Taxes, whether in tangible, electronic or other form;    (qqqq)  “Taxes” means: (1) all foreign, federal, commonwealth, state, provincial and local taxes,           charges, fees, duties, premiums or assessments of any nature whatsoever, including all income,           profits, franchise, gross receipts, net receipts, customs duties, capital stock, recording, stamp,           document, transfer, severance, payroll, employment, unemployment, social security, disability,           sales, goods and services, harmonized sales, use, real property, personal property, withholding,           excise, value-added, ad valorem, occupancy, insurance premium, surplus lines insurance and           other taxes in each case imposed by any Governmental Authority; and (2) all interest, penalties,           fines and additional amounts imposed by any Governmental Authority with respect to such           amounts;    (rrrr)  “Territory” has the meaning attributed to that term in Section 6.8(a);    (ssss)  “Third Party” has the meaning ascribed thereto in Section 2.9(a);    (tttt)  “Third Party Claim” has the meaning ascribed thereto in Section 9.3(a);     (uuuu)  “Transaction Documents” means this Agreement together with the Transitional Services           Agreement and the Royalty Agreement;    (vvvv)  “Transferred Employees” has the meaning ascribed thereto in Section 3.1(d);     (wwww)  “Transferred Information” means the personal information (namely, information about an           identifiable individual other than his or her business contact information when used or disclosed           for the purpose of contacting such individual in that individual’s capacity as a representative of           an organization and for no other purpose) to be disclosed or conveyed to the Purchaser or any of  

 

                                      11           its representatives or agents by or on behalf of the Vendor as a result of or in conjunction with          the transactions contemplated herein, and includes all such personal information disclosed to          the Purchaser prior to the execution of this Agreement;    (xxxx)  “Transitional Services Agreement” means the transitional services agreement between the          Vendor and the Purchaser in the form attached hereto as Exhibit A;   (yyyy)  “Unassignable Contracts” has the meaning ascribed thereto in Section 2.9(a);   (zzzz)  “Unresolved Item” has the meaning ascribed thereto in Section 2.7(f);   (aaaaa) “Vendor” has the meaning ascribed thereto in the Preamble to this Agreement;   1.2   Certain Rules of Interpretation   In this Agreement and the Schedules hereto:   (a)     Currency - unless otherwise specified, all references to money amounts are to Canadian          currency;   (b)     Headings - the division of this Agreement into Articles and Sections and the insertion of          descriptive headings is solely for convenience of reference, the descriptive headings are not          intended as complete or accurate descriptions of the content of such Articles or Sections and          neither the division of this Agreement into Articles and Sections nor the insertion of descriptive          headings shall affect the construction or interpretation of this Agreement;   (c)     Singular, Gender, Herein, etc. - the use of words in the singular or plural, or with a particular          gender, shall not limit the scope or exclude the application of any provision of this Agreement to          such Person or Persons or circumstances as the context otherwise permits, and “hereby”,          “hereof’, “herein”, “hereunder”, “herewith”, “hereto” and similar terms refer to this Agreement          and not to any particular provision of this Agreement;   (d)     Inclusive Terminology - whenever used in this Agreement, the words “includes” and          “including” and similar terms of inclusion will not, unless expressly modified by the words          “only” or “solely”, be construed as terms of limitation, but rather will mean “includes but is not          limited to” and “including but not limited to”, so that references to included matters will be          regarded as illustrative without being either characterizing or exhaustive;   (e)     Consent - whenever a provision of this Agreement requires an approval or consent by a Party to          this Agreement and notification of such approval or consent is not delivered within the          applicable time limit, then, unless otherwise specified, the Party whose consent or approval is          required shall be conclusively deemed to have withheld its approval or consent;   (f)     Calculation of Time - unless otherwise specified, time periods within or following which any          payment is to be made or act is to be done shall be calculated by excluding the day on which the          period commences and including the day on which the period ends and by extending the period          to the next Business Day following if the last day of the period is not a Business Day; and   (g)     Interpretation Not Affected By Drafting Party - the Parties acknowledge and agree that their          respective legal counsel have reviewed and participated in settling the terms of this Agreement          and that any rule of construction or interpretation to the effect that any ambiguity is to be          resolved against the drafting Party shall not be applicable in the interpretation of this          Agreement.  

 

                                       12   1.3   Statutory References   A reference in this Agreement to a statute shall be a reference to the statute and the regulations promulgated  thereunder, as amended or superseded from time to time, either before or after the date hereof, unless  otherwise stated or the context otherwise requires.   1.4   Accounting Principles   All references to “GAAP” shall mean the applicable Canadian Accounting Standards for Private  Enterprises, which are in effect from time to time, consistently applied in accordance with applicable  accounting practices of the particular entity.                                     ARTICLE 2.                                PURCHASE AND SALE    2.1   Purchase and Sale    On the terms and subject to fulfillment of the conditions set out herein, at the Closing, the Vendor hereby   agrees to sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser agrees to purchase   from the Vendor, all of the Vendor’s right, title and interest in and to all of the assets, property (intangible   and tangible) and rights of every kind and description used (or held for use) in connection with, relating to   or necessary for the operation of the Business (the “Purchased Assets”), which shall include the following:    (a)     the Current Assets;     (b)     all Intellectual Property and Intellectual Property Rights of the Vendor used in, held for use in or           relating to the conduct or operation of the Business;    (c)      all Confidential Information;     (d)     the Equipment, including for avoidance of doubt a 50% interest in a Flame Arrestor Cell           Machine and jigs and molds for quality control and assembly in factories in China under the           same terms and conditions as currently held by the Vendor;   (e)      all rights of the Vendor under the Assumed Contracts (including the Leases and Equipment           Leases) and including, for avoidance of doubt, under all Assumed Contracts that are oral           contracts with manufacturer’s of the Vendor’s products in China;     (f)     all Marketing Materials;     (g)     the personal property under the control of each of Foster Anderson, Bridget Pilon and MJ           Aseltine;    (h)     the Books and Records, other than those books and records described in Section 2.2(c);     (i)     all rights, claims, counterclaims, credits, causes of action or rights of set-off of the Vendor           against third parties to the extent arising out of or relating to the Purchased Assets or the           Assumed Liabilities;     (j)     all telephone numbers, facsimile numbers, directory listings, e-mail addresses and other           communication identifiers owned by the Vendor that are used in, held for use in or relating to           the conduct or operation of the Business; and   

 

                                       13   (k)      all goodwill and going concern value of the Vendor arising out of or relating to the Business,           together with the exclusive right of the Purchaser or any of its Affiliates to represent itself as           carrying on the Business in continuation of and in succession to the Vendor.   For avoidance of doubt, the Purchased Assets shall not include any of the Retained Assets, as described in  Section 2.2.   2.2   Retained Assets   The Purchased Assets shall not include the following assets, property and rights (collectively, the  “Retained Assets”):    (a)     rights to refunds of Taxes paid by the Vendor, whether paid directly by the Vendor or indirectly           by a third party on the Vendor’s behalf, regardless of whether such rights have arisen or           hereafter arise, all of the Tax assets of the Vendor, including any loss carry forwards, Tax           credits, Tax refunds receivable, Tax Returns and working papers, information, files,           correspondence, records, data, plans, reports and recorded knowledge related to Taxes           (collectively, the “Tax Records”);    (b)     those Contracts listed in Schedule 2.2(b);    (c)     cash held by the Vendor;    (d)     the personal property not under the control of any of Foster Anderson, Bridget Pilon and MJ           Aseltine;    (e)     the Employee Plans and the Insurance Policies;    (f)     the bank accounts of the Vendor;    (g)     those books and records of the Vendor which are required by Law to be retained by the Vendor           (including the minute books and corporate records of the Vendor);     (h)     any Contract that imposes a Liability on the Business that (a) is not disclosed to the Purchaser in           Schedule 5.2(t) and (b) of which the Vendor has been notified by the Purchaser, within 30 days           of discovery of such Contract by the Purchaser that such Contract is not a Purchased Asset; and    (i)     the Vendor’s rights under or pursuant to this Agreement and each other agreement, document or           instrument executed and delivered by the Vendor in connection with the consummation of the           transactions contemplated by this Agreement.    2.3   Assumption of Liabilities    At the Closing, the Purchaser shall assume, and be solely and exclusively liable for, and shall pay and   perform and discharge when due, the following Liabilities of the Vendor (collectively, the “Assumed   Liabilities”):    (a)     subject to ARTICLE 3, all Liabilities relating to the Transferred Employees arising from events           occurring on or after, but not prior to, the Closing Date;    (b)     the Current Liabilities, in each case to the extent expressly included in the calculation of the           Closing Working Capital;  

 

                                       14   (c)      all Liabilities of the Vendor under the Assumed Contracts (including under the Leases and the           Equipment Leases) accruing after the Closing Date.     Notwithstanding the foregoing, in no event shall the Purchaser be obligated to assume, perform or   otherwise discharge the Liabilities of the Vendor to the Purchaser under this Agreement. Furthermore, the   Purchaser’s assumption of the Assumed Liabilities shall in no way be deemed a waiver or release by the   Purchaser of any rights, at law or in equity, which the Purchaser may have against the Vendor as a result of   any Claim arising out of the breach by the Vendor of any representation, warranty or covenant of the   Vendor under this Agreement.    2.4   Retained Liabilities    Notwithstanding anything in this Agreement to the contrary, the Purchaser shall not assume, and shall be   deemed not to have assumed, any Liabilities of the Vendor (collectively, the “Retained Liabilities”) other  than the Assumed Liabilities. The Retained Liabilities shall include, but not be limited to, those set out  below:   (a)      all Liabilities and Encumbrances, whether past, present or future, arising prior to, on or after the           Closing Time, relating to, under or in respect of the Retained Assets, including in particular all           Liabilities arising out of any Contract listed in Schedule 2.2(b);    (b)     all Excluded Taxes;     (c)     any Liability relating to or arising out of any Assumed Contract unless set forth in Section           2.3(c);    (d)     all Liabilities, whether past, present or future, arising prior to, on or after the Closing Time,           relating to or in respect of any current or former Employee that is not a Transferred Employee;    (e)     with respect to Transferred Employees, (i) any liabilities providing for the payment of salary,           bonuses, commissions or benefits relating to the period prior to the Closing Date, and (ii) any           liabilities arising out of workers’ compensation or benefits claims relating to the period prior to           the Closing Date duly filed prior to, on or following the Closing Date by or on behalf of any           Transferred Employee;     (f)     all Liabilities, whether past, present or future, arising prior to, on or after the Closing Time,           relating to, under or in respect of all Claims against the Vendor set out or required to be set out           in Schedule 5.2(y);     (g)     all Liabilities arising from the sale of goods and services before the Closing pursuant to product           warranties, product returns, recalls and rebates; and     (h)     all Indebtedness of the Vendor.    2.5   Purchase Price    (a)     The consideration payable by the Purchaser to the Vendor for the sale of the Purchased Assets           (the “Purchase Price”) by the Vendor to the Purchaser shall be the aggregate amount of           $3,300,000 (the “Preliminary Purchase Price”), subject to adjustment as provided in Section           2.7.    (b)     On the Closing Date, the Purchaser shall pay to the Vendor an amount (the “Closing Payment”)           equal to (i) the Preliminary Purchase Price minus (ii) the amount, if any, by which the Estimated  

 

                                      15           Closing Working Capital is less than the Target Working Capital, plus (iii) the amount, if any,          by which the Estimated Closing Working Capital exceeds the Target Working Capital minus          (iv) the Holdback Amount, minus (v) the Closing Indebtedness.   (c)     On the Closing Date, the Purchaser shall pay on behalf of the Company the Closing          Indebtedness to the Royal Bank of Canada in the amount and in accordance with the instructions          set forth in the Payoff Letter.    2.6   Estimated Closing Statement    Not less than three Business Days and not more than five Business Days prior to the Closing Date, the  Vendor will prepare and deliver to the Purchaser a statement (the “Estimated Closing Statement”) that  sets forth a reasonably detailed calculation of the Vendor’s good faith estimate of the Closing Working  Capital (the “Estimated Closing Working Capital”). The Vendor will prepare the Estimated Closing  Statement in good faith and in a manner consistent with the Financial Statements. If the Purchaser, acting  reasonably and in good faith, disagrees with the Estimated Closing Statement, the Purchaser will provide  comments and reasons as to the disagreement and the Vendor will consider such comments and reasons and  to the extent appropriate make revisions to the Estimated Closing Statement. The Estimated Closing  Statement will also attach the Payoff Letter.   2.7   Purchase Price Adjustment   (a)     Within 90 days after the Closing Date, the Purchaser (with the assistance of the Vendor to the          extent reasonably requested by the Purchaser) will cause to be prepared and delivered to the          Vendor a statement (the “Closing Statement”) setting forth in reasonable detail the Purchaser’s          good faith calculations of the Closing Working Capital. The Closing Statement will be prepared          in accordance with GAAP.   (b)     As promptly as practicable (and in no event later than five Business Days) after the date of          determination of the Final Closing Working Capital, the Preliminary Purchase Price shall be          adjusted as follows:           (i)   If the Final Closing Working Capital exceeds the Estimated Closing Working Capital                (the amount of such excess, the “Working Capital Excess”), then the Preliminary                Purchase Price shall be increased correspondingly and, subject to the Purchaser’s right                of set-off for indemnification claims pursuant to Section 9.4(a), the Purchaser will pay                or cause to be paid to the Vendor, by wire transfer of immediately available funds, an                amount equal to the Working Capital Excess.           (ii)  If the Final Closing Working Capital is less than the Estimated Closing Working                Capital (the absolute value of such shortfall, the “Working Capital Shortfall”), then                the Preliminary Purchase Price will be decreased correspondingly and (A) the                Purchaser will retain from the Holdback Amount an amount equal to the Working                Capital Shortfall, and (B) if the Working Capital Shortfall exceeds the Holdback                Amount, then (1) the Purchaser will retain the entire Holdback Amount and (2) the                Vendor will pay to the Purchaser, by wire transfer of immediately available funds to a                bank account designated in writing by the Purchaser, an amount equal to the excess of                the Working Capital Shortfall over the Holdback Amount.   (c)     Any amount paid pursuant to this Section 2.7 shall be treated as an adjustment to the Purchase          Price for Tax purposes, except to the extent otherwise required by applicable Law.   

 

                                       16   (d)      The Closing Statement delivered pursuant to Section 2.7(a) and the Purchaser’s calculations of           the Closing Working Capital set forth therein shall be final, binding and conclusive on the           Parties unless the Vendor, within 30 days following the receipt of the Closing Statement,           delivers to the Purchaser a written notice of disagreement (a “Notice of Disagreement”) setting           forth in reasonable detail (i) each specific item or amount in the Closing Statement as to which           the Vendor disagrees in good faith (each, a “Disputed Item”), (ii) the basis for each Disputed           Item (which shall be that either (A) a Disputed Item was not calculated in accordance with           GAAP or the other terms of this Agreement, or (B) the Closing Statement contains a           mathematical or clerical error) and reasonable supporting documentation therefor, and (iii) the           Vendor’s alternative calculations of the Closing Working Capital. The Vendor shall be deemed           to have agreed with all items and amounts set forth in the Closing Statement other than the           Disputed Items set forth in any Notice of Disagreement with respect to the Closing Statement.   (e)      If the Vendor duly and timely delivers to the Purchaser a Notice of Disagreement with respect to           the Closing Statement that complies with Section 2.7(d), the Purchaser and the Vendor shall,           during the 30 day period following the Purchaser’s receipt of such Notice of Disagreement           (the “Resolution Period”), negotiate in good faith and use commercially reasonable efforts to           resolve promptly all of the Disputed Items set forth in such Notice of Disagreement. Any such           Disputed Items that are resolved by a written agreement between the Purchaser and the Vendor           during the Resolution Period shall be final, binding and conclusive on the Parties and shall           become part of the calculations of the Closing Working Capital.    (f)     If, by the end of the Resolution Period, the Purchaser and the Vendor are unable to resolve all of           the Disputed Items set forth in a Notice of Disagreement with respect to the Closing Statement,           then as promptly as practicable and in no event later than ten days thereafter, they shall jointly           engage and submit such unresolved Disputed Items (each, an “Unresolved Item”) for           resolution to a nationally or regionally recognized independent accounting firm mutually           acceptable to the Purchaser and the Vendor (the “Accounting Firm”). If the Purchaser and the           Vendor are unable to agree on the engagement of the Accounting Firm within 15 days after the           end of the Resolution Period, the Purchaser and the Vendor shall each select such an accounting           firm and those two firms shall, within ten days after their selection, select a third nationally or           regionally recognized independent accounting firm to serve as the Accounting Firm hereunder           to resolve the Unresolved Items. The Purchaser and the Vendor shall (A) execute a reasonable           engagement letter with the Accounting Firm, which letter will specifically require the           Accounting Firm to review this Agreement and agree to comply with the terms of this Section           2.7(f), (B) submit to the Accounting Firm not later than 15 days after its engagement a written           statement summarizing its position on the Unresolved Items, together with such supporting           documentation as it deems necessary, and (C) not engage in any ex-parte communications with           the Accounting Firm. In resolving the matters submitted to it, the Accounting Firm (A) shall act           as an expert in accounting, and not as an arbitrator, to resolve only the Unresolved Items in a           manner consistent with the terms of this Agreement; (B) shall base its decision solely on a           single set of written submissions of the Purchaser and the Vendor and not conduct an           independent review or audit; (C) shall not assign a dollar value to any Unresolved Item greater           than the highest amount or less than the lowest amount claimed by the Purchaser or the Vendor,           as applicable, in their written submissions to the Accounting Firm; and (D) shall deliver to the           Purchaser and the Vendor its written decision setting forth its calculations of the Closing           Working Capital as promptly as practicable (and in no event later than 30 days) after the           submission of the Unresolved Items to the Accounting Firm. The Accounting Firm’s written           decision shall be final, binding and conclusive on the Parties absent fraud or manifest error. The           Closing Statement shall be revised as necessary to reflect the Accounting Firm’s written           decision, and such decision may be entered as a judgment in any court of competent jurisdiction.  

 

                                       17   (g)      The fees, costs and expenses of the Accounting Firm shall be allocated to and borne equally by           the Purchaser, on the one hand, and the Vendor, on the other hand.    (h)      During the period from and after the Purchaser’s delivery of the Closing Statement through the           final resolution of any matters contemplated by this Section 2.7, the Purchaser shall afford the           Vendor, on a confidential basis, reasonable access during normal business hours to the books           and records of the Business to the extent related to the calculations of the Closing Working           Capital, provided that any such access shall not interfere unreasonably with the business           operations of the Purchaser and shall be subject to the execution by the Person requesting such           access of a customary confidentiality agreement in form and substance reasonably satisfactory           to the Purchaser. Notwithstanding the foregoing, the Purchaser shall not be required to provide           any such access if the Purchaser determines, in its reasonable judgment, that doing so would           (i) violate any applicable Law, (ii) violate a Contract with, or other obligation of confidentiality           owing to, a third party, or (iii) waive or otherwise jeopardize the protection of any           solicitor-client privilege, work-product doctrine or other applicable privilege (provided that the           Purchaser shall use commercially reasonable efforts, at the cost of the Vendor, to provide such           access in an alternative manner that does not have any of the foregoing effects).    2.8   Allocation of Purchase Price   The Purchase Price and Assumed Liabilities shall be allocated among the Purchased Assets in a manner  reasonably determined by the Purchaser and provided to the Vendor no less than one Business Day prior to  the Closing, provided that the Purchaser shall consider the Vendor’s reasonable comments thereon and shall  allocate $1 to the restrictive covenants set forth in this Agreement. The allocation of the Purchase Price  shall be binding and the Vendor and the Purchaser shall report the purchase and sale of the Purchased  Assets in any Tax Returns or other filings which are necessary or desirable under the Tax Act or any other  applicable Law to give effect to such allocation. Neither the Vendor nor the Purchaser shall take a contrary  position with respect to such allocation in any Tax proceeding, audit, investigation, assessment,  reassessment, objection or appeal.   2.9   Unassignable Rights   (a)      If any rights, entitlements, benefits, remedies, duties or obligations under any Assumed           Contracts or Regulatory Authorizations, whether existing at present or in the future, are as a           matter of law or by their terms: (1) not assignable; or (2) not assignable by the Vendor to the           Purchaser without the consent of a Person who is not a Party to this Agreement (a “Third           Party”) and such consents are not obtained by the Closing (hereinafter in this Section 2.9,           collectively, the “Restricted Rights”, and the Contracts or Regulatory Authorizations under           which the Restricted Rights arise are, collectively, the “Unassignable Contracts”); then:            (i)   pending the effective transfer of the relevant Unassignable Contracts, the Vendor will                 hold the Restricted Rights in trust for the exclusive benefit of the Purchaser as bare                 trustee and agent, provided that the Purchaser will pay, perform and discharge all duties                 and obligations of the Vendor and Purchaser shall have all rights, entitlements, benefits                 and remedies of the Vendor, arising or accruing with respect to such Unassignable                 Contracts during that period;            (ii)  the Vendor will, at the request and expense and under the direction of the Purchaser, in                 the name of the Vendor or otherwise as the Purchaser shall reasonably specify, take all                 such reasonable actions and do all such reasonable things as shall, in the reasonable                 opinion of the Purchaser, be necessary or desirable in order that the rights, entitlements,                 benefits, remedies, duties and obligations of the Vendor under any such Unassignable  

 

                                       18                  Contract, and relating to the applicable Restricted Right, may be enjoyed, received or                 performed, as the case may be, in accordance with the terms of such Unassignable                 Contract, including that all monies receivable under such Unassignable Contract may                 be received by the Purchaser and that all rights and licenses under such Unassignable                 Contracts may be exercised by the Purchaser;            (iii) the Vendor will promptly pay over to the Purchaser all such monies collected by the                 Vendor in respect of such Unassignable Contracts net of any unpaid related costs or                 expenses (including any Taxes that are payable in respect of the receipt of such                 amounts);            (iv)  to the extent permitted by the Third Party and the Vendor:                  A.    the Purchaser will perform the duties and obligations under such Unassignable                       Contracts, on behalf of the Vendor until such time as the Restricted Rights are                       fully vested with the Purchaser; and                  B.    the Vendor will exercise the rights, entitlements, benefits and remedies under                       such Unassignable Contracts, on behalf of the Purchaser, until such time as the                       Restricted Rights are fully vested with the Purchaser;            (v)   the Purchaser will be responsible for all costs reasonably incurred by the Vendor as a                 consequence of or in connection with this Section 2.9; and            (vi)  the Vendor shall maintain its existence, and shall continue to be licensed, registered or                 otherwise qualified and authorized to conduct its affairs and carry on business as is                 necessary to fulfill its obligations as set out in this Section 2.9 until the earlier of the                 expiry or assignment of the last Unassignable Contract;   (b)      Nothing in this Agreement shall be construed as an assignment of, or an attempt to assign to the           Purchaser, any Unassignable Contract.   2.10   Tax Matters    (a)     Unless otherwise provided for in this Section 2.10, the Vendor will be responsible for the           payment of all Taxes payable by it to any relevant taxing authority and relating to the operation           of the Business and/or the ownership of the Purchased Assets which arise on or before, or are           related to a period of time on or before, the Closing Time.    (b)     The Vendor and the Purchaser agree as follows:            (i)   The Purchased Assets being acquired by the Purchaser constitute all or substantially all                 of the property that can reasonably be regarded as being necessary for the Purchaser to                 be capable of carrying on the Business;             (ii)  Subject to the election in respect of GST under subsection 167(1) of the ETA and any                 equivalent or corresponding provision under applicable provincial or territorial Tax                 legislation, the Purchaser shall be liable for and shall pay for all GST in connection with                 the transfer of the Purchased Assets by the Vendor to the Purchaser;            (iii) The Vendor and the Purchaser shall, if applicable, make an election under subsection                 167(1) of the ETA and any equivalent or corresponding provision under applicable  

 

                                       19                  provincial or territorial Tax legislation for GST in respect of the purchase and sale of                 the Purchased Assets. For this purpose, the Vendor represents and warrants to the                 Purchaser that it is registered for GST under the ETA an and the Purchaser represents                 and warrants to the Vendor that it is registered for GST under the ETA. Where the                 context so permits, any reference to the ETA includes reference to any analogous                 provincial legislation.    (c)     The Vendor shall execute an election as to the sale of accounts receivable under section 22 of           the Tax Act designating in such election the applicable portion of the Purchase Price set out in           Schedule 2.8 paid by the Purchaser for such accounts receivable.   (d)      The Purchaser and the Vendor agree to elect jointly in the prescribed form to have the rules in           subsection 20(24) of the Tax Act, and any equivalent or corresponding provision under           applicable provincial or territorial tax legislation, apply to the payment of consideration to the           Purchaser in consideration of the assumption of any future obligations to supply goods or           perform services for which the Vendor has included amounts in its taxable income under           paragraph 12(1)(a) of the Tax Act. The Purchaser and the Vendor will prepare and file their           respective Tax Returns in a manner consistent with this election.                                     ARTICLE 3.                                   EMPLOYMENT    3.1   Employees    (a)     On or before the date that is 5 Business Days prior to the Closing Date, or such other date as the           Purchaser and the Vendor may agree in writing, the Purchaser (or an Affiliate of the Purchaser)           shall make written offers of employment (collectively, the “Employment Offers”), to each of           Foster Anderson, Bridget Pilon and MJ Aseltine, provided that such employment shall be           conditional on Closing and effective at the Closing Time.    (b)     The Employment Offers shall: (i) be in the general geographic area of the current employment           of the respective Employees; (ii) include compensation no less favorable in the aggregate than           the total compensation amount currently offered to each respective Employee by the Vendor on           the date hereof; (iii) recognize the respective Employees’ years of service with the Vendor and           (iv) be substantially consistent with the position, responsibility and scope of work of each           respective Employee on the date hereof.    (c)     The Vendor shall encourage Mr. Anderson, Ms. Pilon and Ms. Aseltine to accept the           Purchaser’s Employment Offers, shall facilitate the delivery of such Employment Offers and           shall use commercially reasonable efforts to provide a reasonable opportunity for such           Employees to discuss such Employment Offers with the Purchaser prior to the Closing Date.    (d)     Employees who accept an Employment Offer as of the Closing Time in writing and return to           their respective workplaces on the Closing Date are collectively referred to herein as           “Transferred Employees”. The Purchaser shall not assume responsibility for any Transferred           Employee until such Employee commences employment with the Purchaser, but in no event           shall the Purchaser assume any responsibility for any commitment, obligation, duty or liability           (i) of the Vendor to any Transferred Employee, or (ii) to any Transferred Employee that arose           prior to the Closing Date, provided that the Purchaser shall be responsible for paying any and all           statutory termination pay, statutory severance pay, and common law pay in lieu of notice (if           applicable) that may have accrued prior to the Closing Date in the event that the Purchaser           terminates the employment of a Transferred Employee following the Closing Date. The  

 

                                       20            Purchaser shall not assume responsibility for any Employee of the Vendor who is not a           Transferred Employee and the Vendor agrees to continue to assume all responsibilities,           commitments and/or liabilities for all Employees who are not Transferred Employees.   (e)      All employment matters relating to the Business, including employee terminations arising up to           and including the Closing Date, salary, benefits and pension obligations accrued and not paid up           to and including the Closing Date, actions, causes of action, Claims and demands, and any           interest, award, judgment, penalties, costs or expenses relating thereto shall be the Vendor’s           responsibility.     (f)     The Vendor shall calculate the accrued vacation credits up to the Closing Date for all           Transferred Employees and shall, at the Closing, pay the amount thereof to the Purchaser to the           extent not included in the Estimated Closing Statement (which amount may be set off against           the Closing Payment). The Purchaser shall assume the obligations of the Vendor with respect to           the vacation entitlements of the Transferred Employees on the same terms and conditions for the           current year as such employees would have been entitled had they remained in the employment           of the Vendor.   (g)      The Purchaser shall ensure that all employee benefits coverage offered by the Purchaser to its           employees is provided without interruption to the Transferred Employees on and after the           Closing Date without any waiting period or other qualification. The Vendor shall be responsible           for all employee benefits currently enjoyed by Employees of the Business, whether or not           required by Law, up to and including the Closing Date.   (h)      The Vendor shall retain responsibility for, and satisfy all obligations and liabilities with respect           to, all payments and benefits of the Employees (and their spouses, dependents and beneficiaries,           and all former Employees, agents and representatives) under the Employee Plans.                                     ARTICLE 4.                                     ROYALTY     4.1   Royalty    (a)     Within 90 days after the last day of each Royalty Period, the Purchaser will cause to be prepared           in good faith and delivered to the Vendor’s Representative a statement (each, a “Royalty           Statement”) setting forth the Purchaser’s calculations of (i) the Royalty Revenue for such           Royalty Period; (ii) the Royalty Margin for such Royalty Period; and (iii) the Royalty Payment,           if any, payable by the Purchaser to the Vendor herein in respect of such Royalty Period.    (b)     Any dispute arising out of or relating to the calculations of Royalty Revenue for any Royalty           Period or a Royalty Payment set forth in a Royalty Statement shall be resolved in accordance           with the dispute resolution procedures set forth in Section 2.7, mutatis mutandis.    (c)     Subject to the Purchaser’s right of set-off for indemnification claims pursuant to Section 9.4 and           to Section 4.1(d), as promptly as practicable (but in no event later than ten (10) Business Days)           after the date of determination of the Final Royalty Revenue for each Royalty Period, the           Purchaser will pay or cause to be paid to the Vendor, by wire transfer of immediately available           funds, an amount (the “Royalty Payment”), if any, equal to the product of  the Final Royalty           Revenue in respect of such Royalty Period multiplied by the Royalty Percentage.    (d)     The Vendor acknowledges that the Royalty Percentage has been determined based on the           calculation of the revenues, expenses and margins associated with Royalty Products in  

 

                                       21            historical periods set forth in the Books and Records that would constitute Royalty Revenue and           Royalty Margin in those periods. If the Royalty Margin in respect of any Royalty Period is less           than the historical margin associated with the Royalty Products in any material respect, the           Royalty Percentage shall be adjusted commensurately, and the Purchaser shall describe such           adjustment in the applicable Royalty Statement.                                     ARTICLE 5.                        REPRESENTATIONS AND WARRANTIES    5.1   Representations and Warranties of the Guarantors    As a condition and material inducement to the Purchaser’s willingness to enter into this Agreement and   consummate the transactions contemplated herein, the Guarantors represent and warrant to the Purchaser as  follows:   Status   (a)      Holdings is a corporation duly formed and validly existing under the laws of the province of           Alberta and has the corporate authority to execute and deliver this Agreement and each           Transaction Document to which it is a party, to perform its obligations hereunder and           thereunder and to consummate the transactions contemplated by this Agreement. Rob has the           requisite legal capacity and authority to execute and deliver this Agreement and each           Transaction Document to which he is a party, to perform his obligations hereunder and           thereunder and to consummate the transactions contemplated by this Agreement.    Authorization and Enforceability   (b)      The execution, delivery and performance by Holdings of this Agreement and each Transaction           Document to which it is a party and the consummation by Holdings of the transactions           contemplated herein have been duly and validly authorized and approved by all necessary           corporate action. This Agreement has been, and each Transaction Document to be executed and           delivered by the Guarantors at Closing will be, duly and validly executed and delivered by the           Guarantors, and this Agreement (assuming due authorization, execution and delivery by the           Purchaser), and each such Transaction Document when so executed and delivered (assuming           due authorization, execution and delivery by the other parties thereto) will, constitute legal,           valid and binding obligations of the Guarantors, enforceable against them in accordance with           their respective terms.   Absence of Conflicts   (c)      The execution, delivery and performance by the Guarantors of this Agreement and each           Transaction Document to which a Guarantor is a party and the consummation of the transactions           contemplated herein do not and will not (i) conflict with or violate any provision of Holdings’           constating documents, (ii) conflict with or violate any applicable Law; or (iii) require any           consent of, notice or payment to or other action by any Person under, conflict with, violate,           result in a breach of the terms, conditions or provisions of, constitute a default (or an event that           with or without notice or lapse of time or both would become a default) under, or give rise to any           rights of acceleration, amendment, termination or cancellation or to a loss of any rights under,           any Contract to which a Guarantor is a party or by which a Guarantor or any of his or its assets           or properties is bound, and no consent, approval or authorization of, or registration, declaration           or filing with, or notice to, any Governmental Authority or any other Person is required to be           obtained, made or given by a Guarantor as a result of or in connection with the execution,  

 

                                       22            delivery and performance of this Agreement or any Transaction Document or the           consummation of the transactions contemplated herein by the Guarantors.    Litigation    (d)     There is no Claim pending or, to the knowledge of the Guarantors, threatened against or           affecting a Guarantor that, if determined or resolved adversely to the Guarantor, would have a           material adverse effect on the ability of the Guarantors or the Vendor to perform their           obligations hereunder.   No Broker   (e)      No broker, finder, investment banker or other intermediary is entitled or has claimed to be           entitled to any fee or commission in connection with the transactions contemplated by this           Agreement based upon arrangements made by or on behalf of a Guarantor.    Bankruptcy    (f)     Neither of the Guarantors (i) is an insolvent Person within the meaning of the Bankruptcy and           Insolvency Act (Canada); and (ii) has made an assignment in favour of his or its creditors or a           proposal in bankruptcy to its creditors or any class thereof or had any petition for a receiving           order presented in respect of it. No receiver has been appointed in respect of a Guarantor or a           Guarantor’s assets or properties and no execution or distress has been levied upon any of his or           its assets or properties.     5.2   Representations and Warranties of the Vendor    As a condition and material inducement to the Purchaser’s willingness to enter into this Agreement and   consummate the transactions contemplated herein, the Vendor represents and warrants to the Purchaser as   follows:    Status    (a)     The Vendor is a corporation duly formed and validly existing under the Laws of the Province of           British Columbia and the Vendor has the requisite power, authority and capacity to own, lease,           license or otherwise hold the Purchased Assets and to carry on the Business as is currently and           has historically been operated, conducted or maintained by it.    (b)     The Vendor is duly registered, licensed or otherwise qualified or authorized to conduct its           affairs and carry on business in connection with the Business, and is in good standing in each           jurisdiction in which the Purchased Assets are owned, leased, licensed or otherwise held, or the           nature of such activities makes such registration, licensing, qualification or authorization           necessary.    (c)     The Vendor is the only Person which, in whole or in part, carries on the Business.    Due Authorization and Enforceability     (d)     The Vendor has all requisite power, authority and capacity to enter into this Agreement and all           documents to be delivered by the Vendor pursuant hereto (including the applicable Transaction           Documents) and to perform its obligations hereunder and thereunder.  

 

                                       23   (e)      This Agreement has been duly authorized, executed and delivered on behalf of the Vendor. This           Agreement constitutes, and each other document to be executed and delivered by the Vendor           hereunder will, following their execution, constitute, a legal, valid and binding obligation of the           Vendor, enforceable against it in accordance with their respective terms and, at the Closing, all           documents required to be executed and delivered by the Vendor hereunder will have been duly           authorized, executed and delivered by the Vendor, and constitute legal, valid and binding           obligations of the Vendor, enforceable against it in accordance with their respective terms.   Absence of Conflicts   (f)      Except as set forth in Schedule 5.2(f), the execution and delivery of this Agreement and all           documents to be delivered pursuant hereto, the performance of the terms hereof and thereof and           the consummation of the transactions contemplated herein and therein do not and will not (i)           result in a breach or violation of, conflict with or constitute a default under, any term or           provision of the articles or governing documents of the Vendor or any resolutions of the           directors or shareholders of the Vendor; (ii) result in a breach or violation of, conflict with,           constitute a default (or an event, condition or occurrence which, with or without notice or           passage of time or both, would constitute a default) under, accelerate or permit the acceleration           of the performance required by, or result in a right of suspension, revocation or termination of,           any Material Contract or Regulatory Authorization to which any of the Purchased Assets and/or           the Business are subject or result in the creation of any Encumbrance upon any of the Purchased           Assets or give others any interest or right, including any right of purchase, termination,           cancellation or acceleration under any such Material Contract or Regulatory Authorization; (iii)           result in the creation of any Encumbrance upon any of the Purchased Assets; (iv) result in a           breach or violation of, conflict with or constitute a default under any Laws applicable to the           Vendor, the Business or any of the Purchased Assets; or (v) give rise to a Material Adverse           Change.    (g)     Other than as set forth in Schedule 5.2(g), no consent, approval or authorization of, or           registration, declaration or filing with, or notice to, any Governmental Authority or any other           Person is required to be obtained, made or given by the Vendor as a result of or in connection           with the Vendor’s execution, delivery and performance of this Agreement or any Transaction           Document or the consummation of the transactions contemplated herein.    (h)     No Person other than the Purchaser has any written or oral agreement, or any option or other           right or privilege (whether by law, pre-emptive, contractual or otherwise) capable of becoming           an agreement or option, for the purchase or acquisition from the Vendor of the Business or any           of the Purchased Assets or any right, title and interest therein.    Regulatory Authorizations    (i)     The Vendor holds and is in material compliance with all Regulatory Authorizations; (ii) such           Regulatory Authorizations are in full force and effect in accordance with their terms and, to the           Knowledge of the Vendor, no event has occurred or circumstance exists that (with or without           notice or passage of time or both) may constitute or result in a violation of any such Regulatory           Authorization; (iii) no proceedings are pending or, to the Knowledge of the Vendor threatened,           which could result in the revocation or limitation of any Regulatory Authorization; and (iv) all           material steps have been taken and filings have been made on a timely basis with respect to each           Regulatory Authorization and, if applicable, its renewal. Schedule 5.2(i) sets forth an accurate           list of all material Regulatory Authorizations held by the Vendor.  

 

                                       24   No Broker   (j)      No broker, finder, investment banker or other intermediary is entitled or has claimed to be           entitled to any fee or commission in connection with the transactions contemplated by this           Agreement based upon arrangements made by or on behalf of the Vendor.   Books and Records   (k)      All of the Books and Records, whether of a financial or accounting nature or otherwise, have           been delivered or made available to the Purchaser and are true, complete, accurate in all material           respects and fairly present the activities of the Business and the Purchased Assets and have been           maintained in accordance with prudent business practices.   Financial Statements and Indebtedness   (l)      The Financial Statements (A) have been derived from, and are in accordance with, the Books           and Records; (B) have been prepared in accordance with GAAP; and (C) present fairly and           accurately in all material respects the financial condition, results of operations and cash flows of           the Vendor as of the dates thereof or for the periods covered thereby. The Vendor has not           received any notice of any fraud that involves any Employee or that calls into question the           effectiveness of the design and operation of the Vendor’s internal controls over accounting or           financial reporting.   (m)      The Vendor does not have any Liabilities, other than (i) Liabilities that are reflected or reserved           against on the Financial Statements, (ii) Liabilities similar in nature to those reflected or           reserved against on the Financial Statements that (A) have been incurred in the Ordinary Course           of Business since December 31, 2018 and (B) are not, individually or in the aggregate, material           to the Business and that will be reflected in the Closing Working Capital, and (iii) Liabilities           pursuant to any executory Contracts to which the Vendor is party that were incurred in the           Ordinary Course of Business, other than any such Liabilities arising out of or relating to any           failure to perform, improper performance, breach, default or violation of the Vendor prior to the           Closing.   (n)      Without limiting the generality of Section 5.2(m), except as set forth in Schedule 5.2(n), (i) the           Vendor has no Indebtedness, (ii) the Vendor does not guarantee any Indebtedness of any other           Person, (iii) there are no Encumbrances (other than Permitted Encumbrances) on the Purchased           Assets.    (o)      The accounts receivable shown on the Balance Sheet (subject to reserves for non-collectability           as reflected therein) and all receivables acquired or generated by the Vendor since the date           thereof are bona fide receivables and represent amounts due with respect to actual arm’s length           transactions entered into in the ordinary course of business consistent with past practice and are           collectable at their recorded amounts. Any reserves for non-collectability have been reflected on           the Balance Sheet in accordance with GAAP and are adequate.   (p)      The Inventory does not include any material items that are slow moving, below standard quality           or of a quality or quantity not useable or saleable in the Ordinary Course of Business, the value           of which has not been written down on the Vendor’s Books and Records to net realizable market           value. None of the Inventory, other than goods in transit, are held on consignment or otherwise           by any other Person or at a location other than the Leased Real Property. Inventory levels of the           Vendor have been maintained at such amounts as are required for the operation of the Business,           and such Inventory levels are adequate therefore. All Inventories are valued on the Books and  

 

                                      25           Records at the lower of cost and net realizable value.   (q)     The Vendor maintains a system of general internal controls over financial reporting in respect of          the Business and the Purchased Assets, effective to provide internal control over financial          reporting in respect of the Business and the Purchased Assets sufficient to provide reasonable          assurance that: (i) transactions are executed in accordance with management’s general or          specific authorizations; (ii) transactions are recorded as necessary to permit preparation of          financial statements in conformity with GAAP and to maintain accountability; and (iii) the          recorded amounts for assets are reassessed periodically as required by GAAP.   Suppliers and Customers   (r)     Schedule 5.2(r) sets out each supplier and customer relating to 10% of the total purchases and          sales, as the case may be, of the Business for each of (a) the last two complete fiscal years, and          (b) the year to date, and the amounts of such purchases and sales. To the Knowledge of the          Vendor, the relationships of the Vendor with each such supplier and customer are good          commercial working relationships. Except as set out in Schedule 5.2(r), no such supplier or          customer has cancelled or otherwise terminated, or threatened in writing to cancel or otherwise          terminate, its relationship with the Vendor or the Business. The Vendor has not received any          notice (whether written or oral) that any such supplier or customer may cancel or otherwise          materially and adversely modify its relationship with the Vendor or the Business or limit its          services, supplies or materials to the Vendor or Business, or its usage or purchase of the services          and products of the Vendor and the Business either as a result of the transactions contemplated          hereby or otherwise. The Vendor has delivered to the Purchaser copies of all Contracts with the          customers and suppliers listed in Schedule 5.2(r). Except as reflected in such Contracts, no          customers of the Purchased Business are entitled to or customarily receive discounts,          allowances, volume rebate or similar reductions in price or other trade terms arising from any          agreements or understandings (whether written or oral) with or concessions granted to any          customer.   Contracts   (s)     Accurate and complete copies, all as amended or supplemented to date, of: (i) all Material          Contracts, and (ii) where Material Contracts are oral, correct and complete written summaries of          the terms thereof have been made available to the Purchaser, and the copies or summaries          thereof (as applicable) made available to the Purchaser constitute the entire agreement between          the relevant parties thereto pertaining to the subject matter of such Material Contract.   (t)     The Contracts listed on Schedule 5.2(t) (the “Material Contracts”) are valid and in full force          and effect, and constitute all:           (i)   Leases and Equipment Leases;           (ii)  Contracts relating to the Intellectual Property;           (iii) Contracts with any Governmental Authority;           (iv)  distribution agreements;           (v)   manufacturing agreements;           (vi)  guarantees in relation to any of the Assumed Liabilities;  

 

                                       26            (vii) Contracts that would by their terms on an assumption prohibit the assuming party from                 freely engaging in business anywhere in the world or competing with any Person or in                 any geographical area;            (viii) Contracts or commitment for capital expenditures with a remaining amount to be paid                 in excess of $10,000;            (ix)  Contracts for the sale of any assets of the Business, other than sales of Inventory in the                 Ordinary Course of Business;            (x)   Contracts granting to any Person of preferential rights to purchase any of the Purchased                 Assets or otherwise in relation to the Business (other than this Agreement), including                 pursuant to any right of first refusal;            (xi)  written employment agreements entered into between the Vendor and any Employee                 who will receive an Employment Offer;             (xii) All Contracts with the customers and suppliers listed in Schedule 5.2(r); and            (xiii) any other Contracts providing for expenses or revenues of the Business in excess of                 $20,000 per annum.   (u)      The Vendor is not in breach of any Assumed Contract, nor to the Knowledge of the Vendor has           any circumstance occurred nor does any circumstance exist, that with or without the passage of           time, notice or both, may constitute such a breach and to the Knowledge of the Vendor no third           party to any Assumed Contract is in breach of any such Assumed Contract nor has any           circumstance occurred nor does any circumstance exist that with or without the passage of time,           notice or both, may constitute such a breach.   (v)      No counterparty to any Material Contract has notified the Vendor of any intention to propose           any material modification to, terminate or not renew, as the case may be, any Material Contract,           and the Vendor has not received any notice alleging its default under any Assumed Contract.   Absence of Changes and Unusual Transactions   (w)      Save and except as set out in Schedule 5.2(w), since December 31, 2018:            (i)   the Vendor has conducted the Business in the Ordinary Course of Business and in                 compliance with all applicable Laws;            (ii)  the Vendor has maintained adequate levels of Inventory and supply consistent with past                 practice in order to carry on the Business in the Ordinary Course of Business;            (iii) the Vendor has not transferred, assigned, sold or otherwise disposed of any of the assets                 shown or reflected in the Balance Sheet or cancelled any debts or entitlements except,                 in each case, in the Ordinary Course of Business;            (iv)  the Vendor has not incurred or assumed any material commitment or Liability relating                 to the Business or affecting any of the Purchased Assets except as disclosed in the                 Financial Statements and any unsecured current obligations and Liabilities incurred in                 the Ordinary Course of Business;  

 

                              27   (v)   the Vendor has not entered into any Contract relating to forward commitment for        Inventory or supply in excess of the level or price of Inventory or supply maintained by        the Vendor in the Ordinary Course of Business;   (vi)  the Vendor has not made any material write-down of the value of the assets of the        Business or the Purchased Assets or any portion thereof;   (vii) the Vendor has not made any material changes in accounting policies;   (viii) the Vendor has not discharged or satisfied any Encumbrance, or paid any material        obligation or Liability relating to the Business or any of the Purchased Assets, other        than Liabilities included in the Balance Sheet and any Liabilities incurred by the        Vendor since the date of the Balance Sheet are in the Ordinary Course of Business;   (ix)  there has been no damage, destruction, loss or other event, development or condition of        any nature (whether or not covered by insurance) materially affecting the Business or        the Purchased Assets (taken as a whole);   (x)   the Vendor has not suffered an operating loss or any unusual or extraordinary loss,        waived or omitted to take any action in respect of any rights, or entered into any        commitment or transaction not in the Ordinary Course of Business;   (xi)  the Vendor has not terminated, waived, released or cancelled any material rights or        Claims relating to the Business or the Purchased Assets;   (xii) the Vendor has not commenced, participated in, or agreed to participate in any        bankruptcy, involuntary liquidation, dissolution, winding up, insolvency or similar        proceeding;   (xiii) the Vendor has not modified or terminated, or received notice of termination of, any        Material Contract;   (xiv) the Vendor has not increased or promised to increase, in any manner, the compensation        or benefits of any of the Employees who will receive Employment Offers, other than in        the Ordinary Course of Business;   (xv)  the Vendor has not entered into, adopted or amended any Employee Plan;   (xvi) the Vendor has used commercially reasonable efforts to preserve the goodwill of the        Business and its relationships with its suppliers, customers, clients and any others        having business dealings with the Vendor in respect of the Business;   (xvii) the Vendor has not created or permitted to be created any Encumbrances on any of the        Purchased Assets other than Permitted Encumbrances;   (xviii) the Vendor has kept in full force and effect, and in good standing, all of the current        insurance policies of the Vendor with respect to the Business and the Purchased Assets;   (xix) there has been no Material Adverse Change; and   (xx)  the Vendor has not authorized, agreed or otherwise become committed to do any of the        foregoing.  

 

                                       28   Joint Venture Interests or Strategic Alliances   (x)      Except as set forth in Schedule 5.2(x), the Vendor is neither the registered nor the beneficial           owner of securities of any Person. The Vendor is not a partner or participant in, or a party to, any           strategic alliance, partnership, joint venture, profit-sharing arrangement, co-operative           agreement or other association of any nature whatsoever relating to the Business or any of the           Purchased Assets.   Litigation   (y)      There is no Claim in progress, pending, or to the Knowledge of the Vendor, threatened against           or relating to the Vendor, the Business or any of the Purchased Assets, other than the Claims           listed on Schedule 5.2(y). There are no judgments unsatisfied against the Vendor nor any           judgment, injunction, order, decree, ruling or charge of any Governmental Authority to which           the Business is, or any of the Purchased Assets are, subject.   Tax   (z)      Except as set forth in Schedule 5.2(z):            (i)   the Vendor has duly and timely, and in all applicable jurisdictions: (A) filed with the                 appropriate Governmental Authority or agency in the manner prescribed by Law all                 Tax Returns required to be filed by the Vendor in relation to the Business and the                 Purchased Assets that would cause or create a lien or charge for Taxes payable by the                 Vendor as required by this Agreement; and (B) paid all Taxes of the Vendor in respect                 of the Business and the Purchased Assets which are capable of forming or resulting in                 an Encumbrance on the Purchased Assets;            (ii)  the Vendor is not a non-resident of Canada for the purposes of the Tax Act;            (iii) the Vendor is duly registered under Part IX of the ETA for GST purposes and its                 registration number is 837936731;            (iv)  the Vendor, with respect to the Business and the Purchased Assets, has duly and timely                 withheld all Taxes and other amounts required by Law to be withheld by it (including                 Taxes and other amounts required to be withheld by it in respect of any amount paid or                 credited or deemed to be paid or credited by it to or for the account or benefit of any                 Person, including any Employees, officers or directors and any non-resident Person),                 and has duly and timely remitted to the appropriate Governmental Authority such Taxes                 and other amounts required by Law to be remitted by it;            (v)   the Vendor has duly and timely collected all material amounts on account of any Taxes,                 including GST and provincial or territorial sales Taxes, required by Law to be collected                 by it and has duly and timely remitted to the appropriate Governmental Authority any                 such amounts required by Law to be remitted by it where failure to do so could result in                 an Encumbrance on the Purchased Assets or could become the Liability of the                 Purchaser after Closing;            (vi)  the Purchaser will not be liable for any Taxes or have successor liability for Successor                 Taxes of the Vendor as a result of acquiring the Purchased Assets.  

 

                                       29   Employees   (aa)     Schedule 5.2(aa) sets forth: (i) job title, location of employment, duration of employment,           vacation entitlement, employee benefit entitlement amount (including under any Employee           Plan), on an individual and aggregate basis, and rate of remuneration (including any bonus,           commission or other incentive compensation entitlement) as at the date of this Agreement, and           status as a full-time or part-time employee, of each Employee who will receive an Employment           Offer. Schedule 5.2(aa) lists every Employee Plan.   (bb)     The Vendor has made available to the Purchaser the employment agreements between the           Vendor and any Employee who will receive an Employment Offer.   (cc)     Neither the Vendor nor any of the Employees is subject to any agreement with any labour union           or employee association in respect of the Business and have not made any commitment to, or           conducted negotiations with, any labour union or employee association with respect to any           future collective bargaining agreement. To the Knowledge of the Vendor, there has been no           attempt to organize, certify or establish any labour union or employee association in relation to           any of the Employees during the five-year period preceding the date of this Agreement. There           are no existing or, to the Knowledge of the Vendor, threatened strikes or labour disputes, walk           outs, work stoppages, slow downs, lock outs, grievances, controversies or other labour troubles           affecting any Employees or the Business.   (dd)     The Vendor has been, and is, in compliance with the Laws regarding labour and employment           practices, including employment standards, terms and conditions of employment, and all of the           personnel engaged to provide services to the Business who are not Employees are treated as           independent contractors, are properly characterized as independent contractors, and are not           likely to be characterized by a Governmental Authority as Employees.   Purchased Assets   (ee)     The Purchased Assets represent all of the assets, of any nature whatsoever, used in the conduct,           operation or maintenance of, or otherwise relating to, the Business and as are necessary and           sufficient to operate the Business in substantially the same manner as the Business is operated,           conducted or maintained in the Ordinary Course of Business. The Vendor owns and has the           exclusive legal, beneficial and (where its interests are registrable) registered right, title and           interest in and to all of the Purchased Assets (other than personal property leased pursuant to the           Equipment Leases), with good and valid marketable title, free and clear of all Encumbrances           other than Permitted Encumbrances and any existing financing charges registered against the           Purchased Assets which will be discharged by the Vendor on Closing, and, in particular,           without limiting the generality of the foregoing, there has been no assignment, subletting or           granting of any license (of occupation or otherwise) of or in respect of the Purchased Assets           which would cause a prohibition or restriction on the use or other exploitation by the Purchaser           of such Purchased Assets in a manner consistent with the Business after giving effect to the           Closing. No notice or proceeding in respect of expropriation of any of the Purchased Assets by           any Governmental Authority has been given or commenced nor, to the Knowledge of the           Vendor, is there any proposal to give such notice or commence any such proceeding or are any           such proceedings threatened.    Real Property   (ff)     The Vendor does not own, nor has it ever owned, any real property. Except for the Leased Real           Property the Vendor does not lease, sublease or otherwise use or occupy any real property. The  

 

                                      30           Vendor has a valid and existing leasehold interest in, and the right to quiet enjoyment of, the          Leased Real Property, free and clear of all Encumbrances other than Permitted Encumbrances.          There are no Contracts to which the Vendor is a party granting to any third party the right of use          or occupancy of any portion of the Leased Real Property. The Vendor has timely paid all rents          and other amounts due or payable, and has complied in all material respects with all of its other          material obligations, under the Leases. To the Knowledge of the Vendor, (i) there are no          material structural, physical or mechanical defects or other material adverse physical conditions          affecting the Leased Real Property; (ii) all building systems and improvements to, or which          constitute a portion of, the Leased Real Property are in good operating condition and repair,          ordinary wear and tear excepted; and (iii) neither the whole nor any part of the Leased Real          Property is subject to any pending or threatened suit for condemnation, expropriation or other          taking by any Governmental Authority.    Insurance   (gg)    The Vendor maintains the policies of insurance listed in Schedule 5.2(gg) (the “Insurance          Policies”), such policies of insurance represent all policies of insurance currently maintained by          the Vendor and all such contracts of insurance are legal, valid, enforceable and in full force and          effect and all premiums due and owing in connection with such policies have been paid; there          exists no state or event of default under any such insurance policies; and there has been no          notice or advice of withdrawal of any such policy or any notice of conditions for continuation of          any coverage that has not been complied with; and the Vendor has given notice or has otherwise          presented, in a timely fashion, every material Claim relating to the Business that is known by it          or known by the Vendor to be covered by insurance under its insurance policies or contracts.          The Vendor has not been refused any insurance coverage sought or applied for in respect of the          Business or in relation to any of the Purchased Assets and there is no material Claim pending          under any insurance policy of the Vendor that has been denied, rejected, questioned or disputed          by any insurer or as to which any insurer has made any reservation of rights or refused to cover          all or any portion of such Claims.   Intellectual Property; Confidential Information   (hh)    The Vendor owns all right, title and interest in and to, or is licensed or otherwise possesses          legally enforceable rights to use, all Intellectual Property used in or necessary for the conduct of          the Business (collectively, the “Business Intellectual Property”), in each case free and clear of          all Encumbrances other than Permitted Encumbrances. Schedule 5.2(hh) sets forth a true,          complete and correct list of all material owned or licensed Business Intellectual Property.          Except as set forth in Schedule 5.2(hh), none of the owned Business Intellectual Property has          been registered or is the subject of an application for registration with any Governmental          Authority. The Vendor has not granted any license or other right to any third party with respect          to the Business Intellectual Property. The consummation of the transactions contemplated by          this Agreement will not result in the termination or impairment of the Business Intellectual          Property.   (ii)    The conduct of the Business and the use of the Business Intellectual Property do not infringe,          misappropriate or otherwise violate any Intellectual Property Rights of any third party. There          are no Claims pending or, to the Knowledge of the Vendor, threatened against the Vendor          alleging that the conduct of the Business or the use of the Business Intellectual Property          infringes, misappropriates or otherwise violates the Intellectual Property Rights of any third          party. To the Knowledge of the Vendor, no third party (including any current or former          Employee or independent contractor) has infringed, misappropriated or otherwise violated, or is  

 

                                       31            currently infringing, misappropriating or otherwise violating, any owned Business Intellectual           Property.    (jj)    None of the Employees, former employees or current or former officers, directors, consultants           or independent contractors of the Vendor who have had access to Confidential Information have           been relieved of their respective obligations of confidentiality to Vendor, and all such Persons           have been expressly advised of their respective continuing obligations of confidentiality. All           Employees, former employees and current and former officers, directors, consultants and           independent contractors of the Vendor who have been involved in the development or           modification of the Business Intellectual Property have assigned all of their rights to the           Business Intellectual Property to the Vendor and expressly waived any moral rights in Business           Intellectual Property. To the Knowledge of the Vendor, none of the Employees, former           employees or current or former officers, directors, consultants or independent contractors of the           Vendor are subject to any obligation to any other Person, whether contractual or otherwise,           including obligations relating to confidentiality, non-competition or possession of proprietary           information, or are subject to any judgment, decree or order of any court or administrative           agency, relating to the Business Intellectual Property that would interfere with the Business as           conducted or presently proposed to be conducted.    (kk)     The Vendor has implemented and maintained commercially reasonable measures in accordance           with sound industry practices to protect and maintain the confidentiality of the Confidential           Information. All Persons with whom the Vendor has shared Confidential Information have           executed a binding non-disclosure and confidentiality agreement governing such Person’s use           of Confidential Information and, to the Knowledge of the Vendor, no such Person is in breach of           such agreements.   (ll)     The IT Systems used by the Vendor in the conduct of the Business (i) are sufficient in all           material respects for the conduct of the Business as currently conducted by the Vendor; (ii) are           in good working condition, ordinary wear and tear excepted, to perform all information           technology and data processing operations necessary for the conduct of the Business as           currently conducted; and (iii) to the Knowledge of the Vendor, are substantially free of any           material viruses, defects, bugs and errors. To the Knowledge of the Vendor, no unauthorized           Person has breached or accessed the IT Systems. The Vendor has taken commercially           reasonable steps, consistent with current industry standards, to protect the confidentiality,           integrity and security of the IT Systems against any unauthorized use, access, interruption or           corruption.   Environmental   (mm)     Except as set out in Schedule 5.2(mm), to the Knowledge of the Vendor: (i) there are no facts           that would reasonably be expected to give rise to any Liabilities or to a notice to the Vendor of           non-compliance with any Environmental Law or Environmental Approvals in respect of the           Business the Purchased Assets; (ii) no written notice, order, complaint or penalty has been           received by the Vendor alleging that the Vendor is in violation of, or has any Liability or           potential Liability under, any Environmental Law, and there are no judicial, administrative or           other actions, suits or proceedings pending or threatened against the Vendor which allege a           violation of, or any Liability or potential Liability under, any Environmental Laws; (iii) no           Remedial Orders have been issued to the Vendor and, to the Knowledge of the Vendor, no fact           or circumstance exists which would give rise to such a Remedial Order being issued; and (iv)           during the Vendor’s occupation of the Leased Real Property and at all other times, to the           Knowledge of the Vendor, there has not been a Release of a Hazardous Substance on any of           such premises in violation of Environmental Laws.  

 

                                       32   Compliance with Laws   (nn)     The operations of the Business have been and are now conducted in compliance with all Laws           of each jurisdiction the Laws of which have been and are now applicable to the Business and the           Vendor has not received any notice of any alleged violation of any such Laws. Neither the           Vendor nor either of the Guarantors has received any notice or other communication from any           Governmental Authority or other Person alleging or relating to any violation of or failure to           comply with any Applicable Law. To the Knowledge of the Vendor, the Vendor is not under           investigation or review by any Governmental Authority with respect to, or has been threatened           to be charged with, any material violation of any Applicable Law. Without limiting the           generality of the foregoing, the operations of the Business have been and are now conducted in           compliance with (i) all applicable anti-corruption or anti-bribery laws, including the Corruption           of Foreign Public Officials Act (Canada) and the United States Foreign Corrupt Practices Act           of 1977, as amended, (ii) the Proceeds of Crime (Money Laundering and Terrorism Financing)           Act (Canada), as amended and any similar legislation in any other jurisdiction in which the           Business is operated and (iii) all import, export control, trade sanctions, anti-terrorism, and           anti-boycott Laws of Canada, the United States and every other relevant jurisdiction.   Privacy   (oo)     The Vendor has conducted the Business in accordance with Laws relating to the collection, use           and disclosure of personal information; and to the Knowledge of the Vendor there is no reason           to believe that the Transferred Information is other than that which is necessary for, and solely           relates to, the completion of the transactions contemplated herein, including the determination           to complete such transactions, or the use and enjoyment of the Purchased Assets by the           Purchaser.   5.3   Representations and Warranties of the Purchaser   As a condition and material inducement to the Vendor’s willingness to enter into this Agreement and  consummate the transactions contemplated herein, the Purchaser represents and warrants to the Vendor as  follows:   Status   (a)      The Purchaser is a corporation duly formed and validly existing under the laws of the Province           of Alberta.   Authorization and Enforceability   (b)      The execution, delivery and performance by the Purchaser of this Agreement and each           Transaction Document to which the Purchaser is a party and the consummation by the Purchaser           of the transactions contemplated herein are within the powers of the Purchaser and have been           duly and validly authorized and approved by all necessary corporate action on the part of the           Purchaser. This Agreement has been, and each Transaction Document to be executed and           delivered by the Purchaser at the Closing will be, duly and validly executed and delivered by the           Purchaser and (assuming due authorization, execution and delivery by the Vendor and the           Guarantors) this Agreement constitutes, and each such Transaction Document when so           executed and delivered (assuming due authorization, execution and delivery by the other parties           thereto) will constitute, legal, valid and binding obligations of the Purchaser, enforceable           against it in accordance with their respective terms.  

 

                                       33   Absence of Conflicts   (c)      The execution, delivery and performance by the Purchaser of this Agreement and each           Transaction Document to which the Purchaser is a party and the consummation by the Purchaser           of the transactions contemplated herein do not and will not (i) conflict with or violate any           provision of the Purchaser’s constating documents, (ii) conflict with or violate any applicable           Law, or (iii) require any consent of, notice or payment to or other action by any Person under,           conflict with, violate, result in a breach of the terms, conditions or provisions of, constitute a           default (or an event that with or without notice or lapse of time or both would become a default)           under, or give rise to any right of acceleration, amendment, termination or cancellation or to a           loss of any rights under, any material Contract to which the Purchaser is a party or by which the           Purchaser or any of its material assets or properties is bound, other than, in the case of clause (ii)           or (iii) above, any such items that have not had and would not reasonably be expected to have,           individually or in the aggregate, a material adverse effect on the Purchaser’s ability to perform           its obligations hereunder or to timely consummate the transactions contemplated herein.                                     ARTICLE 6.                                    COVENANTS    6.1   Covenants of the Vendor    The Vendor covenants and agrees with the Purchaser that from the date hereof until the Closing Date or   termination of this Agreement (the “Interim Period”), except with the prior written consent of the   Purchaser:    (a)     the Vendor shall conduct the Business in the Ordinary Course of Business;    (b)     the Vendor shall pay or cause to be paid or correctly record and accrue for all costs and expenses           relating to the Purchased Assets which are due or become due from the date hereof to the           Closing Time;    (c)     the Vendor shall not do any of the following other than pursuant to transactions contemplated           herein or pursuant to commitments entered into prior to the date of this Agreement and           disclosed to the Purchaser in writing: (i) transfer, assign, sell or otherwise dispose of any of the           Purchased Assets, except in the Ordinary Course of Business; (ii) cancel any debts or           entitlements, except in the Ordinary Course of Business; (ii) make any commitment or propose,           initiate or authorize any single capital expenditure with respect to the Business in excess of           $10,000; or (iii) terminate, waive, release or cancel any right of material value to the Purchased           Assets or the Business;    (d)     the Vendor shall not terminate the employment of any Employee other than for just cause or in           the Ordinary Course of Business;    (e)     the Vendor shall not increase or promise to increase, in any manner, the compensation or           benefits of any Employee;    (f)     the Vendor shall use commercially reasonable efforts to preserve the goodwill of the Business           and the relationships of the Vendor with suppliers, customers, clients, Employees and others           having past or present business dealings with the Vendor in respect of the Business, to keep           available the services of the Employees, and to maintain in full force and effect all Assumed           Contracts and Regulatory Authorizations relating to the Business and the Purchased Assets;  

 

                                       34   (g)      the Vendor shall maintain all of the Purchased Assets in the Ordinary Course of Business;   (h)      the Vendor shall perform all obligations falling due during the Interim Period under the           Assumed Contracts and Regulatory Authorizations;   (i)      the Vendor shall not enter into any Contract which will become an Assumed Contract which           involves, individually or in the aggregate, financial obligations of more than $10,000 per           annum;    (j)     the Vendor shall not create or permit to be created any Encumbrance on any of the Purchased           Assets other than Permitted Encumbrances;   (k)      the Vendor shall use commercially reasonable efforts to keep in full force and effect, and in           good standing, all of the current insurance policies of the Vendor with respect to the Business           and the Purchased Assets until the Closing Date;   (l)      the Vendor shall not consent to or otherwise allow any material amendments or any other           material modifications to any of the Assumed Contracts; and    (m)     the Vendor shall promptly advise the Purchaser in writing of any Material Adverse Change after           the date hereof.    6.2   Mutual Covenants    During the Interim Period:    (a)     each Party hereto will take all such actions, steps or procedures which are reasonably within           such Party’s control as may be necessary to satisfy (or cause the satisfaction of) the conditions           precedent to its obligations hereunder and take, or cause to be taken, all other action and to do,           or cause to be done, all other things necessary, proper or advisable under Laws to complete and           give effect to the transactions contemplated by this Agreement, including to: (i) fulfill all           conditions set forth in Sections 7.1 and 7.2 hereof, as applicable, and perform all its obligations           set forth this Agreement; (ii) obtain all necessary consents, assignments, waivers and           amendments to or terminations of any instruments and take such measures as may be           appropriate to fulfill its obligations hereunder and to carry out the transactions contemplated           hereby; (iii) effect all necessary registrations and filings and submissions of information           required by Governmental Authority required to be effected by it in connection with the           transactions contemplated herein; and (iv) cooperate with each other Party in connection with           the performance by each other Party of its obligations hereunder including continuing to           provide reasonable access to information and to maintain ongoing communications as between           representatives of each of the Parties;    (b)     the Vendor shall, as soon as practicable, notify the Purchaser in writing of any material change           (actual, anticipated, complete or, to the Knowledge of the Vendor, threatened) in the Business or           in respect of any of the Purchased Assets which change is or would reasonably be expected to,           individually or in the aggregate, be of such a nature as to render any representation or warranty           of the Vendor misleading or untrue; and    (c)     the Purchaser shall, as soon as practicable, notify the Vendor in writing of any material change           (actual, anticipated, complete or, to the knowledge of the Purchaser, threatened) in the           businesses of the Purchaser which change is or would reasonably be expected to, individually or  

 

                                       35            in the aggregate, be of such a nature as to render any representation or warranty of the Purchaser           misleading or untrue.    6.3   Information During Interim Period    During the Interim Period the Vendor shall:    (a)     provide the Purchaser and the Purchaser’s authorized representatives and advisors with access           to all files, Books and Records, Contracts and other documents of any nature pertaining to the           Business and the Purchased Assets and promptly provide the Purchaser and the Purchaser’s           authorized representatives and advisors with any and all additional information pertaining to the           Business and the Purchased Assets, in both cases as the Purchaser or the Purchaser’s           representatives or advisors may reasonably request;    (b)     within two Business Days after receiving a request from the Purchaser, provide to the Purchaser           such information as to compliance with Regulatory Authorizations as is reasonably required to           confirm compliance with Regulatory Authorizations;   (c)      provide the Purchaser and the Purchaser’s authorized representatives and advisors with           reasonable access during normal business hours to the Purchased Assets provided the Purchaser           will not interfere with the conduct of Business in the ordinary course or disrupt the Employees           in the undertaking of their duties. The Purchaser shall have the right to have the Purchased           Assets inspected and tested by its authorized representatives; and    (d)     provide the Purchaser and the Purchaser’s authorized representatives and advisors with           reasonable access during normal business hours to its senior personnel and other representatives           as may be reasonably requested, to facilitate due diligence inquiries pertaining to the Business           and the Purchased Assets.    6.4   Exclusivity    During the Interim Period, the Vendor shall not, directly or indirectly, (a) solicit, initiate, seek or encourage   any expression of interest, inquiry, offer or proposal from, (b) initiate or participate in any discussions or   negotiations with, (c) furnish or cause to be furnished any information or documentation to, or (d) accept   any offer from or enter into any agreement or understanding with, any Person (other than the Purchaser and   its Affiliates and representatives) relating to any amalgamation, arrangement, merger, consolidation,   recapitalization, reorganization, sale of assets, sale of equity interests or other business combination   involving the Vendor (an “Alternative Transaction”). The Vendor shall (i) immediately cease and cause   to be terminated all existing discussions, negotiations or other activities with any other Person conducted   prior to the date hereof with respect to any Alternative Transaction and (ii) promptly request the return or   destruction of all confidential information provided to any other Person pursuant to a confidentiality   agreement or otherwise in connection with any such discussions, negotiations or other activities. The   Vendor and the Guarantors shall promptly (and in any event within 24 hours of receipt) notify the Purchaser   in writing upon receipt by the Vendor or a Guarantor of any inquiry, offer or proposal regarding an   Alternative Transaction, which notice shall include the identity of the Person making such inquiry, offer or   proposal and the material terms and conditions thereof.    6.5   Tax Records    The Vendor agrees to maintain in safekeeping the Tax Records for a period of seven years following the   Closing Date, or for such longer period as may be required by Law. During such period, the Vendor will   allow the Purchaser and the Purchaser’s authorized representatives and advisors reasonable access to and to  

 

                                       36   make copies and to produce originals of such Tax Records at the request of the Purchaser, acting  reasonably.   6.6   Name Change or Dissolution Covenant    The Vendor shall, within sixty (60) days after Closing, either (i) change its name to a name which does not   include “Millstream Energy Products”, “Millstream Energy” or “Millstream” and shall provide to the   Purchaser copies of the amendments to the Vendor’s constating documents evidencing such change of   name, and the Vendor shall take all steps and deliver to the Purchaser all documents to permit the Purchaser   and/or any of its Affiliates to use “Millstream Energy Products”, “Millstream Energy” or “Millstream” or   any derivation or combination thereof or any other aspect of Intellectual Property in connection with its   business after Closing or (ii) take such action as is necessary to voluntarily dissolve and provide to the   Purchaser documents evidencing such dissolution.    6.7   Amounts Received    From and after the Closing, if the Vendor or any of its Affiliates receives or collects any funds in respect of   any accounts receivable, under any Assumed Contract or relating to any other Purchased Asset, the Vendor   shall, or shall cause its Affiliate to, remit such funds to the Purchaser within five (5) Business Days after its   receipt thereof. From and after the Closing, if the Purchaser receives or collects any funds relating to any   Retained Asset, the Purchaser shall remit any such funds to the Vendor within five (5) Business Days after   its receipt thereof.    6.8   Restrictive Covenants of the Vendor and the Guarantors    (a)     For a period commencing on the Closing Date and ending on the fifth anniversary of the Closing           Date, neither the Vendor nor a Guarantor shall, and each shall cause his or its Affiliates not to,           directly or indirectly, own, control, manage, operate, conduct, engage in, participate in, consult           with, perform services for, guarantee the debts or obligations of, permit his or its name to be           used by or in connection with, or otherwise carry on, any business that competes with the           Business as conducted as of the Closing Date in British Columbia or Alberta (the “Territory”),           other than pursuant to the Transitional Services Agreement. Notwithstanding the foregoing, the           restrictions set forth in this Section 6.8(a) shall not prohibit the Vendor or a Guarantor from (1)           being an equity holder in a mutual fund or a diversified investment company, or (2) being a           passive owner of not more than two percent in the aggregate of an outstanding class of publicly           traded securities.    (b)     For a period commencing on the Closing Date and ending on the fifth anniversary of the Closing           Date, neither the Vendor nor a Guarantor shall, and each shall cause his or its Affiliates not to,           except on behalf of the Purchaser, directly or indirectly: (1) solicit any customer for a purpose           competitive with the Business; (2) refer any Person that is a customer to a competitor of the           Business; or (3) otherwise attempt to interfere with or damage the business relationship between           the Purchaser and any customer, distributor, supplier or potential customer, distributor or           supplier of the Business as of the Closing Date.    (c)     For a period commencing on the Closing Date and ending on the fifth anniversary of the Closing           Date, neither the Vendor nor a Guarantor shall, and each shall cause his or its Affiliates not to,           directly or indirectly: (i) solicit the employment of (whether as an employee, independent           contractor or otherwise) any employee of the Business (including the Transferred Employees);           or (ii) otherwise attempt to interfere with or damage the business relationship between the           Purchaser or any of its Affiliates, on the one hand, and any employee of the Business (including           the Transferred Employees), on the other hand. Notwithstanding the foregoing, the restrictions  

 

                                       37            set forth in this Section 6.8(c) shall not prohibit the Vendor from conducting general           solicitations of employment or engagement that are not targeted to any employee of the           Business (including the Transferred Employees).   (d)      The Guarantors and the Vendor acknowledge and agree that: (i) the Purchaser and its Affiliates           would suffer irreparable and ongoing damages (including a significant loss of the value and           goodwill of the Business) in the event that any provision of this Section 6.6 was not performed           by a Guarantor or the Vendor in accordance with its terms or otherwise were breached; and (ii)           monetary damages, even if available, alone would not be an adequate remedy for any such           non-performance or breach. Accordingly, the Vendor and the Guarantors agree that in the event           of any breach or threatened breach of any provision of this Section 6.6 by a Guarantor or the           Vendor, the Purchaser shall be entitled, in addition to all other rights and remedies that it may           have existing in its favour at law, in equity or otherwise, to seek injunctive or other equitable           relief (including a temporary restraining order, a preliminary injunction and a final injunction)           to prevent any such breach or threatened breach and to enforce such provisions specifically,           without the necessity of posting a bond or other security or of proving actual damages. The           prevailing party in any action commenced under this Section 6.8(d) (whether through a           monetary judgment, injunctive relief or otherwise) also shall be entitled to recover reasonable           legal fees and court costs incurred in connection with such action.   (e)      Each of the covenants set forth in this Section 6.6 is a severable and independent covenant and           shall be valid and enforceable to the fullest extent permitted by applicable Law. The invalidity           or unenforceability of any covenant as written in this Section 6.6 in any jurisdiction shall not           invalidate or render unenforceable any of the remaining covenants in this Section 6.6 or such           covenant in any other jurisdiction. The existence of any Claim or cause of action against one           party by any other party, whether predicated on the breach of this Agreement or otherwise, shall           not constitute a defense to the enforcement of the covenants set forth in this Section 6.6. The           time period during which the covenants contained in this Section 6.6 shall apply shall be tolled           and suspended for a period equal to the aggregate time during which the Vendor, a Guarantor, or           his or its Affiliates that are subject to this Section 6.6, violates such covenants.     (f)     The Guarantors and the Vendor acknowledge and agree that: (i) the covenants set forth in this           Section 6.6 constitute a material inducement to the Purchaser’s willingness to enter into this           Agreement and consummate the transactions contemplated herein and are an integral part           thereof; (ii) but for these covenants, the Purchaser would not have entered into this Agreement           or agreed to acquire the Purchased Assets; and (iii) in view of the highly competitive nature of           the Business, the business objectives of the Purchaser in acquiring the Purchased Assets, and the           consideration paid for the Purchased Assets, each of the covenants set forth in this Section 6.6 is           reasonable with respect to its scope, geographic area and duration and is necessary in order to           protect the Purchaser’s legitimate business interests.    (g)     The Purchaser will, jointly with the Vendor, within 20 Business Days after receiving a written           request from the Vendor or a Guarantor to do so, and in the form prescribed for such purposes,           make any election pursuant to or in respect of section 56.4 of the Tax Act reasonably requested           by the Vendor. Such election shall confirm that (i) no consideration other than as set forth in           Schedule 2.8 is payable to either the Vendor or a Guarantor in respect of the covenants set forth           in this Section 6.6 and (ii) such covenants are made to preserve the value of the Business to the           Purchaser.  

 

                                      38                                    ARTICLE 7.                             CONDITIONS TO CLOSING   7.1   Conditions for the Benefit of the Purchaser   The obligation of the Purchaser to complete the purchase of the Purchased Assets from the Vendor and  consummate the transactions contemplated hereby is subject to the following conditions (which are for the  exclusive benefit of the Purchaser) being satisfied or complied with in all respects at the Closing, or such  earlier time as is specified herein, provided, however, that any such condition may be waived in writing by  the Purchaser, in whole or in part, at any time, without prejudice to any of the other rights of the Purchaser  hereunder:   (a)     the representations and warranties of the Guarantors and the Vendor set out in Sections 5.1 and          5.2, respectively, shall be true and correct in all respects at the Closing with the same force and          effect as if made at and as of such time, except to the extent such representations and warranties          speak as of an earlier date, in which case such representations and warranties shall be true and          correct in all respects as at such date and the Vendor and the Guarantors shall have delivered, on          the Closing Date, a certificate confirming the foregoing dated the Closing Date, addressed to the          Purchaser and duly executed by an officer of the Vendor and by the Guarantors;   (b)     the Vendor and the Guarantors shall have complied and performed all of the covenants and          obligations set forth in this Agreement to be complied with and performed by the Vendor or a          Guarantor at or prior to the Closing pursuant hereto, and the Vendor and the Guarantors shall          have delivered, on the Closing Date, a certificate confirming the foregoing dated the Closing          Date, addressed to the Purchaser and duly executed by an officer of the Vendor and by the          Guarantors;   (c)     there shall have been no Material Adverse Change since the date of this Agreement;   (d)     there shall be no Order issued delaying, restricting or preventing, and no Claim pending or          threatened by any Governmental Authority or any other Person to enjoin, delay, restrict or          prohibit the purchase and sale of any of the Purchased Assets, as contemplated hereby, or the          right of the Purchaser to conduct the Business or to own or use the Purchased Assets following          the Closing;   (e)     the notifications, consents and approvals set forth in Schedule 5.2(g), including consents from          the counterparties to the Production Contracts, shall have been obtained;   (f)     the Vendor shall have released any Transferred Employees from and after the Closing from any          confidentiality or non-competition agreement or non-solicitation covenants with the Vendor          except to the extent that these have been assigned to the Purchaser;   (g)     the Vendor shall have delivered evidence satisfactory to the Purchaser that all Encumbrances          other than Permitted Encumbrances have been discharged or released as to the Purchased Assets          such that the Purchased Assets are free and clear of all Encumbrances other than Permitted          Encumbrances; and   (h)     at the Closing, the Vendor shall have delivered all items it is required to deliver pursuant to          Section 8.2.  

 

                                       39   7.2   Conditions for the Benefit of the Vendor   The obligations of the Vendor to complete the sale of the Purchased Assets to the Purchaser and  consummate the transactions contemplated hereby are subject to the following conditions (which are for the  exclusive benefit of the Vendor) being satisfied or complied with in all respects at the Closing, or such  earlier time as is specified herein, provided, however, that any such condition may be waived in writing by  the Vendor, in whole or in part, at any time, without prejudice to any of the other rights of the Vendor  hereunder:   (a)      the representations and warranties of the Purchaser in Section 5.3 shall be true and correct in all           respects at the Closing with the same force and effect as if made at and as of such time, except to           the extent such representations and warranties speak as of an earlier date, in which case such           representations and warranties shall be true and correct in all respects as at such date and the           Purchaser shall have delivered, on the Closing Date, a certificate confirming the foregoing dated           the Closing Date, addressed to the Vendor and duly executed by an officer of the Purchaser;   (b)      the Purchaser shall have complied with and performed all of the covenants and obligations set           forth in this Agreement to be complied with and performed by the Purchaser at or prior to the           Closing pursuant hereto, and the Purchaser shall each have delivered, on the Closing Date, a           certificate confirming the foregoing dated the Closing Date, addressed to the Vendor and duly           executed by an officer of the Purchaser;   (c)      there shall be no Order issued delaying, restricting or preventing, and no Claim pending or           threatened by any Governmental Authority or any other Person to enjoin, delay, restrict or           prohibit the purchase and sale of any of the Purchased Assets, as contemplated hereby; and   (d)      at Closing, the Purchaser shall have delivered all items it is required to deliver pursuant to           Section 8.3.                                     ARTICLE 8.                                     CLOSING    8.1   Place of Closing    The Closing shall take place on the Closing Date by way of electronic exchange of closing documentation   and receipt of such original documentation as may be required by any Party and electronic fund transfer,   without the need for physical meeting of the Parties. Once it has occurred, the Closing shall be deemed to be   effective, the Closing Payment shall be deemed to have been received by the Vendor, and all documents   delivered and actions taken at the Closing shall be deemed to have been delivered or taken simultaneously   at the Closing Time.    8.2   Deliveries by the Vendor at Closing    At Closing, the Vendor, shall deliver, or cause to be delivered to the Purchaser:    (a)     certificates of the appropriate Governmental Authority, dated the Closing Date, evidencing the           existence of the Vendor;    (b)     the certificates contemplated under Sections 7.1(a) and 7.1(b);    (c)     a certificate of an officer of the Vendor certifying (i) the shareholders’ resolutions of the Vendor           approving the sale of the Purchased Assets; (ii) the directors’ resolutions of the Vendor           approving this Agreement and the transactions contemplated hereby; and (iii) incumbency;  

 

                                       40   (d)      all consents and approvals set forth in Schedule 5.2(g), in form and substance acceptable to the           Purchaser, acting reasonably;   (e)      discharges or releases in registrable form of all Encumbrances charging or encumbering the           Purchased Assets (or any portion thereof) and not constituting Permitted Encumbrances, or           undertakings to provide such discharges or releases which are in form satisfactory to the           Purchaser’s solicitors, including a payoff letter or “no interest” letter in form satisfactory to the           Purchaser from the Royal Bank of Canada in respect of the Vendor’s line of credit;    (f)     one or more executed general conveyances providing for the sale, assignment, transfer and           conveyance of the Purchased Assets and assumption of the Assumed Liabilities, including an           assignment in respect of the Business Intellectual Property;    (g)     an executed general assignment providing for the sale, assignment, transfer and conveyance of           the Assumed Contracts;    (h)     to the extent applicable, executed tax elections pursuant to Section 2.10;    (i)     possession of the Purchased Assets;    (j)     an employment agreement duly executed by each of the Transferred Employees;    (k)     each of the Transaction Documents, duly executed by the applicable Parties thereto, other than           the Purchaser; and    (l)     such other documents and instruments as the Purchaser may reasonably require.    8.3   Deliveries by Purchaser at Closing    At Closing, the Purchaser shall deliver to the Vendor:    (a)     a certificate of the appropriate Governmental Authority, dated the Closing Date, evidencing the           existence of the Purchaser;    (b)     the certificates contemplated under Sections 7.2(a) and 7.2(b);    (c)     one or more executed general conveyances providing for the sale, assignment, transfer and           conveyance of the Purchased Assets and assumption of the Assumed Liabilities, including an           assignment in respect of the Business Intellectual Property;    (d)     an executed general assignment providing for the sale, assignment, transfer and conveyance and           assumption of the Assumed Contracts;    (e)     to the extent applicable, executed tax elections pursuant to Section 2.10;    (f)     the Closing Payment;    (g)     each of the Transaction Documents, duly executed by the Purchaser; and    (h)     such other documents and instruments as the Vendor may reasonably require.  

 

                                      41                                    ARTICLE 9.                                  INDEMNITIES   9.1   Survival    (a)     Subject to Sections 9.1(b), 9.1(c) and 9.1(d), all representations and warranties of the Parties          contained herein, in the Transaction Documents or in any certificate delivered hereunder will          survive the Closing and the execution and delivery of conveyances provided for herein for a          period of 24 months after the Closing Date and will continue during that period in full force and          effect and will not merge thereon or therein.   (b)     The Fundamental Representations shall survive the Closing indefinitely.   (c)     The representations and warranties of the Vendor in respect of Taxes survive and continue in          full force and effect until 90 days after the expiration of the period during which any Tax          assessment may be issued by a Governmental Authority in respect of the Tax year to which such          representations and warranties extend (which period will be determined having regard to any          consent, waiver, agreement or other document that extends the period during which a          Governmental Authority may issue a Tax assessment, reassessment or other form of recognized          document assessing liability for Taxes under applicable Law).   (d)     There is no limitation as to time for Claims of either Party against the other Party based on          willful misrepresentation or fraud by such other Party, subject only to applicable limitation          periods imposed by applicable Law.   9.2   Indemnification   (a)     The Vendor and each of the Guarantors agrees to jointly and severally indemnify and hold the          Purchaser and its Affiliates and their respective directors, officers, employees, shareholders,          representatives successors and permitted assigns (collectively, the “Purchaser Indemnified          Parties”) harmless against and in respect of any Losses which the Purchaser Indemnified Party          may incur or be required to pay relating to or arising in connection with the following matters:           (i)   any inaccuracy or breach of any representation or warranty of the Guarantors or the                Vendor contained in Section 5.1, Section 5.2, any Transaction Document or in the                certificates related thereto delivered pursuant to Sections 7.1(a) and 7.1(b);           (ii)  any breach or non-performance by the Vendor or a Guarantor of any covenant or                agreement to be performed by the Vendor or a Guarantor contained in this Agreement                or any Transaction Document;           (iii) non-compliance with any bulk sales or similar legislation concerning creditor’s rights                pertaining to or relating to the Purchased Assets and the Business;           (iv)  the Retained Assets;            (v)   the Retained Liabilities and any commitments, obligations or Liabilities related thereto;           (vi)  all Liabilities arising out of or relating to the obligations of the Vendor set forth in                ARTICLE 3; and           (vii) any and all claims for brokerage, commissions, finders’ fees or similar claims which the                Vendor may have committed to pay to third Persons, or any claim by the Vendor or any  

 

                                       42                  of its Affiliates that such Person is entitled to receive any consideration in connection                 with the transactions contemplated in this Agreement that is different from or in                 addition to the consideration payable hereunder.   (b)      The Purchaser agrees to indemnify and hold the Vendor harmless against and in respect of any           Losses which the Vendor may incur or be required to pay relating to or arising in connection           with the following matters:            (i)   any inaccuracy or breach of any representation or warranty of the Purchaser contained                 in this Agreement, any Transaction Document or the certificates delivered pursuant to                 Sections 7.2(a) and 7.2(b); and            (ii)  any breach or non-performance by the Purchaser of any covenant or agreement to be                 performed by the Purchaser contained in this Agreement or any Transaction Document                 or under any applicable Law.   9.3   Claims by Third Parties   (a)      For the purposes of this Section 9.3, “Third Party Claim” means any demand which has been           made by or on behalf of any Third Party and which, if maintained or enforced, might result in a           loss, liability or expense of the nature described in this Section 9.2.   (b)      Upon notice of any Third Party Claim in respect of which a Purchaser Indemnified Party           proposes to demand indemnification from another Party hereto (each, an “Indemnifying           Party”), the Purchaser will give notice to that effect to the Indemnifying Party.   (c)      The Indemnifying Party will have the right, exercisable by giving notice to the Purchaser           Indemnified Party not later than 30 days after receipt of the notice described in Section 9.3(b),           to assume the control of the defence, compromise or settlement of the Third Party Claim,           provided that:            (i)   the Indemnifying Party will first deliver to the Purchaser Indemnified Party written                 confirmation that it will fully indemnify the Purchaser Indemnified Party in respect of                 the Third Party Claim and its written consent to be joined as a party to any action or                 proceeding; and            (ii)  the Indemnifying Party will, at the request of the Purchaser Indemnified Party, furnish it                 with reasonable security against any costs or other liabilities to which it may be or                 become exposed by reason of the Indemnifying Party’s defence, compromise or                 settlement.   (d)      Upon the assumption of control by the Indemnifying Party, the Indemnifying Party will           diligently proceed with the defence, compromise or settlement of the Third Party Claim at the           Indemnifying Party’s sole expense, and the Purchaser will co-operate fully, but at the expense of           the Indemnifying Party, to make available to the Indemnifying Party all pertinent information           and witnesses under the Purchaser’s control, and to make any assignments and take any other           steps which, in the opinion of counsel for the Indemnifying Party, are necessary to enable the           Indemnifying Party to conduct a defence, provided that:            (i)   the Purchaser will be entitled to reasonable security from the Indemnifying Party for                 any expense, costs or other liabilities to which it may become exposed by reason of its                 co-operation; and  

 

                                      43           (ii)  the Indemnifying Party shall not consent to the settlement, compromise or discharge of,                or the entry of any judgment arising from, or with respect to, any Third Party Claim                without the prior written consent of the Purchaser Indemnified Party (which consent                shall not be unreasonably withheld, conditioned or delayed), unless the relief consists                solely of monetary payment to be paid by the Indemnifying Party in an amount                available to be indemnified by the Indemnifying Party hereunder and such settlement                does not involve any finding or admission of any violation of applicable Law by the                Purchaser Indemnified Party.   (e)     The final determination of any Third Party Claim, including any determination of related costs          and expenses, will be binding and conclusive upon the Parties as to the validity of that Third          Party Claim.   (f)     Should the Indemnifying Party fail to give notice to the Purchaser Indemnified Party as          provided in Section 9.3(c), the Purchaser Indemnified Party will be entitled to make any          settlement of the Third Party Claim it deems, in its sole discretion, to be advisable, and that          settlement will be binding upon the Indemnifying Party.   (g)     In the event that any Third Party Claim is made against the Vendor and in respect of which the          Vendor may make a claim against the Purchaser pursuant to Section 9.2, the provisions of this          Section 9.3 shall apply with references to Purchaser and Vendor amended as applicable.   9.4   Right to Set-Off and Release of Holdback   (a)     Subject to the limitations of this ARTICLE 9, the Vendor agrees that all or any portion of any          Losses alleged to be incurred or suffered by any Purchaser Indemnified Parties may, at the          Purchaser’s option and upon at least five days’ prior written notice from the Purchaser to the          Vendor describing in reasonable detail the nature and basis for such Losses, be set-off against          any amount otherwise due and payable by the Purchaser to the Vendor hereunder or under any          of the Transaction Documents, including any upward adjustment to the Preliminary Purchase          Price in respect of the Final Closing Working Capital or the Holdback Amount to which the          Vendor is entitled. For the avoidance of doubt, the right of set-off provided in this Section 9.4(a)          is not intended to be the exclusive means of collecting Losses incurred or suffered by any          Purchaser Indemnified Party in connection with this Agreement.   (b)     No later than the fifth Business Day following the six-month anniversary of the Closing Date          (the “Release Date”), the Purchaser will release and pay to the Vendor an amount equal to the          difference of (i) the Holdback Amount minus (ii) the amount, if any, set off from the Holdback          Amount by the Purchaser pursuant to Section 2.7(b) or Section 9.4(a) prior to the Release Date          minus (iii) the portion of the Holdback Amount then remaining, if any, reserved by the          Purchaser in respect of any pending and unresolved indemnification claims pursuant to this          ARTICLE 9 as of the Release Date (the “Pending Claims”). The Purchaser will continue to          hold any such remaining portion of the Holdback Amount until the Pending Claims are finally          resolved in accordance with the terms of this ARTICLE 9. Upon the final resolution of any such          Pending Claim, (A) if and to the extent that such Pending Claim is finally resolved such that a          Purchaser Indemnified Party is entitled to indemnification from the Vendor pursuant to the          terms hereof, the Purchaser will (1) retain the portion of the remaining Holdback Amount          attributable to such Pending Claim and (2) release and pay to the Vendor the remaining balance          of the Holdback Amount, if any; and (B) if and to the extent that such Pending Claim is finally          resolved such that a Purchaser Indemnified Party is not entitled to indemnification from the          Vendor pursuant to the terms hereof, the Purchaser will release and pay to the Vendor the          portion of the remaining Holdback Amount attributable to such Pending Claim. For greater  

 

                                       44            certainty, to the extent the Holdback Amount is less than the amount to which the Purchaser is           entitled upon resolution of a Pending Claim, the Vendor shall promptly pay such shortfall to the           Purchaser.    9.5   Exclusive Remedy    Except for (a) the remedies of specific performance or injunctive or other equitable relief, (b) claims for   fraud, intentional misrepresentation or willful misconduct or (c) other remedies expressly provided in this   Agreement (including Section 2.7 with respect to the calculation of the Final Closing Working Capital and   Section 6.6 with respect to the enforcement of the restrictive covenants set forth therein), if the Closing   occurs, the indemnification rights set forth in this ARTICLE 9 shall be the sole and exclusive monetary   remedy of the parties for any claim arising out of this Agreement.    9.6   Tax Treatment    Any payment under this ARTICLE 9 shall constitute an adjustment to the Purchase Price unless otherwise   required by applicable Law, and each of the Parties shall within a reasonable time of payment and receipt of   such payment, as applicable, request all amendments to its current or past Tax returns as may be necessary   to reflect the foregoing.     9.7   Reductions and Subrogation    If the amount of any claim incurred by an Indemnified Party at any time subsequent to the making of an  indemnity payment is reduced by:   (a)      any net Tax benefit to the Indemnified Party; or   (b)      any recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant           to any claim, recovery, settlement or payment by or against any other Person,   the amount of such reduction (less any costs, expenses (including Taxes) or premiums incurred in  connection therewith) shall promptly be repaid by the Indemnified Party to the Purchaser, the Vendor or a  Guarantor, as applicable.   9.8   Limitations   (a)      An Indemnified Party shall not be entitled to double recovery for any Losses even though they           may have resulted from the breach of more than one of the representations, warranties,           agreements and covenants made by the Vendor or the Purchaser, as applicable, in this           Agreement.   (b)      The Liability of any party with respect to its representations, warranties, covenants and           agreements contained herein shall not be affected or reduced by any investigation conducted or           any knowledge acquired prior to the Closing by or on behalf of any other party.   (c)      Nothing in this Agreement shall in any way restrict or limit 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 a           Vendor or the Purchaser, as applicable, of any representation, warranty or covenant of such           Party hereunder.    (d)     For purposes of calculating the amount of any Losses arising out of, relating to or resulting from           any breach of any representation or warranty set forth in this Agreement, all limitations and           qualifications relating to “material”, “materiality”, “material adverse effect” or “Material  

 

                                       45            Adverse Change” contained in any such representation or warranty shall be disregarded.                                     ARTICLE 10.                                   TERMINATION    10.1  Termination    This Agreement may be terminated and the transactions contemplated hereby may be abandoned, at any   time prior to the Closing:    (a)     by mutual written consent of the Parties;    (b)     by any Party if the Closing shall not have occurred by June 30, 2019, provided that the right to           terminate this Agreement under this Section 10.1(b) shall not be available to any Party whose           failure to fulfill any obligation under this Agreement shall be the cause of the failure of the           Closing to occur on or before such date;   (c)      by the Purchaser on written notice to the Vendor if the Closing shall not have occurred on the           Closing Date and any of the conditions set forth in Section 7.1 hereof shall not have been           satisfied, provided that the Purchaser shall have complied in all material respects with its           obligations hereunder;     (d)     by the Vendor on written notice to the Purchaser if the Closing shall not have occurred on the           Closing Date and any of the conditions set forth in Section 7.2 hereof shall not have been           satisfied, provided that the Vendor shall have complied in all material respects with its           respective obligations hereunder;    (e)     by either the Purchaser or the Vendor if there shall be any applicable Law that makes           consummation of the transactions contemplated hereby illegal or otherwise prohibited or if any           Order of any Governmental Authority prohibiting such transactions is entered and such order           shall become final and non-appealable; or    (f)     by the Purchaser if there has been a Material Adverse Change with respect to the Business,    and any such notice of termination given by a Party shall specify the basis on which the Party seeks to   terminate this Agreement.    10.2  Effect of Termination    In the event of termination of this Agreement pursuant to Section 10.1, this Agreement shall thereupon   cease to have any further force and effect and each Party shall thereafter have no further Liability   thereunder to any other Party, except that the provisions of ARTICLE 9, Section 10.1, this Section 10.2,   Section 11.1, Section 11.2, Section 11.3, Section 11.4, Section 11.5, Section 11.8, Section 11.11 and  Section 11.17 shall survive any termination of this Agreement, including the preservation of confidentiality  and the return and destruction of information and materials as to the Vendor and all aspects thereof remain  in full force and effect. Nothing in this Section 10.2 shall relieve any Party of Liability for any breach of this  Agreement.  

 

                                       46                                     ARTICLE 11.                                 MISCELLANEOUS    11.1  Notices    Any notice, consent, waiver, direction or other communication required or permitted to be given under this   Agreement by a Party to any other Party shall be in writing and shall be delivered by hand delivery,   facsimile transmission, registered mail (postage prepaid) (provided that the mailing Party does not know   and should not reasonably have known of any disruption or anticipated disruption of postal service which   might affect delivery of the mail) or by electronic mail, addressed to the Party to whom the notice is to be   given, at its address for service herein. Any notice, consent, waiver, direction or other communication   aforesaid shall be deemed received: (i) if hand delivered, on the day of delivery if that day is a Business Day  and it was received before 5:00 p.m. local time in the place of receipt and otherwise on the next Business  Day, (ii) if sent by fax, on the day of transmission if that day is a Business Day and the fax transmission was  made before 5:00 p.m. local time in the place of receipt and otherwise on the next Business Day, (iii) if sent   by registered mail, on the fourth Business Day following the day on which it is mailed, except that if at any   time between the date of mailing and the fourth Business Day thereafter there is a disruption of postal   service then notice must be given by means other than mail, or (iv) if sent by electronic mail, on the day the   sender receives confirmation of receipt by return electronic mail (other than automated responses) from the   recipient if that day is a Business Day and if that confirmation was received before 5:00 p.m. local time in   the place of receipt and otherwise on the next Business Day.    11.2  Address for Service    The address for service of each of the Parties shall be as follows:    (a)     if to the Vendor or a Guarantor:            4925 – 51 Street            Camrose, AB  T4V 1S4                      Attention: Rob Lundstrom           Email:    rob@gomillstream.com            with a copy to:            4925 – 51 Street            Camrose, AB  T4V 1S4                      Attention: David Francoeur           Email:   david.francoeur@kjf-law.ca   (b)      if to the Purchaser:            Profire Combustion, Inc.           Box 3313 Bay 12           55 Alberta Ave.           Spruce Grove, AB  T7X 3A6                      Attention: Brenton Hatch           Email:   bhatch@profireenergy.com  

 

                                       47            with a copy to:            Lawson Lundell LLP           1600 – 925 West Georgia Street           Vancouver, BC  V6C 3L2                      Attention: Chat Ortved           Email:   cortved@lawsonlundell.com   or such other address as may be designated by notice to the other Parties.   11.3  Retention of Records and Confidential Information   The Purchaser acknowledges and agrees that the Vendor will be permitted to retain copies of the Books and  Records for such period after the Closing Date as is required by any applicable Law. Both before and after  the Closing Date, the Vendor will, and will cause its advisors and other representatives to:   (a)      promptly provide to the Purchaser all information in their possession or under their control           relating to the Purchased Assets;   (b)      keep strictly confidential all information relating to the Purchased Assets unless: (i) such           information (other than Transferred Information) is or becomes generally available to the public           other than as a result of a disclosure by the Vendor in violation of this Agreement; (ii) the           disclosure of such information is expressly permitted, in writing, by the Purchaser; or (iii) the           disclosure of such information is required by applicable Law or by a Governmental Authority           (provided that the Vendor shall provide the Purchaser with prompt written notice of same so that           the Purchaser may either seek a protective Order or other appropriate remedy, and the Vendor           shall furnish only the disclosure that is required); and   (c)      not use or permit any other Person to use any information relating to any of the Purchased           Assets for any purpose whatsoever, unless such information (other than Transferred           Information) is or becomes generally available to the public, other than as a result of a           disclosure by the Vendor in violation of this Agreement, or the use of such information is           expressly permitted, in writing, by the Purchaser.    11.4  Privacy    (a)     The Vendor covenants and agrees to advise the Purchaser of all purposes for which the           Transferred Information was initially collected from or in respect of the individual to which           such Transferred Information relates and all additional purposes where the Vendor has notified           the individual of such additional purpose, and where required by Law, obtained the consent of           such individual to use or disclose.    (b)     The Purchaser covenants and agrees: (i) prior to the completion of the transactions           contemplated herein, to collect, use and disclose the Transferred Information solely for the           purpose of reviewing and completing the transactions contemplated herein, including           determining to complete such transactions; (ii) after the completion of the transactions           contemplated herein, to collect, use and disclose the Transferred Information only for those           purposes for which the Transferred Information was initially collected from, or in respect of, the           individual to which such Transferred Information relates or for the completion of the           transactions contemplated herein, unless (A) the Vendor or the Purchaser has first notified such           individual of such additional purpose, and where required by all applicable Laws, obtained the  

 

                                       48            consent of such individual to such additional purpose, or (B) such use or disclosure is permitted           or authorized by Law, without notice to, or consent from, such individual; (iii) where required           by Law, to promptly notify the individuals to whom the Transferred Information relates that the           transactions contemplated herein have taken place and that the Transferred Information has           been disclosed to the Purchaser; (iv) to return or destroy the Transferred Information, at the           option of the Vendor, should the transactions contemplated herein not be completed; and (v) to           use all reasonable efforts to protect and safeguard the Transferred Information including to           protect the Transferred Information from loss or theft, or unauthorized access disclosure,           copying, use, modification, disposal or destruction and promptly advise the Vendor should any           such loss, theft or unauthorized activity occur prior to the completion of the transactions           contemplated herein.    11.5  Guarantee of the Guarantors    The Guarantors hereby absolutely, irrevocably and unconditionally jointly and severally guarantee the full,   complete and timely payment and performance by the Vendor of each and every obligation of the Vendor   under this Agreement (the “Vendor Obligations”). The Guarantors’ obligations hereunder shall not be   affected by the existence, validity, enforceability, perfection or extent of any collateral therefor or by any   other circumstance relating to the Vendor Obligations that might otherwise constitute a legal or equitable   discharge of or defence to a Guarantor as a guarantor not available to the Vendor. The Purchaser shall not be   obligated to file any claim relating to any Vendor Obligations in the event that the Vendor becomes subject   to a bankruptcy, reorganization or similar proceeding, and the failure to so file shall not affect the   Guarantors’ obligations hereunder. This guarantee shall be deemed a continuing guarantee and shall remain  in full force and effect and shall be binding on the Guarantors and their successors and assigns until the date  upon which all of the Vendor Obligations have been satisfied in full. The Guarantors reserve the right to  assert any and all defences which the Vendor may have arising under or related to the Vendor Obligations  other than defences arising from the bankruptcy or insolvency of the Vendor and other defences expressly  waived in this Section 11.5. The Guarantors hereby waive (a) any and all defences specifically available to  a guarantor (other than performance in full by the Vendor) and (b) any notices, including any notice of any  amendment of this Agreement or waiver or other similar action granted pursuant to this Agreement.   11.6  Further Assurances   Each Party shall, from time to time, and at all times hereafter, at the request of another Party, but without  further consideration, do all such further acts and execute and deliver all such further documents and  instruments as shall be reasonably required in order to fully perform and carry out the terms and intent  hereof.   11.7  Time of the Essence   Time shall be of the essence of this Agreement.   11.8  Public Announcements   The Purchaser shall, in its sole discretion, plan and co-ordinate any public notices, press releases and any  other publicity concerning the transactions contemplated in this Agreement. No other party shall issue or  permit to be issued any public notices, press releases or other public announcement concerning the  transactions contemplated by this Agreement without the prior written consent of the Purchaser.   

 

                                       49   11.9  Amendments and Waiver   No modification of or amendment or supplement to this Agreement shall be valid or binding unless set forth  in writing and duly executed by all of the Parties and no waiver of any breach of any term or provisions of  this Agreement shall be effective or binding unless made in writing and signed by the Party purporting to  give the same and, unless otherwise provided, shall be limited to the specific breach waived. No failure on  the part of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall  any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or  the exercise of any other right or remedy in law or in equity or by statute or otherwise conferred.   11.10 Entire Agreement   This Agreement together with the agreements and other documents to be delivered pursuant to this  Agreement (including the Transaction Documents) constitute the entire agreement between the Parties  pertaining to the subject matter of this Agreement and supersede all prior agreements, understandings,  negotiations and discussions, whether oral or written, of the Parties. There are no warranties,  representations or other agreements between the Parties in connection with the subject matter of this  Agreement except as specifically set forth in this Agreement and any document delivered pursuant to this  Agreement.   11.11 Applicable Law   This Agreement shall be construed and enforced in accordance with the Laws of the Province of British  Columbia and the federal Laws of Canada applicable therein. The Parties irrevocably and unconditionally  attorn and submit to the exclusive jurisdiction of the courts of competent jurisdiction in the Province of  British Columbia in respect of any action, application, reference or other proceeding arising out of or  related to this Agreement and agree that all Claims in respect of any such action, application, reference or  other proceeding shall be heard and determined in such British Columbia courts. Each of the Parties  irrevocably waives, to the fullest extent it may effectively do so, the defence of an inconvenient forum to the  maintenance of such action, application, reference or proceeding.   11.12 Severability   If any one or more of the provisions or parts thereof contained in this Agreement should be or become  invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof  contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable  therefrom and:   (a)      the validity, legality or enforceability of such remaining provisions or parts thereof shall not in           any way be affected or impaired by the severance of the provisions or parts thereof severed; and    (b)     the invalidity, illegality or unenforceability of any provision or part thereof contained in this           Agreement in any jurisdiction shall not affect or impair such provision or part thereof or any           other provisions of this Agreement in any other jurisdiction.    11.13 Third Party Beneficiaries    Except as provided in ARTICLE 9, which provisions are intended to benefit and to be enforceable by the   parties specified therein, nothing in this Agreement, express or implied, is intended or shall be construed to   confer upon any Third Party any right, remedy or claim under or by reason of this Agreement. To the extent   required by applicable Law to give full effect to the direct rights in favour of the Persons specified in   ARTICLE 9, the Vendor and the Purchaser agree and acknowledge that they are acting as agent and/or as  

 

                                       50   trustee of such Persons. The parties reserve their right to vary or rescind the rights at any time and in any  way whatsoever, if any, granted by or under this Agreement to any Person who is not a party, without notice  to or consent of that Person, including any Indemnified Party.   11.14 Execution in Counterpart    This Agreement may be executed in any number of counterparts with the same effect as if all signatories to   the counterparts had signed one document, all such counterparts shall together constitute, and be construed   as, one instrument and each of such counterparts shall, notwithstanding the date of its execution, be deemed   to bear the date first above written. Delivery of counterparts may be effected by facsimile transmission or   scanned emails.    11.15 Benefit of the Agreement    This Agreement shall enure to the benefit of and be binding upon the respective successors and permitted   assigns of the Parties.    11.16 Assignment    This Agreement may not be assigned by any Party without the prior consent of the other Parties provided   that the Purchaser may assign its rights and obligations under this Agreement to an Affiliate of the   Purchaser (without novation) if, contemporaneous therewith, such Affiliate of the Purchaser agrees to be   bound by all representations, warranties, covenants and indemnities of the Purchaser, provided that,   notwithstanding any such agreement, the Purchaser continues to be bound by this Agreement and such   agreement shall be in form and substance satisfactory to the Vendor acting reasonably.    11.17 Costs    Except as otherwise provided in this Agreement, each Party shall be responsible for all costs and expenses   (including the fees and disbursements of legal counsel and other advisors) incurred by it in connection with   the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby.    11.18 No Partnership    It is not the intent or purpose of the Agreement to create, and this Agreement shall not be construed as   creating, any association, partnership or syndicate.    11.19 Independent Legal Advice    Each Party acknowledges and agrees that he or it has been advised to, and has had sufficient opportunity to,   consult with independent legal counsel with respect to this Agreement and the transactions contemplated   herein, understands his or its obligations under this Agreement and the Transaction Documents and the   nature of the consequences of this Agreement and the Transaction Documents, and is signing this   Agreement voluntarily.                        [Remainder of this page intentionally left blank]  

 

 

 

 

 

                                                                                                                   EXHIBIT A                  FORM OF TRANSITIONAL SERVICES AGREEMENT   See attached.         

 

                                                                 TRANSITIONAL SERVICES AGREEMENT    THIS AGREEMENT made effective as of the ____ day of __________________, 2019    BETWEEN                PROFIRE COMBUSTION, INC.                 (the “Purchaser”)    AND                MILLSTREAM ENERGY PRODUCTS LTD.                 (the “Vendor”)    WHEREAS:   A.     The Purchaser and the Vendor, among others, have entered into an Asset Purchase Agreement         (the “APA”) dated as of June 12, 2019, pursuant to which, among other things, the Vendor agreed         to sell to the Purchaser, and the Purchaser agreed to purchase, the Purchased Assets on the terms         and conditions therein; and   B.    It is a condition to the closing of the transactions contemplated by the APA that the Purchaser and         the Vendor (together, the “Parties”) enter into this Agreement.    NOW, THEREFORE, in consideration of the foregoing and for other valuable consideration, the   receipt and sufficiency of which is hereby acknowledged, the Parties mutually covenant and agree as   follows:    1.0   DEFINITIONS    1.1   All terms used in this Agreement and not otherwise defined herein shall have the meanings         ascribed to such terms in the APA.    1.2   In this Agreement, “Confidential Information” means all confidential or proprietary         information, intellectual property, confidential facts and non-public information (including,         without limitation, all budgets, forecasts, analyses, financial results, prospects, costs, margins,         and other business activities and all financial information, all customer, supplier, vendor lists and         information, all prospective customer and supplier lists and information, pricing, sales, trade         secrets, marketing techniques, procedures, operations, know-how, and other aspects of business)         of the Purchaser or relating to the Business, whether in written, oral, electronic or any other         format, but excluding any information that is already in the public domain or comes into the         public domain without any breach of this Agreement or any other agreement by the Vendor or         any of its Affiliates, directors, officers, employees, contractors or representatives.    2.0   TRANSITIONAL SERVICES     2.1   Transitional Services. The Vendor agrees to provide to the Purchaser the transitional services set         out in Schedule A hereto without charge (all of which are collectively referred to as the         “Transitional Services”, and individually each is referred to as a “Transitional Service”). The                                              30074.145935.DLB2.16728669.4  

 

                                                  Vendor shall ensure that Robert Lundstrom is engaged, and during the Term remains engaged, to         provide all Transition Services to be provided hereunder. The Vendor agrees that subject to         Section 2.2, Robert Lundstrom will attend the Purchaser’s premises and participate in provision         of the Transitional Services in a manner consistent with past practice.    2.2   Consulting Services. In addition to the Transitional Services, the Purchaser may request that the         Vendor perform additional consulting services (the “Consulting Services”) to be performed at a         date agreed to by the parties and for a fee agreed to by the parties.    2.3   Performance Standards. The Vendor shall provide the Transitional Services and the Consulting         Services using the same standard of care as the Vendor used in and for the Business prior to the         Closing Date.     2.4   Indemnity. Each of the Vendor and Purchaser agrees to indemnify and hold the other in its         capacity as a provider of Transitional Services and Consulting Services hereunder (in each case,        the “Service Provider”) harmless from and against all losses, costs, damages, liabilities and        reasonable out-of-pocket expenses whatsoever, including reasonable legal fees but excluding loss        of profits suffered or incurred by the Service Provider, by reason of the provision of the        Transitional Services or the Consulting Services by the Service Provider hereunder, unless arising        out of the gross negligence or willful misconduct of the Service Provider in connection with the        performance of the Transitional Service or the Consulting Services.    2.5   Books of Account and Information. Both parties shall maintain at their respective head offices         appropriate books of account and records with respect to all Transitional Services and Consulting         Services provided by it as a Service Provider under the terms of this Agreement.  Each party shall         provide to the other whatever additional reports and information relating to the Transitional         Services and Consulting Services provided under this Agreement that it may reasonably request.          Each party shall retain any records maintained under this Agreement for a period of seven (7)         years from the date of the provision of the last of the Transitional Services or Consulting Services         hereunder.    2.6   Term. The term of this Agreement (the “Term”) shall commence on the Closing Date and end on         a date that is six months following the Closing Date, unless terminated earlier by written         agreement of the Parties; provided that the Term may be extended by written agreement of the         Parties. Notwithstanding the termination of this Agreement for any reason, the rights and         obligations under Section 2.4 and Articles 3 and 4 shall survive the termination of this         Agreement. For greater certainty, no termination of this Agreement will discharge, affect or         otherwise modify in any manner the rights of the Parties which have accrued prior to such         termination or relieve any Party from liability for any breach of any provision hereof prior to such         termination.    3.0   CONFIDENTIALITY    3.1   Each of the Parties recognize that the nature of each of their relationship with the other is such         that each may have access to, and that there may be disclosed to such Party during the course of         such relationship, Confidential Information owned by the other or its Affiliates (where a Party         receives any Confidential Information, a “Receiving Party”). Each of the Receiving Parties         acknowledges that, except for each of the Receiving Parties’ relationship with the other Party,         each of the Receiving Parties would not otherwise have access to the Confidential Information.         Each of the Receiving Parties understands and acknowledges that the Confidential Information         constitutes a valuable and unique commercial asset of the other Party, and that disclosure of the                                              30074.145935.DLB2.16728669.4  

 

                                                  Confidential Information would have serious negative effects on such Party’s business and         provide the Receiving Party with a substantial and unfair competitive advantage. Each of the         Receiving Parties agrees that such Receiving Party, as applicable, will not, at any time during or         after the performance of any the obligations hereunder, use for any purpose other than the         furtherance of its business, or disclose to any person, firm, corporation, association or other         entity, or to any combination thereof, directly or indirectly, for any reason or purpose whatsoever,         any Confidential Information, or any part thereof.   4.0    GENERAL PROVISIONS    4.1   Notices. All notices and other communications hereunder shall be in writing and shall be deemed         given when delivered in accordance with the notice provisions set forth in the APA.    4.2   Further Assurances. The parties will use good faith efforts to cooperate with each other in all         matters relating to the provision and receipt of Transitional Services and Consulting Services         hereunder and to mitigate problems should they arise. The parties agree that they shall execute         and deliver such further documents and instruments, and do all other acts and things, that may be         necessary or desirable in order to give full effect to this Agreement.    4.3   Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in         any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or         provision of this Agreement or invalidate or render unenforceable such term or provision in any         other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or         unenforceable, a provision shall be substituted so as to effect the original intent of the parties as         closely as possible in a mutually acceptable manner in order that the transactions contemplated         hereby may be consummated as originally contemplated to the greatest extent possible.    4.4   Entire Agreement. This Agreement, together with the APA and the agreements and other         documents delivered thereunder, constitute the entire agreement of the Parties with respect to the         subject matter contained in the APA, and supersede all prior and contemporaneous         understandings and agreements, both written and oral, with respect to such subject matter.    4.5   Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of         the Parties and their respective successors and permitted assigns. No Party may assign its rights or         obligations hereunder without the prior written consent of the other Parties, which consent shall         not be unreasonably withheld or delayed. No assignment shall relieve the assigning Party of any         of its obligations hereunder.    4.6   Amendment. No modification of or amendment or supplement to this Agreement shall be valid         or binding unless set forth in writing and duly executed by each of the Parties hereto and no         waiver of any breach of any term or provisions of this Agreement shall be effective or binding         unless made in writing and signed by the Party purporting to give the same and, unless otherwise         provided, shall be limited to the specific breach waived. No failure on the part of any Party in         exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or         partial exercise of any such right or remedy preclude any other or further exercise thereof or the         exercise of any other right or remedy in law or in equity or by statute or otherwise conferred.    4.7   Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of         the Province of British Columbia and the federal laws of Canada applicable therein. The Parties        irrevocably and unconditionally attorn and submit to the exclusive jurisdiction of the courts of         competent jurisdiction in the Province of British Columbia in respect of any action, application,                                              30074.145935.DLB2.16728669.4  

 

                                                  reference or other proceeding arising out of or related to this Agreement and agree that all claims         in respect of any such action, application, reference or other proceeding shall be heard and         determined in such British Columbia courts. Each of the Parties irrevocably waives, to the fullest         extent it may effectively do so, the defence of an inconvenient forum to the maintenance of such         action, application, reference or proceeding.    4.8   Independent Legal Advice. Each Party acknowledges and agrees that he or it has been advised         to, and has had sufficient opportunity to, consult with independent legal counsel with respect to         this Agreement and the transactions contemplated herein, understands his or its obligations under         this Agreement and the nature of the consequences of this Agreement, and is signing this         Agreement voluntarily.    4.9   Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed         an original, but all of which together shall be deemed to be one and the same agreement. A signed         copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission         shall be deemed to have the same legal effect as delivery of an original signed copy of this         Agreement.                       [Remainder of this page intentionally left blank.]                                               30074.145935.DLB2.16728669.4  

 

 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.       PROFIRE COMBUSTION, INC.        Per:                                   Name:        Title:       MILLSTREAM ENERGY PRODUCTS LTD.         Per:                                   Name:        Title:                                                       [Signature Page to the Transitional Services Agreement]   30074.145935.DLB2.16728669.4  

 

                                                                             Schedule “A”                                  Transitional Services    The following Transition Services are expected to be performed by Robert Lundstrom (“Lundstrom”) for   consideration paid in the APA. Should the Purchaser choose to engage Robert Lundstrom for any   Consulting Services, beyond what is listed below, the Parties will enter into a separate agreement.         The Transitional Services will be performed in two separate time periods. The first set of Transition   Services will be performed in the time period after signing the APA and before the Closing Date. The   remaining Transition Services will be performed within six months of the Closing Date.        Post Sign – Pre Close   In the period between signing the APA and the Closing Date Lundstrom will:      •  Deliver all drawings of product (“Product Drawings”) that are designed by the Vendor in an         electronic and editable format. This includes all product listed in Schedule 2.8 of the APA.      •  Make himself reasonably available to provide additional information and support to describe the         Product Drawings as requested by the Purchaser       •  Introduce any Transferred Employees to the Purchaser to begin discussing the transition process         including the delivery and support of any Employment Agreements.       •  Make himself reasonably available to respond to questions that the Purchaser may have regarding         any Purchased Assets to assist in transferring those assets in a manner that can be received by the         Purchaser.       •  Provide a digital and editable copy of the Vendor’s customer relations management software or         lists.        Within Six Months of Closing:   Within six months after the Closing Date Lundstrom is expected to:      •  Introduce any customers of the Vendor that are not currently customers of the Purchaser.      •  Complete review of Product Drawings and sign off on final versions as they become available.         All final Product Drawings must be completed with six Months of Closing.       •  Assist Purchaser in categorizing Product Drawings.      •  Support the clean-up and or update of Product Drawings      •  Support and review the Purchaser’s purchase orders to China suppliers as related  to  Vendor’s          products. This review should be done to help describe the process of ordering product from the         Chinese manufacturers as described in the schedules of the APA.       •  Review and provide support for all of the Vendor’s outstanding sales orders.      •  Review all Inventory on-site at Purchaser’s location in Spruce Grove. This review will include         matching all product to part numbers as provided by the Vendor.      •  Provide access to and describe how to access all systems, software, CRM, website, etc. that were         purchased pursuant to the APA.      •  Hand off of customers that contact Lundstrom directly as per Purchaser’s process and script         which will be provided to Lundstrom at or shortly after the Closing Date.      •  Provide answers to initial questions regarding any Purchased Assets.       •  Provide support to collect on any monies owed pursuant to the Accounts Receivable Aging         Report provided at the Closing Date. This includes providing contacts and insight on any         potential discrepancies related to purchase orders or other necessary documentation.      •  Immediately notify the Purchaser if a payment is received by Lundstrom for Vendor products         after the Closing Date and deliver that payment to Purchaser within five days of receipt.                                                30074.145935.DLB2.16728669.4Exhibit 10-1

		
			Exhibit 10.1
		

		
			 
		

			
					
						Private & Confidential

					
					
						Execution Version

				

		
			 
		

		
			Dated July 23, 2019
		

		

		
			 
		

		
			DORIAN LPG FINANCE LLC
		

		
			as Borrower
		

		
			 
		

		
			THE ENTITIES
		

		
			listed in Schedule 1, Part B
		

		
			as Upstream Guarantors
		

		
			 
		

		
			DORIAN LPG LTD.
		

		
			as Facility Guarantor
		

		
			 
		

		
			ABN AMRO CAPITAL USA LLC
		

		
			CITIBANK N.A., LONDON BRANCH
		

		
			and
		

		
			THE OTHER BANKS AND FINANCIAL INSTITUTIONS
		

		
			listed in Schedule 1, Part D
		

		
			as Bookrunners
		

		
			 
		

		
			THE BANKS AND FINANCIAL INSTITUTIONS
		

		
			listed in Schedule 1, Part E
		

		
			as Mandated Lead Arrangers
		

		
			 
		

		
			THE BANKS AND FINANCIAL INSTITUTIONS
		

		
			listed in Schedule 1, Part F
		

		
			as Commercial Lenders
		

		
			 
		

		
			THE BANKS AND FINANCIAL INSTITUTIONS
		

		
			listed in Schedule 1, Part G
		

		
			as KEXIM Lenders
		

		
			 
		

		
			THE EXPORT-IMPORT BANK OF KOREA
		

		
			as KEXIM
		

		
			 
		

		
			THE BANKS AND FINANCIAL INSTITUTIONS
		

		
			listed in Schedule 1, Part I
		

		
			as K-sure Lenders
		

		
			 
		

		
			THE BANKS AND FINANCIAL INSTITUTIONS
		

		
			Listed in Schedule 1, Part J
		

		
			as Swap Banks
		

		
			 
		

		
			ABN AMRO CAPITAL USA LLC
		

		
			as Global Coordinator, Administrative Agent and Security Agent
		

		
			 
		

		
			CITIBANK N.A., LONDON BRANCH
		

		
			or any of its holding companies, subsidiaries or affiliates
		

		
			as ECA coordinator
		

		
			 
		

		
			CITIBANK N.A., LONDON BRANCH
		

		
			as ECA Agent
		

		
			 
		

		

		
			AMENDMENT NO. 3 TO FACILITY AGREEMENT
for a Loan of (originally) up to $758,105,296
		

		
			 
		

		
			
		

		
			 
		

		
			 
		

		
			

		 

		

		
			 
		

		
			AMENDMENT NO. 3 TO FACILITY AGREEMENT (this Amendment), dated as of _______________, 2019 and effective as of the Effective Date, relating to the Facility Agreement dated March 23, 2015, as amended by Amendment No. 1 dated as of June 15, 2015, as further amended by a Side Letter dated February 1, 2016 and as further amended by an Amendment No. 2 dated as of May 31, 2017 (collectively, the Original Facility Agreement, and as further amended hereby, the Facility Agreement), made among (1) Dorian LPG Finance LLC, as borrower (the Borrower), (2) the entities listed in Schedule 1, Part B therein, as upstream guarantors, (3) Dorian LPG Ltd., as facility guarantor (the Facility Guarantor), (4) ABN AMRO Capital USA LLC (the Security Agent), Citibank N.A., London Branch (Citi) and the other banks and financial institutions listed in Schedule 1, Part D therein, as bookrunners, (5) the banks and financial institutions listed in Schedule 1, Part E therein, as mandated lead arrangers, (6) the banks and financial institutions listed in Schedule 1, Part F therein, as commercial lenders (the Commercial Lenders), (7) the banks and financial institutions listed in Schedule 1, Part G therein, as KEXIM lenders (the KEXIM Lenders), (8) the Export-Import Bank of Korea, as KEXIM (KEXIM), (9) the banks and financial institutions listed in Schedule 1, Part I therein, as K-sure lenders (the K-sure Lenders, and together with the Commercial Lenders, KEXIM and the KEXIM Lenders, the Lenders and each a Lender), (10) the banks and financial institutions listed in Schedule 1, Part J therein, as swap banks, (11) the Security Agent as global coordinator, administrative agent, and security agent, (12) Citi, as ECA coordinator, and (13) Citi, as ECA Agent (as may be amended, supplemented, varied, extended or replaced from time-to-time), pursuant to which the Lenders agreed to make available to the Borrower, upon the terms and conditions therein described, a loan facility in the original amount of up to Seven Hundred Fifty Eight Million One Hundred Five Thousand Two Hundred Ninety Six United States Dollars (USD$758,105,296).
		

		
			W I T N E S S E T H:
		

		
			WHEREAS, pursuant to Clause 19.2 (Financial condition) of the Original Facility Agreement, the Facility Guarantor is required to maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of greater than or equal to: (i) 1.25 at all times prior to and through March 31, 2018, (ii) 1.50 at all times from April 1, 2018 through March 31, 2019, and (iii) 2.50 from April 1, 2019 and at all times thereafter;
		

		
			WHEREAS, as of the date of the Compliance Certificate delivered to the Administrative Agent for the fiscal quarter ended March 31, 2019, the Facility Guarantor’s ratio of Consolidated EBITDA to Consolidated Net Interest Expense is 2.00; and
		

		
			WHEREAS, the Borrower has requested that (i) $10,022,747 in expenses incurred in connection with the defense of the unsolicited takeover proposal by BW LPG Limited be excluded from the calculation of Consolidated EBITDA and (ii) certain other amendments be made to the Original Facility Agreement including amongst other things, an amendment to the ratio of Consolidated EBITDA to Consolidated Net Interest Expense for the period beginning June 30, 2019 and ending March 31, 2020;
		

		
			WHEREAS, Concorde LPG Transport LLC and Corvette LPG Transport LLC have been released from their obligations as Upstream Guarantors under the Original Facility Agreement; and
		

		
			NOW, THEREFORE, subject to, and upon the terms and conditions herein set forth, and in consideration of the mutual agreements, provisions, covenants and conditions contained herein, the parties to the Original Facility Agreement hereby agree to amend certain provisions of the Facility Agreement to reflect the parties’ understanding of the aforementioned matters as follows:
		

		
			1.          DEFINITIONS
		

		
			1.1        Wherever used in this Amendment, unless the context requires otherwise: (i) terms defined herein shall have the meanings assigned to them herein and (ii) Clause 1 (Definitions and Interpretation) of the Original Facility Agreement shall apply herein, mutatis mutandis, as if set out in this Amendment in full.
		

		
			1.2        The Finance Parties and the Obligors designate this Amendment as a Finance Document.
		

		
			
		

		
			

		 

		

			- 1 -

		

		

		
			 
		

		
			2.          AMENDATORY PROVISIONS
		

		
			2.1        From and after the Effective Date (as defined in Clause 3.1), all references in the Original Facility Agreement to “this Agreement” (or words or phrases of a similar meaning) shall be deemed to be references to the Original Facility Agreement as amended by this Amendment unless the context otherwise specifically requires.
		

		
			2.2        In Clause 1.1 (Definitions) of the Original Facility Agreement, the following definition shall be inserted:
		

		
			Amendment No. 3 means that certain Amendment No. 3 dated as of July 23, 2019 made among the parties hereto amending and supplementing this Agreement.
		

		
			2.3        In Clause 1.1 (Definitions) of the Original Facility Agreement, the following definition shall be inserted:
		

		
			BW LPG Acquisition Attempt means the unsolicited proposals made and withdrawn in 2018 for the acquisition by BW LPG Limited of 100% of the Equity Interests of the Facility Guarantor.
		

		
			2.4        In Clause 19.1 (Financial Definitions) of the Original Facility Agreement, part (a) of the definition of “Consolidated EBITDA” shall be amended to (a) delete the word “and” at the end of sub-clause (iv) and (b) insert the following new sub-clause (vi):
		

		
			(vi)        expenses incurred by the Facility Guarantor prior to the date of Amendment No. 3 to this Agreement in connection with the BW LPG Acquisition Attempt and disclosed on Schedule 13 (Expenses incurred in connection with the BW LPG Acquisition Attempt); and
		

		
			2.5        Clause 19.2(a) (Minimum Liquidity) of the Original Facility Agreement shall be amended to (a) replace the semi-colon at the end of the existing final paragraph with a period and (b) insert the following new final paragraph at the end of the clause:
		

		
			Notwithstanding the foregoing, if the ratio of Consolidated EBITDA to Consolidated Net Interest Expense maintained by the Facility Guarantor is less than 2.50 at any time or times during the period beginning on and including June 30, 2019 and ending on and including March 31, 2020, Consolidated Liquidity shall at such time or times be maintained in an amount at least equal to $47,500,000, of which an amount at least equal to the applicable Minimum Earnings Account Balance for the relevant period shall be held in an Earnings Account pursuant to Clause 25.1 (Earnings Accounts);
		

		
			2.6        Clause 19.2(c) (Minimum Interest Coverage) of the Original Facility Agreement shall be deleted and replaced in its entirety by the following:
		

		
			Minimum Interest Coverage: It maintains a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of greater than or equal to: (i) 2.00 at all times from June 30, 2019 through March 31, 2020 and (ii) 2.50 from April 1, 2020 and at all times thereafter;
		

		
			2.7        In Schedule 9 (Compliance Certificate) to the Original Facility Agreement, the following paragraph shall be inserted at the end of Item 2(a):
		

		
			[NOTWITHSTANDING THE FOREGOING, TO BE INCLUDED IF INTEREST COVERAGE RATIO IS LESS THAN 2.50 DURING PERIOD FROM JUNE 30, 2019 THROUGH MARCH 31, 2020: is [l].  The Minimum Earnings Account Balance is $[l] and is being maintained in an Earnings Account.]
		

		
			
		

		
			

		 

		

			- 2 -

		

		

		
			2.8        A new Schedule 13 (Expenses incurred in connection with the BW LPG Acquisition Attempt) shall be inserted as follows:
		

		
			Schedule 13
		

		
			Expenses incurred in connection with the BW LPG Acquisition Attempt
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Quarter ended June 30, 2018

					
					
						    

					
					
						$

					
					
						483,000 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Quarter ended September 30, 2018

					
					
						 

					
					
						$

					
					
						1,770,589 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Quarter ended December 31, 2018

					
					
						 

					
					
						$

					
					
						7,766,847 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Quarter ended March 31, 2019

					
					
						 

					
					
						$

					
					
						2,311 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Total

					
					
						 

					
					
						$

					
					
						10,022,747 

					
					
						 

				

		
			 
		

		
			3.          CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT
		

		
			3.1        This Amendment shall not be effective unless and until the date the Administrative Agent, or its duly authorized representative, shall have received all of the documents and other evidence listed in Schedule 1 hereto (Conditions Precedent to Effectiveness of Amendment No. 3), in form and substance satisfactory to the Administrative Agent and at such time, this Amendment shall be deemed effective (the Effective Date).
		

		
			4.          NO FURTHER CHANGES
		

		
			4.1        Except as provided herein, all the remaining provisions of the Original Facility Agreement shall remain unchanged, valid and binding on all the parties thereto.
		

		
			5.          REPRESENTATIONS AND WARRANTIES
		

		
			5.1        The representations and warranties made in Clause 17 (Representations) of the Original Facility Agreement shall be deemed repeated as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date, in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date, or (B) representations and warranties which are no longer true and correct as a result of a transaction expressly permitted by the Original Facility Agreement as amended hereby.
		

		
			6.          EXISTING SECURITY
		

		
			Each Obligor confirms that the Security Documents to which it is a party:
		

		
			6.1        shall continue to secure all liabilities which are expressed to be secured by them; and
		

		
			6.2        shall continue in full force and effect in all respects.
		

		
			7.          FURTHER ASSURANCE
		

		
			7.1        Each Obligor shall, at the reasonable request of the Administrative Agent and at its own expense, do all such acts and things necessary or advisable to give effect to the amendments made or to be made pursuant to this Amendment.
		

		
			
		

		
			

		 

		

			- 3 -

		

		

		
			8.          GOVERNING LAW
		

		
			8.1        The laws of the State of New York shall govern all matters arising out of, in connection with or relating to this Amendment, including, without limitation, its validity, interpretation, construction, performance and enforcement.
		

		
			9.          SUBMISSION TO JURISDICTION; WAIVERS
		

		
			9.1        Any legal action or proceeding with respect to this Amendment shall be brought exclusively in the courts of the State of New York located in the City of New York, Borough of Manhattan, or of the United States of America for the Southern District of New York and, by execution and delivery of this Amendment, each of the Obligors executing this Amendment hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided that nothing in this Amendment shall limit the right of the Finance Parties to commence any proceeding in the federal or state courts of any other jurisdiction to the extent a Finance Party determines that such action is necessary or appropriate to exercise its rights or remedies under this Amendment. The parties hereto hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.
		

		
			 
		

		
			
		

		
			

		 

		

			- 4 -

		

		

		
			Schedule 1
		

		
			Conditions Precedent to Effectiveness of Amendment No. 3
		

		
			1.          Corporate Documents
		

		
			A certificate of an authorized signatory of each Obligor certifying (i) that each copy document relating to it specified in Part 1 of Schedule 3 to the Original Facility Agreement remains correct, complete and in full force and effect as at a date no earlier than a date approved for this purpose and that any resolutions or power of attorney referred to in Part 1 of Schedule 3 to the Original Facility Agreement in relation to it have not been revoked or amended; (ii) that any resolutions or power of attorney referred to in Part 1 of Schedule 3 to the Original Facility Agreement in relation to it have not been revoked or amended; (iii) resolutions of the board of directors and/or managers, members or managing members, as applicable, of each Obligor (or any committee of such board empowered to approve and authorize the following matters) approving the terms of, and the transactions contemplated by, this Amendment and resolving that it executes this Amendment and any documents necessary in connection therewith and authorizing a specified person or persons to execute the Amendment and any such documents; and (iv) any power of attorney under which any person is to execute this Amendment or any documents in connection therewith.
		

		
			2.          Executed Documents
		

		
			(a)         This Amendment.
		

		
			3.          No Default
		

		
			No Default shall have occurred and be continuing under the Facility Documents or will occur by virtue of entering into this Amendment or the transactions contemplated hereby.
		

		
			4.          No Material Adverse Change
		

		
			In the determination of the Required Lenders, no Material Adverse Change shall have occurred.
		

		
			 
		

		
			 
		

		
			

		 

		

			- 5 -

		

		

		
			IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Amendment as of the date first above written.
		

		
			 
		

		
			DORIAN LPG FINANCE LLC
		

		
			As Borrower
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			COMET LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN SHANGHAI LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN HOUSTON LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			DORIAN SAO PAULO LPG TRANSPORT LLC
		

		
			 
		

		
			As Upstream Guarantor
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			CONSTELLATION LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN ULSAN LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN AMSTERDAM LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN MONACO LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			DORIAN BARCELONA LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN TOKYO LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN DUBAI LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN GENEVA LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN CAPE TOWN LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			COMMANDER LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN EXPLORER LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN EXPORTER LPG TRANSPORT LLC
		

		
			As Upstream Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			DORIAN LPG LTD.
		

		
			As Facility Guarantor
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Theodore Young

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						  Theodore Young

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						  Chief Financial Officer & Treasurer

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			ABN AMRO CAPITAL USA LLC
		

		
			As Bookrunner, Mandated Lead Arranger, Global Coordinator, Administrative Agent, Security Agent and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Michael Choina

					
					
						 

					
					
						By:

					
					
						  /s/ John Sullivan

				
	
					
						Name:

					
					
						  Michael Choina

					
					
						 

					
					
						Name:

					
					
						  John Sullivan

				
	
					
						Title:

					
					
						  Managing Director

					
					
						 

					
					
						Title:

					
					
						  Managing Director

				

		
			 
		

		
			 
		

		
			ABN AMRO BANK N.V.
		

		
			As Swap Bank
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ R.A.V. Hoefnagelo

					
					
						 

					
					
						By:

					
					
						  /s/ A.L Lockhors

				
	
					
						Name:

					
					
						  R.A.V. Hoefnagelo

					
					
						 

					
					
						Name:

					
					
						  A.L Lockhors

				
	
					
						Title:

					
					
						 

					
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			 
		

		
			CITIBANK N.A., LONDON BRANCH
		

		
			As Bookrunner, Mandated Lead Arranger, ECA Coordinator, ECA Agent and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Barbara Griffiths

					
					
						 

					
					
						By:

					
					
						 

				
	
					
						Name:

					
					
						  Barbara Griffiths

					
					
						 

					
					
						Name:

					
					
						 

				
	
					
						Title:

					
					
						  Vice President

					
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			 
		

		
			CITIBANK, N.A.
		

		
			As Swap Bank
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Joseph Shanahan

					
					
						 

					
					
						By:

					
					
						 

				
	
					
						Name:

					
					
						  Joseph Shanahan

					
					
						 

					
					
						Name:

					
					
						 

				
	
					
						Title:

					
					
						  Vice President, Citibank N.A,

					
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			THE EXPORT-IMPORT BANK OF KOREA
		

		
			As Mandated Lead Arranger, Swap Bank and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Ju Sang-jin

					
					
						 

					
					
						By:

					
					
						 

				
	
					
						Name:

					
					
						  Ju Sang-jin

					
					
						 

					
					
						Name:

					
					
						 

				
	
					
						Title:

					
					
						  Director General

					
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			 
		

		
			ING CAPITAL MARKETS LLC
		

		
			As Swap Bank
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Juan Carlos Vallarino

					
					
						 

					
					
						By:

					
					
						  /s/ Michael K. Dwyer

				
	
					
						Name:

					
					
						  Juan Carlos Vallarino

					
					
						 

					
					
						Name:

					
					
						  Michael K. Dwyer

				
	
					
						Title:

					
					
						  Vice President

					
					
						 

					
					
						Title:

					
					
						  Managing Director

				

		
			 
		

		
			 
		

		
			ING BANK N.V., LONDON BRANCH
		

		
			As Bookrunner, Mandated Lead Arranger and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Adam Byrne

					
					
						 

					
					
						By:

					
					
						  /s/ Graham Wallden

				
	
					
						Name:

					
					
						  Adam Byrne

					
					
						 

					
					
						Name:

					
					
						  Graham Wallden

				
	
					
						Title:

					
					
						  Managing Director

					
					
						 

					
					
						Title:

					
					
						  Authorised Signatory

				

		
			 
		

		
			 
		

		
			DVB BANK SE
		

		
			As Bookrunner, Mandated Lead Arranger, Swap Bank and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Nikolaos Chonizopoulos

					
					
						 

					
					
						By:

					
					
						  /s/ Anastasia Chatzioannidi-Topintzi

				
	
					
						Name:

					
					
						  Nikolaos Chonizopoulos

					
					
						 

					
					
						Name:

					
					
						  Anastasia Chatzioannidi-Topintzi

				
	
					
						Title:

					
					
						  Senior Vice President

					
					
						 

					
					
						Title:

					
					
						  Assistant Vice President

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			COMMONWEALTH BANK OF AUSTRALIA, NEW YORK BRANCH
		

		
			As Swap Bank and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Chris Li

					
					
						 

					
					
						By:

					
					
						 

				
	
					
						Name:

					
					
						  Chris Li

					
					
						 

					
					
						Name:

					
					
						 

				
	
					
						Title:

					
					
						  AssociateDirector

					
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			 
		

		
			DEUTSCHE BANK AG, HONG KONG BRANCH
		

		
			As Mandated Lead Arranger and Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Ken Cheng

					
					
						 

					
					
						By:

					
					
						  /s/ Edward Hui

				
	
					
						Name:

					
					
						  Ken Cheng

					
					
						 

					
					
						Name:

					
					
						  Edward Hui

				
	
					
						Title:

					
					
						  Assistant Vice President Structured
Trade & Export Finance Hong Kong

					
					
						 

					
					
						Title:

					
					
						  Director Structured Trade & 
Export Finance Hong Kong

				

		
			 
		

		
			 
		

		
			DZ BANK AG
		

		
			DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK
		

		
			FRANKFURT AM MAIN
		

		
			As Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Michael Fischer

					
					
						 

					
					
						By:

					
					
						/s/ Ilko Jantschev

				
	
					
						Name:

					
					
						  Michael Fischer

					
					
						 

					
					
						Name:

					
					
						Ilko Jantschev

				
	
					
						Title:

					
					
						  Managing Director

					
					
						 

					
					
						Title:

					
					
						Vice President

				

		
			 
		

		
			 
		

		
			SANTANDER BANK, N.A.
		

		
			As Original Lender
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Mark Connelly

					
					
						 

					
					
						By:

					
					
						  /s/ Puiki Lok

				
	
					
						Name:

					
					
						  Mark Connelly

					
					
						 

					
					
						Name:

					
					
						  Puiki Lok

				
	
					
						Title:

					
					
						  Senior Vice President

					
					
						 

					
					
						Title:

					
					
						  Vice President

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

		

		

		
			BANCO SANTANDER, S.A.
		

		
			As Mandated Lead Arranger
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						  /s/ Remedios Cantalapiedra

					
					
						 

					
					
						By:

					
					
						  /s/ Francisco Verdugo Munoz

				
	
					
						Name:

					
					
						  Remedios Cantalapiedra

					
					
						 

					
					
						Name:

					
					
						  Francisco Verdugo Munoz

				
	
					
						Title:

					
					
						  Vice President

					
					
						 

					
					
						Title:

					
					
						  Vice President

				

		
			 
		

		 

		

			Signature Page to Amendment No. 3 to Facility Agreement

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